County Bancorp, Inc. Announces First Quarter Results

Company Release - 4/30/2020 4:01 PM ET

Focus remains on continued execution against strategic priorities, as well as swift and deliberate actions to prioritize safety and effectively serve customers and communities

Highlights

  • Net loss of $5.2 million for the first quarter of 2020 or $0.78 diluted loss per share for the first quarter 2020
  • Net interest income decreased $740,000 during first quarter 2020 due to actions by the Federal Reserve in response to COVID-19
  • Goodwill impairment of $5.0 million or $0.74 per diluted share
  • COVID-19 qualitative adjustment of $2.0 million recognized through provision for loan losses for the first quarter 2020
  • Write-down on other real estate owned of $1.4 million during the first quarter 2020
  • Average loans sold and serviced increased $5.4 million and loan fees as a percentage of average loans sold and serviced increased 0.02% to 0.98% during the first quarter 2020
  • Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) decreased $43.9 million or 5.3% largely due to seasonal fluctuations since December 31, 2019
  • Substandard loans decreased $14.3 million since December 31, 2019 due to $13.6 million in upgrades to watch
  • Submitted $104 million in Small Business Administration Paycheck Protection Loan applications which have been approved through April 29, 2020
  • Capital ratios remain strong with a Total Risk-Based Capital ratio of 18.0% and Tier 1 Leverage of 14.9%

MANITOWOC, Wis., April 30, 2020 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), a community bank headquartered in Manitowoc, Wisconsin, today reported results for the first quarter of 2020.  Net loss was $5.2 million, or $0.78 diluted loss per share, for the first quarter of 2020, compared to net income of $3.8 million, or $0.54 diluted earnings per share, for the first quarter of 2019.  Net loss included a $5.0 million goodwill impairment charge as a result of the uncertainty related to COVID-19 and its potential impact on future earnings, as well as overall bank valuations.  Excluding that charge, diluted loss would have been $0.04 per share.

Tim Schneider, President of County Bancorp, Inc., noted, “As a result of the swift and decisive actions we took in response to the pandemic, there were several pushes and pulls to our financials this quarter.  Those included a goodwill impairment primarily related to market changes, the addition of approximately $2.0 million in provisions for loan losses and some increased margin compression due to the impact of the pandemic, and a $1.4 million write-down on one OREO property due to an updated appraised value.  We also recently updated our capital stress testing and it showed that we have more than sufficient capital to maintain our well-capitalized status in a severe adverse stress scenario. Out of an abundance of caution, we have started to extend out our wholesale funding maturities to better manage future liquidity risk and rates up scenarios.” 

Schneider continued, “We prioritized our team’s safety and now have the large majority of our team working efficiently from their home offices, and have closed all locations except the drive-thrus at three of our branch locations.  Even with these disruptions, I am so proud of how our team came together and continued to safely and effectively serve our clients. Through April 29, 2020, we have processed 812 Paycheck Protection Loans (“PPP”) through the SBA applications, totaling $104 million and representing almost 13,000 jobs protected.  Our team is prepared to weather any future temporary disruptions that the pandemic may cause to our business operations and those of our customers.  Our capital ratios remain strong and we will continue to stay balanced in our capital allocation approach, which includes a continuation of our current dividend payout and common stock buyback plan.  Of note, during the first quarter, we were able to purchase 256,000 shares of common stock.”

Loans and Securities

Total loans decreased $23.3 million, or 2.3%, during the first quarter of 2020 and $170.5 million year-over-year, or 14.4%, to $1.0 billion.  The decrease in total loans in the first quarter of 2020 was due to loan paydowns and a continued focus on selling loans in the secondary market.  The decrease in total loans year-over-year was the result of a continued focus on long-term liquidity.  Loan participations the Company continued to service were $747.6 million at March 31, 2020, a decrease of $4.2 million or 0.6% compared to the fourth quarter of 2019, but an increase of $72.3 million, or 10.7%, year-over-year.  By increasing the amount of loans participated, the Company has been reducing credit risk from its balance sheet and increasing non-interest revenue streams.

During the first quarter of 2020, investments increased $87.4 million, or 55.1%, compared to December 31, 2019 due to deploying cash into securities.

