This report, updated on October 27, 2025, provides a comprehensive examination of QCR Holdings, Inc. (QCRH) across five key analytical angles, from its business moat to its fair value. Our analysis benchmarks QCRH against competitors like Heartland Financial USA, Inc. (HTLF) and German American Bancorp, Inc. (GABC), distilling the takeaways through the investment principles of Warren Buffett and Charlie Munger.
Mixed.
QCR Holdings is a highly profitable regional bank with a strong track record of earnings growth.
Its success stems from expertise in specialized commercial lending and a proven acquisition strategy.
However, its business model lacks a strong competitive moat and is concentrated in the Midwest.
Key concerns include a high loan-to-deposit ratio of 96% and a stagnant dividend policy.
While the stock appears fairly valued, its risk profile makes it best suited for growth-oriented investors.
This group must be comfortable with higher risk and not require dividend income.
US: NASDAQ
QCR Holdings, Inc. (QCRH) is a multi-bank holding company that delivers relationship-based community banking services, but with a twist that sets it apart from many peers of its size. At its core, QCRH operates through several charter banks, including Quad City Bank & Trust, Cedar Rapids Bank & Trust, Community State Bank, and SFC Bank. These entities serve communities in Iowa, Illinois, Wisconsin, and Missouri, focusing on the traditional banking needs of local individuals and small-to-medium-sized businesses. The primary revenue driver is net interest income, earned from the spread between the interest it collects on loans and the interest it pays on deposits. However, what truly defines QCRH's business model is its second engine: a highly successful specialty finance group that operates on a national scale. This group engages in niche areas like tax credit financing, equipment finance, and provides correspondent banking services to other financial institutions. This dual strategy allows QCRH to build a deep-rooted local presence while also tapping into higher-margin, specialized national markets, creating a more diversified and potentially more profitable operation than a standard community bank.
The bank's largest and most crucial service is its Commercial and Industrial (C&I) and Commercial Real Estate (CRE) lending, which together form the backbone of its loan portfolio and revenue generation. These loans, extended to small and mid-sized businesses, typically constitute over 70% of the bank's total loan book. The market for commercial lending in the Midwest is highly competitive and mature, with an estimated size in the hundreds of billions, growing at a low single-digit rate annually. Profit margins are dependent on credit quality and the interest rate environment. QCRH competes against a wide array of institutions, from small local credit unions to large national players like U.S. Bank and Wells Fargo, as well as super-regional banks that have a significant presence in its markets. The primary consumers of these loans are established local businesses—manufacturers, service providers, real estate developers, and professionals—who value personalized service and local decision-making. These relationships are often sticky; a business with operating accounts, treasury management services, and a line of credit faces significant hassle and potential disruption in switching its primary banking partner. This high switching cost, built on deep personal relationships and customized solutions, forms the primary moat for this segment of QCRH's business. Its competitive position is fortified by its local expertise, allowing it to underwrite risks that larger, more formulaic lenders might avoid.
Another key component of QCRH's strategy is its Wealth Management division, which contributes a significant and stable source of non-interest (fee) income. This service provides investment management, trust, and financial planning services to high-net-worth individuals, families, and institutions, and it accounts for a substantial portion of the bank's non-interest income. The U.S. wealth management market is vast, valued at over $20 trillion, and is growing steadily as wealth transfers between generations. However, it is also intensely competitive, featuring players from global investment banks to local independent advisors. QCRH's wealth management arm distinguishes itself by integrating its services with its commercial and private banking offerings, creating a holistic financial relationship with successful business owners and executives. Customers are typically affluent individuals in the bank's local communities who entrust a significant portion of their net worth, often over $1 million, to the bank. The stickiness of these relationships is exceptionally high, as trust and personal connection are paramount, and moving complex trust and investment accounts is a major undertaking. The moat for this service is built on reputation, trust, and high switching costs, making it a reliable and high-margin contributor to earnings.
Perhaps the most unique aspect of QCRH’s business is its national Specialty Finance Group, including its correspondent banking division. This segment provides a range of specialized financial services to other financial institutions and niche commercial clients across the country, contributing materially to both interest and non-interest income. For instance, the group is a leader in providing liquidity solutions and other services to other community banks, and it also engages in complex areas like tax-credit-related financing. The market for these niche services is smaller but far less crowded than traditional banking, with success depending on deep institutional knowledge and expertise. Competitors are few and are typically other specialized banks or divisions within much larger financial institutions. The customers are other banks that may lack the scale or expertise to offer these services themselves, or sophisticated developers and investors. The stickiness of these relationships is very high, as they are based on unique capabilities and expertise that are not easily replicated. The competitive moat here is powerful and stems from intangible assets: specialized knowledge and a strong reputation within these niche industries. This creates high barriers to entry and allows QCRH to achieve superior margins on this part of its business, providing a crucial element of diversification away from the cyclicality of traditional community banking.
In conclusion, QCRH's business model is a hybrid that leverages the stability of relationship-based community banking with the high-growth, high-margin potential of national niche businesses. This structure provides it with a more durable competitive edge than many of its peers. The moat is multi-faceted, relying on high switching costs from its embedded local commercial and wealth management clients, and the intangible asset of specialized expertise in its national lending verticals. This diversification of revenue streams, particularly the strong contribution from fee-generating businesses, makes the bank less vulnerable to swings in interest rates than a more traditional lender.
However, the model is not without its risks. The focus on commercial clients leads to a funding base that is more concentrated and potentially less stable than one with a large base of retail consumers. Furthermore, its heavy concentration in commercial real estate lending exposes the bank to the cyclical nature of that market. Despite these risks, the business model appears resilient. The bank's ability to compete and win in specialized national markets demonstrates a level of sophistication and a true competitive advantage that should allow it to protect its profitability over the long term, even as the broader banking landscape evolves.
QCR Holdings' recent financial performance highlights a company with strong earnings momentum but a balance sheet that warrants careful monitoring. On the income statement, the bank is performing well. In the most recent quarter (Q3 2025), revenue grew a significant 16.49% year-over-year to $97.15 million, driven by healthy increases in both net interest income and non-interest income. Profitability metrics are impressive for a regional bank, with a return on assets of 1.56% and a return on equity of 13.74%, suggesting efficient use of its asset and capital base to generate profits.
The balance sheet presents a more mixed picture. The bank has successfully grown its asset base to $9.57 billion, funded by a growing deposit base of $7.38 billion. This growth supports its lending activities, with net loans reaching $7.09 billion. However, this has pushed the loans-to-deposits ratio to 96.0%, a level that is higher than many peers and indicates that the bank is lending out most of the money it brings in through deposits. While this can boost profitability, it also reduces the bank's liquidity buffer to handle unexpected withdrawals.
From a leverage perspective, the bank's debt-to-equity ratio of 0.86 is within a manageable range for the industry. However, total debt saw a notable increase from $718.86 million in Q2 to $937.57 million in Q3, a trend that investors should watch closely. The bank's provision for credit losses remains stable, and its allowance for loan losses at 1.24% of gross loans appears adequate based on available data. In summary, QCRH's financial foundation is currently stable, powered by strong profitability, but its aggressive lending and rising debt introduce risks that require attention.
Over the analysis period of fiscal years 2020 through 2024, QCR Holdings, Inc. has executed a successful growth strategy. This is evident in its expanding balance sheet and robust earnings. The company's core business, lending, has scaled impressively. Gross loans increased from approximately $4.3 billion to $6.8 billion, while total deposits grew from $4.6 billion to $7.1 billion. This fundamental growth provided the fuel for a significant rise in profitability, with net income nearly doubling from $60.6 million in FY2020 to $113.9 million in FY2024.
This operational success translated directly to the bottom line, with diluted earnings per share (EPS) growing from $3.84 to $6.77 over the five-year window. The company has consistently maintained high levels of profitability, with its Return on Equity (ROE) averaging over 13%, a figure that compares favorably to competitors like Heartland Financial (HTLF) and German American Bancorp (GABC). However, the bank has faced headwinds common to the industry, including pressure on its net interest margin from rising interest expenses and a gradual increase in its efficiency ratio, indicating rising costs relative to revenue.
From a shareholder perspective, the historical performance is a tale of two cities. On one hand, the business has grown substantially, which is a positive sign of management's execution capabilities. On the other hand, direct returns to shareholders have been minimal. The dividend per share has remained unchanged at $0.24 annually throughout the entire five-year period, representing a very low payout ratio of under 4%. Furthermore, despite some share repurchase activity, the total number of shares outstanding has crept up, resulting in slight dilution for existing investors. This contrasts with many peers who offer more substantial and growing dividends.
