Earnings call transcript Q2 2023

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Operator

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

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

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

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

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

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

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

Larry Helling

and levels, as us financial taking loan review quarter. for the thanks Welcome a our time capital well the of finance to as followed details the position, Todd strategy. by join quarter, the securitization Thank our and will operator. by business, for specialty sheet and performance, provide liquidity results providing you, strong our on today. our balance additional everyone start will highlights I for call some discussions of

delivered deposit our by results, significant with income. growth, robust be We loan to continue operating quarter performance core pleased highlighted in fee and and second We outstanding XXXX.

asset addition, quality. maintained we strong In

than Our diverse capital net interest fees, revenue income. which and the more markets included on management pressure offset our wealth sources,

capital already exceptional improve continued levels, our solid also We to with upon earnings performance.

$X.XX per income peer adjusted and the near an generated quarter, diluted an we ROAA or believe $XX.X both share. and reported our for of remain of quarter, both million second the XX.XX% and of group. X.XX% We end that delivered net In of ROAE high the metrics

was low primarily tax quarter, program. our the housing on credit and our I'll during loans by growth growing success an annualized income driven expand shortly. lending basis growing Loan exceptional in on XX.X%

significantly diversified Our and deposit experienced core quarter, bankers strong grew the upon deposits franchise. building our during

As held a for further for to loans our investment deposits improved XX.X%. result,

to very Our uninsured and also levels. at manageable improved XX.X%, uncollateralized remain deposits and

than Home and sheet with immediately that Bank Our more our liquidity, Loan the elevated combined cover uncollateralized other uninsured Federal on-balance liquidity deposits. available at

a assembled relationships have importance We strong franchise activity and we to the continued have the our over the quarter deposit and that developed. reflect deposit diversified years, second of

quarter, second $XXX the our short-term deposits core XX% broker grew deposits During annualized. million, excluding

of increased the yet points. historic remains excellent basis remains quality to by the basis points during total slightly ratio near as lows XX assets asset Our three assets non-performing second quarter, at

our reserve to and of be that all and Our for are future our investment of group. credit weather disciplined reserves asset credit plan diligently total of to for X.XX% high and continue the losses We remain peer end leases loans at reserve held the represents confident maintain losses for uncertainty. quality business. adequate continue We we to economic across as prudent monitor to be

cautiously health financial resiliency remain our and economic of We about the optimistic markets our of the clients.

meaningful any footprint. signs weakness of We are across not our seeing

They expectations These size line of performing very concerns. quite are our our are is located $XXX,XXX. repayment adjacent just quarter, mentioned office last with exposure loans predominantly locations with manageable and an are commercial significant average of total in to to or low with loan in we at properties suburban buildings X% As and markets. no well-collateralized within

throughout capital Our remain year. focused we the of and levels are growing on strong the capital remainder

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

our During business. the the tax quarter, in by we credit housing grew loans XX.X% low-income on driven basis an lending strength ongoing annualized primarily

With and the like I some of our Group light drivers growing discussing this business. would Specialty of tech prominence Finance business, high-performing the the time spend lending to

Our we team built specialty select credit of offers finance have relationships. long-standing developers with investors at a group housing long-term lending to and whom

supply clients in demand serve. project as that for we multifamily housing for continue strong their the to the experience Our need affordable markets exceeds

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

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

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

for borrowers arrange a our secure As capital revenue swaps to result, them enabling bankers rate our to significant company. fixed interest rate markets financing the and generating desired the

component been important our The and of has business income. consistent LIHTC a non-interest

We the begun from addition has In softened, the half of first supply space abate. our nice the in in chain swap headwinds clients inflationary of fees have the previous a this and rebound that construction saw the eased. experiencing capital in some were costs economy as XXXX pressures constraints to have markets on as revenue

on very believe industry and multiple is Furthermore, we traditional we and deserves higher business a countercyclical believe experience, be short, will stability our of than in In recessionary future that and valuation business this an that in is own extremely this decades resilient based banking. environments. valuable it the

achieve execution. transactions the improved are the on expect the now planned of securitizations close to in fourth We increasing quarter. and early loans our size We LIHTC of pricing to

be our managing LIHTC liquidity our capital. assets effective will of and tool securitization in an The

expanded capacity continued markets for capital In and production will it provide resulting addition, the LIHTC revenue.

