Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the QCR Holdings, Inc. Earnings Conference Call for the First Quarter of 2023. Yesterday, after market close, the company distributed its first 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. summary the financial analysts. call a we'll and provide up open to will of results, the then Management questions from

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

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

As this website. after a for will is May available conference call. company's this accessible through X, also recorded approximately be will It be afternoon on being and reminder, completion of this the XXXX. X Starting replay the hour

I will over now Mr. at QCR call Larry to Helling turn Holdings. the

Larry Helling

Welcome, operator. time join the thank as business. as our about finance today. position capital you everyone, for liquidity and to the start some a taking levels specialty call well by I the will highlights providing our discussion a and us by review for you, followed Thank quarter, deposit of base,

provide will Todd details financial the on additional for our results quarter.

performance managed by fee carefully increased our expenses. with highlighted operating income pleased for the are quarter, first We and

credit and to capital excellent. strong already Our continue remained grow levels quality

position industry. to recent strong, remains events deposit in liquidity core base we response banking and the improved the in Our significantly our

the $XX.X diluted net million $X.XX quarter delivered per We of or income share. for

our was adjusted Our was adjusted per million, share. income quarter $X.XX EPS diluted for and $XX the net

our peer and the generated that group. believe XX.XX% of ROE remain high both the at metrics of adjusted ROAA of adjusted We quarter end an an X.XX% for and

was of We have years, deposit importance reflection a of our diversified the built deposit that first past franchise a over the strong and XX activity and quarter franchise.

core first million During our or broker quarter, deposits, the nearly excluding deposits, X.X% $XX grew annualized. short-term

deposit core experience in clients the bonuses, deposits taxes. notable as to in deposit quarter first draw typically because seasonal shareholder commercial outflows distributions we our down growth the was Our their quarter pay and

with of grew deposits the a that core time from years. testament relationships Our have million over many that a is built the net XX the believe banks when end clients March deposit outflows. the to through our $XX experienced We may this have we quarter,

liquidity overnight intentionally addition, bolstered deposits from on-balance to add In immediate pay proceeds the our using borrowings off sheet we during liquidity. Loan Home our Bank and Federal with quarter on-balance sheet the short-term broker the

quarter million the to our Our by level of uncollateralized excluding XX.X% improved which deposits deposits of $XXX during or and XX.X% favorably when to peers. deposits, total broker uninsured compares

larger deposit an provides early adopter trusted Cedars clients insurance that participated program balances. expanded nearly in were a years. FDIC coverage the maintain We XX ICS resource is actively The for Seniors program that and for have ICS

uncollateralized needed. have capacity Cedars if uninsured We all sufficient ICS or ensure to deposits,

importantly, sheet on-balance to liquidity client meet needs. off-balance More we our business operate have and immediately ample available and sheet

Federal our billion, which Home cash uninsured $X.X more our was from Federal At quarter end, and cover borrowing and deposits. combined or capacity the Bank uncollateralized excess the Bank Reserve would Loan than

loan to growth. Now turning

low-income in on project primarily annualized traditional quarter, loans an the continued lending basis, business. leasing housing by we strength lending X.X% our and the businesses credit tax grew and our commercial During driven

range in increase by net macro in economic guiding are Fed's is in We the experienced uncertainty, the of sharp the to the planned headwinds which given loan being X% loan a basis, the more loan Therefore, we growth securitization. to on as an result base X% annualized the modest rates. client ongoing of now second our demand created quarter from of

our Specialty of why to high-performing the has sets advantage we peers. discussing growing and us some analysts we prominence the With Finance interest an competitive spend the and Group this and of time believe business apart that from I investors, drivers it important received that have would like from our

track Our developers specialty developers strong with relationships. records a low credit construction in and the development expertise income experience, lending group and offers investors long-standing of finance we affordable to team have of built housing. These select whom investors tax have deep housing and long multifamily and

has These with are track industry and historical investors. banks high-quality loans rates. corporate The by from default record investment negligible excellent equity an strong bolstered

housing Since proud or are our delinquency finance consisting helped nearly have XXX program's inception units of default affordable without XX,XXX portfolio. any we this to in in experiencing over projects XXXX,