In conclusion, QCRH's past performance shows a company that excels at growing its banking operations and generating profits but has not prioritized returning that capital to shareholders. The historical record supports confidence in management's ability to expand the business and navigate the credit cycle effectively. However, investors looking for income or a history of shareholder-friendly capital allocation will find the record disappointing compared to the strong underlying business performance.
The regional and community banking industry is navigating a period of significant change, with growth prospects over the next 3-5 years shaped by economic conditions, technological shifts, and intense competition. The overall market for regional banking services is projected to grow at a modest CAGR of 2-4%, heavily influenced by interest rate cycles and regional economic performance. A key trend is the increasing importance of digital service delivery. While physical branches remain relevant for complex relationships, customers now expect seamless digital onboarding, transactions, and support. This puts pressure on smaller banks to invest in technology to compete with national giants and nimble fintechs. Another major shift is the flight to quality in deposits; following recent bank failures, both consumers and businesses are more sensitive to a bank's stability, favoring institutions with strong capital ratios and diversified funding sources. Catalysts for demand include a potential economic 'soft landing' that encourages business investment and borrowing, as well as ongoing consolidation, which allows well-managed banks to acquire scale and enter new markets.
Competitive intensity in the sector is expected to remain high and potentially increase. Large national banks are leveraging their scale and technology budgets to push further into middle-market commercial lending, a traditional stronghold for regional banks. Simultaneously, non-bank lenders and private credit funds are capturing a growing share of specialized lending, offering faster and more flexible terms. For a regional bank to thrive, it must differentiate itself beyond simple geography. This means cultivating deep expertise in specific industry verticals, offering superior advisory services, or building a robust fee-income engine to supplement interest-rate-dependent lending. The ability to gather and retain low-cost core deposits will remain a critical battleground, as it directly impacts a bank's profitability and resilience. Banks that successfully integrate digital convenience with high-touch, relationship-based service will be best positioned to win and retain high-value customers in the coming years.
QCRH's primary engine, its core commercial lending portfolio (C&I and CRE), currently forms the bulk of its balance sheet. Consumption is driven by the capital needs of small-to-medium-sized businesses in its Midwest footprint. The main constraint today is the cautious economic outlook and higher interest rates, which dampen business investment and expansion plans. Over the next 3-5 years, growth in this segment will likely track regional GDP. Consumption is expected to increase among businesses involved in manufacturing, logistics, and healthcare, sectors with strong roots in the Midwest. A potential decrease could be seen in speculative commercial real estate development if economic conditions soften. Catalysts for accelerated growth include federal infrastructure spending that boosts local contractors and suppliers, or a resurgence in domestic manufacturing. The market for middle-market commercial lending in the U.S. is worth trillions, but QCRH's addressable market is much smaller and highly competitive. Customers choose QCRH over larger rivals like U.S. Bank for its local decision-making and relationship-based approach. QCRH will outperform when it leverages its deep community ties to bank businesses that require customized underwriting. A key future risk is a concentrated downturn in the Midwest economy (high probability), which would directly hit loan demand and credit quality. Another risk is further market share erosion from non-bank lenders in the C&I space who can offer more aggressive terms (medium probability).
QCRH's Wealth Management division is a key driver of future fee income growth. Current consumption is tied to the financial planning and investment needs of high-net-worth individuals and business owners, often sourced from the bank's commercial client base. Growth is constrained by intense competition from national wirehouses like Morgan Stanley and independent registered investment advisors (RIAs). Over the next 3-5 years, consumption is set to increase significantly due to the ongoing 'great wealth transfer' between generations. QCRH is well-positioned to capture assets from successful business owners planning for succession. The U.S. wealth management market is expected to grow at a 5-7% CAGR. A key consumption metric is Assets under Management (AUM), which for QCRH is over $5 billion. The bank can accelerate growth by hiring more financial advisors and enhancing its digital tools for clients. Customers choose integrated bank-wealth platforms like QCRH's for the convenience of having their personal, business, and investment finances managed under one roof. The number of wealth management providers continues to increase, particularly in the independent RIA space, driven by low capital requirements. A key risk for QCRH is a severe equity market downturn (medium probability), which would reduce its AUM-based fees. Another risk is the potential for key wealth advisors to be poached by competitors, potentially taking clients with them (medium probability).
The Specialty Finance Group is QCRH's most significant growth differentiator. This division engages in niche national businesses like tax credit financing and correspondent banking. Current consumption is driven by demand for specialized financing solutions that larger, more standardized banks often avoid. Growth is constrained primarily by the need for deep, specialized expertise and the cyclical nature of some programs (e.g., tax credits). Over the next 3-5 years, this segment is expected to grow much faster than traditional lending. Consumption will increase as more community banks seek correspondent services to manage liquidity and as demand for specialized financing in areas like renewable energy grows. The market for correspondent banking services is stable, while niche financing markets can grow at rates exceeding 10%. QCRH's competitive advantage is its expertise and reputation, which create high barriers to entry. Customers choose QCRH because it is one of a few players with the specific knowledge to execute these complex transactions. The number of companies in these niches is small and likely to remain so due to the high intellectual capital required. A major risk is a change in federal or state tax law that reduces the attractiveness of tax credit financing programs (medium probability), which could eliminate a key revenue stream. Another risk is a systemic liquidity event in the banking sector (low probability), which could stress its correspondent banking clients and create contagion risk for QCRH.
Finally, QCRH's growth in treasury management services represents a crucial, under-the-radar opportunity. These services, including cash management, payment processing, and fraud protection, are sold to the bank's commercial clients. Current usage is high among its existing client base, but the primary constraint is the effort required for a business to switch its primary operating accounts and integrated services from another bank. Over the next 3-5 years, growth will come from deepening relationships with existing clients (cross-selling more services) and using a superior treasury platform as a hook to win new full-banking relationships. Consumption will shift towards more sophisticated digital platforms that offer real-time cash positioning and integrated payables/receivables. The market for treasury and cash management services is large and growing at 4-6% annually. QCRH can accelerate growth by investing in a next-generation technology platform that rivals those of larger banks. In this space, customers choose based on a combination of technology, price, and the quality of implementation and service. QCRH can outperform by offering a better service experience than large, impersonal competitors. The primary risk is underinvestment in technology (medium probability), which would make its platform uncompetitive and lead to client attrition. A second risk is the increasing threat of cyberattacks targeting commercial payment systems (high probability), which could cause financial and reputational damage.
Looking forward, QCRH's growth path is contingent on balancing its various engines. The bank's ability to continue sourcing talent for its specialty finance and wealth management groups will be critical. Furthermore, the strategy of cross-selling wealth and treasury services into its commercial loan client base is a powerful synergy that can drive low-cost deposit growth and high-margin fee income. Management's challenge will be to manage the inherent concentration risks in its commercial-heavy balance sheet while funding the growth of its more scalable and differentiated national businesses. Success over the next 3-5 years will be defined by its ability to protect its net interest margin while steadily growing its fee income to over 30% of total revenue, creating a more resilient and valuable earnings stream than its peers.
As of October 24, 2025, with a stock price of $76.89, a detailed analysis suggests that QCR Holdings is trading near its intrinsic value, with some potential for modest upside. A triangulated valuation, combining asset-based and earnings-based approaches, points to a fair value range that brackets the current market price. This suggests the company is neither significantly overvalued nor undervalued at its present level, offering a balanced risk-reward profile for potential investors.
The primary valuation method for a bank is its Price-to-Tangible-Book (P/TBV) multiple. QCRH's P/TBV ratio is 1.38x, based on a tangible book value per share of $55.78. This multiple is appropriate for a bank with a healthy Return on Equity (ROE) of 13.74%, as peer banks with similar profitability often trade between 1.3x and 1.6x P/TBV. This asset-based approach suggests a fair value between $72.51 and $89.25, and it is weighted most heavily due to its relevance in the banking industry.
From an earnings perspective, QCRH's trailing P/E ratio of 10.75 and forward P/E of 10.17 place it squarely within the typical 10x to 12x range for peer regional banks. Applying an 11x multiple to its trailing EPS of $7.15 implies a value of $78.65, reinforcing that the stock is fairly priced. A dividend-based valuation is less relevant due to the company's low 0.31% yield and 3.36% payout ratio, which indicates a strategic focus on reinvesting earnings for growth rather than providing shareholder income.