risk, headwinds the during remain While quarter. second economic experienced growth a loan strong we

annualized a basis X% net XX% on brand which increasing a are the X% to for an basis securitizations. in an our for result of As remainder LIHTC annualized growth on of in be of year loan guidance range growth the result, loan we would to the to X%

will over to Todd quarter I results. the turn now detail provide further regarding second call to our

Todd Gipple

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

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

the first anticipation we In continue our LIHTC first long-term levels. to the for during business $XXX lending strategy of added the concentration Executing loan have within as our category an million established later our of year. to the growth quarter, maintain LIHTC $XXX enable sale this credit significant classified for us build of we securitization towards fund will We the securitization, continue held held sale. tax million to as securitization our loans to portfolio of additional and loans

strong which deposits core deposits, growth Total total during and deposits available of $XXX excludes from us our municipal quarter, increased the by liquidity driven amount the $XXX of $XXX to commercial, mix grew The million. growth deposits. and reduce broker deposits deposit allowed retail million, by a in broker million core of

to of Our diversification as a and strong separate core variety continue is due base across charters our to commercial a markets spread that industries. have deposits client as well

an our balance our correspondent XXX $X.X core average average with balance deposits our our represent partners an have average of $XX,XXX. commercial $XXX,XXX. of banking our million. an and of remaining deposits have and XX% XX% The of balance consist Approximately from are of of from of XX% consumer clients deposits deposits deposits

expenses. We well-controlled our income markets increase delivered decrease capital Now for of our turning margin income strong of quarter, to XX.X% by the the net and revenue net an million interest overpowered statement. $XX.X as annualized in was

$XX interest million adjusted our points was X.XX%, Our X.XX% tax Adjusted in basis net prior to income and NIM the equivalent range. down in quarter. XX first from the million decreased which quarter down tax on yield a million, on $X.X from was equivalent within guidance a $XX.X basis basis

second cost deposits. of As we continued the during guided beta deposits higher of and primarily beta quarter. We've with from increase of funds result performance in the beta cycle. the been throughout in experienced the pleased a the low we This deposits lower shift last was our beta a composition our to of anticipated the quarter,

an lower deposits has shift more of non-interest funds. to continued beta the to cost higher and increase our expected than from led outsized However, been and has beta deposits in

hike third that continues including that we liability-sensitive to yesterday, inverted, As be to challenging. rate our quarter, sharply point be look and environment curve continues moderate announced yield the interest a rate basis to XX an balance the creates sheet

However, margin second slowed we strong on has to growth. mix expect the pressure lessen, the shift from as and quarter loan benefit deposit late we

basis range static adjusted of in XX down quarter. for to We are the points third the NIM guiding TEY

$X.X the XX% our or income, quarter. million, to Turning which second non-interest increased during

in stabilization Capital million supply capital benefit our markets for million, from annualized swaps to from continues revenue first to compared costs. was the and outperformed chain which quarter, range. $XX Our revenue Markets guidance $XX.X construction the

swap economic stacks in consistent provided have addition, do in and importantly, has to rate is Capital the new in revenue of capital has significant developers successful interest In source downturns. expected source the from been this and benefits environment. fees countercyclical And fee strong pandemic income. been during revenue a their restructuring markets so future

markets remains projects. demand continue for to strong credit tax Our as new experience revenue lending and pipeline capital healthy, clients our

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

In generated the first quarter, consistent $X.X Management with in Wealth revenue second quarter. of million addition, the we

in clients the and adding $XXX benefit first half of to continues relationships, this team management million Management in Wealth Our under new year. from assets new XXX