Deposits

Total deposits at March 31, 2020 were $1.0 billion, a decrease of $81.5 million, or 7.4%, sequentially and $156.3 million, or 13.3%, year-over-year.  Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) decreased $43.9 million, or 5.3%, sequentially and increased $32.1 million, or 4.2%, year-over-year.  The decrease in client deposits from the sequential quarter was driven by the timing of farmer milk check deposits in December 2019, as well as overall declines in money market account balances across all product lines.

During the first quarter of 2020, the Company took advantage of the Federal Reserve Bank’s interest rate cuts and increased borrowings from FHLB by $65.0 million, with an average rate of 0.77%.  The Company’s overall focus remains on funding loan growth with client deposits; however, these borrowings help reduce interest rate risk and our lower cost of funds.  Due to the increases in loan participations and client deposit growth discussed above, the Company decreased its dependence on brokered deposits and national certificates of deposit to $228.3 million at March 31, 2020.  This represents a decrease of $188.5 million, or 45.2%, from March 31, 2019.   

Net Interest Income and Margin

  • Net interest margin decreased both sequentially and year-over-year, due to actions taken by the Federal Reserve Bank related to COVID-19 during the first quarter of 2020 and the resulting decrease in rates across the yield curve.
  • Interest income on investment securities increased in the linked quarter, due to shifting balances from interest-bearing deposits with banks to investment securities.
  • Loan interest income decreased in the both linked and year-over-year periods as a result of the previously mentioned shift from loans held on balance sheet to loans sold and serviced.
  • Interest expense on savings, NOW, money market, and interest checking accounts decreased despite the increase in average balance both in the linked quarter and year-over year due to the market driven drop in interest rates which contributed to an overall lower cost of funds.
  • Interest expense on time deposits decreased in the linked quarter due to the Company’s continued focus on shifting away from brokered time deposit balances for funding. Year-over-year, time deposits also decreased due to the Company’s shift away from wholesale funding.
  • Interest expense on FHLB advances increased in the linked quarter due to the overall increase in volume this quarter as FHLB advance rates were more competitive than other forms of wholesale funding. Year-over-year, FHLB advances interest expense decreased due to the Company’s shift away from wholesale funding.

The table below presents the effects of changing rates and volumes on net interest income for the periods indicated.

  Three Months Ended March 31, 2020 v.
Three Months Ended December 31, 2019
  Three Months Ended March 31, 2020 v.
Three Months Ended March 31, 2019
 
  Increase (Decrease)
Due to Change in Average
  Increase (Decrease)
Due to Change in Average
 
  Volume  Rate  Net  Volume  Rate  Net 
  (dollars in thousands) 
Interest Income:                        
Investment securities $239  $(57) $182  $24  $(96) $(72)
Loans  (415)  (694)  (1,109)  (2,211)  (708)  (2,919)
Federal funds sold and
  interest-bearing
  deposits with banks
  (150)  (67)  (217)  (144)  104   (40)
Total interest income  (326)  (818)  (1,144)  (2,331)  (700)  (3,031)
Interest Expense:                        
Savings, NOW, money market
  and interest checking
 $35  $(137) $(102) $188  $(599) $(411)
Time deposits  (264)  (68)  (332)  (1,135)  469   (666)
Other borrowings  3   (1)  2   (1)  1   - 
FHLB advances  39   (22)  17   (157)  (63)  (220)
Junior subordinated
  debentures
     11   11   4   24   28 
Total interest expense $(187) $(217) $(404) $(1,101) $(168) $(1,269)
Net interest income $(139) $(601) $(740) $(1,230) $(532) $(1,762)

The following tables set forth average balance sheets, average yields and rates, and income and expenses for the period indicated.

  For the Three Months Ended 
  March 31, 2020  December 31, 2019  March 31, 2019 
  Average
Balance (1)
  Income/
Expense
 Yields/
Rates
  Average
Balance (1)
  Income/
Expense
 Yields/
Rates
  Average
Balance (1)
  Income/
Expense
 Yields/
Rates
 
  (dollars in thousands) 
Assets                              
Investment securities $196,353  $1,289 2.63% $159,202  $1,106 2.78% $192,963  $1,361 2.82%
Loans (2)  1,028,637   12,582 4.89%  1,061,432   13,691 5.16%  1,207,240   15,501 5.14%
Interest bearing deposits due from
  other banks
  60,825   225 1.48%  98,848   441 1.79%  36,227   264 2.91%
Total interest-earning assets $1,285,815  $14,096 4.39% $1,319,482  $15,238 4.62% $1,436,430  $17,126 4.77%
Allowance for loan losses  (15,330)        (14,868)        (17,005)      
Other assets  84,461         77,934         78,654       
  Total assets $1,354,946        $1,382,548        $1,498,079       
                               