Combining these methods leads to a triangulated fair value estimate of $75 - $85. With the current price of $76.89 falling comfortably within this range, the stock is considered fairly valued. This suggests there is limited margin of safety at the current price, making it a hold for existing investors or a name to add to a watchlist for a more attractive entry point.
Bill Ackman's investment thesis for the banking sector would focus on identifying simple, high-quality franchises with strong management and a clear path to per-share value growth. He would be impressed by QCR Holdings' exceptional profitability, demonstrated by a Return on Equity (ROE) consistently in the 13-15% range, which signifies it generates very high profits from its capital base compared to peers. However, Ackman would likely hesitate due to the bank's relatively small scale and significant geographic concentration in the slower-growing Midwest, preferring businesses with dominant positions in more dynamic markets. The M&A-driven growth strategy, while successful, adds a layer of execution risk he might find unappealing compared to a more organic growth story in a better market. For retail investors, the key takeaway is that while QCRH is a top-tier operator, it likely lacks the scale and dominant market characteristics that Ackman typically requires for a long-term investment.
Warren Buffett would view QCR Holdings as a highly profitable but specialized banking operation, driven by a skilled management team. He would be immediately drawn to its impressive Return on Equity, which consistently sits in the 13-15% range, as this indicates the bank generates excellent profits for every dollar shareholders have invested. However, Buffett's enthusiasm would be tempered by the bank's reliance on acquisitions for growth and its geographic concentration in the Midwest, a region with slower economic expansion than others. He prioritizes businesses with simple, organic growth and would be cautious about the execution risk that comes with frequent M&A. When forced to choose the best banks from this group, Buffett would likely favor Lakeland Financial (LKFN) for its pristine credit quality and remarkable consistency, Enterprise Financial (EFSC) for its greater scale and diversification, and German American Bancorp (GABC) for its fortress-like balance sheet, as these qualities align more closely with his primary rule of 'don't lose money'. For retail investors, the key takeaway is that while QCRH is a high-performance bank, its risk profile is slightly higher than what a conservative investor like Buffett would typically underwrite at its current price. Buffett would likely only become a buyer after a significant price decline of 20-25%, which would provide the 'margin of safety' he requires to compensate for the higher M&A and concentration risks.
Charlie Munger would analyze QCR Holdings by applying his mental models for quality and durability, focusing heavily on returns on capital and management's rationality. He would be highly impressed by QCRH’s return on common equity (ROCE), which consistently sits in the 13-15% range; this key metric shows how much profit the bank generates with shareholder money, and QCRH's figure is well above the industry average of 10-12%, indicating a superior business model. Munger would strongly approve of management's use of cash, as they reinvest nearly all profits back into the business via an M&A strategy, evidenced by a very low dividend yield below 1%, unlike peers like EFSC. This compounds value effectively, as those reinvestments are clearly earning high returns. However, he would be fundamentally cautious about the bank's geographic concentration in the slower-growing Midwest, viewing this as a structural weakness in its long-term competitive moat compared to banks operating in more dynamic regions like Texas. For retail investors, Munger would likely see a high-quality operator in a less-than-ideal market, making it a good, but not truly 'great,' investment for a concentrated portfolio.
QCR Holdings, Inc. distinguishes itself in the crowded community banking space through a focused strategy of serving niche commercial clients and pursuing strategic acquisitions. Unlike many peers who adopt a broader, more generalized approach to community banking, QCRH targets specific sectors like healthcare and technology, allowing it to develop deeper expertise and offer more tailored financial products. This specialization often translates into stronger client relationships and higher-quality loan portfolios, which is a key differentiator from banks that compete primarily on price or convenience. The company's growth has been a dual-engine story, combining steady organic loan growth from its relationship-based model with opportunistic M&A activity that expands its geographic footprint and service capabilities.
This strategy, however, is not without its unique risks. QCRH's concentration in specific Midwestern markets, such as the Quad Cities and Cedar Rapids, makes it more susceptible to localized economic downturns compared to more geographically diversified competitors. Furthermore, its reliance on acquisitions for a significant portion of its growth introduces integration risk. A poorly executed merger could disrupt customer relationships, lead to operational inefficiencies, and negatively impact shareholder value. This contrasts with competitors who may prioritize slower, purely organic growth, which can be a more stable, albeit less spectacular, path to expansion.
Financially, QCRH often stands out for its above-average profitability metrics, particularly Return on Average Assets (ROAA) and Return on Average Equity (ROAE). This is a direct result of its effective niche lending strategy and disciplined expense management, reflected in a competitive efficiency ratio. While some competitors may boast larger asset bases or higher dividend yields, QCRH's focus is clearly on reinvesting capital to fuel further growth. This makes it an attractive option for growth-oriented investors, but potentially less so for those seeking stable, high-yield income, which many other regional banks are structured to provide.
In essence, QCRH's competitive position is that of a nimble, growth-focused acquirer with a specialized lending model. It doesn't try to be the biggest bank on the block, but rather the most effective and profitable operator within its chosen markets and client segments. This positions it as a higher-growth, higher-profitability play within the regional banking sector, with the corresponding risks of market concentration and M&A execution. Investors must weigh this aggressive growth profile against the more conservative, dividend-focused models of many of its direct competitors.
Heartland Financial (HTLF) presents a classic case of scale versus profitability when compared to QCR Holdings (QCRH). HTLF is a significantly larger and more geographically diversified bank holding company, which provides it with greater stability and a broader operational base. In contrast, QCRH is a smaller, more focused institution that has historically delivered superior profitability and growth metrics. Investors are therefore choosing between HTLF's safer, more diversified model and QCRH's higher-risk, higher-reward profile driven by niche market expertise.
When comparing their business moats, HTLF has a clear advantage in scale and diversification. With assets approaching ~$20 billion across 11 states, HTLF benefits from greater economies of scale and reduced dependence on any single regional economy compared to QCRH's ~$8 billion in assets concentrated in the Midwest. HTLF's brand is established across a wider footprint, while QCRH's is strong but localized. Switching costs are moderate for both, typical of community banking. Regulatory barriers are identical for both as chartered banks. Overall, the winner for Business & Moat is HTLF due to its superior scale and geographic diversification, which create a more durable and less risky operational foundation.
From a financial statement perspective, QCRH demonstrates superior profitability. QCRH's Return on Equity (ROE) is often in the 13-15% range, significantly better than HTLF's which is typically closer to 10-11%. This indicates QCRH generates more profit for every dollar of shareholder equity. While both maintain healthy balance sheets with Tier 1 capital ratios well above the 8% required, QCRH often runs a more efficient operation, with an efficiency ratio in the high 50s versus HTLF's in the low 60s (a lower ratio is better). HTLF offers better liquidity and a higher dividend yield, but QCRH's ability to generate higher returns is a powerful advantage. The overall Financials winner is QCRH because of its superior profitability and efficiency.
Looking at past performance, QCRH has been the stronger growth story. Over the past five years, QCRH has delivered higher revenue and earnings per share (EPS) compound annual growth rates (CAGR), often in the double digits, compared to HTLF's more modest mid-single-digit growth. This has translated into superior total shareholder returns (TSR) for QCRH investors over most trailing periods. In terms of risk, HTLF's larger size provides more stability and typically a lower stock beta, but QCRH's execution has been strong. The winner for Past Performance is QCRH due to its standout growth and shareholder returns.
For future growth, the outlook is more balanced. HTLF's growth will likely come from incremental gains across its wide network and disciplined acquisitions, offering a steady, predictable path. QCRH's growth is more aggressive, relying on deepening its niche market penetration and continued M&A activity within its target regions. Analyst consensus often projects higher near-term EPS growth for QCRH, but this comes with higher execution risk. HTLF has the edge on market demand due to its diversification, while QCRH has the edge on its proven high-growth model. This category is Even, as both have credible but different paths to future growth.
In terms of fair value, the market typically assigns a higher valuation multiple to QCRH for its superior growth and profitability. QCRH often trades at a higher Price-to-Book (P/B) ratio, around 1.1x-1.3x, compared to HTLF which can trade at or slightly below its book value of 1.0x. HTLF offers a much more attractive dividend yield, often above 4%, versus QCRH's sub-1% yield. The quality vs. price decision is stark: QCRH's premium is justified by its performance, while HTLF's lower valuation and higher yield appeal to value and income investors. HTLF is the better value today for risk-averse or income-seeking investors, given its solid fundamentals at a lower multiple.
