QCR Holdings Exceeds Estimates with Q2 2025 EPS of $1.71, Revenue Growth Driven by Capital Markets Expansion.

QCR Holdings Inc reported Q2 2025 EPS of $1.71, beating estimates, driven by revenue growth in capital markets expansion. Net income was $29.0 million, with adjusted net income at $29.4 million. The company's net interest margin expanded by four basis points to 3.46%. Despite a slight decline in total deposits, QCR Holdings faces challenges in maintaining deposit growth and managing criticized loans.

QCR Holdings Inc (QCRH) has reported its second-quarter 2025 earnings, showcasing a notable improvement in earnings per share (EPS) and revenue growth, particularly in capital markets expansion. The company reported an EPS of $1.71, surpassing the estimated EPS of $1.60 [1]. The net income for the quarter was $29.0 million, with adjusted net income standing at $29.4 million [1].

The company's net interest margin (NIM) expanded by four basis points to 3.46% on a tax-equivalent yield basis [1]. This expansion, coupled with a significant increase in capital markets revenue, contributed to the overall financial strength of the company. Capital markets revenue grew by 51% on a linked-quarter basis, reflecting a robust performance in this segment [1].

Despite a slight decline in total deposits by $19.0 million, or 1% annualized, from the first quarter, average deposit balances increased by $72.0 million, indicating a strong core deposit base [1]. The company's loan growth was driven by strong demand in low-income housing tax credit (LIHTC) and traditional lending, with total loans and leases increasing by $102.6 million to reach $6.9 billion [1].

The company's noninterest income also saw an increase to $22.1 million, with capital markets revenue rising significantly to $9.9 million from the previous quarter [1]. The nonperforming assets to total assets ratio improved to 0.46%, indicating excellent asset quality management [1].

Todd Gipple, President and Chief Executive Officer of QCR Holdings Inc, commented on the company's performance, stating, "We delivered strong second quarter results highlighted by a significant increase in net interest income from the previous quarter, driven by both net interest margin expansion and strong loan growth" [2].

While the company's stock price saw a 1.04% increase following the earnings release, closing at $75.25, it remains within its 52-week range [2]. The company's overall financial health score of 2.92 (rated as GOOD by InvestingPro) supports this positive sentiment [2].

Looking ahead, QCR Holdings projects gross loan growth of 8-10% in the second half of 2025 and anticipates capital markets revenue of $50-60 million over the next four quarters [2]. The company expects net interest margin (NIM) to remain flat or increase by up to 4 basis points in Q3, while the effective tax rate is projected to be 6-8% [2].

However, the company faces challenges such as maintaining deposit growth and managing criticized loans [1]. Revenue shortfalls could impact future earnings if not addressed, and market saturation in key regions may limit growth potential [2]. Regulatory changes, such as the Durbin Amendment, could also affect operations, and economic uncertainties could impact loan and deposit growth [2].

References:
[1] https://www.gurufocus.com/news/2998916/qcr-holdings-inc-qcrh-reports-q2-2025-eps-of-171-beating-estimates-revenue-growth-driven-by-capital-markets-expansion
[2] https://za.investing.com/news/transcripts/earnings-call-transcript-qcr-holdings-beats-q2-2025-eps-forecast-stock-rises-93CH-3803747