ICBK - County Bancorp Inc. Announces Fourth Quarter and Year-End 2020 Financial Results

January, 21 2021 04:01 PM County Bancorp Inc.

Strong execution and growing business momentum drive fourth quarter net income growth of 36% year-over-year Company enters 2021 from a position of strength and with a renewed focus on growth

Highlights

Net income of $4.5 million for the fourth quarter of 2020; $5.5 million for the year 2020
Diluted earnings per share of $0.70 for the fourth quarter of 2020; $0.79 for the year 2020
Loans sold with servicing retained increased $14.7 million since September 30, 2020 and $60.8 million since December 31, 2019
Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased $18.4 million during the fourth quarter of 2020 and by $80.4 million since December 31, 2019
Net interest margin for the fourth quarter of 2020 increased by 66 basis points to 3.06% compared to the sequential quarter and 17 basis points year-over-year
Cost of funds decreased by 10 basis points compared to the sequential quarter to 1.42%, a decrease of 71 basis points since December 31, 2019
Loans in payment deferral associated with COVID-19 customer support programs declined $83.7 million to $16.8 million, or 1.7%, of loans since September 30, 2020

MANITOWOC, Wis., Jan. 21, 2021 (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 financial results for the fourth quarter and year ended December 31, 2020. Net income was $4.5 million, or $0.70 per diluted share, for the fourth quarter of 2020, compared to net income of $3.3 million, or $0.47 per diluted share, for the fourth quarter of 2019. For the year ended December 31, 2020, net income was $5.5 million, or $0.79 per diluted share, compared to net income of $16.5 million, or $2.36 per diluted share, for the year ended December 31, 2019. The net income for the year ended December 31, 2020 included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share, in the first quarter of 2020. Excluding that charge, net income for the year ended December 31, 2020 would have been $10.1 million, or $1.56 per diluted share.

Tim Schneider, President of County Bancorp, Inc., noted, “I am very proud of what our team accomplished in a challenging year. We transformed the funding side of our balance sheet with 10% growth in client deposits and a 53% reduction in wholesale deposits in 2020. We continued to have strong growth in loans sold and serviced, which has expanded our noninterest income. Additionally, our adverse classified asset ratio improved in the quarter due to sales of OREO properties, and we saw payment deferrals associated with COVID-19 drop to less than 2% of total loans.”

Schneider continued, “As we look to 2021, improvements in milk prices continue to bolster our clients’ cash flows and we expect to see continued improvement in our overall credit metrics. Our strong performance through a challenging 2020 reinforces our faith in our long-term prospects and ability to grow our business, as evidenced by our repurchase of 570,842 shares of our common stock in 2020, including 107,437 shares during the fourth quarter. We believe we have the right strategy to maintain the momentum as we shift our attention to long-term growth in 2021. We look forward to partnering and growing with our commercial, agricultural and consumer customers in 2021 and beyond.”

Loans and Securities

Total loans decreased $79.6 million, or 7.4%, during the fourth quarter of 2020, to $1.0 billion, and decreased $39.5 million, or 3.8%, since December 31, 2019, primarily due to $60.6 million of Paycheck Protection Program (“PPP”) loans being forgiven by the Small Business Administration (“SBA”) during the fourth quarter of 2020. This represented 61.6% of PPP loans originated in 2020 and as of December 31, 2020, the Company had $37.8 million of PPP loans remaining in the loan portfolio, and $1.2 million of SBA origination fees were deferred on the balance sheet until the remaining loans are forgiven.
Loan participations the Company continued to service were $812.6 million as of December 31, 2020, an increase of $14.7 million, or 1.9%, compared to September 30, 2020, and an increase of $60.8 million, or 8.1%, compared to December 31, 2019.
As of December 31, 2020, there were 24 customer relationships with loans in payment deferral associated with COVID-19 customer support programs totaling $16.8 million, or 1.7% of total loans, which is a decrease of $83.7 million, or 83.3%, since September 30, 2020.
During the fourth quarter of 2020, investments increased by $54.4 million, or 18.2%, and increased $194.1 million, or 122.3%, since December 31, 2019. For the year ended December 31, 2020 purchases totaling $247.2 million were offset in part by $34.5 million in security sales and $25.7 million in maturities. Gain on sale of securities during 2020 was $0.7 million.

