- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to the QCR Holdings, Inc. Earnings Conference Call for the Third Quarter of 2022. Yesterday, after market close, the company distributed its third quarter earnings press release. If there is anyone on the call who has not received a copy, you may access it on the company's website, www.qcrh.com. With us today from management are Larry Helling, CEO; and Todd Gipple, President, COO and CFO. brief up the from the a then results, analysts. provide open we'll call will summary financial of and Management to questions

some and the guidelines Before remind forward-looking statements will would I by of providing of the defined that Securities be under we management Commission. the falls like today as information Exchange begin, everyone to

results predictions part could statements, company's hopes, the of call this concerning forward-looking those from these As materially are expectations differ guidelines, of and projected. during and future, any actual statements made the beliefs,

Additional filings, information on the company's these factors is included which company's in the on SEC are available website.

may the for which the are the financial information to and management on today, The intended substitute comparable to measures. directly available not measures. other well of GAAP quantitative but Additionally, reconciliation non-GAAP discussed as the most press GAAP be refer contains to as non-GAAP website measures, to release supplement, the

being replay one XXXX, will this Mr. also reminder, and time, to be the recorded be a the accessible after at turn hour this Helling Holdings. for available call. QCR starting At now call of on the completion conference It As I this website. Larry this over will X, November afternoon is company's through will approximately

Larry Helling

third delivered quarter. carefully exceptional and follow performance. strong Thank our loan will will join our taking the us and credit results brief Todd of We improved quality, managed another on net with you, start a thank additional today. driven the growth, details quarter for and operator. expenses. income, by financial quarter Welcome, the ladies regarding gentlemen, discussion I for you time to call with

delivered robust earnings previously for of XXX by items. generated lending with our risk-based share, for issuance. loan quarter, subordinated strengthened XX.X%. the per million we core generating the in points. we of our ratio capital first the in This the half addition, the adjusting again total $XX.X million transaction Building quarter a with ROAA basis capital or after we third posted ratio X.XX% our announced on year, We In increased a annualized non-recurring of XXX $X.XX of total momentum debt growth activity risk-based

Our driven businesses. our and was leasing, quarter in for loan by lending, commercial finance traditional specialty growth the strength

Our experienced growth. loan levels to generate exceptional continue lenders of

are our growth targeted current XX% Given pipelines, to and vigilant quarter, our on between the XX% credit maintaining while exceptional loan we fourth our reaffirming be of for continuing quality.

$XXX growth on loan by funded by in which Our an basis. growth primarily million our X.X% was deposits, annualized or grew

in However, we a of deposits. experience did shift our the composition

our deposits correspondent during sheet liquidity the commercial on pre-pandemic declined and of demand moving in clients to our to deposits returned bank correspondent the were as larger positions the levels. of bank non-interest-bearing some normal Our We successful quarter. balance third more

clients our rate-sensitive shifted upward on addition, some In term portfolio within in as funding, This our grew, time of more shift costs. deposit to added mix some pressure deposit overall deposits. our our has

hikes primarily experience This low our tax diluted on debt to rate higher earning quarter, are of has The nearly of balance made helped projects yields affordable deposits loans the During impact our with of basis debt subordinated the loan our five credits, interest these our record, projects prior inception net across by drove values. cost margin housing asset-sensitive of for The to we affordable supply the about to industry housing interest subordinated Since the inflationary see need NIM markets Notably, program's expanded remain asset the this was our of remain impact as the issuance, XX,XXX basis-point These default never pressures, an quality select chain three issuance, adjusted delays, the been interest income in XXX detail proud the is middle disruptions, Todd we increased and have due utilize impact units. basis points the are non-interest These XXXX, sheet, and being remarks. in multiple higher. in swap southeast. more modest fees. in the affordable central finance delays as in over client historic the limited has his quarter of result capital excellent a market as consisting increase strong. ongoing NIM. the optimistic adjusted developers a US and economics We with rates. housing revenues track will minimal of projects business year-over-year. into primarily underlying to housing third our line did go high rates. in up points for from developments greater. Despite caused decline which throughout lower provide XX We by

a result, and expect be to we it going contributor continue our As a to to significant consistent forward. profitability

are by quality declined loans asset the of comfortable represent X.XX% reserves, Our our the during million and during net charge-offs leases. as improved total $X.X and We non-performing had quarter with loans quarter, XX%. which manageable or

are the We our of but remain resiliency markets. recessionary cautiously mindful about of economic optimistic concerns, relative

credit well quality asset to and economic uncertainty. us excellent strong culture our prepares weather Additionally,

well quarter, of challenges new may As debt occur. we for issued a previously $XXX announced subordinated as million potential bolster to during that economic we we capital the believe proactive We positioned third position. that are our move

continue provide that, attractive of position, prudent reserves, With level have over earnings, us will call excellent shareholders. disciplined to Todd quarter solid for deliver quality, information I our returns about strong to will turn credit enable capital our the growth and to further results. We a first which a and

