By Ann Heffron, CFA
QCR Holdings, Inc. (NasdaqGM:QCRH) posted fourth quarter diluted EPS of $0.49, up 40% from the $0.35 EPS reported last year. Compared to the year-ago quarter, fourth quarter results were boosted by a gain in noninterest income on the back of strong 20%-plus increases in trust department fees and investment management & advisory fees, a one-fourth reduction in the loan loss provision, an almost 4-point drop in the effective tax rate to 24.4%, and preferred dividends that were down $0.2 million, or 21%, from a year ago, reflecting changes in QCRH’s capital structure.
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Diluted EPS came in $0.02 above our $0.47 per share estimate, principally the result of an effective tax rate of 24.4% that was lower than our 25.0% estimate and a reduction in average diluted shares outstanding compared to our expectation of a slight increase.
For the year, QCRH earned $9.1 million, or $1.85 per diluted share, up 63% from the $5.6 million, or $1.17 per diluted share in 2011, which excludes a one-time discount accretion on the redemption of the Series D preferred stock. Primary contributors to this growth were a 6 ½% gain in net interest income on a 7% increase in average interest-earning assets combined with a 2 basis-point rise in the net interest margin to 3.10%, a one-third reduction in the loan loss provision, strong control over operating expenses, a 2-point decline in the effective tax rate to 25.7%, and a $0.6 million, or 14%, fall in preferred dividends, partly offset by a 5% slide in noninterest income.
Nonperforming loans rose modestly during the quarter by $1.5 million, or 6%, to $25.4 million as a few problem loans were restructured, while foreclosed assets dropped $0.9 million, or 19%, to $4.2 million, due to the sale of several properties. As a percentage of total loans and OREO, total nonperforming assets fell 4 basis points sequentially to 2.29% from 2.33% at the end of the third quarter and 106 basis points year over year from 3.35%.
For 2013, we are maintaining our diluted EPS estimate at $2.05, up 11% over 2012.
QCR Holdings, Inc. (QCRH or the Company) is a multibank holding company, which was founded in 1993 and is headquartered in Moline, Illinois, with $2.1 billion in total assets at December 31, 2012 and 10 offices. QCRH provides a broad range of business and retail lending products and investment services through three wholly owned, full-service banking subsidiaries that are located in Illinois and Iowa. These subsidiaries include Quad City Bank and Trust Company (QCBT), based in Bettendorf, Iowa; Cedar Rapids Bank and Trust Company (CRBT), based in Cedar Rapids, Iowa; and Rockford Bank and Trust Company (RB&T), based in Rockford, Illinois.
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