Deposits

Total deposits as of December 31, 2020 were $1.0 billion, a decrease of $9.3 million, or 0.9%, from September 30, 2020, and a decrease $60.6 million, or 5.5%, since December 31, 2019.
Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $18.4 million, or 2.1%, from September 30, 2020, to $916.0 million, and increased $80.4 million, or 9.6%, since December 31, 2019.
The Company continued to decrease its reliance on brokered deposits and national certificate of deposits by $27.8 million, or 18.2%, to $124.8 million during the fourth quarter of 2020, and decreased by $141.0 million, or 53.1%, since December 31, 2019.

Common Stock Share Repurchase

During the fourth quarter of 2020, the Company repurchased 107,437 shares of its common stock at a weighted average price of $22.64 per share.
For the year ended December 31, 2020, the Company repurchased 570,842 shares of its common stock at a weighted average price of $21.89 per share.

Net Interest Income and Margin

Net interest margin for the quarter ended December 31, 2020 was 3.06%, which was an increase of 66 basis points compared to the sequential quarter and an increase of 17 basis points year-over-year. The SBA PPP origination fees of $3.1 million that were recognized during the fourth quarter of 2020 in connection with the PPP loans that were forgiven accounted for 57 basis points of the total margin increase. The issuance of subordinated debt during 2020 adversely affected net interest margin by 4 and 38 basis points for the quarter ended December 31, 2020 compared to the quarters ended September 30, 2020 and December 31, 2019, respectively.
Interest income on investment securities increased $0.5 million and $0.9 million, quarter-to-quarter and year-over-year, respectively, due to shifting balances from interest-bearing deposits with banks to investment securities with higher yields.
Loan interest income (including fees) increased $1.1 million compared to the sequential quarter primarily due to the previously mentioned SBA PPP loan origination fees. Year-over-year, loan interest income decreased $1.0 million primarily due to lower yields on the previously mentioned PPP loans.
Interest expense on savings, NOW, money market, and interest checking accounts decreased, despite an increase in average balance, by 10 basis points in the sequential quarter and 73 basis points year-over year due to the market-driven drop in the federal funds rates.
Interest expense on time deposits decreased quarter-over-quarter due in part to the Company’s continued focus on decreasing reliance on time deposit balances for funding and a decline in the federal funds rate. Rates paid on time deposits decreased by 10 and 52 basis points in the sequential quarter and year-over-year, respectively, which also contributed to the overall decrease in the cost of funds.
The Company issued $22.4 million of subordinated debt during 2020 to strengthen the Company’s capital structure. The issuance resulted in an increase in interest expense on subordinated debt year of 38 basis points year-over-year.

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


Three Months Ended December 31, 2020 v. Three Months Ended September 30, 2020

Three Months Ended December 31, 2020 v. Three Months Ended December 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
$
405


$
79


$
484


$
990


$
(118
)

$
872

Loans

(438
)


1,581



1,143



(253
)


(701
)


(954
)
Federal funds sold and interest-bearing deposits with banks

(22
)


14



(8
)


(172
)


(260
)


(432
)
Total interest income

(55
)


1,674



1,619



565



(1,079
)


(514
)
Interest Expense:























Savings, NOW, money market and interest checking
$
18


$
(104
)

$
(86
)

$
422


$
(915
)

$
(493
)
Time deposits

(234
)


(111
)


(345
)


(1,071
)


(736
)


(1,807
)
Other borrowings

(35
)


(46
)


(81
)


69



(1
)


68

FHLB advances

27



(40
)


(13
)


95



(26
)


69

Junior subordinated debentures

19



6



25



368



45



413

Total interest expense
$
(205
)

$
(295
)

$
(500
)

$
(117
)

$
(1,633
)

$
(1,750
)
Net interest income
$
150


$
1,969


$
2,119


$
682


$
554


$
1,236

The following table sets forth average balances, average yields and rates, and income and expenses for the periods indicated.


