ICBK - County Bancorp Inc. Announces Fourth Quarter Results and Record Net Income for the Year 2019

January, 23 2020 04:01 PM County Bancorp Inc.

Highlights

Net income of $3.3 million for the fourth quarter of 2019; $16.5 million for the year 2019
Diluted earnings per share of $0.47 for the fourth quarter of 2019; $2.36 for the year 2019
Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased $17.4 million, or 2.1%, since September 30, 2019, and increased $81.2 million, or 10.8%, since December 31, 2018
Loans sold with servicing retained increased $90.5 million, or 13.7%, since December 31, 2018, resulting in $10.0 million of non-interest income
Substandard loans decreased $11.0 million, or 10.4%, since September 30, 2019

MANITOWOC, Wisc., Jan. 23, 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 fourth quarter and year ended December 31, 2019. Net income was $3.3 million, or $0.47 diluted earnings per share, for the fourth quarter of 2019, compared to net income of $5.7 million, or $0.82 diluted earnings per share, for the third quarter of 2019 and $2.8 million, or $0.40 diluted earnings per share, for the fourth quarter of 2018.

Tim Schneider, President of County Bancorp, Inc., noted, “In 2019, we focused on improving credit quality, reducing wholesale funding, and growing our client deposits. I am pleased to say that our strategic initiatives drove improvements across all three focus areas, resulting in record full-year net profit for County Bancorp. Our business is progressing at a solid pace, but we understand there is more work to be done. Our dairy portfolio continued to strengthen as milk prices improved throughout 2019, and the futures market is the strongest we have seen in years. As trade deals with Mexico, Canada and China near the finish line, we feel more optimistic about the future of agricultural export stability. We made great progress in 2019, which is a testament to the diligent and tireless work of our team, and we look to continue our momentum as we head into 2020.”

Loans and Total Assets

Total assets at December 31, 2019 were $1.4 billion, a decrease of $36.5 million, or 2.6%, and a decrease of $142.5 million, or 9.4%, from total assets as of September 30, 2019 and December 31, 2018, respectively. Total loans were $1.0 billion at December 31, 2019, which represents a $45.0 million, or 4.2%, decrease from total loans at September 30, 2019, and a decrease of $171.5 million, or 14.2%, from total loans at December 31, 2018.

The decrease in total loans and assets were the result of our continued focus on loan participation sales and the resulting reduction in wholesale funding (brokered deposits, national certificates of deposit, and Federal Home Loan Bank (FHLB) advances) on our balance sheet. Loan participations that the Company continued to service were $751.7 million at December 31, 2019, which was an increase of $14.9 million, or 2.0%, and $90.5 million, or 13.7%, over participated loans that the Company serviced at September 30, 2019 and December 31, 2018, respectively. By increasing the amount of loans participated, the Company has been reducing credit risk from its balance sheet and increasing non-interest revenue streams.

Deposits

Total deposits at December 31, 2019 were $1.1 billion, a decrease of $41.3 million, or 3.6%, and a decrease of $121.9 million, or 10.0%, from total deposits as of September 30, 2019 and December 31, 2018, respectively. Despite the decline in total deposits, client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $17.4 million, or 2.1%, since September 30, 2019, and increased $81.2 million, or 10.8%, since December 31, 2018.

During 2019, the Company focused on reducing its reliance on wholesale funding. Due to the increases in loan participations and client deposit growth discussed above, the Company was able to decrease its dependence on brokered deposits and national certificates of deposit to $265.8 million at December 31, 2019. This represents a decrease of $58.7 million, or 18.1%, from September 30, 2019, and a decrease of $203.1 million, or 43.3%, from December 31, 2018.

Also during 2019, the Company paid off a portion of its FHLB advances. At December 31, 2019, advances from the FHLB totaled $44.4 million, which was a decrease of $45.0 million, or 50.3%, since December 31, 2018.