Winner: QCRH over HTLF. While HTLF is a larger, safer, and better-valued bank for income investors, QCRH wins the overall comparison due to its demonstrated ability to generate superior profitability and growth. QCRH's key strengths are its stellar ROE of over 14% and its history of double-digit EPS growth, which HTLF cannot match. Its notable weakness is its geographic concentration and negligible dividend. HTLF's primary risk is its lower profitability and slower growth profile, which may lead to underperformance in a bull market. For investors prioritizing capital appreciation and willing to accept higher specific risks, QCRH's dynamic business model has proven more effective at creating shareholder value.
German American Bancorp (GABC) and QCR Holdings (QCRH) are both community-focused banks, but they represent different strategic philosophies. GABC is a model of conservative, steady growth primarily concentrated in Indiana and Kentucky, known for its pristine credit quality and consistent dividend. QCRH is a more dynamic, acquisition-oriented entity with a focus on higher-growth niche commercial lending. The comparison highlights a trade-off between GABC's stability and strong credit culture versus QCRH's superior profitability and more aggressive growth posture.
In terms of business moat, GABC's strength lies in its deeply entrenched brand and market share in Southern Indiana, where it has operated for over a century. This longevity builds significant trust and high switching costs for its local customer base. QCRH has a strong brand in its own right but in more fragmented metropolitan markets. In terms of scale, GABC has total assets of around ~$7.5 billion, slightly smaller than QCRH's ~$8 billion, making them comparable. Neither possesses significant network effects beyond their local communities. Regulatory barriers are equal. The winner for Business & Moat is GABC due to its century-long operating history and dominant market share in its core rural and suburban communities, creating a more defensible local franchise.
Financially, QCRH is the clear leader in performance. QCRH consistently posts a Return on Equity (ROE) in the 13-15% range and a Return on Assets (ROA) above 1.2%, which are top-tier for a bank of its size. GABC's metrics are solid but more moderate, with an ROE typically around 10-12% and an ROA around 1.1%. QCRH's Net Interest Margin (NIM) is also generally wider due to its focus on higher-yielding commercial loans. GABC's key financial strength is its exceptionally strong balance sheet and low net charge-off rates, indicating superior credit risk management. However, QCRH's ability to generate higher returns from its assets and equity is undeniable. The overall Financials winner is QCRH for its significantly stronger profitability metrics.
Analyzing past performance, QCRH has delivered far more impressive growth. Over the last five years, QCRH's revenue and EPS growth have consistently outpaced GABC's steady, low-single-digit expansion. This growth disparity is also reflected in their total shareholder returns, with QCRH generally providing significantly higher capital appreciation. GABC has offered more stability and less stock price volatility, making it a safer holding during market downturns. The winner for Past Performance is QCRH because its aggressive growth strategy has translated into superior returns for shareholders.
Regarding future growth, QCRH appears better positioned for aggressive expansion. Its proven model of entering new markets via acquisition and building out specialized lending teams provides a clear, repeatable growth algorithm. GABC's growth is more likely to be slow and organic, tied to the economic health of its home markets, with only occasional small, in-market acquisitions. While GABC's path is lower risk, QCRH has a significant edge in its potential growth trajectory, assuming it can continue to execute its M&A strategy effectively. The winner for Growth outlook is QCRH due to its more dynamic and scalable growth model.
From a valuation perspective, GABC often trades at a higher Price-to-Book (P/B) multiple, sometimes reaching 1.4x-1.6x, reflecting the market's appreciation for its stability and pristine credit quality. QCRH typically trades at a lower P/B multiple of 1.1x-1.3x, despite its higher profitability. GABC also offers a substantially higher dividend yield, often in the 3-4% range, making it attractive to income investors. Given QCRH's superior ROE and growth profile, its lower P/B multiple suggests it may be the better value. QCRH is the better value today, as you are paying a lower multiple for a bank with a higher return on equity and stronger growth prospects.
Winner: QCRH over GABC. Despite GABC's admirable stability, strong credit culture, and appeal to income investors, QCRH wins this comparison due to its superior financial performance and growth engine. QCRH’s primary strength is its ability to generate a top-tier ROE (~14%) and EPS growth, which creates more value for shareholders over time. Its key weakness is its concentration risk and lower dividend. GABC’s strength is its fortress-like balance sheet and predictable earnings, but its weakness is its pedestrian growth profile. For investors with a long-term horizon focused on total return, QCRH's dynamic model is positioned to outperform GABC's more conservative approach.
Enterprise Financial Services Corp (EFSC) and QCR Holdings (QCRH) are two high-performing regional banks with a shared focus on commercial lending, making them very direct competitors in terms of business model. EFSC, based in St. Louis, is larger, with assets over ~$13 billion, and operates across a broader geographic footprint in the Southwest and Midwest. QCRH is smaller and more concentrated in its specific Midwestern markets. The competition here is between EFSC's broader scale and specialized business banking platform versus QCRH's highly profitable, niche-focused lending approach.
Comparing their business moats, EFSC holds an edge due to its larger scale and more diversified geographic presence across states like Missouri, Arizona, California, and New Mexico. This diversification insulates it better from regional economic downturns. EFSC has built a strong brand around serving privately held businesses, a valuable niche. QCRH’s brand is potent but localized. Both have high switching costs due to deep client relationships in commercial banking. In terms of scale, EFSC's ~$13 billion in assets provides greater operational leverage than QCRH's ~$8 billion. The winner for Business & Moat is EFSC because its larger, more diversified footprint creates a more resilient and scalable franchise.
Financially, both companies are top performers, but QCRH often has a slight edge in profitability. QCRH's Return on Equity (ROE) frequently hovers in the 13-15% bracket, while EFSC's is also strong but typically a step behind at 12-14%. Both banks run highly efficient operations, with efficiency ratios well below the industry average, often in the 50-55% range. Both are well-capitalized. EFSC's larger size allows it to generate more net income in absolute terms, but on a relative basis, QCRH squeezes out slightly more profit from its equity base. The overall Financials winner is QCRH, albeit by a narrow margin, for its consistently superior return on equity.
In a review of past performance, both banks have been exceptional growth stories. Both EFSC and QCRH have used a combination of organic growth and strategic M&A to expand significantly over the past five years, delivering strong double-digit EPS growth in many years. Their total shareholder returns have also been very competitive and have often outperformed the broader banking index. It is difficult to declare a clear winner here, as both have executed their respective strategies exceptionally well. This category is a Tie, as both banks have demonstrated outstanding historical performance in growth and returns.
Looking ahead at future growth, both banks are well-positioned but have different drivers. EFSC's growth will come from expanding its specialized commercial banking services across its newer markets in the Sun Belt, which have favorable economic tailwinds. QCRH's growth continues to be driven by its focused M&A strategy and deepening its presence in its core Midwestern markets. EFSC's exposure to faster-growing states like Arizona and California gives it a slight advantage in terms of market demand. The winner for Growth outlook is EFSC due to its leverage to more dynamic and faster-growing regional economies.
Valuation for these two high-quality banks is often very close. Both typically trade at a premium to many regional bank peers, with Price-to-Book (P/B) ratios often in the 1.1x to 1.4x range. Their Price-to-Earnings (P/E) ratios are also comparable. EFSC generally offers a higher dividend yield, often in the 2.5-3.0% range, compared to QCRH's very low yield. This makes EFSC more attractive from an income perspective. Given their similar quality and growth profiles, EFSC's superior dividend makes it a slightly better value proposition. EFSC is the better value today because it offers a similar growth and quality profile with a much more substantial dividend return for investors.
Winner: EFSC over QCRH. This is a very close contest between two best-in-class commercial banks, but EFSC takes the win due to its larger scale, greater geographic diversification, and superior dividend yield. EFSC’s key strengths are its exposure to high-growth markets and its balanced return profile of growth plus income. Its primary risk is the fierce competition in its commercial lending niche. QCRH's main strength remains its chart-topping profitability (ROE > 14%), but its weaknesses of geographic concentration and a negligible dividend make it a slightly less balanced investment. EFSC offers a similarly compelling growth story but with a more robust and diversified foundation.
First Busey Corporation (BUSE) and QCR Holdings (QCRH) represent two different approaches to Midwestern banking. BUSE is a larger, more traditional institution with assets of approximately ~$12 billion, offering a full suite of banking, wealth management, and remittance services across Illinois, Missouri, Florida, and Indiana. Its strategy is one of comprehensive financial services and steady, conservative growth. QCRH is smaller and more singularly focused on high-growth commercial and industrial lending. This comparison pits BUSE's diversified revenue streams and stability against QCRH's specialized, higher-profitability model.
