QCR (NASDAQ:QCRH) reported what management described as its strongest quarter of 2025 in the fourth quarter and “record full-year results,” supported by net interest margin expansion, loan and deposit growth, and continued capital markets revenue tied to its low-income housing tax credit (LIHTC) platform. Executives also emphasized progress in the company’s multi-year digital transformation and reiterated expectations for continued momentum in 2026.
Record quarterly and full-year earnings
Chief Financial Officer Nick Anderson said the company delivered record adjusted net income of $37 million, or $2.21 per diluted share, in the fourth quarter. For full-year 2025, QCR reported record adjusted net income of $130 million, or $7.64 per diluted share.
Margin expansion outlook and balance sheet positioning
Net interest income increased $4 million in the fourth quarter (a 22% annualized increase) and rose $23 million for the year (up 10%), Anderson said. On a tax-equivalent yield basis, net interest margin increased 6 basis points from the third quarter, near the upper end of the company’s guidance range.
Management tied the margin expansion to higher average earning assets, lower funding costs, and a mix shift toward non-interest-bearing deposits. Anderson said that since the Federal Reserve began cutting rates in 2024, QCR’s deposit costs have declined by 56 basis points compared with a 32 basis point decline in loan yields. He also said new loan yields during the quarter exceeded payoff yields by nearly 30 basis points, although he expects that benefit to moderate as the rate-cutting cycle progresses.
Looking ahead, QCR guided to additional core margin expansion of 3 to 7 basis points in the first quarter of 2026, assuming no further federal rate cuts. Anderson said QCR remains positioned to benefit from future rate reductions, noting rate-sensitive liabilities exceed rate-sensitive assets by about $700 million. The company expects roughly 1 to 2 basis points of margin accretion for every 25 basis point cut, depending on the shape of the yield curve.
Capital markets and LIHTC: guidance raised, with seasonality noted
Non-interest income totaled $39 million in the fourth quarter, driven primarily by $25 million in capital markets revenue. For 2025, capital markets revenue reached $65 million, surpassing management’s original annual guidance of $50 million to $60 million.
Chief Executive Officer Todd Gipple said the company is raising the upper end of its capital markets revenue guidance to $55 million to $70 million over the next four quarters. In response to analyst questions, Gipple cautioned that the first quarter is historically the slowest for capital markets revenue in the affordable housing industry, citing an average first-quarter capital markets revenue of $11 million over the past five years.
Management also discussed balance sheet actions to increase capacity within the LIHTC lending business. Gipple said QCR sold $285 million of LIHTC construction loans at par to a third-party investor late in the fourth quarter, a move he said improves balance sheet efficiency, reduces risk-weighted assets, and helps fund the retirement of higher-cost FHLB term advances. Anderson added that the loan sale did not materially impact net interest income, and management noted that new LIHTC origination during the quarter largely offset the balance sheet impact.
On securitization, Gipple told analysts the company continues to target a permanent loan securitization with Freddie Mac in the first half of 2026, expecting a transaction in the $300 million to $350 million range prior to June 30, while noting that changes at Freddie have made the process more time-consuming.
Growth across traditional banking and wealth management
Gipple framed QCR’s strategy around three business lines: traditional banking, wealth management, and its LIHTC lending platform (which he referred to as “LiTech” during the call). He said all three produced strong results in the quarter and year.
In wealth management, management said QCR added nearly 500 new client relationships in 2025 and brought in more than $1 billion in new assets under management. Anderson reported wealth management revenue of $5 million in the fourth quarter, up 4% sequentially, and said full-year wealth management revenue increased $2 million, or 11%.
In traditional banking, Anderson said total loans grew by $304 million in the fourth quarter (up 17% annualized) before the impact of the construction loan sale and planned runoff of the M2 portfolio. Excluding that runoff, the traditional loan portfolio increased $92 million (up 8% annualized) in the quarter and $185 million (up 4%) for the year. For 2026, management guided to gross annualized loan growth of 8% to 10% in the first quarter, ramping to 10% to 15% for the remainder of the year, citing healthy pipelines in both traditional and LIHTC lending.
On funding, total core deposits grew $64 million in the fourth quarter (up 4% annualized), while average deposit balances increased $237 million (up 13% annualized) from the third quarter. For the full year, core deposits increased $474 million, or 7%. Anderson said deposit mix improved with higher non-interest-bearing balances and a 34% reduction in higher-cost broker deposits.
Expenses, credit trends, capital, and $10 billion planning
Core non-interest expenses increased $4 million in the fourth quarter excluding a $2 million non-recurring prepayment fee tied to retiring higher-cost FHLB term funding. Anderson attributed the quarterly expense increase mainly to higher variable compensation tied to strong performance, as well as professional and data processing expenses related to the first core system conversion in the digital transformation initiative. QCR’s adjusted core efficiency ratio was 56.8%.
For the first quarter of 2026, management guided non-interest expense to a range of $55 million to $58 million, assuming capital markets revenue and loan growth land within guidance ranges. Gipple and Anderson also discussed preparations for eventually crossing $10 billion in assets, with Gipple saying QCR ended 2025 around $9.5 billion and expects to remain under $10 billion at the end of 2026, moving above that level in 2027. Management said it has been proactively building costs associated with operating at the $10 billion level into its run-rate expenses over several years.
On credit quality, Anderson said total criticized loans declined $5 million during the quarter and $20 million for the full year, a 12% reduction, reaching the lowest level since June 2022. Total criticized loans fell to 1.94% of total loans and leases, and non-performing assets to total assets remained at 0.45%. The allowance for credit losses increased to 1.26% of total loans held for investment.
QCR also continued share repurchases, buying about 163,000 shares in the fourth quarter for $13 million. For the full year, the company returned nearly $22 million to shareholders through repurchases. Anderson said tangible common equity to tangible assets rose to 10.24%, and the CET1 ratio increased to 10.52%. Tangible book value per share rose $2.08 in the quarter to approximately $58, representing 15% annualized growth for the quarter, management said.
About QCR (NASDAQ:QCRH)
QCR Holdings, Inc, headquartered in Moline, Illinois, is a bank holding company that delivers community banking services through its wholly owned subsidiary, QCR Bank. The company focuses on serving individuals, small to medium-sized businesses and municipal clients in select Midwestern markets.
QCR Bank offers a broad array of deposit and lending products, including personal and business checking and savings accounts, commercial real estate loans, equipment financing, mortgage lending and treasury management solutions.
