MOLINE, IL - QCR Holdings , Inc. (NASDAQ: NASDAQ:QCRH), a multi-bank holding company, announced today that it will cease offering new loans and leases through its subsidiary m2 Equipment Finance, LLC, as part of a strategy to enhance profitability and reduce credit losses. The decision marks a shift in focus towards business units with higher deposit gathering potential.
m2 Equipment Finance, based in Waukesha, Wisconsin, was acquired by QCR Holdings in 2005 and has since provided equipment financing solutions to commercial clients. Despite its historical contributions, the company has decided to halt new financing activities due to evolving market conditions and the pursuit of higher risk-adjusted returns.
The company's CEO, Larry J. Helling, remarked on the strategic move, stating that the company will concentrate on areas with more opportunities for building client relationships. m2 will continue to service its existing equipment finance portfolio, valued at approximately $360 million, with a reduced staff and expects the majority of this portfolio to amortize over the next three years.
QCR Holdings anticipates recognizing one-time restructuring expenses of about $2.1 million and a goodwill write-down of roughly $0.4 million in the third quarter of 2024. The company projects to recoup the one-time charge within two quarters.
Helling expressed gratitude towards the m2 team for their dedication and contribution to QCR Holdings' success. As of June 30, 2024, QCR Holdings reported $8.9 billion in assets, $6.9 billion in loans, and $6.8 billion in deposits. The company operates 36 locations across Iowa, Missouri, Wisconsin, and Illinois through its subsidiary banks.
This strategic change is based on a press release statement from QCR Holdings, Inc. and reflects the company's efforts to adapt to changing market dynamics and optimize its financial operations.
In other recent news, QCR Holdings has reported significant developments. The company announced robust financial results for the second quarter of 2024, with a net income of $29 million or $1.72 per diluted share. The company's net interest income increased by 3%, driven by higher average loan balances and an expanded margin. A notable acceleration in loan growth was also reported, with balances rising by 12% from the last quarter on an annualized basis.
QCR Holdings also expanded its Board of Directors with the appointment of two new members, James R. Batten and Amy L. Reasner, and announced a cash dividend of $0.06 per share. Keefe, Bruyette & Woods (KBW) revised their price target on shares of QCR Holdings, raising it to $82.00 from the previous $70.00 while maintaining its Outperform rating.
The company is planning future securitizations of low-income housing tax credit loans, with an expectation of continued growth in capital markets revenue and wealth management. However, a modest loss from securitization activities in the third quarter is anticipated, but overall gains for the year are expected. These are the recent developments in the company's performance.
InvestingPro Insights
QCR Holdings, Inc. (NASDAQ: QCRH) has recently announced a significant shift in its business strategy, and investors are keenly observing the company’s financial health and market performance. According to InvestingPro data, QCR Holdings has a market capitalization of $1.25 billion and maintains a price-to-earnings (P/E) ratio of 11, which is in line with the industry average, suggesting that the company is fairly valued in terms of its earnings. The company's revenue growth over the last twelve months as of Q2 2024 stands at 2.22%, indicating a steady financial trajectory.
While the company has decided to cease offering new loans and leases through its subsidiary m2 Equipment Finance, LLC, it's worth noting that QCR Holdings has demonstrated a strong return over the past three months, with a price total return of 33.84%. This performance could be a testament to the company's robust operational framework and the market's positive reception to its strategic decisions. InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, which could signal confidence in the company's future profitability.
Moreover, QCR Holdings has maintained dividend payments for 23 consecutive years, a testament to its commitment to shareholder returns. This consistency in dividend payments, coupled with the company's long-term track record of profitability, as noted in the InvestingPro Tips, provides a layer of assurance to investors looking for stable income streams. For those interested in further insights, there are additional tips available on InvestingPro that delve into QCR Holdings' financial performance and future prospects.
As the company navigates through its current strategic shift, these financial metrics and insights from InvestingPro could provide valuable context to investors monitoring QCR Holdings' progress.
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