In the realm of business moats, BUSE has an advantage due to its diversified business model and larger scale. Its significant wealth management division (with several billion in assets under care) creates sticky, fee-based revenue that is less sensitive to interest rate cycles than QCRH's loan-heavy model. BUSE's brand is well-established, particularly in its home state of Illinois. With ~$12 billion in assets, it enjoys better economies of scale than QCRH. Switching costs are high in its wealth division and moderate in banking. The winner for Business & Moat is BUSE because its diversified revenue streams provide a more resilient and durable franchise.
Financially, QCRH is the more dynamic performer. QCRH's Return on Equity (ROE) consistently outperforms BUSE's, with QCRH often posting 13-15% compared to BUSE's 9-11%. This highlights QCRH's superior ability to generate profits from its capital base. QCRH also tends to have a better efficiency ratio. BUSE's strength lies in its stable, fee-based income from wealth management, which adds a layer of predictability QCRH lacks. However, from a pure banking profitability standpoint, QCRH is more effective. The overall Financials winner is QCRH based on its superior core profitability metrics.
Evaluating past performance, QCRH has delivered stronger growth. Over the last five years, QCRH's EPS and revenue growth have been more robust, driven by its aggressive lending and acquisition strategy. BUSE's growth has been more methodical and slower. Consequently, QCRH's stock has generally produced higher total shareholder returns over multi-year periods. BUSE offers lower volatility and a more stable dividend history, which appeals to conservative investors, but QCRH has created more wealth through capital gains. The winner for Past Performance is QCRH due to its superior growth and returns.
For future growth, QCRH seems to have a clearer path to rapid expansion through its proven M&A and niche lending strategy. BUSE's growth is more tied to the slower-growing Illinois economy and its ability to gather more assets in its wealth management division. While the wealth management business is a great asset, its growth potential is typically more measured than what can be achieved through successful bank acquisitions and aggressive commercial lending. Analyst estimates often favor QCRH for higher near-term earnings growth. The winner for Growth outlook is QCRH.
From a valuation standpoint, BUSE is often more appealing to income and value investors. It typically trades at a lower Price-to-Book (P/B) multiple than QCRH and offers a significantly higher dividend yield, often in the 4-5% range. QCRH's valuation reflects its higher growth expectations. For an investor, the choice is between BUSE's immediate income and lower valuation versus QCRH's potential for higher capital appreciation. Given its substantial yield and lower relative valuation, BUSE presents a compelling case for value. BUSE is the better value today, especially for investors prioritizing income.
Winner: QCRH over BUSE. While BUSE is a solid, stable institution with an attractive dividend, QCRH wins the comparison because its business model is simply more profitable and generates faster growth. QCRH's key strength is its best-in-class ROE (>14%) and a proven strategy for value creation through M&A and specialized lending. Its main weakness is a lack of revenue diversification and a low dividend. BUSE's strength lies in its diversified income streams and high yield, but its primary weakness is its mediocre profitability and slower growth. For total return-oriented investors, QCRH's superior financial engine makes it the more compelling choice.
Lakeland Financial Corporation (LKFN), the holding company for Lake City Bank, is widely regarded as one of the highest-quality community banks in the Midwest, making it a formidable competitor for QCR Holdings (QCRH). Based in Indiana, LKFN focuses on commercial and industrial lending with a reputation for disciplined underwriting and consistent performance. Both banks are high-performers, but LKFN's story is one of steady, organic growth and pristine credit quality, while QCRH's is one of more aggressive, M&A-fueled expansion. The comparison is between two elite operators with different growth philosophies.
Regarding their business moats, LKFN has a powerful and concentrated franchise in Northern and Central Indiana. It has built an incredibly strong brand and deep client relationships over decades, leading to a dominant market share in its core counties. This is a classic example of a durable, geographically focused moat. QCRH has a strong niche but operates in more competitive metro areas. In terms of scale, LKFN is smaller, with assets around ~$6.5 billion compared to QCRH's ~$8 billion. Despite its smaller size, LKFN's market dominance in its home turf gives it a powerful advantage. The winner for Business & Moat is LKFN due to its entrenched market position and stellar reputation for quality.
Financially, this is a matchup of two titans. Both banks consistently produce industry-leading profitability metrics. Both QCRH and LKFN often report Return on Equity (ROE) figures in the 13-16% range and Return on Assets (ROA) well above 1.2%. They are also both highly efficient operators. LKFN's historical advantage has been its exceptionally low level of non-performing assets and net charge-offs, a testament to its conservative credit culture. QCRH's financials are equally impressive on the profitability front, but its credit metrics, while strong, typically do not reach the pristine levels of LKFN. This category is a Tie, as both are elite financial performers, with QCRH's M&A growth balancing LKFN's superior credit quality.
In terms of past performance, both have been outstanding. LKFN has a long, uninterrupted history of dividend payments and consistent, high-single-digit to low-double-digit organic earnings growth. QCRH's growth has been lumpier due to acquisitions but has often been higher in aggregate. Over the last decade, both stocks have been fantastic performers and have handily beaten the banking sector indexes. Choosing a winner is difficult. LKFN offers more consistency, while QCRH has had periods of more explosive growth. The winner for Past Performance is LKFN by a razor-thin margin, rewarding its remarkable consistency and long-term track record of excellence.
For future growth, QCRH may have a slight edge. Its strategy is explicitly designed for expansion into new markets via M&A, giving it more levers to pull for growth. LKFN's growth is almost entirely organic and tied to the economic prospects of Indiana. While this is a stable and profitable model, it has a lower ceiling than QCRH's expansionist strategy. Analysts may project slightly higher growth for QCRH, assuming it continues to find attractive acquisition targets. The winner for Growth outlook is QCRH, as its M&A platform provides a higher potential growth trajectory.
Valuation for these two premium banks almost always reflects their high quality. Both LKFN and QCRH typically trade at some of the highest Price-to-Book (P/B) multiples in the regional banking sector, often in the 1.3x to 1.8x range. The market recognizes their superior returns and is willing to pay a premium. LKFN usually offers a better dividend yield, typically in the 2.5-3.5% range, which is a significant advantage over QCRH's minimal payout. Given their similar quality profiles, LKFN's much higher dividend makes it a better value proposition. LKFN is the better value today as it provides a substantial income stream alongside elite performance.
Winner: Lakeland Financial Corporation (LKFN) over QCRH. This is a competition between two A-tier banks, but LKFN wins due to its unmatched consistency, superior credit quality, and more shareholder-friendly capital return policy. LKFN's key strengths are its fortress-like balance sheet, its decades-long track record of profitable organic growth, and its meaningful dividend. Its primary weakness is a growth rate that is capped by its Indiana-centric focus. QCRH's strength is its higher-octane growth potential, but this comes with M&A integration risk and a near-zero dividend for shareholders. LKFN provides a rare combination of safety, quality, and performance that is hard to beat.
Veritex Holdings, Inc. (VBTX), a Dallas-based commercial bank, offers a compelling comparison to QCR Holdings (QCRH) by highlighting the impact of geography. VBTX operates in the dynamic, high-growth metropolitan markets of Texas, while QCRH is focused on the slower-growing Midwest. Both banks employ an aggressive, commercial-focused, M&A-driven strategy, but VBTX has the advantage of a much stronger economic tailwind. This matchup pits two similar business models against each other in vastly different economic environments.
In evaluating their business moats, VBTX benefits immensely from its location. Operating in Dallas-Fort Worth and Houston, two of the fastest-growing metro areas in the US, provides a massive tailwind. VBTX has built a strong brand as a go-to bank for Texan entrepreneurs. In terms of scale, VBTX is larger, with assets around ~$12 billion versus QCRH's ~$8 billion. While both have strong commercial banking relationships, the sheer volume of business creation in VBTX's markets gives it a structural advantage. Regulatory barriers are the same. The winner for Business & Moat is VBTX due to its superior operating environment and larger scale.
Financially, both banks are strong, but they exhibit different characteristics. QCRH often generates a higher Return on Equity (ROE), typically in the 13-15% range, compared to VBTX's 10-12%. This suggests QCRH has a more profitable core lending model. However, VBTX has shown a greater ability to grow its loan book and revenue base at a faster clip, capitalizing on its hot market. VBTX's Net Interest Margin (NIM) can be higher due to the nature of its lending. Both are efficient operators. The overall Financials winner is QCRH because of its superior bottom-line profitability and return on shareholder capital.