Todd Gipple

net today. I'll Good you, with interest joining Larry. Thank morning, for everyone. Thanks income. us start

a on with a increase income linked-quarter quarter. of higher due the annualized XX% from XX% XX.X% interest The with for increase was and average an in annualized, approximately assets net those to of million, accretion earning quarter. $XX.X the yields coupled tax PPP, acquisition-related was beta second for assets, growth the of adjusted equivalent on basis, Our

recent the partially Additionally, expense strong of our growth costs, higher a a subordinated XX%, in of and deposit points our loan shift in as deposits, higher our yield yields. debt result for of interest improved offsetting and issuance. of expanded earning the the mix a XX assets We experienced basis impact beta

improved the three NIM issuance. points our Our subordinated dilutive basis-point by adjusted impact of five prior debt basis to

As slower we benefits rate second nonlinear the is know, lower quarter, XX rapid the deposit betas, increase previous and basis of during periods we we of a saw In increases. typically of points impact NIM in NIM the quarter. as posted

two quarter, However, the we those and through betas accelerated increases. Fed rate progressed as third additional

the on year, the For X%. half was of beta total deposits our first

still ended height from the quarter, on which moved to on to our last date, deposits XX%, full for For beta total below beta the beta third period the our is XX%, rate is cycle our total we which that and deposits Part through result of rates move rising a as rate we our was in cycle. of mix, which a beta of is in deposit hike lesson expect shift XXXX, the XX%. the increased our

growing continue loan bankers to strong fund well-priced are on core our talented focused deposits growth. to Our

peer at near and our XXXX. Looking growth, significant cycle-to-date the group. our our NIM loan robust a the growth our and from solid a on net organic for experienced have adjusted performance fourth expansion expanded top quarter NIM has NIM has of or income basis, we points XX at of also achieved With the basis interest year,

quarter points two quarter ahead, to additional basis of Looking subordinated the expansion fourth in range adjusted a issuance. we the the the dilution of project four after full debt NIM in from

was the lower which million our in million non-interest quarter, we $XX.X $XX.X quarter. the to income, for than Turning the generated second

of averaged clients expect with Larry our was quarter. million for guidance the per out million to are to a wealth revenue project of million that the the fee second million, our Capital of the source income, of approximately of delays generated experiencing, $XX.X markets to the million range our the and the therefore, be capital $X.X pipeline million fourth four As and quarter. we strong. $XX mentioned, quarter revenue for third quarters, management last $XX consistent quarter market Despite $XX quarter, in our in discussion despite remains has this below revenue the non-interest was decline. income million $XX we markets $XX range Rounding for

stock client is valuations. wealth significant and relationships, meaningful to is new adding team in assets Our helping offset continues management, under decline market management new which sharp to the generate

compared quarter low acquisition, Guaranty incentive-based expenses for the non-interest quarter. both Bank million quarter for lower $XX quarters to for were The from relatively prior elevated our adjusting Now million to third the quarter. million Non-interest million to decrease million. turning of of and the expenses the and $XX.X this guidance $XX.X end related the compensation post-acquisition due respectively, second After primarily expense to at related our was acquisition expenses. $XX.X to and quarter expenses, at $XX.X million, in $XX totaled static and second the

range non-interest million of anticipate we million. that Looking again ahead to $XX the be the our expense of will fourth in to level quarter, $XX

the for Non-performing As ratio assets NPAs be quarter, overall paydowns end quality third quarter, of of million prior to to quarter. continues asset million driven total the during to strong. improved the the $X at by several by Larry was h at assets The the end the of down third X.XX% on our noted, quite $XX quarter. compared X.XX%

a in overall quarter of criticized the quarter, We X.XX% quality. loans total the X.XX% for not the X.XX% result to addition, the quarter. In did loans and continued the respectively, in classified of to our credit company's improved third record and losses X.XX%, improvements and compared loans as from provision leases at credit and third as end prior to

