ICBK - County Bancorp Inc. Announces Record Earnings for the Third Quarter of 2019
Highlights
- Record net income of $5.7 million for the third quarter of 2019; $13.1 million for the nine months ended September 30, 2019
- Diluted earnings per share of $0.82 for the third quarter of 2019; $1.89 for the nine months ended September 30, 2019
- Book value per share of $23.89 as of September 30, 2019, an increase of $0.86, or 3.7%, since June 30, 2019, and an increase of $2.39, or 11.1%, since December 31, 2018
- Adverse classified asset ratio improved to 45.67% at September 30, 2019 from 53.21% at June 30, 2019.
- Non-performing assets decreased $0.8 million, an improvement of 2.6%, since June 30, 2019, and decreased $7.7 million, or 21.6%, since September 30, 2018
- Client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018.
- Brokered and national deposits decreased $81.5 million during the third quarter of 2019, a reduction of 20.1%, and decreased $166.2 million, or 33.9%, since September 30, 2018
MANITOWOC, Wis., Oct. 17, 2019 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), an agricultural and commercial community bank headquartered in Manitowoc, Wisconsin, reported net income of $5.7 million, or $0.82 diluted earnings per share, for the third quarter of 2019, compared to net income of $3.7 million, or $0.53 diluted earnings per share, for the second quarter of 2019 and $3.5 million, or $0.50 diluted earnings per share, for the third quarter of 2018. This represents an annualized return on average assets of 1.57% for the three months ended September 30, 2019, compared to 0.94% for the three months ended September 30, 2018. The annualized return on average assets for the nine months ended September 30, 2019 was 1.19% compared to 1.04% for the same period of 2018. Third quarter earnings were largely impacted by a credit to provision for loan losses of $1.2 million for third quarter of 2019 compared to a $0.9 million provision expense for the second quarter of 2019, and a $1.0 million provision expense for the third quarter of 2018.
“We are very pleased with the improvement we have seen in our credit portfolio this quarter,” stated Tim Schneider, President of the Company and CEO of the Bank. “We continue to see an improved milk price environment: the 12-month forward looking average for class III milk increased from $15.88 to $17.12 per hundredweight on the Chicago Mercantile Exchange from December 31, 2018 to September 30, 2019. These trends are encouraging, but still have work to do to continue to improve our asset quality.”
Schneider continued, “As previously announced, we are still committed to reducing our wholesale funding. We were able to make significant progress this quarter and year-over-year, primarily through the additional liquidity from selling loan participations, which has also led to solid growth in our loan servicing income. We are also very pleased with our client deposit growth year-over-year and during the quarter.”
Loans and Total Assets
Total assets at September 30, 2019 were $1.4 billion, a decrease of $69.7 million, or 4.7%, and a decrease of $100.0 million, or 6.6%, over total assets as of June 30, 2019 and September 30, 2018, respectively. Total loans were $1.1 billion at September 30, 2019, which represents a $67.0 million, or 5.8%, decrease over total loans at June 30, 2019, and a decrease of $122.2 million, or 10.2%, over total loans at September 30, 2018.
The decrease in total loans and assets was the result of our continued focus on reducing loans on our balance sheet through the sale of loan participations during 2019. Participated loans that the Company continued to service were $736.8 million at September 30, 2019, which was an increase of $41.2 million, or 5.9%, and $91.9 million, or 14.3%, over participated loans that the Company serviced at June 30, 2019 and September 30, 2018, respectively. By increasing the amount of loans participated, the Company is reducing credit risk from its balance sheet and increasing non-interest revenue streams.
Deposits
Total deposits at September 30, 2019 were $1.1 billion, a decrease of $62.4 million, or 5.2%, and a decrease of $66.0 million, or 5.5%, over total deposits as of June 30, 2019 and September 30, 2018, respectively. Despite the decline in total deposits, client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018.