Noninterest prior direct program. Now and for FDIC our higher million. rates million, more totaled of to was quarter deposits for the the holding quarter to guidance $XX.X insurance quarter $XX in within compared primarily expenses. from range million the million turning increase the compensation, due from $XX first to to expense higher costs The ICS variable our second increased $XX.X and

our Our in while strong variable remain diligent expenses growth. an compensation to increase salary in second decreased. the in benefit-related performance expense and quarter controlling other fee-based We led

million. be our we guidance again million quarter, quarter $XX in $XX range third the a For of this to are to noninterest reaffirming expense

remains asset average. Our quality our and historical better exceptional than

$XX.X our this basis loss. only relationship points and credit the assets. During NPAs one modestly. a million will without XX be resolved total consist of NPAs the Approximately were believe of total NPAs of quarter, or for that we increased quarter half

credit the provision was losses during for The $X.X quarter. million

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

reserve group. at for static and was fairly higher our to the of end at peer to loans investment be held X.XX% Our continues

per prior coupled by tangible from slightly XX.XX% declined the increased quarter. quarter. the up second value the capital Our XX.X% continued X.XX%, the assets basis our tangible of ratio growth to X.XX% earnings strong at common modest equity book two dividend, during share ratio by With annualized our quarter. end tangible our our the or $X.XX with We total during increased points loan due strong risk-based to to to

tangible our common the As partially value. and which interest quarter, higher diluted tangible sequentially moved some book equity rates in declined AOCI the of during our growth

During the modest quarter we of number a shares. repurchased

priorities Our capital on of top remain group. our near the our and growing focused allocation levels capital targeting capital peer

rate XX.X% this quarter. taxable Finally, The our higher due the quarter. was in in tax markets mix X.X% from primarily first for revenue to compared the to quarter effective capital growth of increase significant a the was income,

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

in rate range be the XX% to of We to expect the remainder effective for XX% XXXX. tax of a

ready With let's open that Operator, for context question. we're results, our quarter our your first for on the financial second added questions. call

Operator

much. very you Thank

the begin KBW. Please question Today's comes will Instructions] ahead. [Operator DelMonte from with now We go Damon first question-and-answer session.

Damon DelMonte

morning, Good Hope is guys. today. everybody well doing

Larry Helling

Damon. Hey,

Todd Gipple

Damon. Good morning,

Damon DelMonte

on off the start to markets the on wanted outlook revised just capital I revenues.

to you the over think quarters. million million $XX four next I said $XX

here feel to strong might given in going pipeline the ramps that for especially here half back of back kind of higher in year keep be couple do it costs a second the of the half the slower you of of do feel XXXX, in that you and buying little first supply performance this and or level chain a quarter, up and kind the the next year construction Given bit in out that the just quarters? of you're the

Larry Helling

with first. couple a points data I'll Damon, start you for of So

was And XXXX million our First $XX $XX of million. of fee fourth quarter per quarter is average per swap in all, trailing our quarter. income

our of the in middle is guidance the numbers. So middle of those right two

some remains So between modest strong. certainly pipeline to can move you The in you as numbers a trying give that the know it's timing think we're we of But deals number dollars quarters. are achievable.

pandemic about headwinds we see because talked lot and those time. So borrowing today projects inflation those as achievable, that is some believe a we beautifully came our the chain through certainly but those on we it can't during took guidance supply pressures

in are But trying what's to happen a the four going great long-term. -- the There We it whereas, we're we the of to it's And you variability so pipeline predict solid. quarters a turn underpinnings is feel because but certainly future business was probably think going love we this good some trying next to into forward, tell business. long-term about really quarter this variability. business the not

Damon DelMonte

the it, yield okay. guidance that quarter. With on for $XXX,XXX I only this quarter $XXX,XXX like margin Thanks was accretable Got to Todd, to the believe color. the last like regards compared

going compression is that we both And based looks -- margin quarters, and guess how off think was it the of that back the you the so when first second you if about said value So I about to of zero to the core out should forward? those like XX XXX like off I basis like points fair XXX think accretion XXX, talk you based of number?