track this as securitization, record risk strong makes loans ideal alternative use source we for lower The which business. to funding these for an expect attractive

improved our ability risk. All on interest which manage basis, of are rate these loans to greatly a made has rate floating

ownership long-term of loan. these the over to financing in of seek our Due to projects, borrowers life the lock costs their structure the

rate the bankers financing. desired As borrowers, a them to to rate result, interest swap fixed arrange contracts the enabling our secure

business LIHTC and consistent in a income our cycles. important has been component This economic of all noninterest

eased. headwinds that have as this were clients in some addition, economy the the has our In of softened experiencing space previous

and strong underpinnings our to are a some revenue constraints We to on business, months. abate. this the million guidance inflationary in as capital supply increasing the next of $XX to the the nice of that projects materials $XX and in million client for we chain markets range of Because rebound revenue XX markets begun first were have saw a raw labor pressures capital quarter impacting

that over barriers advantage. us to years. and business a in provide entry this We a lending expertise the There tax have significant business several are credit competitive with built significant assembled

valuable and deserves In a than short, that banking. this traditional is it valuation an extremely we higher business, multiple believe

resilient in of on future very stability be our this recessionary and countercyclical experience, based the environments. and believe industry that Furthermore, decades in will own is business we

assets the to end. Our nonperforming quarter at asset was excellent as remains quality ratio X.XX% total assets of

comfortable high peer our represents which with of are group. and be leases and X.XX% held of our investment loans for end total reserve, at continues to We the

the remain relative optimistic footprint. of not signs our our seeing across we are any markets, We and meaningful about resiliency of cautiously weakness economic

Our are strong during quarter. and capital the increased levels

We growing of XXXX. capital remainder the remain throughout focused on

ratios to are in quartile earnings the targeting top We strong dividend our our than We peers. capital of will capital peer group. us faster modest our that allow and believe power grow

detail turn call regarding now to will I the that, first results. Todd our provide quarter to With further over

Todd Gipple

our everyone. Thank quarter. for I'll today. activity sheet Good joining details you, Larry. the start morning, with comments us on balance during Thanks my

quarter net growth. million X.X% we of the or $XX annualized mentioned, Larry As grew loans total by during

of securitization, million have held loan for anticipation plan first classified loans loans in Notably, to our $XXX.X we of LIHTC sale.

fund needed. the of We the liquidity expect lending levels our and market to securitization strategically concentration business, credit to the portfolio maintain established growth improved as help tax within access our

grew $XXX quarter, by deposits a primarily the increased sheet increase substantially liquidity. which deposits million in short-term driven in Total million brokered $XXX our on-balance

deposits eliminate FHLB to $XXX We totaled XX. on reliance which million December use advances, overnight at our these

industries. charters when due as deposits, client Our commercial deposits, core markets across separate excluding spread diversification base a broker and many have to well as strong our

of XXX Approximately $X.X X% partners correspondent banking balance are deposits of average an our from million. our with

balance Another XX% with average an represent $XXX,XXX. commercial deposits of our clients from

of average deposits with $XX,XXX. consists remaining The XX% an balance of consumer

from as Our quarter. XXX.X% of the loan-to-deposit fourth ratio improved end, quarter to down XX.X% at

range XX% for held XXX%. to target investment has of deposits in long-term our been for to Historically, loans the

However, we additional in drive XX% the the this to to to coming expect with of growth. deposit ratio range closer quarters XX% core

million at cash, of borrowing At $XXX Reserve million and availability our Bank. billion of borrowing and immediate FHLB Federal of the the consisted total quarter of $XXX $XXX end, liquidity excess $X.X availability with was million

While cover we current it uncollateralized need on expect more level does draw our uninsured don't of this deposits. and the to liquidity, than