Net Interest Income and Margin

Net interest income was $9.5 million for the three months ended December 31, 2019, which was a $0.7 million, or 7.0%, decrease from the three months ended September 30, 2019, and a $1.2 million, or 11.6%, decrease from the three months ended December 31, 2018. For the year ended December 31, 2019, net interest income decreased $1.2 million, or 2.8%, to $40.8 million from the same period in 2018. The decrease in net interest income in the fourth quarter 2019 was the result of a lower average loan balance due to loan payoffs and the increase in loan participations sold. This was partially offset by a $58.7 million decrease in brokered deposits and national certificates of deposit and the resulting decrease in interest expense. The current quarter was also adversely impacted by a $10.2 million increase in nonaccrual loans, as well as a 25 basis point decrease in the Prime rate.

Net interest margin was 2.89% for the three months ended December 31, 2019, which was a decrease from 2.95% for the three months ended September 30, 2019. The decrease in net interest margin was primarily due to the noted increase in nonaccrual loans. Net interest margin was also impacted during the fourth quarter of 2019 by a 25 basis point decrease in the Prime rate, immediately impacting the yield of the loan portfolio. This was partially offset by a decrease in rates offered on savings, NOW and money market accounts.

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



Three Months Ended December 31, 2019 v. Three Months Ended September 30, 2019


Three Months Ended December 31, 2019 v. Three Months Ended December 31, 2018



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

$
1


$
(11
)

$
(10
)

$
(228
)

$
(17
)

$
(245
)
Loans


(847
)


(493
)


(1,340
)


(1,889
)


44



(1,845
)
Federal funds sold and interest-bearing deposits with banks


(30
)


(140
)


(170
)


126



92



218

Total interest income


(876
)


(644
)


(1,520
)


(1,991
)


119



(1,872
)
Interest Expense:
























Savings, NOW, money market and interest checking

$
(15
)

$
(385
)

$
(400
)

$
158


$
(325
)

$
(167
)
Time deposits


(515
)


123



(392
)


(1,354
)


1,029



(325
)
Other borrowings


-



-



-



-



-



-

FHLB advances


(22
)


1



(21
)


(226
)


24



(202
)
Junior subordinated debentures


1



6



7



2



25



27

Total interest expense

$
(551
)

$
(255
)

$
(806
)

$
(1,420
)

$
753


$
(667
)
Net interest income

$
(325
)

$
(389
)

$
(714
)

$
(571
)

$
(634
)

$
(1,205
)

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



December 31, 2019


September 30, 2019


December 31, 2018



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

$
159,202


$
1,106



2.78
%

$
159,091


$
1,117



2.81
%

$
191,955


$
1,351



2.82
%
Loans ⁽²⁾


1,061,432



13,691



5.16
%


1,126,243



15,030



5.34
%


1,207,883



15,536



5.14
%
Interest bearing deposits due from other banks


98,848



441



1.79
%


104,253



612



2.35
%


67,153



223



1.33
%
Total interest-earning assets

$
1,319,482


$
15,238



4.62
%

$
1,389,587


$
16,759



4.82
%

$
1,466,991


$
17,110



4.67
%
Allowance for loan losses


(14,868
)










(16,209
)










(16,034
)