Liabilities                              
Savings, NOW, money market,
  interest checking
 $334,740  $774 0.92% $322,629  $876 1.09% $295,418  $1,184 1.60%
Time deposits  613,753   3,574 2.33%  658,864   3,905 2.37%  797,476   4,240 2.13%
Total interest-bearing deposits $948,493  $4,348 1.83% $981,493  $4,781 1.95% $1,092,894  $5,424 1.99%
Other borrowings  1,259   11 3.49%  799   9 4.60%  844   11 5.27%
FHLB advances  56,708   233 1.65%  44,400   216 1.95%  92,900   453 1.95%
Junior subordinated debentures  44,871   706 6.29%  44,839   694 6.19%  44,606   678 6.08%
Total interest-bearing liabilities $1,051,331  $5,298 2.02% $1,071,531  $5,700 2.13% $1,231,244  $6,566 2.13%
Non-interest bearing deposits  113,351         123,541         101,532       
Other liabilities  16,877         16,749         11,362       
  Total liabilities $1,181,559        $1,211,821        $1,344,138       
                               
Shareholders' equity  173,387         170,727         153,941       
  Total liabilities and equity $1,354,946        $1,382,548        $1,498,079       
                               
Net interest income     $8,798        $9,538        $10,560   
Interest rate spread (3)        2.37%        2.49%        2.64%
Net interest margin (4)        2.74%        2.89%        2.94%
Ratio of interest-earning assets to
  interest-bearing liabilities
  1.22         1.23         1.17       
  1. Average balances are calculated on amortized cost.
  2. Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
  3. Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
  4. Net interest margin represents net interest income divided by average total interest-earning assets.

Non-Interest Income

  • Loan servicing income increased in the linked quarter due to a 0.02% increase in loan servicing fees income spread during Q1 2020. Year-over-year, loan servicing fees increased due to a 0.07% increase in loan servicing fee spread and an increase in loans serviced.
  • Loan servicing right origination income decreased in the linked quarter due to the decreases in loans sold and serviced; however, the loan servicing rights as a percent of loans serviced increased by 4.6% due to our election to switch to fair value accounting versus amortized cost to better reflect shareholder value and the value of future revenue streams.
  • Other income decreased year-over-year due to a reduction of the allowance for unused commitments of $0.5 million during Q1 2019.  
  For the Three Months Ended 
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands) 
  Non-Interest Income                    
Service charges $342  $549  $348  $407  $353 
Gain (loss) on sale of loans, net  38   34   87   26   (1)
Loan servicing fees  1,831   1,778   1,677   1,563   1,519 
Loan servicing right origination  289   1,146   1,741   346   228 
Income on OREO     54   10   40   26 
Gain on sale of securities           341    
Other  203   161   171   164   625 
Total non-interest income $2,703  $3,722  $4,034  $2,887  $2,750 


  For the Three Months Ended 
  March 31, 2020  December 31, 2019  September 30, 2019  June 30, 2019  March 31, 2019 
  (dollars in thousands) 
Loan servicing rights, beginning of period $12,509  $11,362  $9,621  $9,275  $9,047 
  Changes in loan servicing rights:                    
  Additions related to new loans  505   1,812   2,276   843   621 
  Impairment due to prepayment  (142)  (296)  (198)  (190)  (73)
  Amortization of existing asset  (73)  (632)  (584)  (554)  (550)
  Reduction of valuation allowance     263   247   247   230 
  Addition due to change in accounting principle  3,412             
  Total loan servicing right origination income  3,702   1,147   1,741   346   228 
Loan servicing rights, end of period $16,211  $12,509  $11,362  $9,621  $9,275 
Loans serviced, end of period  747,553   751,738   736,823   695,629   675,268 
Loan servicing rights as a % of loans serviced  2.17%  1.66%  1.54%  1.38%  1.37%
                     