For the Three Months Ended

December 31, 2020

September 30, 2020

December 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
$
322,706


$
1,978

2.44
%

$
256,059


$
1,494

2.32
%

$
159,202


$
1,106

2.78
%
Loans ⁽²⁾

1,040,080



12,737

4.87
%


1,083,383



11,594

4.26
%


1,061,432



13,691

5.16
%
Interest bearing deposits due from other banks

37,385



10

0.11
%


92,701



18

0.08
%


98,848



441

1.79
%
Total interest-earning assets
$
1,400,171


$
14,725

4.18
%

$
1,432,143


$
13,106

3.64
%

$
1,319,482


$
15,238

4.62
%
Allowance for loan losses

(18,535
)








(18,641
)








(14,868
)






Other assets

87,785









86,109









77,934







Total assets
$
1,469,421








$
1,499,611








$
1,382,548





































Liabilities





























Savings, NOW, money market, interest checking
$
421,969


$
383

0.36
%

$
406,888


$
469

0.46
%

$
322,629


$
876

1.09
%
Time deposits

450,193



2,099

1.85
%


499,665



2,444

1.95
%


658,864



3,905

2.37
%
Total interest-bearing deposits
$
872,162


$
2,482

1.13
%

$
906,553


$
2,913

1.28
%

$
981,493


$
4,781

1.95
%
Other borrowings

75,341



77

0.41
%


101,829



158

0.62
%


799



9

4.60
%
FHLB advances

96,191



285

1.18
%


89,622



298

1.32
%


44,400



216

1.94
%
Junior subordinated debentures

67,055



1,107

6.57
%


65,903



1,082

6.53
%


44,839



694

6.19
%
Total interest-bearing liabilities
$
1,110,749


$
3,951

1.42
%

$
1,163,907


$
4,451

1.52
%

$
1,071,531


$
5,700

2.13
%
Non-interest-bearing deposits

168,765









147,595









123,541







Other liabilities

18,758









18,314









16,749







Total liabilities
$
1,298,272








$
1,329,816








$
1,211,821





































Shareholders' equity

171,149









169,795









170,727







Total liabilities and equity
$
1,469,421








$
1,499,611








$
1,382,548





































Net interest income




$
10,774








$
8,655








$
9,538



Interest rate spread ⁽³⁾







2.76
%








2.12
%








2.49
%
Net interest margin ⁽⁴⁾







3.06
%








2.40
%








2.89
%
Ratio of interest-earning assets to interest-bearing liabilities

1.26









1.23









1.23

(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 fees decreased quarter-over-quarter primarily due a decrease servicing income spread. Loan servicing fees as a percent of average loans serviced decreased seven basis points in the fourth quarter. Year-over-year, loan servicing fees increased due primarily to a two basis point increase in loan servicing fees as a percent of average loans serviced and an increase in loans serviced.
Loan servicing right origination increased quarter-over-quarter and year-over-year. The increase quarter-over-quarter was primarily due to the $14.7 million increase in loans sold. Loan servicing rights as a percent of loans serviced increased to 2.26% at December 31, 2020 from 2.16% at September 30, 2020. The year-over-year increase from 1.66% of loan servicing rights as a percent of loans serviced at December 31, 2019 was due in part to loans being recorded at fair value in 2020 versus amortized cost in 2019.


For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019











(dollars in thousands)
Non-Interest Income














Service charges
$
108

$
108

$
139

$
113

$
117
Crop insurance commission

517


271


229


229


432
Gain on sale of loans, net

219


17


4


38


34
Loan servicing fees

1,974


2,054


1,923


1,831


1,778
Loan servicing right origination

1,193


717


275


289


1,146
Income on OREO

—


—


3


—


54
Gain on sale of securities

—


101


570


—


—
Referral fees

64


110


121


17


20
Other

283


294


237


203


161
Total non-interest income
$
4,358

$
3,672

$
3,501

$
2,720

$
3,742


For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019
















(dollars in thousands)