Our over at times of allowance This X.XX% remained assets. five strong our represents for loans total leases. credit losses non-performing allowance and

and X.XX% points risk-based our decline to quarter AOCI we mentioned, ratio was assets largely activity our equity subordinated to Larry at capital issuance This common share ratio XXX result posting debt XX.XX%, earnings As end, of quarter, of X.XX% strengthened improvement the our repurchase declined our the an of during during while basis to the the at with tangible quarter. a June. total our stronger to end and compared in tangible

tangible equity, earnings share. While negatively which impact, value impacted strong repurchases our per to tangible increase in the this helped slight share AOCI offset a book led the company's to common and

was quarter X.X% a to rate of taxable The higher Finally, to increased earnings our the ratio effective due XX.X% from third revenue to for quarter. in quarter. in tax-exempt second tax the the rate higher

to we the your the of on effective rate first tax our Operator, quarter be With are results, fourth that open let's expect for added context our for quarter. We questions. up the a range to for call ready question. XX% in financial third XX%

Operator

Instructions] Damon KBW. first from with [Operator DelMonte Go ahead. Our comes question

Damon DelMonte

morning, guys. today. everybody's Hope well good Hey, doing

on quick Just wanted credit. to to Obviously, really be continue question things strong. -

reserve. broader growth going then given for healthy outlook growing about about and a have loan You favorable softness should throughout the provisioning just a we economy? concerns continued How think forward, of kind just

Larry Helling

Damon. Thanks, Yes.

it's deterioration not sector softness I think be certainly and no there juncture, measurements this sometime up whole say, I'd certainly, some any showing First, year, the during next are far. there'll at of so signs in but credit our of thinks

you end know, very reserve a run standpoint. group from the peer we as So, toward high of our

in minimal So, certainly, for provision quarter, the expect to fourth quarter. the fourth we'd no

we'll we fourth go guidance try end into give on little year, As probably you when next and quarter more earnings. we do the that a

Damon DelMonte

elaborate quarter, fair this incurred And a the could you you bit? enough. Okay, charge-offs just that little on

Larry Helling

Yes. the came reduction in charge-off they of attention. get small, a and non-accruals. it’s a modest. of is when were our your just NPAs payoffs couple of clean-up, nice very from couple the of They’re Most

deals hopefully future so, on of in recoveries of we'll those. quarters, we were the isolated some two up, couple should that they And about and thought we clean talk a just decided, one

Damon DelMonte

basis you then four quarter. points the with of two great. regards said fourth outlook, Okay, I think the a of to couple basis And margin Todd, in points to expansion,

the balance As and think impact do the going the or margin at look funding to costs, quarter, peaks into sheet you kind ‘XX? see you in think and fourth at you here of there's look opportunity still deposit you your rising of expansion

Todd Gipple

expansion. around question, to be our full guide billion RSAs, Thanks still QX beta the billion with of asset-sensitive. of that's of up to $X.X quarter, sub We're for We the continued RSLs. and about to third in basis margin that the two the we the net Certainly, points believe margin experienced of a quarter seven points in three this We Yes. up to third debt. of RSAs, million that for remain here snapped $XXX net basis We five bit margin Again, four clients the $X.X lag that back. quarter, don't solidly really deposit caught of expansion. Damon. quarter last did will core

say were that We bit QX, expect be kind middle QX, they moderate I deposit pretty were soft. I of that would expect betas QX. hard. we a those in to guess to in range. QX, the the of

by expansion the RSAs. we're in peaked don't some of why the of expecting yet net because end QX. that we're think So, that's We year

to So, we expect to expansion. continue some see

QX XXX. QX, just new that at of reference average point XXX. of was our a here, an rates loan a Another on good coming thing, In

loans So, new coming on better rates. are at

lift the loan some bit. getting we're a rate floating while in also has So, new loans, lifted our production

Damon DelMonte

And Got the that ones balance your the you have, can just it. us, you of rate-sensitive remind reprice that deposits immediately?