Other assets


77,934











78,664











61,316









Total assets

$
1,382,548










$
1,452,042










$
1,512,273














































Liabilities




































Savings, NOW, money market, interest checking

$
322,629


$
876



1.09
%

$
326,592


$
1,276



1.56
%

$
287,420


$
1,043



1.45
%
Time deposits


658,864



3,905



2.37
%


745,032



4,298



2.31
%


820,515



4,230



2.06
%
Total interest-bearing deposits

$
981,493


$
4,781



1.95
%

$
1,071,624


$
5,574



2.08
%

$
1,107,935


$
5,273



1.90
%
Other borrowings


799



9



4.60
%


804



9



4.60
%


837



10



4.62
%
FHLB advances


44,400



216



1.94
%


48,857



237



1.94
%


90,509



417



1.84
%
Junior subordinated debentures


44,839



694



6.19
%


44,800



687



6.14
%


44,681



667



5.97
%
Total interest-bearing liabilities

$
1,071,531


$
5,700



2.13
%

$
1,166,085


$
6,507



2.23
%

$
1,243,962


$
6,367



2.05
%
Non-interest bearing deposits


123,541











105,578











108,140









Other liabilities


16,749











14,801











10,913









Total liabilities

$
1,211,821










$
1,286,464










$
1,363,015














































Shareholders' equity


170,727











165,578











149,258









Total liabilities and equity

$
1,382,548










$
1,452,042










$
1,512,273














































Net interest income





$
9,538










$
10,252










$
10,743





Interest rate spread ⁽³⁾










2.49
%










2.59
%










2.62
%
Net interest margin ⁽⁴⁾










2.89
%










2.95
%










2.91
%
Ratio of interest-earning assets to interest-bearing liabilities


1.23











1.19











1.18

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.

For the year ended December 31, 2019, net interest margin improved slightly to 2.93% from 2.91% for the year ended December 31, 2018, despite a six basis point decrease in interest rate spread. The increase in net interest margin in 2019 is due to a 3.2% decrease in the average balance of interest-earning assets.



For the Year Ended



December 31, 2019


December 31, 2018



Average Balance⁽¹⁾


Income/ Expense


Yields/ Rates


Average Balance⁽¹⁾


Income/ Expense


Yields/ Rates



(dollars in thousands)

Assets
























Investment securities

$
172,500


$
4,843



2.81
%

$
169,302


$
4,425



2.61
%
Loans ⁽²⁾


1,142,551



59,706



5.23
%


1,193,254



58,706



4.92
%
Interest bearing deposits due from other banks


78,517



1,783



2.27
%


77,545



1,086



1.40
%
Total interest-earning assets

$
1,393,568


$
66,332



4.76
%

$
1,440,101


$
64,217



4.46
%
Allowance for loan losses


(16,460
)










(15,037
)








Other assets


77,444











59,291









Total assets

$
1,454,552










$
1,484,355


































Liabilities
























Savings, NOW, money market, interest checking

$
316,278



4,582



1.45
%

$
282,746



3,398



1.20
%
Time deposits


741,483



16,875



2.28
%


801,892



15,251



1.90
%
Total interest-bearing deposits

$
1,057,761


$
21,457



2.03
%

$
1,084,638


$
18,649



1.72
%
Other borrowings


913



43



4.71
%


1,027



50



4.81
%
FHLB advances


66,022



1,307



1.98
%


105,218



1,759



1.67
%
Junior subordinated debentures


44,781



2,743



6.13
%


32,721



1,804



5.51
%
Total interest-bearing liabilities

$
1,169,477


$
25,550



2.18
%

$
1,223,604


$
22,262



1.82
%
Non-interest bearing deposits


108,356











100,819









Other liabilities


13,796











9,883









Total liabilities

$
1,291,629










$
1,334,306


































Shareholders' equity


162,923











150,049









Total liabilities and equity

$
1,454,552










$
1,484,355


































Net interest income





$
40,782










$
41,955





Interest rate spread ⁽³⁾










2.58
%










2.64
%
Net interest margin ⁽⁴⁾










2.93
%










2.91
%
Ratio of interest-earning assets to interest- bearing liabilities


1.19











1.18

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 and Expense



For the Three Months Ended



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands)

Non-Interest Income




















Service charges

$
549


$
348


$
407


$
353


$
470

Gain (loss) on sale of loans, net


34



87



26



(1
)


54

Loan servicing fees


1,778



1,677



1,563



1,519



1,553

Loan servicing right origination


1,146



1,741



346



228



7

Income on OREO


54



10



40



26



83

Gain on sale of securities


-



-



341



-



-

Other


161



171



164



625



153

Total non-interest income

$
3,722


$
4,034


$
2,887


$
2,750


$
2,320

Non-interest income for the three months ended December 31, 2019 decreased by $0.3 million, or 7.7%, to $3.7 million compared to the three months ended September 30, 2019, which was primarily the result of a decrease of $0.6 million of loan servicing right origination due to the $41.2 million in loans that were sold or participated during the third quarter compared to only $14.9 million in loans that were sold or participated during the fourth quarter.