$XXX from as $XXX end, quarter. fourth down securities quarter Our million million of totaled at the portfolio

mid-quarter We the sold of were million decline. end to to the approximately before a The remaining had year. rapid with modest of strategy back maturities small calendar securities securities delever and a part the paydowns the sheet of the net loss of $XX balance and earn contributing sold

health portion transactions. the of maturity. is securities as for direct in the municipal XX% placement portfolio and securities large from XX% high-quality Over total consists of classified our a sale XX% classified is of remaining as private with available portfolio

a XX% I the bond in and value municipal equivalent -- the improved market longer-term of AFS intermediate securities These have and and HTM XX% X.X%. the tax to rates. decline book respectively, of placement private yield portfolios of our with interest currently value,

HTM would If were TCE the we to XX realize of losses portfolio, the in our the on points. basis only be all impact ratio

an of a the part debt identified we subordinated one for XXXX of impairment $XXX,XXX investment quarter, This the was failed recently of a acquisition. as acquired banks. that we the investment Bank legacy Guaranty During in

investment. a reserve full established impaired We the for

weaknesses. portfolio, entire million. subordinated remaining after with $XX debt Our banks it review identified the no believe high-performing consists And thorough is a credit of that portfolio of we

Larry peers, we for we successful adjusted of our $XX.X the have Unlike net pre-provision of delivered our been mentioned, income. in pretax As growing income million many quarter.

the million During pretax discount of accretion. pre-provision excluding adjusted X.X% income grew $X we loan or by our quarter, the impact when

X.XX%, basis interest Adjusted quarter. from fourth which tax XX equivalent tax was down quarter. points in $XX net on equivalent adjusted $XX.X prior income was basis million a was Our the X.XX% down basis in yield from million, NIM the a on

quarter. expansion loan ongoing the continued in yields, increase the cost of we of during Despite sharp growth a the loan experienced and funds

to higher mix this betas deposit from deposits. beta anticipated quarter Our our shifted accelerated more further deposits as beta lower than

change liability-sensitive, deposit to has shifted and interest with sensitive in rate well which interest net The cuts. rate positioned moderately income mix our risk asset position our potential has us to from expand margin

continued we our impact due As on anticipate sensitivity and pressure net modest sheet. liability second quarter, carrying margin dilutive income the and more balance liquidity to we on of look the interest to

continued to basis throughout of rate XX NIM XX inversion to in guiding quarter, hike points. adjusted another compress May and XX Assuming are point curve TEY we in basis the the second yield range

the $XX.X noninterest the quarter, the income, significantly quarter. $XX.X in we our to million Turning generated up fourth which from million was for

million, $XX ahead was revenue of $X.X an guidance markets the capital our fourth Our from and range. well million of quarter increase

and credit that have previously pipeline subside with begun many of markets several experiencing of lending to had tax clients forward. remains projects the capital headwinds now delayed been some Our moving healthy our

of As to the million. to a are our markets increasing for capital Larry $XX we mentioned, $XX revenue XX next range million guidance months

X% we quarter. generated fourth revenue of wealth the up in million addition, first In the management quarter, from $X.X

new onboard new to team Our $XXX relationships, last XX continues new and months. client management under over wealth assets the adding of relationships million management XXX

to we million compensation the below accrued fourth for expense to to was a guidance quarter incentive-based compared lower million range. first performance. decrease the end $XX.X the for quarter The year our our full from $XX.X due and based Now totaled in Noninterest year's record as on primarily amount of the quarter low fourth turning expenses. higher prior quarter the last

insurance million fees, to controlling for and regulatory processing range In data noninterest expense We our remain growth. adjusting fees expense and expenses. and we diligent advertising are to a addition, quarter, of downward lower $XX second guidance in million. we experienced $XX professional and marketing our And the

Turning excellent to first total have quarter as assets remains X.XX%. a asset nonaccrual one modest with NPAs increase did in to we status. the credit moved quality, We to large which of

specific cost mixed-use newly overruns loan fund property involves their that impacted completed a the been experience a constructed developer local is with has fully This fully property leased. property. to and The ability

and believe of indication Given isolated systemic this resolve impairment. issues. any of without We incident an an expect the credit this to is this any credit property, attractiveness we credit further promptly not

loan million credit added million allowance sheet exposures. was losses was the $X.X to $XXX,XXX amount, off-balance for was and the allowance, quarter. during added $XXX,XXX allowance Of the was $X.X provision The added to for to the bond this

reserves We expect to strong continue economic the given to maintain uncertainty.