Looking at past performance, both have been growth powerhouses. VBTX's revenue and asset growth have been phenomenal, consistently in the double digits, driven by the booming Texas economy and a series of successful large acquisitions. QCRH has also grown rapidly, but VBTX's top-line expansion has often been even more dramatic. In terms of total shareholder return, performance has been competitive between the two, with each having periods of outperformance. VBTX's risk profile is tied to the sometimes-volatile Texas economy, particularly its connection to energy. The winner for Past Performance is VBTX for achieving a larger scale and faster top-line growth.
For future growth, VBTX has a clear and significant advantage. The demographic and business migration trends to Texas are a powerful, long-term tailwind that the Midwest cannot match. This provides VBTX with a much deeper pool of potential clients and opportunities for organic growth. While both banks will continue to pursue M&A, VBTX is fishing in a much more bountiful pond. Analyst consensus almost universally projects higher long-term growth for banks in prime Texas markets. The winner for Growth outlook is VBTX, unequivocally.
Valuation often reflects this growth differential. The market typically awards VBTX a higher valuation multiple, with its Price-to-Book (P/B) ratio often exceeding 1.5x, significantly higher than QCRH's 1.1x-1.3x. Investors are willing to pay more for VBTX's exposure to the Texas growth story. VBTX also tends to offer a better dividend yield than QCRH. Even at a premium valuation, the growth argument for VBTX is very strong, but QCRH is statistically cheaper. QCRH is the better value today because it offers superior profitability at a much lower P/B multiple.
Winner: Veritex Holdings, Inc. (VBTX) over QCRH. Although QCRH is a more profitable bank on a return-on-equity basis, VBTX wins this comparison due to its strategic position in a far superior geographic market, which provides a powerful and durable growth advantage. VBTX's key strength is its exposure to the booming Texas economy, which fuels exceptional loan demand and M&A opportunities. Its weakness is a slightly lower profitability profile than QCRH and a valuation that already reflects its growth prospects. QCRH's strength is its elite profitability, but its major risk and weakness is being tied to the slow-growth Midwest. In banking, location is a critical component of the moat, and VBTX has a decisive edge.
Based on industry classification and performance score:
QCR Holdings operates a dual-engine business model, combining traditional community banking with a sophisticated national specialty finance group. This unique structure provides a strong competitive moat through specialized expertise, particularly in wealth management and correspondent banking, which generates significant fee income. However, the bank's funding profile shows weakness, with a high concentration in rate-sensitive commercial deposits and a greater reliance on borrowed funds than peers. The investor takeaway is mixed; QCRH possesses a differentiated and profitable business model, but its funding vulnerabilities present a notable risk in the current interest rate environment.
QCRH generates a strong and diverse stream of fee income, particularly from its wealth management and specialty finance divisions, which significantly reduces its dependence on interest rate-sensitive lending.
QCR Holdings excels at generating non-interest income, which accounts for approximately 25-30% of its total revenue. This is a strong showing and well above the typical 15-20% for many community bank peers. The quality of this income is also high. Rather than relying on volatile sources like mortgage banking, QCRH's fee income is driven by stable, recurring revenue from its wealth management division (with over $5 billion in assets under administration) and unique swap fee income from its specialty finance group. This robust fee income stream provides a valuable buffer against the compression of net interest margins, making its earnings more resilient and predictable across different economic cycles. It is a core strength of the bank's business model.
QCRH's deposit base is heavily concentrated in commercial customers, which, while aligned with its business strategy, presents a significant lack of diversification and heightens its funding risk.
QCRH's strategic focus on being a premier commercial bank inherently leads to a lack of deposit customer diversification. The vast majority of its deposits come from business clients rather than a balanced mix of retail, small business, and public funds. This concentration makes the bank more vulnerable to industry-specific downturns that could affect its commercial depositors simultaneously. While the bank does not appear to overly rely on volatile brokered deposits (less than 5% of total funding), the fundamental concentration in one customer type is a risk. A more diversified deposit base, with a larger retail component, would provide a more stable and lower-cost source of funding, especially during periods of economic uncertainty. This strategic choice creates a clear trade-off: deep expertise in one area at the expense of broad-based stability.
The bank has built a powerful and differentiated business around its national specialty and correspondent banking groups, creating a distinct competitive moat based on expertise that is rare for a bank of its size.
QCRH's primary competitive advantage lies in its specialized lending franchises. While it is a competent commercial and industrial (C&I) and commercial real estate (CRE) lender, its national specialty finance group sets it apart. This division focuses on complex areas like tax credit financing and provides a suite of correspondent banking services, which has allowed it to build a national reputation. This focus on niche expertise creates high barriers to entry and allows for superior risk-adjusted returns compared to commoditized lending. This is not a typical community bank; it's a sophisticated financial institution that leverages deep expertise to serve overlooked markets. This specialized focus is the core of its moat and the primary reason for its strong profitability.
The bank's focus on commercial clients results in a lower-than-average level of 'sticky,' low-cost deposits, creating a funding profile that is more expensive and potentially less stable than its retail-focused peers.
A bank's strength often lies in its ability to gather low-cost, stable core deposits. For QCRH, noninterest-bearing deposits make up around 15% of total deposits. This is below the sub-industry average, which is often closer to 20-25%. Consequently, its cost of total deposits, at over 2.50%, is higher than many peers who benefit from a larger base of 'free' checking account funds from retail customers. Furthermore, a significant portion of its deposits, estimated to be over 40%, are uninsured, which is common for commercial banks holding large business accounts but represents a higher risk of outflows during periods of market stress. This reliance on more rate-sensitive and less 'sticky' funding sources is a clear weakness in its business model.
QCRH employs a 'branch-lite' strategy focused on commercial clients, resulting in exceptionally high deposits per branch, which indicates high efficiency for its target market.
QCR Holdings operates a relatively small network of 36 branches across its footprint. This lean physical presence reflects its strategic focus on commercial and private banking clients rather than mass-market retail customers. The key metric of this strategy's success is deposits per branch, which stands at approximately $240 million for QCRH. This figure is significantly above the average for many community banks, which often fall in the $75-$125 million range. This demonstrates a highly efficient network tailored to gathering substantial deposits from a smaller number of high-value business relationships. While this approach limits its reach into the broad consumer market, it creates strong operating leverage and aligns perfectly with its relationship-driven commercial lending model.
QCR Holdings shows strong profitability and revenue growth in its recent financial statements. Key strengths include a high return on equity of 13.74% and robust growth in both net interest income (+8.5% YoY in Q3) and net income (+32.14% in Q3). However, the bank's loan-to-deposit ratio has climbed to a high 96.0%, indicating potential liquidity constraints, and total debt has increased significantly. Overall, the financial picture is positive due to strong earnings power, but investors should monitor the bank's liquidity and leverage.
The bank maintains a strong capital position relative to its assets, but its high loan-to-deposit ratio of `96.0%` signals potential liquidity weakness.
QCR Holdings exhibits a solid capital base, which is a key strength. Its Tangible Common Equity to Total Assets ratio was approximately 9.8% as of Q3 2025 ($939.24 million in tangible equity vs. $9.57 billion in assets). A ratio above 8% is generally considered strong, providing a healthy cushion to absorb potential losses. This indicates the bank is well-capitalized from a regulatory perspective.
However, the bank's liquidity position is a concern. The loan-to-deposit ratio (LDR), calculated as net loans divided by total deposits, stood at 96.0% in the latest quarter ($7.09 billion / $7.38 billion). An LDR above 90% is considered aggressive, suggesting the bank is using nearly all of its deposit funding for loans, leaving little excess liquidity. While this strategy can maximize profits, it creates risk if the bank faces unexpected deposit outflows. This high LDR is a significant weakness that offsets the strong capital ratio.
The bank's credit reserves appear adequate and provisions are stable, suggesting disciplined underwriting, though key data on nonperforming loans is not available.
Assessing a bank's credit quality is crucial, as loan losses can quickly erode earnings. QCRH's provision for loan losses was stable at $4.31 million in Q3 2025, slightly up from $4.04 million in Q2. This indicates that the bank is consistently setting aside funds to cover expected losses without any sudden alarms. The bank's total allowance for loan losses was $88.77 million against a gross loan portfolio of $7.18 billion, resulting in a reserve coverage ratio of 1.24%.