Non-interest income for the three months ended December 31, 2019 increased $1.4 million, or 60.4%, compared to $2.3 million for the three months ended December 31, 2018. The year-over-year increase was primarily due to the increase in loan participations sold and related loan servicing right origination income compared to the fourth quarter of 2018.



For the Three Months Ended



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands)

Loan servicing rights, beginning of period

$
11,362


$
9,621


$
9,275


$
9,047


$
9,040

Changes in loan servicing rights:




















Additions related to new loans


1,811



2,276



843



621



596

Impairment due to prepayment


(296
)


(198
)


(190
)


(73
)


(37
)
Amortization of existing asset


(632
)


(584
)


(554
)


(550
)


(552
)
Reduction of valuation allowance


263



247



247



230



-

Total loan servicing right origination income


1,146



1,741



346



228



7

Loan servicing rights, end of period

$
12,508


$
11,362


$
9,621


$
9,275


$
9,047

Loans serviced, end of period


751,738



736,823



695,629



675,268



661,257

Loan servicing rights as a % of loans serviced


1.66
%


1.54
%


1.38
%


1.37
%


1.37
%





















Total loan servicing fees

$
1,778


$
1,677


$
1,563


$
1,519


$
1,553

Average loans serviced


744,281



716,226



685,449



668,263



653,068

Annualized loan servicing fees as a % of average loans serviced


0.96
%


0.94
%


0.91
%


0.91
%


0.95
%

Loan servicing right origination and loan serving fee income was positively impacted during the second half of the year in 2019 due to the higher volumes of loan participation sales as well as higher loan servicing fee spreads.



For the Three Months Ended



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands, except per share data)

Non-Interest Expense




















Employee compensation and benefits

$
5,696


$
4,735


$
4,199


$
4,482


$
4,059

Occupancy


417



313



283



389



245

Information processing


645



683



591



563



641

Professional fees


371



483



417



399



497

Business development


335



351



347



325



259

OREO expenses


59



57



121



51



106

Write-down of OREO


376



-



250



-



688

Net loss (gain) on sale of OREO


(231
)


160



9



(136
)


(54
)
Depreciation and amortization


319



319



328



337



408

Other


2,278



567



901



895



689

Total non-interest expense

$
10,265


$
7,668


$
7,446


$
7,305


$
7,538

Non-interest expense for the three months ended December 31, 2019 increased by $2.6 million, or 33.9%, to $10.3 million compared to the three months ended September 30, 2019. Employee compensation and benefits increased $1.0 million, or 20.3%, in the linked quarter due to the additional accrual of $0.9 million for incentive compensation related to current year financial results. The year-over-year increase was also the result of a 5.3% increase in head count and a 21.7% increase in insurance benefits in 2019. Other non-interest expense increased from impairment recognized from an investment in a historical tax credit project of $1.1 million. The impairment was offset by a $1.4 million benefit to income tax expense when the credit was earned. The three months ended December 31, 2019 was also adversely affected by decline in market values of three OREO properties which resulted in write-downs totaling $0.4 million.