Loan servicing rights, end of period
$
18,396


$
17,203


$
16,486


$
16,211


$
12,509

Loans serviced, end of period

812,560



797,819



762,058



747,553



751,738

Loan servicing rights as a % of loans serviced

2.26
%


2.16
%


2.16
%


2.17
%


1.66
%




















Total loan servicing fees
$
1,974


$
2,054


$
1,923


$
1,831


$
1,778

Average loans serviced

805,190



779,939



754,806



749,646



744,281

Annualized loan servicing fees as a % of average loans serviced

0.98
%


1.05
%


1.02
%


0.98
%


0.96
%

Non-Interest Expense

The increase in employee compensation and benefits expense of $1.9 million in the fourth quarter of 2020 compared to the prior quarter was primarily the result of an additional accrual of $1.6 million for incentive compensation related to 2020 financial results. The $2.2 million increase for the year ended December 31, 2020 compared to the prior year was primarily the result of a 13.9% increase in headcount.
During the fourth quarter of 2020, three properties in other real estate owned totaling $2.0 million were sold for a gain of $0.3 million. During 2020, six properties in other real estate owned totaling $3.5 million were sold for a gain of $0.3 million.


For the Three Months Ended


December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019













(dollars in thousands, except per share data)

Non-Interest Expense
















Employee compensation and benefits
$
6,687


$
4,766

$
4,594

$
5,260

$
5,696

Occupancy

297



321


305


354


417

Information processing

656



641


663


670


645

Professional fees

582



555


480


401


371

Business development

136



305


333


366


335

OREO expenses

20



47


44


116


59

Writedown of OREO

148



—


—


1,360


376

Net loss (gain) on sale of OREO

(326
)


9


—


4


(231
)
Depreciation and amortization

289



295


303


301


319

Goodwill impairment

—



—


—


5,038


—

Other

1,005



728


743


1,148


2,278

Total non-interest expense
$
9,494


$
7,667

$
7,465

$
15,018

$
10,265

Asset Quality

The decrease in substandard loans and the adverse classified asset ratio in the quarter were primarily due to the charge-off of $3.4 million of commercial loans.


December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019
















(dollars in thousands)

Loans by risk category ⁽¹⁾ :



















Sound/Acceptable/Satisfactory/Low Satisfactory
$
716,313


$
800,451


$
798,945


$
706,247


$
724,444

Watch

190,101



185,254



198,044



219,459



216,098

Special Mention

2,501



1,851



1,856



15,036



9,239

Substandard Performing

40,420



41,577



47,741



34,179



49,774

Substandard Impaired

46,950



46,793



40,938



37,515



36,218

Total loans
$
996,285


$
1,075,926


$
1,087,524


$
1,012,436


$
1,035,773

Adverse classified asset ratio ⁽²⁾

39.43
%


42.64
%


41.73
%


32.35
%


39.85
%

(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

A recovery of loan loss provisions of $0.5 million was recorded for the three months ended December 31, 2020 compared to a provision of $0.1 million for the three months ended September 30, 2020. The decrease in the provision relative to the previous quarter was driven by a reduction of qualitative risk factors related to industries at risk due to COVID-19, which was partially offset by general reserve increases due to actual loss rates incurred.
Non-performing assets decreased in the quarter by $1.7 million, or 3.9%, sequentially compared to the third quarter of 2020. Year-over-year, non-performing assets increased $6.2 million, or 17.0%, due to a $8.7 million increase in non-accrual agricultural loans from one customer and a $2.0 million increase in non-accrual commercial loans, which were partially offset by a $4.4 million decrease in OREO properties.


December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019











(dollars in thousands)

Non-Performing Assets:



















Nonaccrual loans
$
41,624


$
41,351


$
35,456


$
32,051


$
30,968

Other real estate owned

1,077



3,064



2,629



3,247



5,521

Total non-performing assets
$
42,701


$
44,415


$
38,085


$
35,298


$
36,489





















Performing TDRs not on nonaccrual
$
18,592


$
19,036


$
21,986


$
21,853


$
21,784





















Non-performing assets as a % of total loans

4.29
%


4.13
%


3.50
%


3.49
%


3.52
%
Non-performing assets as a % of total assets

2.90
%


2.98
%


2.52
%


2.61
%


2.65
%
Allowance for loan losses as a % of total loans

1.49
%


1.73
%


1.71
%


1.73
%


1.47
%
Net charge-offs (recoveries) quarter-to-date
$
3,386


$
(1
)

$
120


$
(62
)

$
(253
)

Conference Call

The Company will host an earnings call tomorrow, January 22, 2021 at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President; Glen L. Stiteley, Chief Financial Officer; David C. Coggins, Chief Banking Officer; John R. Fillingim, Chief Credit Officer; and Matthew R. Lemke, Chief Retail and Deposit Officer. 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 January 22, 2022, 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 Stat e m ents