Todd Gipple

Sure Damon.

terms I'll be to normalized what of half expect expect in I that you And point is per $XXX,XXX last around got $XXX our like did said should number. how We the more we happened on the for The basis and first. the guide. more more as leap First point QX, QX in zero the just little so opening off what and off, in comments, we answer QX to spot million quarter a color in -- contraction XX to QX. a of there. accretion would hike. XX basis you're

replace QX. over and We're range rate today. $XXX We scenarios, this deposit inverted are million all million we we brokers static. have assuming continue CDs remains the $XXX have a of we of quarter. that outcomes do in Those that fairly the brokered on a to core maturing Under curve mix of at modeled it XXX

with those So roll see our And it's and going core off to loan assume replaced of then be guidance. to growth we the deposits. nice midpoint

from was contraction. range a modeling of outcomes XX static basis to unfavorable So gives that of us a points favorable

base. would that be of off So that XXX

Damon DelMonte

Got it.

lastly Okay. That's very then and step then And Thank I'll helpful. you. back. guess I just

the quality, there in $X a is credit under nonperforming the involved loans credit that? one million. bit On slight quarter or little in Was that this couple uptick particular, in

Larry Helling

on credit longer normal Good those in so kind really with term to that felt Yeah. but handful pain. -- of from seeing maybe trying pickup and seems while And with coming not -- had handful portfolio. the question. costs sophisticated the know smaller broad was under economy, that normal happens as talked going companies loans the It management equipment of I to stress Thanks pressure, to that's play are to came we've don't to degradation a just we trying companies We're is that's some like Damon. small long-term. about mostly less things. The small we're our and feel a companies companies when are having any what most out based be. that and It going different, to be them. the depends deal there's of

a half big a that increase. certainly It's deal. NPA so a deals one that created And dozen not in it's concentration smaller

Damon DelMonte

on and quarter. the Great. it. color, Thanks for nice congrats Got all

Larry Helling

Damon. Thanks

Todd Gipple

Thanks Damon.

Operator

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

Nathan Race

for Hi, guys. Good taking morning. the Thanks questions.

Todd Gipple

Nate. morning Good

Nathan Race

quarter, it Just third about in lines? to the were third end any want held thinking for and in period sure balances like about the earning we're along size side think just to investment the than the color asset balances. X% looks including just higher the accurately heading sheet the want balance loans held provide of average of about And I make those for quarter, sale kind

Todd Gipple

sure. Larry. ahead, Go Yeah,

Larry Helling

half of for Yeah. initially you guidance I was gave the the mean we year. back

fourth expect we the that quarter. happened so the securitization And in

then -- that toward securitization quarter that we the of in in the will the growth quarter. that take of So range and to going third higher balance the end fourth you some off do be we're growth gave will that the the sheet

continued I growth so, we to that's And the late quarter had quarter. the expect mean I into so second strong third We think going run growth. in

higher end to growth quarter. toward be the the we'd in expect range the so the And third of

Nathan Race

Got helpful. you. That's

a the like of quarter. the sounds growth late it lot occurred So in

maybe And so $XXX $XXX quarter-over-quarter? be earning should assets up million to million

Todd Gipple

about outcome in we expecting margin That's That talked that right. we're would be that what Nate.

Nathan Race

Perfect. Okay.

want make kind expense of kind within that revenue I Just think expense expectations sure to particular? I the that capital source then midpoint guys right. how relative hitting markets And to guidance, the does your of the next guess about of should or have you Todd XX-month contemplate the variability of revenue we that base in

Todd Gipple

Sure.

still range annualized impact non-interest continue to that comfortable that end just As even we within our on you upper perform of would if be that higher well we significant rolling $XX the pretty a $XX of guidance million XX increase to range for has I'm know at the we the a at Nate million that expense. months.

about still in very feel at touch or we think I that million under. a coming confident $XX

Nathan Race

maybe And just one last then Great. one. Okay.

you I coming and strong it in here to came think second pipeline pretty describing last fruition seems quarter. quarter a kind were Larry core deposit like into the of that XQ

curious pipeline the So just share additional looks the be of I of deposit for and what wins kind kind would gains? core