Todd Gipple

that That's very We Sure. few other have than to X.X. other pretty close very those high betas. RSLs really

Damon DelMonte

Got it.

had that's for now. you. all I Okay. great, Thank

Operator

comes Our James. Raymond Tamayo next Please Daniel ahead. from with question go

Daniel Tamayo

deposit I Thank you. that lot third levels Good banks quarter as deposit had up And not in think guiding rate. but quarter, the quarter? on depositors will are of margin, to moderate guess morning, higher to those just the the the from folks betas I beat I demand confidence in up than what guys. maybe going certainly, dead here you horse fourth the a third in quarter but a following know fourth more most you betas here, gives pressure

Todd Gipple

you, great I than given more will Sure, their deposits commercial most significantly-sized deposit part. Danny, most, quickly question. reacts tell base the for very our

will really third showed in in that we up more here tend quarter. little quickly, react bit to a more and So, harshly the -

of really, most mix we now. have experienced the shift believe, We

XX%, is really and norm. around non-interest Our historical from bearing down XX% down XX% that more is

the worst up range. that's think We're to will be We compression So, of in shift bit. some fairly through In a that's the QX, to QX, to for early are we in in we little what beta we some we're to in beta going on showed a that comments, a more about of I on to. non-linear. right think done, the deposits QX, mix or non-index our that and beta more a that's I just XX% bit guiding more that XXs now, XX% that component. counterintuitive impact it. that we're significant in compared of our the but XX% peers think you, in here looking And QX. saw I opening mentioned know tell expecting moderate ours high

what QX. I think expecting it a betas, deposit helps to with that's harshest that a our deposit of little bit respect color really is the we part with that for It's you choppy case, saw and in base. Hope particularly we're that. little here

Daniel Tamayo

XX% somewhat loan you mean, little unrelated, on bit it of guess follow-up, Yes, side, to I does. the XX% Thanks, growth a Todd. deposit And a just I but guide. reiterated the

you going that deposit loan You've to ratio over do to got about competition up deposits wholesale or higher, A utilize deposit funding that being out lot maintain or of you you XXX%. forward? going for now the ratio certainly there. feel loan comfortable range, in How able more plan do are

Todd Gipple

Sure. Great question. Thanks for one. asking that

XXX% loan over on we're to yes, deposit. So,

where First, talk I'm go. going about talk then ratio to about to and you to we that expect

numerator. to of We our the deposit will because a historically have loan higher ratio peers than

our total XX% peer Our percentage total most of higher about are loans assets the of is where of than assets group, XX% loans.

loan deposit for ratio is the in L us. the higher So, to

here XXX% competition would We there. in the XX%, over more think in fierce. like of in and Pricing to range bit even QX, So, XXs over is normal XXX%, to we our a XX% be be elevated but a will be is Deposit XX% longer the time. period fierce. goal times. this to We see to around would we hover can we typically get in

hard the to We great deposits. have we're work going fund bankers core and to company, all around with very it

result little forward. about expectations bit we the and more So, are tend then what ratio our going to bit show, and a that's a about the that little

Larry Helling

location openings Cedar retail having in we record management an wealth having this Danny, of in month record new in at openings. we're morning, talked and August. And account I meeting all-employees that, I'll new add the Rapids account about was our just

short So, from by underpinnings new environment. certainly, new been the adding rate relationships, and long-term the are clients great certainly, exacerbated the but interest term's

Daniel Tamayo

out. with and swap or non-interest thanks to issues, obviously And for the supply just you chain higher Yes. the for from over as fees, shifting now on continued rates, the there No, income headwinds Understood. that finally, from called color. should in side here the $XX But the prior pressure that new quarter, in guidance million to and you earlier this guidance then gears then from in $XX down as beyond? in was, it we the levels and XXXX you years, million what but get to think think years, future specifically about can range range not or fourth that year, that up back do historical

Larry Helling

XXXX quarter, little point. will think get price depend. wants, guiding slow the it Fed get maintain will the put be on Certainly, and of The for offset same Over we stacks at cautious started into that's then this But it what fourth on kind which a reasonable time, materials the a which a little climbed, together. inventory. the will and and We'll expectation to the supply then of down it chain kind stuff of getting rates really Yes. at better. has interest bit time, pressure capital

the of So, is, depend building is the affordable at housing, is no it'll I environment new need of rate is for what record interest on that there What shortage the demand say product. would people who levels. The are. certainly facilities and cost

is about, everywhere they get just kind slowdown and to and but the some that we of in going challenge so, not together increase put curve we It's getting rates is until about And the capital have this these of Fed projects is spectacularly. really their stacks our there's are kind make to be get the of performing work, all space, slowness in which what books through these accomplished.