Due to the increases in loan participations and client deposit growth, the Company was able to further decrease its reliance on brokered deposits and national certificates of deposit to $324.5 million at September 30, 2019. This represents a decrease of $81.5 million, or 20.1%, from June 30, 2019, and a decrease of $166.2 million, or 33.9%, from September 30, 2018.
During the third quarter of 2019, the Company continued to pay off portions of its FHLB borrowings. At September 30, 2019, borrowings from the FHLB totaled $44.4 million, which was a decrease of $15.0 million, or 25.3%, from June 30, 2019, and a decrease of $58.0 million, or 56.6%, from September 30, 2018.
Net Interest Income and Margin
Net interest income was $10.3 million for the three months ended September 30, 2019, which was a $0.1 million, or 1.7%, decrease from the three months ended June 30, 2019, and a $0.4 million, or 3.3%, decrease from the three months ended September 30, 2018. The decrease in net interest income quarter-over-quarter and year-over-year was the result of a lower average loan balance due to loan payoffs and the increase in loan participations discussed above.
Net interest margin was 2.95% for the three months ended September 30, 2019, which was an increase from 2.92% for the three months ended June 30, 2019, and an increase from 2.89% for the three months ended September 30, 2018. The increase in net interest margin over the linked quarter was primarily due to a decline in average loans from loan participation sales that took place primarily the last half of the quarter. Year-over-year third quarter net interest margin increased by six basis points primarily due to a 32 basis point increase in loan yields, which was partially offset by a 29 basis point increase in cost of funds.
| For the Three Months Ended |
| September 30, 2019 |
| June 30, 2019 |
| September 30, 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 |
| $ |
| 159,091 |
| $ |
| 1,117 |
| 2.81 |
| % |
| $ |
| 176,237 |
| $ |
| 1,259 |
| 2.86 |
| % |
| $ |
| 189,448 |
| $ |
| 1,289 |
| 2.72 |
| % |
| Loans (2) |
| 1,126,243 |
| 15,030 |
| 5.34 |
| % |
| 1,177,071 |
| 15,484 |
| 5.26 |
| % |
| 1,204,122 |
| 15,113 |
| 5.02 |
| % |
| Interest bearing deposits due from other banks |
| 104,253 |
| 612 |
| 2.35 |
| % |
| 73,769 |
| 465 |
| 2.52 |
| % |
| 62,560 |
| 249 |
| 1.59 |
| % |
| Total interest-earning assets |
| $ |
| 1,389,587 |
| $ |
| 16,759 |
| 4.82 |
| % |
| $ |
| 1,427,077 |
| $ |
| 17,208 |
| 4.82 |
| % |
| $ |
| 1,456,130 |
| $ |
| 16,651 |
| 4.57 |
| % |
| Allowance for loan losses |
| (16,209 |
| ) |
| (17,782 |
| ) |
| (15,445 |
| ) |
| Other assets |
| 78,664 |
| 76,806 |
| 58,921 |
| Total assets |
| $ |
| 1,452,042 |
| $ |
| 1,486,101 |
| $ |
| 1,499,606 |
| Liabilities |
| Savings, NOW, money market, interest checking |
| $ |
| 326,592 |
| $ |
| 1,276 |
| 1.56 |
| % |
| $ |
| 315,940 |
| $ |
| 1,316 |
| 1.67 |
| % |
| $ |
| 276,468 |
| $ |
| 907 |
| 1.31 |
| % |
| Time deposits |
| 745,032 |
| 4,298 |
| 2.31 |
| % |
| 770,554 |
| 4,363 |
| 2.26 |
| % |
| 830,168 |
| 4,073 |
| 1.96 |