Larry Helling

Yeah, I'll pipeline the growth the remains our deposit strong and start core here. really certainly maybe let proud quarter. for I'm team then Certainly, Todd during XX% and finish still of

and in replaced of see with the we a can was deposits. did and you added banking did that disrupted, last it when to very quarter of successfully just is As broker lot a the first bunch getting then just the CDs market in what quarter boost we liquidity rotated we core what late out

base we've from can we money certainly it pipeline the proven client is and need say the we still them. get there I'd go So that when our

certainly we that about certainly good environment. feel So this in

feels So deposit pipeline us. still to fine

Nathan Race

provide actually just out Is here ACL, last it just a of And could I if and looks hold the the benign growth it for coming the just outlook just it the then like down kind one And bit of hear. second came terms of goal to the outlook great little quarter? charge-off quarter-over-quarter. in ask That's any seems on it. Got and charge-offs. fairly to one

Larry Helling

Good Barring here in a group some what hiring change be to we'd have with Yeah. probably Nate. question, given in is our at economy going the we're I'd group. we level XXXs certainly and to prudent this consistent good hold it today. And yes be certainly, think peer we peer quality know bad credit the say our or

it much manage as we're approach I to numbers we these trying think can. So and conservative take around as

Nathan Race

Okay. again. color. questions and Perfect. taking Thanks the I all again the appreciate

Larry Helling

Thanks Nate.

Todd Gipple

Nate. you, Thank

Operator

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

Brian Martin

Hey, good morning guys.

Larry Helling

Good morning, Brian.

Todd Gipple

Brian. Good morning,

Brian Martin

Hey, that. Todd, maybe just one for back

-- On from the the the that new as core changing deposits from range of kind at? far What's core get swapped to funding -- deposit what outlook broker as where those you're of replaced those out where this the quarter.

Todd Gipple

Sure. Brian. question, asked Really that glad you

So again, had going of just we're brokers replace XXX. to to $XXX million reset, at we

from in wins from Our dollars on at you and in QX do is XXX of million the lot I'm picked $XX mid-Xs. had to expectation bring growing new that see. better. existing clients. we we really in at a looking continue some mid-Xs, of deposits significant some with to existing the We slightly our new but clients also clients And up success that of sheet big some money had at or we a And as could some

money five and relationships and three market. funds $X new $X million those a the I'm of be range of with but some couple in of million wins handle, new couple here in ICS at of terms Certainly two a with would looking a

And hard than really be -- contraction, XX basis though really than little may And might replace guided we're that of our think certainly even points static lesser to optimistic have to at most that's achievable. that that weighted we we more part average that of a a So, working is XXX. expected. rate

days beat pricy growing deposits. on core XXX. while we'll they're focused really are And We that we think these

Brian Martin

you. a that that I a to Is begins little kind less we near-term? does quarter trough? fourth bit Got is it's down picture Todd? the that's kind continue outlook and of No, should that picking number, kind think it's And if your to sequentially -- how quarter trough maybe not big -- of of about it out rates helpful. for but mean contemplate next down

Todd Gipple

be clear. me Fed about Well, fundings? our Brian, deposit little more expectations you a you maybe the asking on more our if could Are or on

Brian Martin

outlook increase your have base your yes? margin if rate Just the and on

Todd Gipple

Yes.

Okay.

another meeting So really kind in September. pause we'll We're increase this there. optimistic no blended third here. optimistic There's another fourth There's in of we're to I down. about; in or static one meeting quarter. about August. one a guidance quarter in But a knows margin no guess very of the answer achieving if very see XX% the

in NIM points. basis some accretive Larry details be actually securitization fourth That securitization gave by quarter. more the the around about will four

in So, has of a we'll margin in a that get a benefits, little and give securitization of It of other offtake. margin. the but bit us lift will ton little from course, lift

while have total like of beta industry right but at cycle. a a got that industry the on most entire that's tail of level getting we back more we're beta maybe we're of our might the reasons. close beta. betas to through those feel longer the about half And now more the probably We quickly we're optimistic for of performance, to pretty And all the peak the year than for little think worst now. we it XX rest of deposits the And on peak

Brian Martin

on last it appreciate I helpful. that's No, you. one Todd. just And margin. maybe Got

remind next up QCR in that -- some just type cuts Just year us we the see environment? how the if sets of do

Todd Gipple

Thanks Yes. Brian.

first Over the of that now the sensitive. are third We us cycle. gone asset liability have helped we sensitivity in time modestly hiking an from

during rotated first we So, we converted to third beta to are liability low interest-bearing where our XXX beta deposits expansion sensitive. and we've saw modestly have as now non-interest-bearing the deposits margin from

the in does we come we're When place cuts So, to see might down. some feel happen lift long back were rates well positioned that margin like that out when take when rate future. to however be

Brian Martin

Perfect.