be held at strong investment end to remained loans continues of group. the for to at X.XX% reserves our Our high peer and

held result total of loan with decline million experienced associated related our securitization. quarter a a loan $X.X for as reserves net the balance to loans the of planned ACL removing Our sale the during

total XX We strengthened quarter, the risk-based improvement to ratio XX.XX%. our basis generating of points capital during an

also our December. from tangible We of ratio at common increased X.XX% up the assets end to X.XX%, equity tangible to

or share increased a ratio basis points XX our due book our nearly and $X value $X.X tangible earnings X% This to to quarter. by was TCE million during per X% in AOCI. the first increase Our solid or X.XX% both grew and

the Tangible our end quarter book XXXX, of of Bank. by Guaranty following value since XX.X% second the has of acquisition increased

plan per of stock the $X.XX we continue to our XXX,XXX year. an the repurchase price execute announced retired at shares purchased we purchases of quarter, first During average common share last as under share and

of leadership Board members recently is addition, our belief In Directors have the of demonstration company. open shares the of many future of purchased our and in market, in their senior strong a which

capital our are capital further priorities levels. focused growing Our strong allocation to enhance on our already

a level can AOCI, with and our earnings than points this growing We TCE and level. a believe power peers approximately quarter, dividend our rate low basis each capital at accrete at to due that we assuming XX earnings of static of many faster our

Finally, improved to our effective for the XX.X% rate in X.X% fourth quarter. tax the quarter from

of The first the as rate higher a floating was growth in credit tax-exempt to primarily tax benefit strong as quarter, lower portfolio. our revenue from due well to ratio earnings due in to loans taxable rate tax-exempt increased

In addition, a on our be tends the we quarter. benefit recognized tax elevated which stock-based stronger in compensation, to first

which portfolio benefit of group. peer rate continue our has We to of loans, helped from our tax in strong remain investments effective our the one tax-exempt and lowest

the first our XX% up financial tax the We in for remainder rate for With questions. of let's expect effective the results, be added XX% of open call range on to XXXX. that your to quarter context a

our for question. we're Operator, ready first

Operator

begin question-and-answer will now Instructions]. [Operator We session. the

Damon Our KBW. come with first question from DelMonte will

Damon DelMonte

will to said margin the outlook. quarter around Todd, pressure you additional as in feel we bottom of remainder to Do you're the the think the that? Or year XX through? of basis bit the betas pressure start feel that likely a accelerating wanted points. you second off expecting add go here I that do little throughout more with Just after you XX will margin

Todd Gipple

basis we the QX. Damon. to Fed's points to liability-sensitive. XX XX depends Yes, slightly now compression we're Thanks, in are here Yes. It action, that guiding really on of

stop. here do the basis As fact, and XX does, in point Fed a then increase

the of for expect static would margin half a more back year. We the see to

some margin. back the a see has the higher would year. shift we A and stabilize be really of happened more think half beta, do the for of optimism the we So around us, static of lot and in lot it

Damon DelMonte

it. Got

Okay.

see think end cycle year? do XX%. as the for total I of your going cycle we around to the you beta of kind deposits full So cumulative Where to deposit get date the is

Todd Gipple

Yes.

it I underlying product. range. significantly. I been think we've XX% has don't shift. right to will XX%, Most about it challenge that low the of the the expect in be beta with been that high had jump It's mix not more

is or other that's during for $XXX that the all to and So -- portion don't example, cycle. for high on consider funding date only beta, beta billion cycle $X.X us. we XXX our deposits the million XX% has But beta that of about those, dropped

The more betas. about for the been about billion shift is and So a mix about and stuff, beta it's really XX less it's us, $X.X underlying the XXX the high beta beta.

million and is So the it very high that has jumped cycle. $XXX during over

So we contributed Damon, Fed its it's the mix that's really beta. here slowing been that that to slows the anticipate higher do start as shift And actions. to