| % |
| Total interest-bearing deposits |
| $ |
| 1,071,624 |
| $ |
| 5,574 |
| 2.08 |
| % |
| $ |
| 1,086,494 |
| $ |
| 5,679 |
| 2.09 |
| % |
| $ |
| 1,106,636 |
| $ |
| 4,980 |
| 1.80 |
| % |
| Other borrowings |
| 804 |
| 9 |
| 4.60 |
| % |
| 1,204 |
| 13 |
| 4.47 |
| % |
| 839 |
| 10 |
| 4.61 |
| % |
| FHLB advances |
| 48,857 |
| 237 |
| 1.94 |
| % |
| 78,653 |
| 401 |
| 2.04 |
| % |
| 92,443 |
| 401 |
| 1.74 |
| % |
| Junior subordinated debentures |
| 44,800 |
| 687 |
| 6.14 |
| % |
| 44,762 |
| 683 |
| 6.11 |
| % |
| 44,659 |
| 656 |
| 5.88 |
| % |
| Total interest-bearing liabilities |
| $ |
| 1,166,085 |
| $ |
| 6,507 |
| 2.23 |
| % |
| $ |
| 1,211,113 |
| 6,776 |
| 2.24 |
| % |
| $ |
| 1,244,577 |
| $ |
| 6,047 |
| 1.94 |
| % |
| Non-interest-bearing deposits |
| 105,578 |
| 102,432 |
| 97,947 |
| Other liabilities |
| 14,801 |
| 12,154 |
| 9,136 |
| Total liabilities |
| $ |
| 1,286,464 |
| $ |
| 1,325,699 |
| $ |
| 1,351,660 |
| Shareholders' equity |
| 165,578 |
| 160,402 |
| 147,946 |
| Total liabilities and equity |
| $ |
| 1,452,042 |
| $ |
| 1,486,101 |
| $ |
| 1,499,606 |
| Net interest income |
| $ |
| 10,252 |
| $ |
| 10,432 |
| $ |
| 10,604 |
| Interest rate spread (3) |
| 2.59 |
| % |
| 2.58 |
| % |
| 2.63 |
| % |
| Net interest margin (4) |
| 2.95 |
| % |
| 2.92 |
| % |
| 2.89 |
| % |
| Ratio of interest-earning assets to interest-bearing liabilities |
| 1.19 |
| 1.18 |
| 1.17 |
| (1) Average balances are calculated on amortized cost. |
| (2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans. |
| (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (4) Net interest margin represents net interest income divided by average total interest-earning assets. |
Net interest income for the nine months ended September 30, 2019 was $31.2 million which was the same as to the nine month ended September 30, 2018, primarily as a result of the combination of a higher average loan yield on a smaller average balance of the loan portfolio.
For the nine months ended September 30, 2019, net interest margin improved slightly to 2.94% from 2.92% for the nine months ended September 30, 2018, primarily as a result of a 40 basis point increase in loan yields that was partially offset by a 46 basis point increase in cost of funds.
Non-Interest Income and Expense
Non-interest income for the three months ended September 30, 2019 increased by $1.1 million, or 39.7%, to $4.0 million compared to the three months ended June 30, 2019, which was primarily the result of an increase of $1.4 million of loan servicing right origination due to the $41.2 million in loans that were sold or participated during the third quarter. The Company also continued to reduce the valuation allowance on its loan servicing rights portfolio which resulted in an additional servicing rights income of $0.2 million.
Non-interest income for the three months ended September 30, 2019 increased $1.9 million, or 87.0%, compared to $2.2 million for the three months ended September 30, 2018. The year-over-year increase was primarily due to the increase in loan participations discussed above.