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands)

Loans by risk category:




















Sound/Acceptable/Satisfactory/ Low Satisfactory

$
724,444


$
771,568


$
836,988


$
896,328


$
908,172

Watch


207,173



193,942



167,824



174,642



171,670

Special Mention


9,239



9,346



25,255



4,501



6,566

Substandard Performing


30,478



44,183



56,336



46,075



65,501

Substandard Impaired


64,439



61,728



61,429



61,417



55,386

Total loans

$
1,035,773


$
1,080,767


$
1,147,832


$
1,182,963


$
1,207,295

Adverse classified asset ratio ⁽¹⁾


39.85
%


45.67
%


53.21
%


48.59
%


57.12
%

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

Substandard loans were $94.9 million at December 31, 2019, compared to $105.9 million at September 30, 2019 and $120.9 million at December 31, 2018. Adverse classified asset ratio (a non-GAAP measure) decreased to 39.85% at December 31, 2019 from 45.67% and 57.12% at September 30, 2019 and December 31, 2018, respectively. The decrease in substandard loans and the adverse classified ratio were in part the result of improving milk prices. The average 12-month future price of class III milk on the Chicago Mercantile Exchange rose to $17.40 at December 31, 2019 compared to $17.12 at September 30, 2019 and $15.88 at December 31, 2018.



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands)

Non-Performing Assets:




















Nonaccrual loans

$
30,968


$
20,776


$
20,096


$
25,880


$
22,983

Other real estate owned


5,521



7,252



8,693



5,019



6,568

Total non-performing assets

$
36,489


$
28,028


$
28,789


$
30,899


$
29,551






















Performing TDRs not on nonaccrual

$
21,784


$
28,520


$
28,892


$
21,111


$
18,258






















Non-performing assets as a % of total loans


3.52
%


2.59
%


2.51
%


2.61
%


2.45
%
Non-performing assets as a % of total assets


2.65
%


1.98
%


1.94
%


2.07
%


1.94
%
Allowance for loan losses as a % of total loans


1.47
%


1.39
%


1.42
%


1.48
%


1.37
%
Net charge-offs (recoveries) quarter- to-date

$
(253
)

$
39


$
2,111


$
(236
)

$
1,210

At December 31, 2019, non-performing assets were $36.5 million, an increase of $8.5 million, compared to September 30, 2019. Non-performing assets as a percent of total assets increased to 2.65% at December 31, 2019, from 1.98% at September 30, 2019. The increases were primarily due to an increase in non-accrual loans of $10.2 million in the fourth quarter related to one agriculture customer for $6.0 million and one commercial customer for $3.9 million, which was partially offset by two OREO properties that were sold during the fourth quarter of 2019, resulting in a decrease of $1.7 million in OREO.

A credit to provision for loan losses of $0.1 million was recorded for the three months ended December 31, 2019 compared to a credit of $1.2 million for the three months ended September 30, 2019. The credit provision in the fourth quarter of 2019 was primarily a result of the reduction of the size of the loan portfolio, improved economic factors, and upgrades to credit ratings, which was partially offset by a $1.9 million impairment to a substandard commercial credit. In addition, during the fourth quarter of 2019, the Company recovered a $0.4 million loan that was previously charged-off.

The allowance for loan losses was $15.3 million at December 31, 2019 compared to $16.5 million at December 31, 2018. The $1.2 million decrease in the allowance during 2019 was the result of a reduction in general reserves due to the decreases in total loans, improvement of economic factors, and the credit upgrades discussed previously. Despite the decrease in allowance year-over-year, the allowance as a percent of total loans increased from 1.37% at December 31, 2018 to 1.47% at December 31, 2019.

Conference Call

The Company will host an earnings call tomorrow, January 24, 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 January 25, 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)

December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands, except per share data)

Period-End Balance Sheet:




















Assets




















Cash and cash equivalents

$
129,011


$
120,845


$
116,251


$
62,426


$
61,087

Securities available for sale, at fair value


160,361



154,962



158,561



192,210



195,945

Loans held for sale


2,151



4,192



7,448



2,750



2,949

Agricultural loans


659,725



673,742



713,602



722,107



724,508

Commercial loans


331,723



360,132



383,542



403,490



415,672

Multi-family real estate loans


41,070



43,487



46,683



52,974



62,321

Residential real estate loans


2,888



3,183



3,753



4,172



4,522

Installment and consumer other


367



223



252



220



272

Total loans


1,035,773



1,080,767



1,147,832



1,182,963



1,207,295

Allowance for loan losses


(15,267
)