Damon DelMonte

it. Got

balance maybe to can then then the you And the after second talk will that just some of quarter with little during Okay. securitization, regard here. And bit about occur sheet a that. dynamics the

Larry Helling

second after to in that. the quarter. start Should with I late take can just date got a planned I'll [Indiscernible] one? and that you Yes, with securitize then that, we've

really talked front-end to a on one. or first costs previously, that there's gain the lot we As of loss first we securitization because do don't expect

have it's will more a range. After do what to but we securitization in be. a million be to expect year. do do $XXX some for think the one little expect that, us premature to we second We gains, later in likely those the That may telegraph

static, stays is change other that we make if environment, given that liquidity would The comment that. the I don't probably

assets. we We needed have We roughly million if could additional to. $XXX of an securitize quickly

about challenging not us a If have. liquidity reason. today, Certainly, liquidity gets our of that that we wouldn't sudden, all others some feel for some but lever optionality that's environment gives we're that at of do So nice peers good where a most the increasingly have.

Damon DelMonte

it. Got

And on I just for Okay. lastly, the outlook. more one expense me guess, then,

the the I think $XX guidance $XX outlook? million -- second year? that for going kind remainder to you Was said, to for of that is is of Or kind of just quarter the Todd, million. your that hold

Todd Gipple

with and the for half a after QX remainder some client in year, the do of Yes. but the through Great our the guidance be improving would of get same automation, clarification, time. having Damon. of service subject success to year, the efficiency certainly really at lot we while we're That first adjustment

in of staff, of and second the operations was our gaining This bankers, really integration. quarter automation. Really proud conversion efficiency post-guarantee proud our bank some

XXX well, got did project. that actually as That we thanks And great really a a job to went bit that of that better efficiency folks result of little work. good a

year, July I subject million to after of would $XX the remainder So in the say calendar QX. XX% to clarification for

Operator

go will Race Nathan Piper with question Sandler. next Our from

Nathan Race

Yes.

Going back likely the for maybe the securitization just added sheet reduce quarter, the the there's CDs the second that growth of the opportunity outlook the were of with XQ? around in some Is here broker to David's the some loan softer some that particularly given balance occurring expectation question in dynamics. to of quarter,

Larry Helling

sorry, that's Yes. use ways there, lower the the I'll I'll brokered Todd, start securitization start certainly, let and -- one the of is reliance. that the we'll

The thing have seen tell activity I've pipeline the our largest I'd of we company's probably you, in are deposit -- Nathan, other history.

willing exactly figure activity core trying trying it's one, I'm to of deposits. Part And X, out more to about us created it's and on causing relationships. away interest deposit moving from focus talk rates people our moving that. to it to and grow is what's Number the

into we just our over some can think now. moving core time, level make meaningful right And a strong also, moving company. activity is we deposit So headway that relationships at

we just can certainly between think move core we that. needle and the securitization on growing our So -- funding, I

Todd Gipple

And second year. calendar -- and as million, up this a $XX front-loaded great ladder. first $XXX telling million year. the short brokered remaining is a the during of actually set third that job you half did in Of much mature the of very quarter calendar Larry the all the we Nate, the how these So did intentionally

ladder and a has weighted those brokered. on intentional the It again, are were rates And average XXX rate short there. of we QX a higher about So of QX. having in some

to use we're plan. off. about core our deposits pipeline on that and That's these let talked that strong really Larry roll So going broker those bring to

Nathan Race

Okay.

like are broker sounds these CDs it So callable?

Todd Gipple

Yes. a they're of They're very just in No, a very just short ladder terms short duration.

