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 | |||||||||||||||||||||||||||
- Average balances are calculated on amortized cost.
- Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
- Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
- 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 | |||||||||||||||
- Annualized
- 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 | % | ||||||||||
- Management uses the return on average common shareholders’ equity in order to review our core operating results and our performance.
- 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 | % | ||||||||||
- 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.
- 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.