ICBK - County Bancorp Inc. Announces First Quarter Results

April, 30 2020 04:01 PM County Bancorp Inc.

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.

Company Name:	County Bancorp Inc.
Stock Symbol:	ICBK
Market:	NASDAQ
Website:	investorscommunitybank.com

Twitter