  Total loan servicing fees $1,831  $1,778  $1,677  $1,563  $1,519 
Average loans serviced  749,646   744,281   716,226   685,449   668,263 
Annualized loan servicing fees as a
  % of average loans serviced
  0.98%  0.96%  0.94%  0.91%  0.91%

Non-Interest Expense

  • The write down of OREO in Q1 2020 was the result of an updated appraisal on a retail shopping center.
  • The goodwill impairment in Q1 2020 was due to the anticipated reduction in future earnings and a decrease in bank trading multiples resulting from COVID-19.
  • The decrease in employee compensation and benefits expense in the linked quarter was the result of higher incentive compensation expense during Q4 2019.
  • The year-over-year increase in employee compensation and benefits expense was the result of a 5.1% increase in headcount and a $0.3 million increase in payroll taxes and options expense related to the 2019 incentive compensation that was paid during the first quarter of 2020.
  • The decrease in other non-interest expense in the linked quarter is the result of an impairment that was recognized in Q4 2019 for an investment in a historical tax credit project that did not recur in Q1 2020.
  For the Three Months Ended 
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands, except per share data) 
  Non-Interest Expense                    
Employee compensation and
  benefits
 $5,260  $5,696  $4,735  $4,199  $4,482 
Occupancy  354   417   313   283   389 
Information processing  670   645   683   591   563 
Professional fees  401   371   483   417   399 
Business development  366   335   351   347   325 
OREO expenses  116   59   57   121   51 
  Writedown of OREO  1,360   376      250    
  Net loss (gain) on sale of OREO  4   (231)  160   9   (136)
  Depreciation and amortization  301   319   319   328   337 
  Goodwill impairment  5,038             
Other  1,148   2,278   567   901   895 
Total non-interest expense $15,018  $10,265  $7,668  $7,446  $7,305 

Asset Quality

  • The decrease in substandard loans and the adverse classified asset ratio in the linked quarter were primarily due to the improved milk prices in 2019 and 2020 prior to the COVID-19 pandemic which caused the average 12-month future price of Class III milk to drop by 17.8% on the Chicago Mercantile Exchange from December 31, 2019 to March 31, 2020. 
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands) 
Loans by risk category(1):                    
  Sound/Acceptable/Satisfactory/
  Low Satisfactory
 $706,247  $724,444  $771,567  $837,094  $896,933 
  Watch  219,459   216,098   202,615   175,995   180,419 
  Special Mention  15,036   9,239   9,346   25,254   4,501 
  Substandard Performing  34,179   49,774   71,133   83,992   70,060 
  Substandard Impaired  37,515   36,218   26,106   25,497   31,050 
  Total loans $1,012,436  $1,035,773  $1,080,767  $1,147,832  $1,182,963 
Adverse classified asset ratio (2)  32.35%  39.85%  45.67%  53.21%  48.59%

(1)     Troubled debt restructurings are presented in their internal risk rating category rather than reclassified to substandard impaired.  Prior quarters have been reclassified to reflect this change.

(2)   This is a non-GAAP financial measure.  A reconciliation to GAAP is included at the end of this earnings release.

Non-Performing Assets

  • Non-performing assets decreased in the linked quarter by $1.2 million. Year-over-year, non-performing assets increased due to a $7.8 million increase in non-accrual agricultural loans, which was partially offset by a $1.6 million improvement in commercial non-accrual loans and a $1.8 million decrease in OREO properties.
  • A provision for loan losses of $2.2 million was recorded for the three months ended March 31, 2020 compared to a provision of $0.8 million for the three months ended March 31, 2019.  The increase in provision is the result of the additional qualitative factor of $2.0 million related to customers that are at a higher risk of being impacted by COVID-19 based on the information currently known.  We will continue to evaluate the impact of COVID-19 and the unprecedented Federal support of small businesses as we estimate provisions in future periods.
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands) 
Non-Performing Assets:                    
  Nonaccrual loans $32,051  $30,968  $20,776  $20,096  $25,880 
  Other real estate owned  3,247   5,521   7,252   8,693   5,019 
  Total non-performing assets $35,298  $36,489  $28,028  $28,789  $30,899 
                     