I super helpful. one if ask one. last just That's can Okay. And

the the strong, bit side a Just and taking being talked more about specialty but guidance modest. maybe business little loan traditional guys looked on the growth up, being commentary it the particularly you --

guess the about some next in the how kind see do thinking you guide traditional leading business, charge? still I or business your couple the specialty of quarters, just of that rebound more it or is you're I in that's mean

Larry Helling

I there of specialty about that talked pandemic space, the was that seems of the now business, and normal a -- resilient back seems that Yes, kind think it the the pace during in to be be very to as to down kind in we business. especially is LIHTC slowing of a past

The in the commercial core people. business, dealing estate, rates they're up it's normal commercial the and shock C&I I real think and still of with affected the psychology

So, modest get pre-securitization certainly because I certainly is double-digit grow of will And there. that's in going think pace, growth that the the we're nice digits at LIHTC. low-single but a how to really of to kind numbers

Brian Martin

you. Got

take appreciate I questions. Okay. the Perfect. that you all

Larry Helling

Thank you, Brian.

Todd Gipple

Brian. Thanks

Operator

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

Unidentified Analyst

is for morning. Jeff today. on Andrew Hi. Good This

question just that are? wondering Just buyers just revenue the from also or regards loans, type another those? LIHTC of of in targeted what gain product who follow-up servicing the to wondering, then And received you

Larry Helling

Yeah.

securitize will probably all retain long-term So to probably for some first term. build infrastructure we'd us, the not have we not as play long we a That's of those. servicing more because

going service initially outside engage that. an So to we're around

buyers And institutional because a investors, kind those insurance is this funds, for our where all banks kinds security, companies into of go. we're would places this of so the this, AAA-rated turning

normal we'll to kind readily it's remarkable. go the of think buyers. And we institutional So

Unidentified Analyst

higher, swap expenses with a a have variable surge sense. fee up than income the makes question the we maybe in another you. thought fees average? component quarter, little with picked That but this going more that to Thank expense on And might when, higher cost side, the way handicap are lower -- or then forward there is Okay. the just

Todd Gipple

for and Markets variable say a our beat. variable of incentives Capital that's that say guess, would correlation I in around between the And XX%, comp There's historically, Andrew. might Sure and certainly results compensation. I you that all

to the normal guidance we quarter. might beat a our on extent -- So more

ago Roughly around And margins several remained and would deliberate carry. here expected team non-interest our That's has really several industry. why see The XX% that focused our doing that we being that the guide noninterest very honestly quarters. is the add expenses. expense our second may reason quarter, be here in of beat in getting we've thoughtful been it on the static entire you leadership quarters for quite that didn't We've squeezed last four now. quarters expense probably to for and

just spend. we're And We're focused on really great more making thoughtful we're decisions, still to being expenses. intentional just but and long-term paying attention

that pretty that's we're range comfortable we'd I capital still still in So, that markets revenue. outperform XX might the to range even the end we within XX though even of guide, why we think if that upper on be be

but to long of capital but answer that a lot your on parts XX% a kind moving So question, about markets short just handle think of there really revenue.

Unidentified Analyst

deposits? have helpful. net Thank from you. you average one cost very June just That's or do more And of me, a then for interest margin spot on rate

Todd Gipple

I'm question, not but confident That's more we're QX. you Yeah. to just outcome that very pretty the of about one because we glad the good doing in had margin, asked that Actually, gotten I'd comfortable feel spot that. probably a reasons

about that was $XXX call. NIM the QX earlier talked Our with we million, in that Damon

and contraction May. was April in the big margin in in second really quarter The

was margin at static June May XXX. Our was and XXX

So, really some We saw we one outcome level the that have June. about confidence of that's reasons in a QX. off good in

So that I hope helps.