| For the Three Months Ended |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except per share data) |
| Non-Interest Income |
| Services charges |
| $ |
| 348 |
| $ |
| 407 |
| $ |
| 353 |
| $ |
| 470 |
| $ |
| 394 |
| Gain (loss) on sale of loans, net |
| 87 |
| 26 |
| (1 |
| ) |
| 54 |
| 41 |
| Loan servicing fees |
| 1,677 |
| 1,563 |
| 1,519 |
| 1,553 |
| 1,521 |
| Loan servicing right origination |
| 1,741 |
| 346 |
| 228 |
| 7 |
| (46 |
| ) |
| Income on OREO |
| 10 |
| 40 |
| 26 |
| 83 |
| 96 |
| Gain on sale of securities |
| - |
| 341 |
| - |
| - |
| - |
| Other |
| 171 |
| 164 |
| 625 |
| 153 |
| 151 |
| Total non-interest income |
| $ |
| 4,034 |
| $ |
| 2,887 |
| $ |
| 2,750 |
| $ |
| 2,320 |
| $ |
| 2,157 |
For the nine months ended September 30, 2019, non-interest income improved to $9.7 million, an increase of $3.2 million, or 48.5%, over the nine months ended September 30, 2018. The increase was primarily due to the increase in servicing fees as the result of the reduction of the servicing right valuation allowance totaling $0.8 million and the increase in fees generated by the $91.9 million of loans that were participated since September 30, 2018. In addition, the Company eliminated its allowance for unused commitments, which resulted in an increase of $0.5 million in other non-interest income. The Company evaluated the need for this allowance during the first quarter of 2019 and concluded there was not sufficient evidence that represented credit loss inherent in these commitments to substantiate the necessity of this reserve and concluded to eliminate it. The Company will continue to evaluate credit risk on these off-balance sheet commitments.
Non-interest expense for the three months ended September 30, 2019 increased by $0.2 million, or 3.0%, to $7.7 million compared to the three months ended June 30, 2019, and increased $0.6 million, or 9.2%, compared to the three months ended September 30, 2018. Employee compensation and benefits increased $0.5 million, or 12.8%, in the linked quarter due in part to additional accrual of $0.3 million for incentive compensation related to anticipated current year financial results. The increased employee compensation and benefits was partially offset by a $0.2 million small bank assessment credit that was received from the FDIC, which reduced other non-interest expense. This one-time credit was awarded to banks with total assets less than $10 billion due to the FDIC’s Reserve fund exceeding its target balance. The year-over-year increase was due in part to a $0.2 million loss on the sale an OREO property during the third quarter of 2019 and small increases in information processing, professional fees, and business development.
| For the Three Months Ended |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except per share data) |
| Non-Interest Expense |
| Employee compensation and benefits |
| $ |
| 4,735 |
| $ |
| 4,199 |
| $ |
| 4,482 |
| $ |
| 4,059 |
| $ |
| 4,394 |
| Occupancy |
| 313 |
| 283 |
| 389 |
| 245 |
| 332 |
| Information processing |
| 683 |
| 591 |
| 563 |
| 641 |
| 529 |
| Professional fees |
| 483 |
| 417 |
| 399 |
| 497 |
| 351 |
| Business development |
| 351 |
| 347 |
| 325 |
| 259 |
| 258 |
| OREO expenses |
| 57 |
| 121 |
| 51 |
| 106 |
| 46 |
| Writedown of OREO |
| - |
| 250 |
| - |
| 688 |
| 81 |
| Net loss (gain) on sale of OREO |
| 160 |
| 9 |
| (136 |
| ) |
| (54 |
| ) |
| (28 |
| ) |
| Depreciation and amortization |
| 319 |
| 328 |
| 337 |
| 408 |
| 302 |
| Other |
| 567 |
| 901 |
| 895 |
| 689 |
| 758 |
| Total non-interest expense |
| $ |
| 7,668 |
| $ |
| 7,446 |
| $ |
| 7,305 |
| $ |
| 7,538 |
| $ |
| 7,023 |
Asset Quality
At September 30, 2019, non-performing assets were $28.0 million, a decrease of $0.8 million, or 2.6%, and $7.7 million, or 21.6%, compared to June 30, 2019 and September 30, 2018, respectively. Non-performing assets as a percent of total assets increased to 1.98% at September 30, 2019, from 1.94% at June 30, 2019, due to the reduction in total assets and decreased from 2.36% at September 30, 2018. During the third quarter of 2019, two OREO properties were sold, resulting in a decrease of $1.4 million in OREO.