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, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as, any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic. 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)
December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019











(dollars in thousands, except per share data)

Period-End Balance Sheet:



















Assets



















Cash and cash equivalents
$
19,500


$
53,283


$
127,432


$
21,545


$
129,011

Securities available-for-sale, at fair value

352,854



298,476



226,971



246,148



158,733

Loans held for sale

35,976



2,593



11,847



14,388



2,151

Agricultural loans

606,881



619,617



624,340



642,066



659,725

Commercial loans

313,265



317,782



328,368



325,310



331,723

Paycheck Protection Plan loans

37,790



98,421



103,317



—



—

Multi-family real estate loans

33,457



35,496



30,439



42,198



41,070

Residential real estate loans

4,627



4,489



975



2,753



2,888

Installment and consumer other

265



121



85



109



367

Total loans

996,285



1,075,926



1,087,524



1,012,436



1,035,773

Allowance for loan losses

(14,808
)


(18,649
)


(18,569
)


(17,547
)


(15,267
)
Net loans

981,477



1,057,277



1,068,955



994,889



1,020,506

Other assets

82,551



80,426



78,712



78,004



68,378

Total Assets
$
1,472,358


$
1,492,055


$
1,513,917


$
1,354,974


$
1,378,779





















Liabilities and Shareholders' Equity



















Demand deposits
$
163,202


$
158,798


$
149,963


$
117,434


$
138,489

NOW accounts and interest checking

96,624



78,026



81,656



64,873



63,781

Savings

7,367



11,900



8,369



6,566



15,708

Money market accounts

344,250



325,900



307,083



237,889



242,539

Time deposits

304,580



322,992



346,482



364,930



375,100

Brokered deposits

80,456



101,808



121,503



161,882



166,340

National time deposits

44,347



50,747



57,997



66,386



99,485

Total deposits

1,040,826



1,050,171



1,073,053



1,019,960



1,101,442

Federal Reserve Discount Window advances

47,531



99,693



99,693



—



—

FHLB advances

129,000



84,600



93,400



109,400



44,400

Subordinated debentures

67,111



67,025



61,910



44,896



44,858

Other liabilities

16,114



20,656



17,336



15,672



16,050

Total Liabilities

1,300,582



1,322,145



1,345,392



1,189,928



1,206,750





















Shareholders' equity

171,776



169,910



168,525



165,046



172,029

? Total Liabilities and Shareholders' Equity
$
1,472,358


$
1,492,055


$
1,513,917


$
1,354,974


$
1,378,779





















Stock Price Information:



















High - Quarter-to-date
$
23.72


$
22.00


$
24.67


$
27.19


$
27.98

Low - Quarter-to-date
$
18.20


$
17.04


$
17.13


$
13.55


$
18.76

Market price - Quarter-end
$
22.08


$
18.80


$
20.93


$
18.50


$
25.63

Book value per share
$
26.42


$
25.72


$
25.18


$
24.17


$
24.32

Tangible book value per share ⁽¹⁾
$
26.42


$
25.71


$
25.16


$
24.15


$
23.58

Common shares outstanding

6,197,965



6,294,675



6,375,150



6,496,790



6,734,132

(1)

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


For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019














(dollars in thousands, except per share data)

Selected Income Statement Data:

















Interest and Dividend Income

















Loans, including fees ⁽¹⁾
$
12,737


$
11,594

$
12,009

$
12,565


$
13,671

Taxable securities

1,777



1,293


1,283


1,282



1,106

Tax-exempt securities

201



167


162


6



—

Federal funds sold and other

10



52


111


225



442

Total interest and dividend income

14,725



13,106


13,565


14,078



15,219



















Interest Expense

















Deposits

2,482



2,914


3,721


4,347



4,781

FHLB advances and other borrowed funds

362



456


343


244



225

Subordinated debentures

1,107



1,082


736


706



695

Total interest expense

3,951



4,452


4,800


5,297



5,701

Net interest income

10,774



8,654


8,765


8,781



9,518

Provision for loan losses

(455
)