Unidentified Analyst

That helps. Thank on you the congrats and quarter.

Todd Gipple

Thank you.

Larry Helling

you. Thank

Operator

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

Daniel Tamayo

sheet multifamily, the remind us, much a in into terms Good construction of bit and you. first, on the LIHTC in is further you LIHTC specific of to balance how this Maybe digging if portfolio, morning just Thank point? kind could what's at so everyone. little just just

Larry Helling

a at able time We've of in got million forward. $XXX got to is would million and stabilizing securitize in LIHTC about then And we we of any stabilized, that as running over that's process completion. $XXX we and the that be up construction go little

we forward. creating go And be assets we'll is as future so, that pipeline what the securitizable

Daniel Tamayo

And terms much right. And or you Thank type what the do borrowers, the how you Okay. those for kind on? to them? loan in of getting then deposits All of for deposit relationship kind in are for the putting how from of are they LIHTC about think that. currently deposit borrowers, you

Larry Helling

Yes.

from deposits the that in quick that certainly but around where sector so getting business, that pace business far. $XXX out are the of are. at deposits of source loans of We we got It's not those million

deposit We that parts are and of makes from long-term have because because about a new some that initiative low some space, that perspective. deposits sense it that put interest-bearing, combination, It just of reserve business are structurings getting funds there's things the serious we a collecting certainly would interest-bearing be from kind those a together. more cost, we

would nonmaturity interest-bearing, combination I of type non-interest-bearing kind both deposit. So a accounts. it's say, of Typically,

Daniel Tamayo

Great. the then growth And Okay. back to circling conversation. loan

growth about you loan So, a securitizations the of of going X% part to questions kind securitization. talked going to are There's the be like two It sounds forward. of strategy the X% a here. net bigger

probably First, big or are all bigger on on letting net how are loans you the a loan curious, function fits this of XXXX, portfolio, growth LIHTC get? the two, it's comfortable this balance loan And is -- maybe sheet thinking number you are into more about traditional if coming into But how the of picture? back. kind we just growth about how thinking how

Larry Helling

Great.

million securitize total We're you LIHTC just $X.X about if at the short today. billion $XXX look in going fourth yes in they're quarter. of So, to loans, the

-- And we're would if our capital. balance keep outstandings with at relatively in X% taking pace going it the modest it static forward would then -- which it those probably and at more on let there. same top capital pace keep the of the off sheet do of range So could we a grow, percent grow

have. have a look Longer think growth, two, pretty can loan in plan as as to for this beauty long term it that of securitization we growth and liquidity and front that's won't we quarter that future use nicely, tool capital or as manage the loan We for securitizations. most out I we

So we do securitizations more expect to XXXX. in

we capital. going sheet, probably more As that, much much, off top grow kind of give relative certainly how to balance to close of of get closer and should you same yes but some to it the percent growth the that modestly as which when take a that we'll of basis indication keep we're on

Daniel Tamayo

doing What multifamily? what LIHTC. the kind just lastly, helpful. Okay. you loans are in on of especially to on relative construction the And are already Great. those look yields That's again and like,

Larry Helling

Yes. rate component because there's books. our The -- between tax floating tax of -- loans. And big are to the yields -- number and those portion a a going yields also on exclusively the I'm exempt are one effective loans to

are the X%. up tax to in equivalent So yields the Xs

Daniel Tamayo

That's for the construction portion.

Larry Helling

for And books are floating prices. relative too, our and that's permanent, permanent so and on same the all because the those on floating

Daniel Tamayo

there. Got Thanks all right. That’s I the Terrific. for all color had. it. All

Larry Helling

Daniel. Thanks,

Operator

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

Larry Helling

coming our of our again Thanks a in to We company. the talking your interest appreciate all for joining Have today. day. to look you months. with call in you We forward great

Operator

for has now Thank your you conference concluded. The participation.

You now may disconnect.

QCR (QCRH) 27 Jul 232023 Q2 Earnings call transcript