Substandard loans were $105.9 million at September 30, 2019, compared to $117.8 million at June 30, 2019 and $118.4 million at September 30, 2018. Adverse classified asset ratio (a non-GAAP measure) decreased to 45.67% at September 30, 2019 from 53.21% and 51.89% at June 30, 2019 and September 30, 2018, respectively. The decrease in substandard loans and the adverse classified ratio was in part the result of a combination of an improving milk price outlook and concerted efforts by our dairy customers to manage their expenses wherever they reasonably can. We are actively managing these credits, and we are optimistic about the industry’s outlook as there was a 4.7% increase in the 12-month future price of class III milk on the Chicago Mercantile Exchange from June 30, 2019 to September 30, 2019.
A credit to provision for loan losses of $1.2 million was recorded for the three months ended September 30, 2019 compared to a provision of $0.9 million for the three months ended June 30, 2019, and a provision of $1.0 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, a provision for loan losses was $0.5 million compared to $1.6 million for the nine months ended September 30, 2018. The decrease in provision in the linked quarter and year-over- year was directly related to the decrease in the dairy loan portfolio as the result of the increase in loan participations, improvements in milk price, and upgrade to credit ratings. The upgrade of $26.1 million of substandard performing and special mention loans to the watch risk category in the third quarter resulted in $0.8 million reduction to the allowance for loan losses.
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands) |
| Loans by risk category: |
| Sound/Acceptable/Satisfactory/Low Satisfactory |
| $ |
| 771,568 |
| $ |
| 836,988 |
| $ |
| 896,328 |
| $ |
| 908,172 |
| $ |
| 901,643 |
| Watch |
| 193,942 |
| 167,824 |
| 174,642 |
| 171,670 |
| 171,890 |
| Special Mention |
| 9,346 |
| 25,255 |
| 4,501 |
| 6,566 |
| 11,036 |
| Substandard Performing |
| 44,183 |
| 56,336 |
| 46,075 |
| 65,501 |
| 61,851 |
| Substandard Impaired |
| 61,728 |
| 61,429 |
| 61,417 |
| 55,386 |
| 56,517 |
| Total loans |
| $ |
| 1,080,767 |
| $ |
| 1,147,832 |
| $ |
| 1,182,963 |
| $ |
| 1,207,295 |
| $ |
| 1,202,937 |
The allowance for loan losses was $15.1 million at September 30, 2019 compared to $16.5 million at December 31, 2018. The $1.4 million decrease in the allowance during the first nine months of 2019 was the result of a reduction in general reserves due to the decreases in total loans and the credit upgrades discussed previously.
Conference Call
The Company will host an earnings call tomorrow, October 18, 2019, 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 http://investors.icbk.com. From the top menu, select “News”, then “Event Calendar.” 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 October 18, 2020, by visiting the Company’s website at http://investors.icbk.com.