   Performing TDRs not on
  nonaccrual
 $21,853  $21,784  $28,520  $28,892  $21,111 
                     
Non-performing assets as a % of total
  loans
  3.49%  3.52%  2.59%  2.51%  2.61%
Non-performing assets as a % of total
  assets
  2.61%  2.65%  1.98%  1.94%  2.07%
Allowance for loan losses as a % of
  total loans
  1.73%  1.47%  1.39%  1.42%  1.48%
Net charge-offs (recoveries) quarter-
  to-date
 $(62) $(253) $39  $2,111  $(236)

Conference Call

The Company will host an earnings call tomorrow, May 1, 2020, at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President, and Glen L. Stiteley, CFO.  The earnings call will be broadcast over the Internet on the Company’s website at Investors.ICBK.com.  In addition, you may listen to the Company’s earnings call via telephone by dialing (844) 835-9984.  Investors should visit the Company’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.  

A replay of the earnings call will be available until May 1, 2021, by visiting the Company’s website at Investors.ICBK.com/QuarterlyResults.

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and its wholly-owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin.  The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches it has developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending.  It also serves business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin.  Its customers are served from its full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and its loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

Forward-Looking Statements

This press release includes "forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Investor Relations Contact
Glen L. Stiteley
EVP - CFO, Investors Community Bank
Phone: (920) 686-5658
Email: gstiteley@icbk.com     

County Bancorp, Inc.
Consolidated Financial Summary
(Unaudited)
 March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands, except per share data) 
Period-End Balance Sheet:                    
  Assets                    
  Cash and cash equivalents $21,545  $129,011  $120,845  $116,251  $62,426 
  Securities available for sale, at fair
  value
  246,148   158,733   154,962   158,561   192,210 
  Loans held for sale  14,388   2,151   4,192   7,448   2,750 
  Agricultural loans  642,066   659,725   673,742   713,602   722,107 
  Commercial loans  325,310   331,723   360,132   383,542   403,490 
  Multi-family real estate loans  42,198   41,070   43,487   46,683   52,974 
  Residential real estate loans  2,753   2,888   3,183   3,753   4,172 
  Installment and consumer other  109   367   223   252   220 
  Total loans  1,012,436   1,035,773   1,080,767   1,147,832   1,182,963 
  Allowance for loan losses  (17,547)  (15,267)  (15,065)  (16,258)  (17,493)
  Net loans  994,889   1,020,506   1,065,702   1,131,574   1,165,470 
  Other assets  78,004   68,378   69,263   70,812   68,532 
  Total Assets $1,354,974  $1,378,779  $1,414,964  $1,484,646  $1,491,388 
                     
  Liabilities and Shareholders' Equity                    
  Demand deposits $117,434  $138,489  $117,224  $111,022  $101,434 
  NOW accounts and interest checking  64,873   63,781   56,637   54,253   49,902 
  Savings  6,566   15,708   6,981   6,621   6,210 
  Money market accounts  237,889   242,539   248,608   239,337   225,975 
  Time deposits  364,930   375,100   388,759   387,899   376,034 
  Brokered deposits  161,882   166,340   206,474   256,475   269,917 
  National time deposits  66,386   99,485   118,070   149,570   146,805 
  Total deposits  1,019,960   1,101,442   1,142,753   1,205,177   1,176,277 
  FHLB advances  109,400   44,400   44,400   59,400   100,400 
  Subordinated debentures  44,896   44,858   44,820   44,781   44,742 
  Other liabilities  15,672   16,050   14,239   12,564   11,952 
  Total Liabilities  1,189,928   1,206,750   1,246,212   1,321,922   1,333,371 
                     
  Shareholders' equity  165,046   172,029   168,752   162,724   158,017 
  Total Liabilities and Shareholders'
  Equity
 $1,354,974  $1,378,779  $1,414,964  $1,484,646  $1,491,388 
                     
Stock Price Information:                    
  High - Quarter-to-date $27.19  $27.98  $20.99  $18.92  $19.69 
  Low - Quarter-to-date $13.55  $18.76  $16.80  $16.24  $16.74 
  Market price - Quarter-end $18.50  $25.63  $19.62  $17.09  $17.60 
  Book value per share $24.17  $24.32  $23.89  $23.03  $22.36 
  Tangible book value per share (1) $24.15  $23.58  $23.10  $22.23  $21.54 
  Common shares outstanding  6,496,790   6,734,132   6,727,908   6,717,908   6,709,254 