This reserve level is generally considered reasonable for a community bank of its size. Furthermore, the amount of foreclosed property (Other Real Estate Owned) on its books is minimal at $0.51 million, which is a positive sign of healthy loan performance. While critical metrics like the nonperforming loans to total loans ratio are not provided, the available data suggests that credit quality is being managed effectively.
The bank appears exposed to interest rate risk, as suggested by negative comprehensive income figures that point to unrealized losses on its investment portfolio, which directly reduces its tangible book value.
While specific metrics like the duration of the securities portfolio are not provided, the bank's balance sheet offers clues about its sensitivity to interest rates. In Q2 2025, the 'comprehensive income and other' line item showed a negative balance of -$60.91 million. This often includes accumulated other comprehensive income (AOCI), which reflects unrealized gains or losses on investment securities. A negative balance typically indicates that the market value of the bank's bond holdings has fallen due to rising interest rates, which negatively impacts the bank's tangible equity.
This pressure on tangible equity is a significant risk for banks, as it can limit financial flexibility. Although interest income has been growing, interest expense is also rising quickly. This dynamic, combined with the apparent unrealized losses on securities, suggests the bank's earnings and capital could be volatile in a changing rate environment. Without more detailed disclosures, the visible impact on tangible equity is a clear weakness.
The bank continues to grow its net interest income at a healthy pace, with recent results showing interest income growing faster than interest expense, a positive sign for margin stability.
Net interest income (NII) is the lifeblood of a bank's earnings, representing the difference between what it earns on loans and what it pays on deposits. QCRH has demonstrated solid performance here, with NII growing 8.5% year-over-year in Q3 2025 to $64.8 million. This follows 10.54% growth in the prior quarter, showing sustained momentum.
More importantly, in the most recent quarter, the bank's total interest income grew 4.0% while its total interest expense grew at a slower 3.5%. This is a positive development, as many banks have recently faced net interest margin (NIM) compression due to funding costs rising faster than asset yields. QCRH's ability to grow income faster than expenses suggests it has strong pricing power on its loans or an effective strategy for managing its funding costs, which supports a stable or expanding NIM.
The bank operates with a strong efficiency ratio of `55.8%`, but a recent spike in non-interest expenses, particularly salaries, is a trend to watch.
A bank's efficiency ratio measures how much it costs to generate a dollar of revenue, with lower being better. In Q3 2025, QCRH's efficiency ratio was 55.8% ($56.59 million in expenses divided by $101.45 million in revenue). This is a strong result, as ratios below 60% are typically viewed as very efficient, especially for a relationship-focused community bank. This indicates good cost discipline and operational leverage.
However, there is a potential red flag in the recent trend. Total non-interest expense jumped 14.1% from Q2 to Q3 2025, primarily driven by a significant increase in salaries and employee benefits. While some of this may be tied to growth initiatives, such a sharp quarterly increase in the largest expense category warrants monitoring. If this trend continues, it could pressure the bank's otherwise excellent efficiency ratio and reduce profitability.
QCR Holdings has demonstrated a strong track record of growth over the past five years, driven by aggressive expansion of its loan and deposit base. This has translated into impressive earnings growth, with EPS growing at a compound annual rate of about 15%. However, this growth has not been shared with investors through dividends, which have remained flat, and shareholder returns have been inconsistent. The bank's core strength is its high profitability, often posting a Return on Equity above 13%, which is superior to many peers. The investor takeaway is mixed: while the company's operational performance has been excellent, its capital return policy has been lackluster, making it more suitable for growth-focused investors than those seeking income.
The bank has achieved impressive and consistent double-digit annual growth in both its loan portfolio and deposit base over the last five years, indicating successful market share gains.
QCRH's history is defined by strong balance sheet growth. From fiscal year-end 2020 to 2024, gross loans expanded from $4.26 billion to $6.78 billion, a compound annual growth rate (CAGR) of 12.3%. This loan growth was responsibly funded by a similar expansion in deposits, which grew from $4.60 billion to $7.06 billion over the same period, representing an 11.3% CAGR. This sustained, high-level growth is a clear indicator of successful execution of its business model and effective competition in its markets. The loan-to-deposit ratio remained stable, moving from 92.5% in 2020 to 96.1% in 2024, which suggests prudent management of its funding and lending activities without taking on excessive liquidity risk.
While the bank has successfully grown its net interest income, its profitability trends have weakened due to industry-wide margin pressure and a worsening efficiency ratio over the past five years.
QCRH's net interest income (NII), the core profit from lending, grew at a solid 8.5% CAGR from $166.95 million in FY2020 to $231.79 million in FY2024. However, this top-line growth masks some underlying pressure. A sharp rise in interest expense, which grew from $31.4 million to $250.1 million over the period, has compressed the net interest margin (NIM). This is a common challenge for banks in a rising rate environment. At the same time, cost discipline has slipped. The efficiency ratio, which measures non-interest expenses as a percentage of revenue, has deteriorated from a strong 52.2% in FY2020 to 59.1% in FY2024. A lower number is better, so this rising trend indicates that costs are growing faster than revenues, which can drag on future profitability.
The company has an excellent track record of growing its earnings per share at a high rate, reflecting strong profitability and successful execution of its growth strategy.
Over the five-year period from FY2020 to FY2024, QCRH's diluted earnings per share (EPS) increased from $3.84 to $6.77. This represents a strong compound annual growth rate (CAGR) of approximately 15.2%. This performance significantly outpaces that of more conservative peers like GABC and HTLF. The growth was driven by a near-doubling of net income during the period. The bank's average Return on Equity (ROE) over the last three years (FY2022-2024) was 13.15%, demonstrating consistently high profitability that fuels its earnings power. Despite a minor dip in EPS in FY2024, the multi-year trend is overwhelmingly positive and is a primary strength of the company.
QCRH has effectively managed credit risk while rapidly growing its loan book, as evidenced by manageable provisions for loan losses and a stable allowance ratio.
Maintaining credit quality during a period of rapid growth is crucial for any bank. QCRH appears to have managed this well. The provision for loan losses, which is money set aside to cover potential bad loans, was elevated at $55.7 million in 2020 during the pandemic's peak uncertainty but has since moderated to $17.1 million in 2024, even as the loan portfolio grew by over $2.5 billion. The allowance for loan losses as a percentage of gross loans stood at a healthy 1.32% in 2024. While this ratio has decreased from 1.98% in 2020, it remains a solid buffer. The ability to grow loans so significantly without a corresponding surge in credit costs suggests that the bank's underwriting standards have remained disciplined throughout its expansion.
The company has a poor track record of capital returns, characterized by a stagnant dividend for the past five years and net share dilution.
QCR Holdings' approach to capital returns has heavily favored reinvestment over shareholder distributions. The annual dividend per share has been flat at $0.24 from FY2020 through FY2024, resulting in a 5-year dividend CAGR of 0%. This is particularly noteworthy given that earnings per share grew significantly during this period. The dividend payout ratio is exceptionally low, standing at just 3.54% in FY2024, meaning over 96% of profits are retained. While the company engaged in share repurchases in some years, such as -$53 million in 2022, these were offset by share issuances, leading to a net increase in basic shares outstanding from 16 million in 2020 to 17 million in 2024. This history signals that income and buyback-driven returns are not a priority, a key differentiator from peers like GABC or EFSC that offer more substantial yields.
QCR Holdings' future growth outlook is positive, driven by its unique and high-margin Specialty Finance Group and a strong Wealth Management division. These segments are poised to deliver above-average growth in fee income and niche lending, providing diversification from traditional banking. However, the company faces headwinds from its concentrated commercial loan book, which is sensitive to economic cycles, and a relatively expensive funding base that could pressure its net interest margin. The investor takeaway is positive; while risks in its funding and loan concentration exist, QCRH's specialized business model provides a clear path to grow earnings and shareholder value faster than typical community bank peers over the next 3-5 years.
While QCRH has strong niche lending businesses, its overall loan growth outlook is constrained by its heavy concentration in cyclical commercial loans and a cautious economic environment.
QCRH's loan growth prospects are mixed. While its specialty finance group provides unique growth avenues, the bulk of its portfolio is in traditional C&I and CRE lending within the Midwest. Loan growth guidance for banks in this sector is modest, often in the low-to-mid single digits, reflecting economic uncertainty and higher borrowing costs. The bank's heavy concentration in commercial real estate, a sector facing secular headwinds, presents a significant risk to both growth and credit quality. While the loan pipeline may be solid in niche areas, the outlook for the core portfolio is muted and carries elevated cyclical risk. This dependence on a concentrated and economically sensitive loan book warrants a cautious stance on its future growth potential from lending alone.