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) |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except per share data) |
| Period-End Balance Sheet: |
| Assets |
| Cash and cash equivalents |
| $ |
| 120,845 |
| $ |
| 116,251 |
| $ |
| 62,426 |
| $ |
| 61,087 |
| $ |
| 49,996 |
| Securities available for sale, at fair value |
| 154,962 |
| 158,561 |
| 192,210 |
| 195,945 |
| 190,185 |
| Loans held for sale |
| 4,192 |
| 7,448 |
| 2,750 |
| 2,949 |
| 13,770 |
| Agricultural loans |
| 673,742 |
| 713,602 |
| 722,107 |
| 724,508 |
| 714,310 |
| Commercial loans |
| 360,132 |
| 383,542 |
| 403,490 |
| 415,672 |
| 417,146 |
| Multi-family real estate loans |
| 43,487 |
| 46,683 |
| 52,974 |
| 62,321 |
| 66,403 |
| Residential real estate loans |
| 3,183 |
| 3,753 |
| 4,172 |
| 4,522 |
| 4,965 |
| Installment and consumer other |
| 223 |
| 252 |
| 220 |
| 272 |
| 113 |
| Total loans |
| 1,080,767 |
| 1,147,832 |
| 1,182,963 |
| 1,207,295 |
| 1,202,937 |
| Allowance for loan losses |
| (15,065 |
| ) |
| (16,258 |
| ) |
| (17,493 |
| ) |
| (16,505 |
| ) |
| (16,143 |
| ) |
| Net loans |
| 1,065,702 |
| 1,131,574 |
| 1,165,470 |
| 1,190,790 |
| 1,186,794 |
| Other assets |
| 69,263 |
| 70,812 |
| 68,532 |
| 70,256 |
| 74,223 |
| Total Assets |
| $ |
| 1,414,964 |
| $ |
| 1,484,646 |
| $ |
| 1,491,388 |
| $ |
| 1,521,027 |
| $ |
| 1,514,968 |
| Liabilities and Shareholders' Equity |
| Demand deposits |
| $ |
| 117,224 |
| $ |
| 111,022 |
| $ |
| 101,434 |
| $ |
| 121,436 |
| $ |
| 103,862 |
| NOW accounts and interest checking |
| 56,637 |
| 54,253 |
| 49,902 |
| 51,779 |
| 46,811 |
| Savings |
| 6,981 |
| 6,621 |
| 6,210 |
| 5,770 |
| 6,616 |
| Money market accounts |
| 248,608 |
| 239,337 |
| 225,975 |
| 218,929 |
| 208,233 |
| Time deposits |
| 388,759 |
| 387,899 |
| 376,034 |
| 356,484 |
| 352,531 |
| Brokered deposits |
| 206,474 |
| 256,475 |
| 269,917 |
| 308,504 |
| 317,291 |
| National time deposits |
| 118,070 |
| 149,570 |
| 146,805 |
| 160,445 |
| 173,440 |
| Total deposits |
| 1,142,753 |
| 1,205,177 |
| 1,176,277 |
| 1,223,347 |
| 1,208,784 |
| FHLB advances |
| 44,400 |
| 59,400 |
| 100,400 |
| 89,400 |
| 102,400 |
| Subordinated debentures |
| 44,820 |
| 44,781 |
| 44,742 |
| 44,703 |
| 44,663 |
| Other liabilities |
| 14,239 |
| 12,564 |
| 11,952 |
| 11,492 |
| 11,134 |
| Total Liabilities |
| 1,246,212 |
| 1,321,922 |
| 1,333,371 |
| 1,368,942 |
| 1,366,981 |
| Shareholders' equity |
| 168,752 |
| 162,724 |
| 158,017 |
| 152,085 |
| 147,987 |
| Total Liabilities and Shareholders' Equity |
| $ |
| 1,414,964 |
| $ |
| 1,484,646 |
| $ |
| 1,491,388 |
| $ |
| 1,521,027 |
| $ |
| 1,514,968 |
| Stock Price Information: |
| High - Quarter-to-date |
| $ |
| 20.99 |
| $ |
| 18.92 |
| $ |
| 19.69 |
| $ |
| 26.00 |
| $ |
| 28.20 |
| Low - Quarter-to-date |
| $ |
| 16.80 |
| $ |
| 16.24 |
| $ |
| 16.74 |
| $ |
| 17.37 |
| $ |
| 24.29 |
| Market price - Quarter-end |
| $ |
| 19.62 |
| $ |
| 17.09 |
| $ |
| 17.60 |
| $ |
| 17.37 |
| $ |
| 25.10 |
| Book value per share |