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

  For the Three Months Ended 
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands, except per share data) 
Selected Income Statement Data:                    
  Interest and Dividend Income                    
Loans, including fees  12,582  $13,691  $15,030  $15,484  $15,501 
Taxable securities  1,282   1,106   1,117   1,177   1,186 
Tax-exempt securities  6         82   175 
Federal funds sold and other  225   442   612   465   264 
Total interest and dividend
  income
  14,095   15,239   16,759   17,208   17,126 
                     
  Interest Expense                    
Deposits  4,347   4,781   5,574   5,678   5,424 
FHLB advances and other
  borrowed funds
  244   225   246   415   464 
Subordinated debentures  706   695   687   683   678 
Total interest expense  5,297   5,701   6,507   6,776   6,566 
Net interest income  8,798   9,538   10,252   10,432   10,560 
Provision for loan losses  2,218   (51)  (1,154)  876   752 
Net interest income after provision
  for loan losses
  6,580   9,589   11,406   9,556   9,808 
                     
  Non-Interest Income                    
Services charges  342   549   348   407   353 
Gain (loss) on sale of loans, net  38   34   87   26   (1)
Loan servicing fees  1,831   1,778   1,677   1,563   1,519 
Loan servicing right origination  289   1,146   1,741   346   228 
Income on OREO     54   10   40   26 
Gain on sale of securities           341    
Other  203   161   171   164   625 
Total non-interest income  2,703   3,722   4,034   2,887   2,750 
                     
  Non-Interest Expense                    
Employee compensation and
  benefits
  5,260   5,696   4,735   4,199   4,482 
Occupancy  354   417   313   283   389 
Information processing  670   645   683   591   563 
Professional fees  401   371   483   417   399 
Business development  366   335   351   347   325 
OREO expenses  116   59   57   121   51 
Writedown of OREO  1,360   376      250    
Net loss (gain) on sale of OREO  4   (231)  160   9   (136)
Depreciation and amortization  301   319   319   328   337 
Goodwill impairment  5,038             
Other  1,148   2,278   567   901   895 
Total non-interest expense  15,018   10,265   7,668   7,446   7,305 
  Income before income taxes  (5,735)  3,046   7,772   4,997   5,253 
Income tax expense  (547)  (258)  2,090   1,293   1,491 
  NET INCOME $(5,188) $3,304  $5,682  $3,704  $3,762 
                     
  Basic $(0.79) $0.47  $0.82  $0.53  $0.54 
  Diluted $(0.78) $0.47  $0.82  $0.53  $0.54 
  Dividends declared $0.07  $0.05  $0.05  $0.05  $0.05 


   For the Three Months Ended 
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands, except share data) 
Other Data:                    
  Return on average assets(1)  (1.53)%  0.96%  1.57%  1.00%  1.00%
  Return on average
  shareholders' equity(1)
  (11.97)%  7.74%  13.73%  9.24%  9.78%
  Return on average common
  shareholders' equity (1)(2)
  (12.81)%  7.83%  14.14%  9.41%  9.99%
  Efficiency ratio (1)(2)  74.92%  76.32%  52.55%  55.38%  55.91%
  Tangible common equity to
  tangible assets (2)
  11.58%  11.54%  11.03%  10.10%  9.73%
                     
Common Share Data:                    
  Net income from continuing
  operations
 $(5,188) $3,304  $5,682  $3,704  $3,762 
  Less:  Preferred stock
  dividends
  108   117   120   118   117 
  Income available to common
  shareholders
 $(5,296) $3,187  $5,562  $3,586  $3,645 
                     
  Weighted average number of
  common shares issued
  7,182,945   7,173,290   7,168,785   7,159,072   7,153,174 
  Less: Weighted average
  treasury shares
  518,740   443,920   443,920   443,920   443,729 
  Plus: Weighted average non-
  vested restricted stock units
  39,785   32,125   32,125   30,483   16,260 
  Weighted average number of
  common shares outstanding
  6,703,990   6,761,495   6,756,990   6,745,635   6,725,705 
  Effect of dilutive options  49,072   44,630   19,160   20,731   21,323 
  Weighted average number
  of common shares
  outstanding used to
   calculate diluted earnings
  per common share
  6,753,062   6,806,125   6,776,150   6,766,366   6,747,028 
  1. Annualized
  2. This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
   For the Three Months Ended 
Non-GAAP Financial
  Measures:
 March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands) 
Return on average common
  shareholders' equity
  reconciliation(1):
                    