(15,065
)


(16,258
)


(17,493
)


(16,505
)
Net loans


1,020,506



1,065,702



1,131,574



1,165,470



1,190,790

Other assets


66,485



69,263



70,812



68,532



70,256

Total Assets

$
1,378,514


$
1,414,964


$
1,484,646


$
1,491,388


$
1,521,027






















Liabilities and Shareholders' Equity




















Demand deposits

$
138,489


$
117,224


$
111,022


$
101,434


$
121,436

NOW accounts and interest checking


63,781



56,637



54,253



49,902



51,779

Savings


15,708



6,981



6,621



6,210



5,770

Money market accounts


242,539



248,608



239,337



225,975



218,929

Time deposits


375,100



388,759



387,899



376,034



356,484

Brokered deposits


166,340



206,474



256,475



269,917



308,504

National time deposits


99,485



118,070



149,570



146,805



160,445

Total deposits


1,101,442



1,142,753



1,205,177



1,176,277



1,223,347

FHLB advances


44,400



44,400



59,400



100,400



89,400

Subordinated debentures


44,858



44,820



44,781



44,742



44,703

Other liabilities


16,051



14,239



12,564



11,952



11,293

Total Liabilities


1,206,751



1,246,212



1,321,922



1,333,371



1,368,743






















Shareholders' equity


171,763



168,752



162,724



158,017



152,284

Total Liabilities and Shareholders' Equity

$
1,378,514


$
1,414,964


$
1,484,646


$
1,491,388


$
1,521,027






















Stock Price Information:




















High - Quarter-to-date

$
27.98


$
20.99


$
18.92


$
19.69


$
26.00

Low - Quarter-to-date

$
18.76


$
16.80


$
16.24


$
16.74


$
17.37

Market price - Quarter-end

$
25.63


$
19.62


$
17.09


$
17.60


$
17.37

Book value per share

$
24.32


$
23.89


$
23.03


$
22.36


$
21.50

Tangible book value per share ⁽¹⁾

$
23.54


$
23.10


$
22.23


$
21.54


$
20.68

Common shares outstanding


6,734,132



6,727,908



6,717,908



6,709,254



6,709,480

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



For the Three Months Ended


For the Year Ended



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018



(dollars in thousands, except per share data)

Selected Income Statement Data:




























Interest and Dividend Income




























Loans, including fees


13,691


$
15,030


$
15,484


$
15,501


$
15,536


$
59,706


$
58,706

Taxable securities


1,106



1,117



1,177



1,186



1,168



4,586



3,727

Tax-exempt securities


-



-



82



175



183



257



698

Federal funds sold and other


442



612



465



264



223



1,783



1,086

Total interest and dividend income


15,239



16,759



17,208



17,126



17,110



66,332



64,217






























Interest Expense




























Deposits


4,781



5,574



5,678



5,424



5,273



21,457



18,649

FHLB advances and other borrowed funds


225



246



415



464



427



1,350



1,809

Subordinated debentures


695



687



683



678



667



2,743



1,804

Total interest expense


5,701



6,507



6,776



6,566



6,367



25,550



22,262

Net interest income


9,538



10,252



10,432



10,560



10,743



40,782



41,955

Provision for loan losses


(51
)


(1,154
)


876



752



1,572



423



3,195

Net interest income after provision for loan losses


9,589



11,406



9,556



9,808



9,171



40,359



38,760






























Non-Interest Income




























Services charges


549



348



407



353



470



1,657



1,674

Gain (loss) on sale of loans, net


34



87



26



(1
)