done factors of between financing So, depend potential. the that cost will is of When I there think that will of projects combination cost getting longer and on term, them. be

Daniel Tamayo

have. answering for all That's I questions. That's my helpful. Thanks

Operator

Janney Montgomery. ahead. Martin go Our next with comes question Please from Brian

Brian Martin

question late. - Todd, to a I'm ask the the you good don't apologize. - I in think a if just - deposits. joined morning, or migration I guys. two, Hey, but here bit the going I covered I you But just little about talked it,

of today you what your side Just kind or of rates pre-pandemic, kind it properly? if deposit I the deposit is but kind stay, the maybe still I is the in mix of some given migration not wondering change were sense is this, expect of guess, did that wondering, Just saying on maybe we've seen hear prospectively. you said where where kind you should

Todd Gipple

shift. Sure. No, mix of would be we shift We're in more the which With point our is We've mix. clear in norm. at been all the that the XX, Brian, always we that XX, at high good is roughly experienced XX% liquidity it's about I non-interest the say And bearing, to XX. excess now floating market, it’s QX that think historical XX. around

it static be expect that to at We level. really pretty

of clients they’re shift to the part Certainly, will that be up we think sensitive pressure and waking on So, mix over. is non-rate continue there deciding rate-sensitive.

there's some deposit the terms be really us So, continue we mix saying is, base. on what I behind of think change, of in pressure going pricing. the of we're to is that our to the of But worst some guess

Our deposit a base, as lot commercial in sensitivity around typical rate much of bigger, deposits, you there, know, much that. lot is chunkier, of a

headwind think quickly is most, it the reacted but of So, us. more behind than we that majority

Brian Martin

Got you.

how helpful. thinking give any easy that just buyback the other And you on from just or about did can here? the ones, cover you're from just a buyback thoughts Okay, standpoint, you that's

Larry Helling

in down slowed Yes, the I'll past quarter. that Brian. bit take a a one, swing at We

happen recession think year. as seemed guess, next hold more expected given to the, we I bit like little onto - the could capital, prudent a Just that thing

risk our third standpoint but So, group ratio at base. capital a look we're from know, when approaching you top a you as of total peer

be upper quarters available back we in to So, are major for prudent We of year point certainly for a in like base. where going more are seeing and we alternative our and today. capital spot at But buy it term, which in thought it to position to the probably few to the having where downturns, risk XXs answer. well the will XX us aggressively, will ourselves shareholders right not just bodes company on we're because capital was total long lots close next barring economic think in we we sometime the to the our have for that be feels next the

Brian Martin

Got you.

the monthly or the that's to kind what kind two you have the what September? helpful. margin the the trying you'd end of Okay. - had already of quarter, just one Just for do just was is kind And month been. seen dynamics No, - understand just how maybe of last by the much of the of

Todd Gipple

of right end. evenly like wasn't Brian. through deposit pressure fairly spread were we pressure at betas Sure, on the up the was majority that Yes, the think on the quarter. beta really ramping It

was for I that's we're up. like some reason So, quarter. expansion some was throughout the pretty providing it's think It guidance ramping another consistent is QX continued for that not

Brian Martin

you. Got

just helpful, some - That's the mean, really been I have then loan one, just And last pipelines, for time guys the now. Okay. Todd. strong the or has you growth growth quite loan

or looking curious quarters, you're Just to out you I'm your to if customers. is kind get hearing sustainable? like and a your But some customers much we've for think seeing are you the growth that and kind been I what over just, Just on your pulling that some, the give you're more back that guess the trying type not from feel going and of optimistic of sense are ’XX. take getting outlook of they are still as look from coming for you

Larry Helling

business because are expansions, have our to been bit, is that normal it sectors on another Brian, bit but really from and a looking business be are new slowing where slowing their Yes. rate offset presence capital and really C&I buying strong. our true in we're ways a of because portfolio, where is and material are Fed stack down swap because making to certainly and inflation higher the do clients the just the operating costs for would things The metrics plan bit. construction interest work. to down of grow other their noticed just developers it's well, the the company, fee in a just most of most it We've income intent more probably performing inclined seeing

why part do for that of we couple we've we decades a to offset probably that's XX%. the and think done has X% been which now. of done So, can historically, We've what the