  Return on average
  shareholders' equity
  (11.97)%  7.74%  13.73%  9.24%  9.78%
  Effect of excluding average
  preferred shareholders'
  equity
  (0.84)%  0.09%  0.41%  0.17%  0.21%
  Return on average common
  shareholders' equity
  (12.81)%  7.83%  14.14%  9.41%  9.99%
                     
Efficiency ratio GAAP to
  non-GAAP reconciliation(2):
                    
  Non-interest expense $15,018  $10,265  $7,668  $7,446  $7,305 
  Less: goodwill impairment  (5,038)            
  Less: net gain (loss) on sales
  and write-downs of OREO
  (1,364)  (145)  (160)  (259)  136 
  Adjusted non-interest
  expense (non-GAAP)
 $8,616  $10,120  $7,508  $7,187  $7,441 
                     
  Net interest income $8,798  $9,538  $10,252  $10,432  $10,560 
  Non-interest income  2,703   3,722   4,034   2,887   2,750 
  Less: net gain on sales of
  securities
           (341)   
  Operating revenue $11,501  $13,260  $14,286  $12,978  $13,310 
  Efficiency ratio  74.92%  76.32%  52.55%  55.38%  55.91%
  1. Management uses the return on average common shareholders’ equity in order to review our core operating results and our performance.
  2. In our judgment, the adjustments made to non-interest expense allow investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
Non-GAAP Financial
  Measures:
 March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
 
  (dollars in thousands, except per share data) 
Tangible book value per share and
  tangible common equity to tangible
  assets reconciliation(1):
                    
  Common equity $157,046  $164,029  $160,752  $154,724  $150,017 
  Less: Goodwill     5,038   5,038   5,038   5,038 
  Less: Core deposit intangible, net of
  amortization
  171   225   286   354   430 
  Tangible common equity
  (non-GAAP)
 $156,875  $158,766  $155,428  $149,332  $144,549 
  Common shares outstanding  6,496,790   6,734,132   6,727,908   6,717,908   6,709,254 
  Tangible book value per share $24.15  $23.58  $23.10  $22.23  $21.54 
                     
  Total assets $1,354,974  $1,378,779  $1,414,964  $1,484,646  $1,491,388 
  Less: Goodwill     5,038   5,038   5,038   5,038 
  Less: Core deposit intangible, net of
  amortization
  171   225   286   603   701 
  Tangible assets (non-GAAP) $1,354,803  $1,373,516  $1,409,640  $1,479,005  $1,485,649 
  Tangible common equity to tangible
  assets
  11.58%  11.56%  11.03%  10.10%  9.73%
                     
Adverse classified asset ratio(2):                    
  Substandard loans $71,694  $85,992  $97,239  $109,489  $101,110 
  Other real estate owned  3,247   5,521   7,252   8,693   5,019 
  Substandard unused commitments  2,840   2,849   991   1,458   976 
  Less: Substandard government
  guarantees
  (7,699)  (7,892)  (7,746)  (7,821)  (5,864)
  Total adverse classified assets
  (non-GAAP)
 $70,082  $86,470  $97,736  $111,819  $101,241 
                     
  Total equity (Bank) $204,089  $204,240  $201,967  $196,036  $191,287 
  Accumulated other comprehensive loss
  (gain) on available for sale securities
  (5,012)  (2,505)  (3,016)  (2,166)  (436)
  Allowance for loan losses  17,547   15,267   15,065   16,258   17,493 
  Adjusted total equity (non-GAAP) $216,624  $217,002  $214,016  $210,128  $208,344 
  Adverse classified asset ratio  32.35%  39.85%  45.67%  53.21%  48.59%
  1. In our judgment, the adjustments made to book value, equity and assets allow investors to better assess our capital adequacy and net worth by removing the effect of goodwill and intangible assets that are unrelated to our core business.
  2. The adjustments made to non-performing assets allow management to better assess asset quality and monitor the amount of capital coverage necessary for non-performing assets.    

 

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Source: County Bancorp, Inc.

Manitowoc Phone:
(920) 686-9998

Stevens Point Phone:
(715) 254-3400

Appleton Phone:
(920) 739-2660

Green Bay Phone:
(920) 884-1166