X X, laddered. months So X,

Nathan Race

Got in kind does then just the is on And of debt in one rate back of guidance then Fed contemplate the the Fed and margin hike you. hold XQ? and year, half the May for more XQ that

Todd Gipple

that by moving assumption slightly sheet balance rates up perform would steady sensitive, opening set we coming Correct, comments, start so us be our to to about Nat. the would Fed. our it talked held be In rates down. That liability better the when does

I done it's more is year be. think something think But we'd pauses, if back the speculate half far early static might here when and the of margin. on But feeling too to in better May in Fed the about that I be

Nathan Race

Okay. of XQ? And the XQ markets this within and then just quarter. in Great. look Was of guys I kind how that does XQ the there pull-through just year well? and revenue the kind second you of as out guess as swap activity and look pipeline quarter any in capital into in And entering

Larry Helling

to actually Yes, Nate. bit. increased starting we a continues the generally, to during there pipeline bit that Thanks, say, of, of Yes. little activity bit a space The be the our strong I'd pipeline quarter. last and guidance built because a in unthaw

ease. cost supply and And the has issues, most projects of started down the things probably slowed started is tag of that have one chain some material materials the to have those that

yet, quarters. we haven't expect have to but few eased the Labor next over some impact much too, that costs

and had So these the projects them some that's across we've solid what's activity. of increased finish getting why line helped

in $XX.X fee been X space, the looking average I'm I our quarters, million Over if has last income think, right. that

those the can would our certainly, at we that towards of to top end be feel way range. we continue And And the levels. so perform

Nathan Race

issue Great. that the relationship apologize driver I helpful. in just then quarter? the but last one touched occurred it credit if that one of Very comments, one you on terms that in on your with Okay. or And prepared maybe to quality dynamics. nonaccrual the in moved just

about -- just charge-offs you generally, or for somewhat loss into content growth, to seen the there, need any at provide guess, kind provide least and And of the you loan for need to slower to think XQ? guys I guys have how

Larry Helling

Yes. pretty put on Certainly, that money out cash, of space. cost it's a and They project explanation the up. loan ran were the into simple one line and right we did more unwilling the nonaccrual, they manage we to project

loss to we for what will with That's better move there if the closing one. for we think decided were we forward already we're what total reserved on property. doing. So is We've be the

at been we've like always would once project So be we a spot. that we've conservative got

our that's levels top globally rest to maintain we the focus probably is our think reserves because quartile on of uncertain environment. the going are year so just into at for to what conservative we continue And think reserves this more prudent

you any that broad-based happen people with eventually will things will don't that move frames the Likely, our used and in our about. back see and talking past and with I've employees is have the guys We that to degradation that normal. with been Board

has And normal credit weird, everybody's experience next bad our will X. we'll experience toward back and it's feel the because will it's that credit years X over likely or normal good the last year normal so move been but feel

Nathan Race

Got it. the I guys. very That's appreciate color, all helpful.

Operator

Montgomery. question Martin will next from with Brian Our come Janney

Brian Martin

of for a things Just me. couple

kind the of about outlook. kind you're growth, Maybe the what kind of the beyond or of loan conversation what you're quarter. beyond guidance next and just a on Just thinking hearing little just

but certainly the it just just beyond on about are how definitely trying This the the cautious guys that, seems pipeline more to front, next with market, quarter, you growth understandably the just quarter. understand loan thinking is

Larry Helling

we're regency of Yes. conversations. Brian, sometimes framed by

properties, performing million apartment they meaningful XX a talked just one, addition very do of to to I projects, in addition apartment their of planned apartment our a and portfolio, morning, successful one to who's to cash developers flow one very project. yesterday got a $XX nice probably had So and a

going piece because it he of X.X% morning, a they in that when him interest so yesterday time." at first they're locked saw hold rates And "Yes, because the long I for that this, doesn't we're pause. really did And these goes, on more they just on at putting work

would for new in it's of So work. certainly, that's the see we hard projects anything certainly to just project slower that kind because occupied, lending normally make non-owner

that's we probably rest X.X% this year think sense. why of So makes the throughout

Their say, and buying and growing down clients kinds and buildings still things. slow companies probably that they're it's going plowing estate there Our numbers -- C&I more look activity capacities is the real I'd the those good, that building space. in are of going ahead. and But likely to to is still investor

Brian Martin

just And rates, have you. utilization Got they -- any change there?