79


1,142


2,218



(51
)
Net interest income after provision for loan losses

11,229



8,575


7,623


6,563



9,569



















Non-Interest Income

















Services charges

108



108


139


113



117

Crop insurance commission

517



271


229


229



432

Gain on sale of loans, net

219



17


4


38



34

Loan servicing fees

1,974



2,054


1,923


1,831



1,778

Loan servicing right origination

1,193



717


275


289



1,146

Income on OREO

—



—


3


—



54

Gain on sale of securities

—



101


570


—



—

Referral fees

64



110


121


17



20

Other

283



294


237


203



161

Total non-interest income

4,358



3,672


3,501


2,720



3,742



















Non-Interest Expense

















Employee compensation and benefits

6,687



4,766


4,594


5,260



5,696

Occupancy

297



321


305


354



417

Information processing

656



641


663


670



645

Professional fees

582



555


480


401



371

Business development

136



305


333


366



335

OREO expenses

20



47


44


116



59

Writedown of OREO

148



—


—


1,360



376

Net loss (gain) on sale of OREO

(326
)


9


—


4



(231
)
Depreciation and amortization

289



295


303


301



319

Goodwill impairment

—



—


—


5,038



—

Other

1,005



728


743


1,148



2,278

Total non-interest expense

9,494



7,667


7,465


15,018



10,265

Income before income taxes

6,093



4,580


3,659


(5,735
)


3,046

Income tax expense (benefit)

1,575



1,164


926


(547
)


(258
)
NET INCOME (LOSS)
$
4,518


$
3,416

$
2,733

$
(5,188
)

$
3,304



















Basic earnings (loss) per share
$
0.70


$
0.52

$
0.40

$
(0.79
)

$
0.47

Diluted earnings (loss) per share
$
0.70


$
0.52

$
0.40

$
(0.78
)

$
0.47

Dividends declared per share
$
0.10


$
0.07

$
0.07

$
0.07


$
0.05

(1)

Referral fees in prior quarters reclassed to non-interest income to match current classification


For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

(dollars in thousands, except share data)

Other Data:



















Return on average assets ⁽¹⁾

1.23
%


0.91
%


0.74
%


(1.53
)%


0.96
%
Return on average shareholders' equity ⁽¹⁾

10.56
%


8.05
%


6.55
%


(11.97
)%


7.74
%
Return on average common shareholders' equity ⁽¹⁾⁽²⁾

10.88
%


8.25
%


6.63
%


(12.81
)%


7.83
%
Efficiency ratio ⁽¹⁾⁽²⁾

63.92
%


62.64
%


63.83
%


74.92
%


67.65
%
Equity to assets ratio

11.67
%


11.39
%


11.13
%


12.18
%


12.48
%
Tangible common equity to tangible assets ⁽²⁾

11.12
%


10.85
%


10.60
%


11.58
%


11.56
%




















Common Share Data:



















Net income from continuing operations
$
4,518


$
3,416


$
2,733


$
(5,188
)

$
3,304

Less: Preferred stock dividends

80



80



99



108



117

Income available to common shareholders
$
4,438


$
3,336


$
2,634


$
(5,296
)

$
3,187





















Weighted average number of common shares issued

7,206,238



7,202,000



7,198,901



7,182,945



7,173,290

Less: Weighted average treasury shares

957,573



882,153



759,294



518,740



443,920

Plus: Weighted average non-vested restricted stock units

67,529



66,492



65,291



39,785



32,125

Weighted average number of common shares outstanding

6,316,194



6,386,339



6,504,898



6,703,990



6,761,495

Effect of dilutive options

28,025



20,915



28,511



49,072



44,630

Weighted average number of common shares outstanding used to calculate diluted earnings per common share

6,344,219



6,407,254



6,533,409



6,753,062



6,806,125

(1)

Annualized

(2)

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

Non-GAAP Financial Measures:


For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019











(dollars in thousands)

Return on average common shareholders' equity reconciliation ⁽¹⁾ :



















Return on average shareholders' equity

10.56
%


8.05
%


6.55
%


(11.97
)%


7.74
%
Effect of excluding average preferred shareholders' equity

0.32
%


0.20
%


0.08
%


(0.84
)%


0.09
%
Return on average common shareholders' equity

10.88
%


8.25
%


6.63
%


(12.81
)%


7.83
%




















Efficiency ratio ⁽²⁾ :



