Operator

Please question ahead. next Sandler. Nathan from Piper go Our comes Race with

Nathan Race

guys. Thanks for the Good taking Yes. question. morning. Hi,

to Just the to of the of on September, curious on weight going production more relative paying that what margin discussion, seeing the margin-accretive rate and back of at of Is relative based kind the rate that the end in you're speaking? on kind third maybe these spot you’re deposits quarter loan average recently, is the deposits days? growth to generally

Todd Gipple

again, Yes. think Generally sheet, margin. of growing margin, on speaking, we're on the we're optimistic the sides is And net new that why balance it accretive. not that's the both I done

Nathan Race

turning GFED, buybacks then it's remained capital quarter? this fourth capital, quarter. I you maybe just within the at in are to your great. still point. on to expect at late within its albeit on the guys a innings component that context this integrating utilize the continue Okay, guys that Is you And in toolbox, probably imagine that guys active focused you least management to middle

thinking strong forward. trying just managing guys in of how So, just terms going given an profitability remain that to is about you pretty get capital, to of kind update excess are going

Larry Helling

any been I've seen went well a I've as gone just really We've around in all, as career, say lots on first passed these Yes. it's of I'd of about these them well. Nate, And of my the while the system integration. go. GFED conversions. comment

pull So, conversion. power system stuff, now the past we're the still the kudos off team on speed of some year, be to and helping and but our and between there'll curve end bumps system for the the

we Secondly, we're where kind capital, close on getting targeted. of to

aggressive were little - dividend know, we because really We're aggressive capital our in can pretty of accrue getting a low less capital last in quarter, quickly. second As the now levels buyback you we the quarter.

be risk-based XX% probably the place that prudent between so, capital point recession. the at And so, us total approaching just of or year to we're some seems be likely over next and the to next like because

same not that allow so, buyback, second And to at did probably do level some we should us the stock the in as quarter. but

Nathan Race

do of correspondent and deposit Switching your so expectations you kind Okay. across are you of maybe some just strong footprint this guys and the but just guys tap on, intend growth little sources gains the little deposits apologize I main bit, Or growth a platform off-balance I share a the expectations what into gears like sheet support of loan in if the on expecting Got be to quarter? to still late, it. was future fourth to there? from got of some terms that, continued pretty driver the looks touched

Todd Gipple

to Sure, loan Nate. Happy we with to predominantly growth. core fund our continue cover growth that. Yes, do to expect deposit

charters, We're balance correspondent some We on shifted that our on at were deposits. core have ours. growing of really of We sheet, core. XXX all consider deposits off-balance of the sheet. focused, those Those are very clients good

don't off sheet. go need much a I so, really And see to balance of

worked wean the off five very wholesale have years to over hard very, ourselves funding. almost We three entirely to last

to it XXX. bit to from today, little of a want have XXs We the into deposit back ratio pull really but upper that loan the we

Nathan Race

just relative saw forward, And just should to question last great. something on the going GFED forward? out extrapolate that we accretion the is Okay, down housekeeping impact going in that one we future maybe quarters step

Todd Gipple

Nate, bit of asked you a big number. the question. That's so glad a

you of which a of the quarter saw and the transaction, forward, to And predominantly early was accretion base base was $X.X accretion give so, first we impact significant guidance really bit in roughly recap of million. happened would little pretty some what's a so going just That have which restructurings. QX, the plus accretion just It at QX amount. the payoffs was $X and been million really in here

up million maybe accretion. base some paydowns then quarter more or around that in some already some expect loans. on acquired think the here to We we've per see those like We the it had payoffs add And to to some base X some to restructurings with $X fluctuation in payoffs to XXXX, we of when add occasionally fourth that X.X that float and quarter. to know to

million amount that per So, going known here on Probably base. the we'll ’XX. top pretty with quarter, to this sometimes during That $X $X float in payoffs pretty but some solid of much QX some We're up have payoffs, ‘XX. quarter million was help? for

Nathan Race

Yes, no, ‘XX, per sorry, that that's not’ XX? helpful. I'm for quarter million $X is

Todd Gipple

‘XX. Oh, ‘XX. I'm sorry, Yes.

Nathan Race

Perfect. Yes. great. Okay,

Todd Gipple

Thank you.