Larry Helling

is kind the of utilization Line in middle.

kind getting peak. we're to the at So normal of closer back

Our be out, When line got on kind of would XX% the the back it low money the the XXs, all utilization line mid-XXs in PPP in utilization. again the here came range. into we're

So there's normal. utilization toward starting more to but it's out, come probably to a little move

Brian Martin

you. Got

Todd. just then And maybe for Okay.

do that core of I the Todd, On or the on. will, the on replacement, see front? you margin you us the the if you go off anticipate gave you broker Where ones deposits, coming ones rate, those mean deposit coming out coming just on the on, the

Todd Gipple

Yes. nearly Brian, great top replace the question. those are to be And with? it What of are going right to on brokered going rates. rates we

really CDs we're brokered converting what So really want. to we simply

course, deposits. core be term, Of would long

roll off. terms the any to indicated, robust. going But the that doing have make very as these to cost. top for these brokers really in headway we on right not Larry initiatives It's going be there, As are pipeline underway of of we're

let short intentionally be calendar clarify, that did. to we just off CDs them callable brokered to aren't short laddered duration These roll these that able we to year. were this during just again, unwind And very them,

Brian Martin

about at you. do -- that's March ended shake was I where that Got helpful. for how that average where for just the quarter the versus you you quarter? margin were you the where anticipate mean for to where you out Todd, was, when the did one No, And look versus margin moment the

Todd Gipple

back Sure. month, from on course, put we the -- our financials. amount a that would the bit average been of liquidity of for the the like that, quarter, down I in have a fair keep of was for impacted excess half by seeing and

half We to a in million compression intend carrying of guidance of couple And cash liquidity. We we've continue of that carry were last month. excess to of hundred part that's the margin the provided. some excess the

think So that compression X/X that carrying prudent liquidity. bit. that's to excess maybe it's that do We for just would be a of here

Brian Martin

of start do mean, you margin, is I it representative to a provided? how guess, that to having to XQ? a able provide think worth margin from the have about Are And Okay. not it Or where I I I -- you as was March? not guess, good guess, you what

Todd Gipple

I going anyone QX. to model you try really else or to think Yes. don't it's help

at accurate of it's probably growth and not think I half March probably that. on model guidance the moving look better all is loan considering go to the our parts both month. and in margin very off compression forward, a representation back the the of

Brian Martin

you a does third are then is if when actually What Fed pause, thinking that there fourth event? quarter deposits on just quarter, the peak. And you're you. Understood. thinking Got --

Todd Gipple

Yes. I here and Fed in basis points May likely Again, to, pause. I the XX think, was if XX% think then now and

is optimistic would third done cost our things would betas we're changing of deposit perspective. would flatten from our quarter, settle mix that that we think to think deposit like funds and I down in and a out sometime the

Brian Martin

Got you.

grow was simple. where it's I to you on is. like a is quarters. Okay. did rapidly buyback. And building assume going just getting to guys change quarter, then last much over your focus still this here sounds you next goal on of few the end know it capital the but couple still But shares the -- pretty one to I not the

is So stock today. just kind of in the wondering, it's still just where going balance, to the be particularly valuation a

Larry Helling

quarter. every sure Thanks, focus Yes, growing our Yes. we're capital to Brian. first is make

like XX So basis TCE points would be move that our primary focus quarter. roughly we'd to up a and

the really That kind right in at the some capital the the think end that given gee, the group some the some levels. thing. would We're building have uncertainty in peer get and by impact, our for we us of strong already is quartile recession, top year. prospect probably But of could

still be And peer know opportunities and we little top not but aggressive kind phase more, that get valuation some the group, what hard given our makes today, we happen bit in us of more now a to built quartile then. right, You're but we between further. of modest will there to capital get to that buy might be likely lot give after a things will until of more that buyback are it we

Operator

with Our Raymond next will Tamayo come question from Daniel James.

Daniel Tamayo

line My revenue be of income, outside if with we at seems quick the rest I you point, comments it had markets if the clarification. what been the in was where for, have a this relatively and to I income on it, what but for, outlook your answered capital but questions fee at any of missed lies? fee were I least terms curious just apologize in but of looking just looking

Todd Gipple

Yes.

we mention, clients and management wealth really by Danny, other from folks had AUM. was The QX great thing our a first and Wealth in quarter, Management X% of terms nice growing of up did numbers continued job

AUM, AUM. alone, So we're in optimistic the nearly $XXX this grow. in clients and We we about clients terms in just full opening additions Wealth year to and had Management past but continuing new new comments million in of quarter some to gave numbers XXX

to grow So us about wealth for addition optimistic continuing management in capital to markets.