Non-interest expense
$
9,494


$
7,667


$
7,465


$
15,018


$
10,265

Less: goodwill impairment

—



—



—



(5,038
)


—

Less: historical tax credit investment impairment

—



—



—



—



(1,149
)
Less: net loss on sales and write-downs of OREO

178



(9
)


—



(1,364
)


(145
)
Adjusted non-interest expense (non-GAAP)
$
9,672


$
7,658


$
7,465


$
8,616


$
8,971





















Net interest income
$
10,774


$
8,654


$
8,765


$
8,781


$
9,518

Non-interest income

4,358



3,672



3,501



2,720



3,742

Less: net gain on sales of securities

—



(101
)


(570
)


—



—

Operating revenue
$
15,132


$
12,225


$
11,696


$
11,501


$
13,260

Efficiency ratio

63.92
%


62.64
%


63.83
%


74.92
%


67.65
%


For the Three Months Ended

For the Year Ended





December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019









(dollars in thousands, except per share data)

Adjusted diluted earnings per share ⁽³⁾ :















Net income from continuing operations
$
4,518


$
3,304


$
5,478


$
16,452

Less: preferred stock dividends

(80
)


(117
)


(367
)


(472
)
Plus: goodwill impairment

—



—



5,038



—

Adjusted income available to common shareholders for basic earnings per common share
$
4,438


$
3,187


$
10,149


$
15,980

















Weighted average number of common shares outstanding

6,316,194



6,761,495



6,477,173



6,747,581

Effect of dilutive options

28,025



44,630



28,025



21,344

Weighted average number of common shares outstanding used to calculate diluted earnings per common share

6,344,219



6,806,125



6,505,198



6,768,925

















Adjusted diluted earnings per share
$
0.70


$
0.47


$
1.56


$
2.36

(1)

Management uses the return on average common shareholders’ equity 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.

(3)

In our judgment, the adjustment made to diluted earnings per share allows investors to better assess our income related to core operations by removing the volatility associated with the goodwill impairment, which was a one-time, non-cash expense.

Non-GAAP Financial Measures (continued):


December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 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
$
163,776


$
161,910


$
160,525


$
157,046


$
164,029

Less: Goodwill

—



—



—



—



5,038

Less: Core deposit intangible, net of amortization

54



86



125



171



225

Tangible common equity (non-GAAP)
$
163,722


$
161,824


$
160,400


$
156,875


$
158,766

Common shares outstanding

6,197,965



6,294,675



6,375,150



6,496,790



6,734,132

Tangible book value per share
$
26.42


$
25.71


$
25.16


$
24.15


$
23.58





















Total assets
$
1,472,358


$
1,492,055


$
1,513,917


$
1,354,974


$
1,378,779

Less: Goodwill

—



—



—



—



5,038

Less: Core deposit intangible, net of amortization

54



86



125



171



225

Tangible assets (non-GAAP)
$
1,472,304


$
1,491,969


$
1,513,792


$
1,354,803


$
1,373,516

Tangible common equity to tangible assets

11.12
%


10.85
%


10.60
%


11.58
%


11.56
%




















Adverse classified asset ratio ⁽²⁾ :



















Substandard loans
$
87,370


$
88,370


$
88,680


$
71,694


$
85,992

Other real estate owned

1,077



3,064



2,629



3,247



5,521

Substandard unused commitments

4,049



5,124



3,230



2,840



2,849

Less: Substandard government guarantees

(8,960
)


(7,002
)


(6,336
)


(7,699
)


(7,892
)
Total adverse classified assets (non-GAAP)
$
83,536


$
89,556


$
88,203


$
70,082


$
86,470





















Total equity (Bank)
$
205,743


$
200,011


$
201,507


$
204,089


$
204,240

Accumulated other comprehensive loss (gain) on available for sale securities

(8,686
)


(8,640
)


(8,734
)


(5,012
)


(2,505
)
Allowance for loan losses

14,808



18,649



18,569



17,547



15,267

Adjusted total equity (non-GAAP)
$
211,865


$
210,020


$
211,342


$
216,624


$
217,002

Adverse classified asset ratio

39.43
%


42.64
%


41.73
%


32.35
%


39.85
%

(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.

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

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