Nathan Race

I taking color and the you Awesome. Great. Well, all the guys appreciate questions.

Operator

question with Davidson. D.A. from next ahead. Please Rulis go Our comes Jeff

Jeff Rulis

on back Good morning. the Thanks. to Wanted paydowns. circle NPA, the

are I Sounds anything like based sense came things that just a if sort or upfront kind to or the timing if and things was lumpier dedicated down in could little - effort short trend? that non-performers. that to in chase that a - was deal you was head clean it And so, got some you to aggressive to sort to credits of term continue reduce there of those is with if there you any there more if a wanted up. get of think a

Larry Helling

a that two and - we GFED to we two in a of I'll then things. put the quarter, prior Jeff, had of on same credits of because bit just of the list, acquisition put all or us kind of the tick-up, NPA quarter, had just little Number decent on tick-up little Yes, Last the one, page, a the history. we size portfolio.

just that an paid a kind was five progress to up millions on it of ticked off The was in or we’ve good And NPAs a almost those combination from credits. of went our that quarter. largest NPA portfolio four so, of bit. both a several And just one made

out have the low and so, that substantially. our bank. on those figure getting team on several had And seven four work paid working we two, then balances, worked And that gotten those just good three, of by just down been of on we we've really smaller credits, just

So, progress. many in left aren't deals really good large there. There

be know, figure So, probably but the a loss. there's moderate of expect seven take of out with one could that we by number quarter as the year these to into take that's It you time. end we some may out first the get of that, no

downturn to credit away, continuing make use trying still impact expect before kind to quality. to good of we're we So, pristine really environment what's some ourselves to that credit chip a

Jeff Rulis

I linked-quarter, the range. within guess kind got Okay. expenses Thanks, flat guide And on the then Larry. just we of

Given go growth expectations that if and exiting merger maybe some, kind ‘XX, kind into of I of growth base kind QX? guess we expense moderates for largely the of if any integration complete, off

Todd Gipple

expenses. We Yes, Jeff, thanks asking those. really talked about about hadn't for

QX. So, yes, for XX guide XX we're here to that of maintaining

I philosophy around versed X% with expense think expectations and you're growth. XXX our well our very

next So, will some five. in expenses more than see to we no expect would growth XXX, with certainly those keeping year. be In we

Bank. integration We from will the southwest with in see having cost some now conversion behind Missouri and Guaranty savings us

count tend will offset So, pressure. we'd some like of on managed you I you to But to know. as think think show that closely pretty focus to creep. expense can us that that help on some We well expense pretty that,

jump expect there. see So, we any don't big really to

Jeff Rulis

a Maybe Thanks, last Todd. housekeeping.

of the tax referenced rate XX You XX to QX. in

like roll you guess? ‘XX. versus were So, similar of to into teens Do high if think forward in kind you’re just you question, double-digit look mid we ’XX,

Todd Gipple

and is and the Yes, tax-exempt It little our a that's Jeff. is rate (light-tech) lot grown portfolio would be correct, than A modest of growing. more historical.

benefit tax our And part is stronger. from portfolio getting so, of our that

So, the be use good in middle ‘XX. teens a for thing upper versus the to teens would somewhere

Jeff Rulis

you. Thank good. Sounds

Operator

Tamayo Our Raymond Daniel James. Please with next go comes from question ahead.

Daniel Tamayo

Hey, a guys, clarification the here on quick just follow-up margin.

wanted before talked that point Is that four The that basis this to the about you about. accretion you Just two before correct? understanding I'm talked correctly. NIM - adjusted NIM was sure make the that guidance to numbers was

Todd Gipple

be would That that accretion. not Yes. for core affected Danny. NIM by of accounting accounting the top acquisition Correct, on NII Yep. That - be would dollars.

Daniel Tamayo

Got it.

guys. Thanks, I had. That's Okay. all

Todd Gipple

that. clarifying for Thanks

Operator

remarks. like session. would over to to This any concludes our turn Larry conference closing back Mr. question-and-answer for I Helling the

Larry Helling

Thanks our We again day. a call to look all with to soon. you of great today. speaking for forward Have all you joining

Operator

you has presentation. now today's attending Thank concluded. The for conference

disconnect. now may You

QCR (QCRH) 30 Oct 222022 Q3 Earnings call transcript