54



146



172

Loan servicing fees


1,778



1,677



1,563



1,519



1,553



6,537



6,012

Loan servicing right origination


1,146



1,741



346



228



7



3,461



98

Income on OREO


54



10



40



26



83



130



256

Gain on sale of securities


-



-



341



-



-



341



-

Other


161



171



164



625



153



1,121



621

Total non-interest income


3,722



4,034



2,887



2,750



2,320



13,393



8,833






























Non-Interest Expense




























Employee compensation and benefits


5,696



4,735



4,199



4,482



4,059



19,112



16,785

Occupancy


417



313



283



389



245



1,402



1,059

Information processing


645



683



591



563



641



2,482



2,164

Professional fees


371



483



417



399



497



1,670



1,522

Business development


335



351



347



325



259



1,358



1,076

OREO expenses


59



57



121



51



106



288



444

Writedown of OREO


376



-



250



-



688



626



873

Net loss (gain) on sale of OREO


(231
)


160



9



(136
)


(54
)


(198
)


(189
)
Depreciation and amortization


319



319



328



337



408



1,303



1,348

Other


2,278



567



901



895



689



4,641



3,201

Total non-interest expense


10,265



7,668



7,446



7,305



7,538



32,684



28,283

Income before income taxes


3,046



7,772



4,997



5,253



3,953



21,068



19,310

Income tax expense


(258
)


2,090



1,293



1,491



1,123



4,616



5,059

NET INCOME

$
3,304


$
5,682


$
3,704


$
3,762


$
2,830


$
16,452


$
14,251






























Basic

$
0.47


$
0.82


$
0.53


$
0.54


$
0.41


$
2.37


$
2.06

Diluted

$
0.47


$
0.82


$
0.53


$
0.54


$
0.40


$
2.36


$
2.04

Dividends declared

$
0.05


$
0.05


$
0.05


$
0.05


$
0.07


$
0.20


$
0.28



For the Three Months Ended


For the Year Ended



December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018



(dollars in thousands, except share data)

Other Data:




























Return on average assets⁽¹⁾


0.96
%


1.57
%


1.00
%


1.00
%


0.75
%


1.13
%


0.96
%
Return on average shareholders' equity⁽¹⁾


7.74
%


13.73
%


9.24
%


9.78
%


7.58
%


10.10
%


9.50
%
Return on average common shareholders' equity⁽¹⁾⁽²⁾


7.83
%


14.14
%


9.41
%


9.99
%


7.70
%


10.31
%


9.74
%
Efficiency ratio ⁽¹⁾⁽²⁾


76.32
%


52.55
%


55.38
%


55.91
%


52.85
%


59.92
%


54.42
%
Tangible common equity to tangible assets ⁽²⁾


11.54
%


11.03
%


10.10
%


9.73
%


9.16
%


11.54
%


9.16
%





























Common Share Data:




























Net income from continuing operations

$
3,304


$
5,682


$
3,704


$
3,762


$
2,830


$
16,452


$
14,251

Less: Preferred stock dividends


117



120



118



117



111



472



413

Income available to common shareholders

$
3,187


$
5,562


$
3,586


$
3,645


$
2,719


$
15,980


$
13,838






























Weighted average number of common shares issued


7,173,290



7,168,785



7,159,072



7,153,174



7,143,204



7,163,650



7,132,985

Less: Weighted average treasury shares


443,920



443,920



443,920



443,729



443,694



443,873



442,206

Plus: Weighted average non- vested restricted stock units


32,125



32,125



30,483



16,260



13,041



27,804



13,272

Weighted average number of common shares outstanding


6,761,495



6,756,990



6,745,635



6,725,705



6,712,551



6,747,581



6,704,051

Effect of dilutive options


44,630



19,160



20,731



21,323



45,116



21,344



68,876

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


6,806,125



6,776,150



6,766,366



6,747,028



6,757,667



6,768,925



6,772,927

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



For the Three Months Ended


For the Year Ended

Non-GAAP Financial Measures:

December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018



(dollars in thousands)

Return on average common shareholders' equity reconciliation:




