Larry Helling

are about interest a has willingness one the of time this first just the to our long on there. time. morning. to created People business in been Danny, for of And activity bonds thinking talk buying that's more leaders management wealth going the talked I rate actually

for And getting been that's continues wind wealth management our so sales Their clients be our clients business. to long working and really and some good, in we've with potential we're that business in a and time. ad with bats I think

nicely. that grow think going to we to so continue is And business

Daniel Tamayo

those of lines then first the the play into those I in the you million the And items quarter, $XX would and big to wealth guidance. in saw guess increase line swaps expense growth X that along million how management the $XX Okay.

I about as lag remind fees just expenses the talked before, you could from the if think impacts but on we've any well. this swap of us

Todd Gipple

No get good part, booked lag are we're a the to Capital Sure, we Danny. Those same really, for that in see the see revenue Markets When there. have within quarter. the related most quarter, quarter. going very compensation

that impact being range. The take range really our markets related to incentives of would other gave guidance the in and compensation capital guidance we care

So were noninterest to expense our outperform range swaps. guidance through you expect top the shouldn't that we really unless blow of to us end on

put expectation. of really in our So terms of those items are both of guidance together

you So markets. surprise expect from capital good any later in results shouldn't

Operator

Rulis Our next will with Jeff come question from D.A. Davidson.

Jeffrey Rulis

this On is I Jeff... brokered And were deposit deposits, the -- quarter. up quick excluding those Andrew the Jeff side. question deposits for just on a today. over see

seen recently? flows if curious unusual in Just have more April or the guys you anything with just deposit

Todd Gipple

No surprise...

Larry Helling

money flow that to Sorry. nothing big happen not unusual. the I'd banks concerns for to us. The was did going say

in unusual and So our clients and first activity than would commercial better distributions we tax payments other held we that the quarter no things dip from all in our had normally, the those deposits were of see first and deposits up because bonuses happen because quarter.

deposits continued to Our have since grow. quarter end

to than even of better a at weeks to did feel our grow we end couple deposits. about So continue we ability ago quarter

the or in disruption many space temporary the earlier dislocation in create we're Q&A, to said for deposit opportunities looking at banking us. As I this

say there a relationships mean half us glass excited faster full. doesn't challenges, go is It build pace here going aren't for So an -- to going we're to we're the through at as we forward. but be to there's opportunity

Jeffrey Rulis

loan missed the is That's this, on current what And I commercial just great wondering to to exposure Got but then real hear. office it. might just the side, estate? have

Larry Helling

couple we for up. Office of a our days Yes, one. I'll talked take that not that ago Officer check a Chief had potential us. is I And as questions with come exposure big through Credit

total exposure First X%. our of is all,

The X office an that's higher the Xs the stories. just going building And have talk percent. than occupied in high about don't is deals. I'm to We non-owner

thinking give that where will it's vacant. you that are people different what are than in sense some where major metropolitan about you've billings office got multistory large So the areas half

kind don't and have very buildings in just of markets. of experience We our little we that, those

So $X if XX million you look got at XXX% those leased. XX that -- are deals we've greater are of than

and the are things firm, a government insurance fine, just major brokerage working tenants like major are a accounting major agency, those So company. a firm,

not to are that experience expect in that just total, seen of have and issues space. we space others to. And kinds so in And the in don't starting that

be that We on or $X worse. would our list than have less watch million

looking strong us, for is issues in portfolio that space. that So and we've seen really no

Jeffrey Rulis

all that's And detail. had great That's I Okay. today.

step I'll So away.

Operator

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

Larry Helling

joining great all your and in we to interest many a our look Have appreciate Thanks call day, you months. coming of with for We today. connecting QCRH. to in forward of the you

Operator

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

now may disconnect. You

QCR (QCRH) 27 Apr 232023 Q1 Earnings call transcript