With a solid capital position, the bank is well-equipped to pursue disciplined M&A and shareholder returns, which are key value drivers for regional banks.
QCRH maintains a healthy capital position, with a CET1 ratio typically above regulatory requirements, providing flexibility for growth. For a regional bank, strategic M&A is a primary method for expanding its footprint and achieving economies of scale. Management has a track record of successfully integrating acquisitions that fit its relationship-banking model. While no major deals have been recently announced, the bank's strong capital base positions it as a potential acquirer as industry consolidation continues. Furthermore, the company has historically utilized share buyback programs to return capital to shareholders when opportunities arise. This balanced approach to capital deployment—investing in organic growth, pursuing strategic acquisitions, and returning excess capital—is a positive indicator for future earnings per share and tangible book value growth.
QCRH's 'branch-lite' strategy is highly efficient, and future growth will depend on enhancing its digital offerings to better serve its high-value commercial clients.
QCR Holdings already operates a highly efficient physical footprint, focusing on high-value commercial relationships rather than a large retail network, as evidenced by its exceptionally high deposits per branch. The future growth lever is not in physical expansion but in digital optimization. The company's plans should be centered on deploying advanced digital treasury management and private banking platforms. Success will be measured by growth in digital user adoption among its business clients and the ability of its digital tools to attract and retain operating accounts. While no specific cost-saving targets have been announced, the strategy itself is inherently cost-effective. The bank's focus on digital tools for its specific client base, rather than a broad retail app, is a sound strategy that supports its relationship-based model.
The bank's reliance on more expensive, rate-sensitive commercial deposits creates significant pressure on its net interest margin (NIM) in the current rate environment.
QCRH's funding profile is its primary weakness regarding future profitability. The bank has a lower proportion of noninterest-bearing deposits (around 15%) and a higher cost of deposits compared to many retail-focused peers. This means its funding costs are likely to remain elevated as long as interest rates are high. While the bank has variable-rate loans that can reprice higher, the intense competition for deposits is a powerful headwind. Management's NIM guidance will likely be cautious, reflecting this funding pressure. Without a significant shift in its deposit mix towards lower-cost sources, the bank will struggle to expand or even maintain its NIM, putting a cap on its core earnings power.
The bank has clear and proven growth drivers in its wealth management and specialty finance divisions, which should continue to produce strong fee income and diversify earnings.
This is a core strength for QCRH. The bank's future growth is heavily tied to expanding its non-interest income, which already sits at a healthy 25-30% of revenue. The primary drivers are its wealth management arm, which has a clear path to grow assets under management, and its unique specialty finance group that generates significant swap and correspondent banking fees. Management's strategy is explicitly focused on growing these areas to reduce reliance on net interest income. While specific growth targets are not always publicized, the consistent historical performance and the scalable nature of these businesses suggest a strong outlook for continued fee income expansion, positioning QCRH favorably against peers who are more exposed to interest rate volatility.
Based on its current financial metrics, QCR Holdings, Inc. appears to be fairly valued with a slightly positive outlook. Its valuation is supported by strong profitability and reasonable multiples, including a Price-to-Tangible-Book (P/TBV) ratio of 1.38x and a trailing P/E of 10.75. The stock price sits comfortably in the middle of its 52-week range, reflecting a balanced market view. For investors, the takeaway is neutral to positive; while not a deep bargain, the company is priced reasonably for its performance and warrants a spot on a watchlist.
The company trades at a sensible premium to its tangible book value, which is justified by its strong profitability and return on equity.
Price to Tangible Book Value (P/TBV) is a critical metric for banks. QCRH's P/TBV is 1.38x (calculated as price of $76.89 divided by Tangible Book Value Per Share of $55.78). For a bank to trade at a premium to its tangible net worth, it must generate returns that exceed its cost of capital. QCRH's Return on Equity of 13.74% is well above the ~10-12% that investors typically expect from community banks, justifying this premium. General regional bank P/TBV multiples are often in the 1.0x to 1.5x range, placing QCRH in the upper-middle of this band, consistent with its above-average profitability.
The company's Price-to-Book multiple is well-supported by its high Return on Equity, indicating an efficient use of shareholder capital.
A bank's P/B ratio should be evaluated in the context of its Return on Equity (ROE). A higher ROE justifies a higher P/B multiple. QCRH's current P/B ratio is 1.19, while its ROE is 13.74%. This relationship is healthy. Many community banks have struggled to consistently produce ROEs above 12.5%. QCRH's ability to generate a 13.74% return suggests strong operational efficiency and profitability. This level of return comfortably supports its P/B multiple, signaling that the market is appropriately valuing its ability to generate profits from its asset base.
The stock's P/E ratio is reasonable and sits in line with the industry average, supported by solid recent earnings growth.
With a trailing P/E of 10.75 and a forward P/E of 10.17, QCRH is valued consistently with the regional banking sector, which typically sees forward P/E ratios between 10x and 12x. This valuation does not appear stretched, especially given the company's performance. In the most recent quarter (Q3 2025), QCRH reported strong EPS growth of 31.71%. While this level of growth may not be sustainable, the forward P/E implies analyst expectations for continued earnings expansion of around 5-6% in the next fiscal year. This combination of a fair price for current earnings and positive near-term growth prospects supports a passing result.
The company's focus on reinvesting earnings results in a very low dividend yield and minimal capital return to shareholders, making it unsuitable for income-focused investors.
QCR Holdings offers a minimal dividend yield of 0.31%, which is significantly lower than many of its regional banking peers. The dividend payout ratio is extremely low at 3.36%, meaning the company retains over 96% of its profits. While this high retention rate fuels balance sheet growth, it offers little direct income to shareholders. Furthermore, there is no evidence of significant share repurchases; in fact, shares outstanding have slightly increased over the past year. For an investor whose objective is income and total yield from dividends and buybacks, QCRH does not currently meet the criteria.
QCRH's key valuation multiples are aligned with peer averages, suggesting it is not overpriced relative to the competition.
When stacked against its peers, QCRH's valuation appears reasonable. Its TTM P/E of 10.75 is comparable to the industry average, which hovers around 11x. Its calculated P/TBV of 1.38x is also in line with peers that generate similar returns on equity. While its dividend yield of 0.31% is low, this is a reflection of its growth-oriented strategy. The stock's beta of 0.83 indicates it has been slightly less volatile than the broader market. Overall, these metrics paint a picture of a company valued in step with its industry, without any significant signs of being over or undervalued on a relative basis.
The primary risk for QCR Holdings is its sensitivity to macroeconomic conditions, particularly within its regional footprint. A slowdown in the U.S. economy or a specific downturn in its Midwestern markets would directly impact loan demand and, more importantly, the ability of its borrowers to repay their debts. Persistently high interest rates create a challenging environment for the bank's profitability. While higher rates allow the bank to charge more for new loans, they also force it to pay significantly more to keep customer deposits. This can compress its net interest margin (NIM)—the key profit driver for a bank—if funding costs rise faster than what it earns on its assets, potentially leading to lower earnings.
The banking industry is fiercely competitive, posing a continuous threat to QCRH's growth and profitability. The bank competes with giant national players, other community banks, and agile fintech companies for both loans and deposits. This competition creates significant pressure on deposit pricing, forcing QCRH to offer attractive rates to prevent customers from moving their money to higher-yielding alternatives. On the regulatory front, banks of QCRH's size are under increased scrutiny following the regional banking turmoil of 2023. Future regulations could demand higher capital reserves and stricter liquidity standards, which would increase compliance costs and could constrain the bank's ability to lend, potentially lowering its return on equity for shareholders.
From a company-specific standpoint, QCRH's loan portfolio carries notable concentration risk, particularly in commercial real estate (CRE). While management has a history of strong credit discipline, a significant downturn in the CRE market—especially in vulnerable sectors like office space—could lead to a material increase in non-performing loans and write-offs. Additionally, QCRH has historically relied on an acquisition-based strategy, including "lift-outs" of banking teams from competitors, to fuel its growth. This model depends on finding suitable targets and successfully integrating them, a process that is not guaranteed to continue at the same pace and carries inherent execution risks. A slowdown in M&A activity could temper the bank's future growth prospects.
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