Return on average shareholders' equity


7.74
%


13.73
%


9.24
%


9.78
%


7.58
%


10.10
%


9.50
%
Effect of excluding average preferred shareholders' equity


0.09
%


0.41
%


0.17
%


0.21
%


0.12
%


0.21
%


0.24
%
Return on average common shareholders' equity


7.83
%


14.14
%


9.41
%


9.99
%


7.70
%


10.31
%


9.74
%





























Efficiency ratio GAAP to non-GAAP reconciliation:




























Non-interest expense

$
10,265


$
7,668


$
7,446


$
7,305


$
7,538


$
32,684


$
28,283

Less: net gain (loss) on sales and write-downs of OREO


(145
)


(160
)


(259
)


136



(634
)


(428
)


(642
)
Adjusted non-interest expense (non-GAAP)

$
10,120


$
7,508


$
7,187


$
7,441


$
6,904


$
32,256


$
27,641






























Net interest income

$
9,538


$
10,252


$
10,432


$
10,560


$
10,743


$
40,782


$
41,955

Non-interest income


3,722



4,034



2,887



2,750



2,320



13,393



8,833

Less: net gain on sales of securities


-



-



(341
)


-



-



(341
)


-

Operating revenue

$
13,260


$
14,286


$
12,978


$
13,310


$
13,063


$
53,834


$
50,788

Efficiency ratio


76.32
%


52.55
%


55.38
%


55.91
%


52.85
%


59.92
%


54.42
%

Non-GAAP Financial Measures:

December 31, 2019


September 30, 2019


June 30, 2019


March 31, 2019


December 31, 2018



(dollars in thousands, except per share data)

Tangible book value per share and tangible common equity to tangible assets reconciliation:




















Common equity

$
163,763


$
160,752


$
154,724


$
150,017


$
144,284

Less: Goodwill


5,038



5,038



5,038



5,038



5,038

Less: Core deposit intangible, net of amortization


225



286



354



430



513

Tangible common equity (non-GAAP)

$
158,500


$
155,428


$
149,332


$
144,549


$
138,733

Common shares outstanding


6,734,132



6,727,908



6,717,908



6,709,254



6,709,480

Tangible book value per share

$
23.54


$
23.10


$
22.23


$
21.54


$
20.68






















Total assets

$
1,378,514


$
1,414,964


$
1,484,646


$
1,491,388


$
1,521,027

Less: Goodwill


5,038



5,038



5,038



5,038



5,038

Less: Core deposit intangible, net of amortization


225



286



354



603



701

Tangible assets (non-GAAP)

$
1,373,251


$
1,409,640


$
1,479,254


$
1,485,747


$
1,515,288

Tangible common equity to tangible assets


11.54
%


11.03
%


10.10
%


9.73
%


9.16
%





















Adverse classified asset ratio:




















Substandard loans

$
94,917


$
105,911


$
117,765


$
107,492


$
120,887

Less: Impaired performing restructured loans


(8,925
)


(8,672
)


(8,276
)


(6,382
)


(5,078
)
Net substandard loans

$
85,992


$
97,239


$
109,489


$
101,110


$
115,809

Other real estate owned


5,521



7,252



8,693



5,019



6,568

Substandard unused commitments


2,849



991



1,458



976



1,625

Less: Substandard government guarantees


(7,892
)


(7,746
)


(7,821
)


(5,864
)


(7,111
)
Total adverse classified assets (non-GAAP)

$
86,470


$
97,736


$
111,819


$
101,241


$
116,891






















Total equity (Bank)

$
204,240


$
201,967


$
196,036


$
191,287


$
185,458

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


(2,505
)


(3,016
)


(2,166
)


(436
)


2,221

Allowance for loan losses


15,267



15,065



16,258



17,493



16,505

Allowance for unused commitments


-



-



-



-



475

Adjusted total equity (non-GAAP)

$
217,002


$
214,016


$
210,128


$
208,344


$
204,659

Adverse classified asset ratio


39.85
%


45.67
%


53.21
%


48.59
%


57.12
%

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

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