| $ |
| 23.89 |
| $ |
| 23.03 |
| $ |
| 22.36 |
| $ |
| 21.50 |
| $ |
| 20.91 |
| Tangible book value per share (1) |
| $ |
| 23.10 |
| $ |
| 22.23 |
| $ |
| 21.54 |
| $ |
| 20.68 |
| $ |
| 20.07 |
| Common shares outstanding |
| 6,727,908 |
| 6,717,908 |
| 6,709,254 |
| 6,709,480 |
| 6,694,230 |
| (1) This is a non-GAAP financial measure. A reconciliation to GAAP is included below. |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands) |
| Loans by risk category: |
| Sound/Acceptable/Satisfactory/Low Satisfactory |
| $ |
| 771,568 |
| $ |
| 836,988 |
| $ |
| 896,328 |
| $ |
| 908,172 |
| $ |
| 901,643 |
| Watch |
| 193,942 |
| 167,824 |
| 174,642 |
| 171,670 |
| 171,890 |
| Special Mention |
| 9,346 |
| 25,255 |
| 4,501 |
| 6,566 |
| 11,036 |
| Substandard Performing |
| 44,183 |
| 56,336 |
| 46,075 |
| 65,501 |
| 61,851 |
| Substandard Impaired |
| 61,728 |
| 61,429 |
| 61,417 |
| 55,386 |
| 56,517 |
| Total loans |
| 1,080,767 |
| 1,147,832 |
| 1,182,963 |
| 1,207,295 |
| 1,202,937 |
| Loans sold with servicing retained |
| 736,823 |
| 695,629 |
| 675,268 |
| 661,257 |
| 644,879 |
| Total loans and loans sold with servicing retained |
| $ |
| 1,817,590 |
| $ |
| 1,843,461 |
| $ |
| 1,858,231 |
| $ |
| 1,868,552 |
| $ |
| 1,847,816 |
| Non-Performing Assets: |
| Nonaccrual loans |
| $ |
| 20,776 |
| $ |
| 20,096 |
| $ |
| 25,880 |
| $ |
| 22,983 |
| $ |
| 27,881 |
| Other real estate owned (1) |
| 7,252 |
| 8,693 |
| 5,019 |
| 6,568 |
| 7,851 |
| Total non-performing assets |
| $ |
| 28,028 |
| $ |
| 28,789 |
| $ |
| 30,899 |
| $ |
| 29,551 |
| $ |
| 35,732 |
| Performing TDRs not on nonaccrual |
| $ |
| 28,520 |
| $ |
| 28,892 |
| $ |
| 21,111 |
| $ |
| 18,258 |
| $ |
| 11,863 |
| Non-performing assets as a % of total loans |
| 2.59 |
| % |
| 2.51 |
| % |
| 2.61 |
| % |
| 2.45 |
| % |
| 2.97 |
| % |
| Non-performing assets as a % of total assets |
| 1.98 |
| % |
| 1.94 |
| % |
| 2.07 |
| % |
| 1.94 |
| % |
| 2.36 |
| % |
| Adverse classified asset ratio (2) |
| 45.67 |
| % |
| 53.21 |
| % |
| 48.59 |
| % |
| 57.12 |
| % |
| 51.89 |
| % |
| Allowance for loan losses as a % of nonaccrual loans |
| 72.51 |
| % |
| 80.90 |
| % |
| 67.59 |
| % |
| 71.81 |
| % |
| 57.90 |
| % |
| Allowance for loan losses as a % of total loans |
| 1.39 |
| % |
| 1.42 |
| % |
| 1.48 |
| % |
| 1.37 |
| % |
| 1.34 |
| % |
| Net charge-offs (recoveries) quarter-to-date |
| $ |
| 39 |
| $ |
| 2,111 |
| $ |
| (236 |
| ) |
| $ |
| 1,210 |
| $ |
| (21 |
| ) |
| Provision for loan loss quarter-to-date |
| $ |
| (1,154 |
| ) |
| $ |
| 876 |
| $ |
| 752 |
| $ |
| 1,572 |
| $ |
| 993 |
| (1) The quarter ended September 30, 2018, does not include $0.4 million of bank property transferred from premises and equipment, which is not considered a non-performing asset. For the quarter ended December 31, 2018, and all subsequent quarters, that bank property was considered classified due to the length of the holding period. |
| (2) This is a non-GAAP financial measure. A reconciliation to GAAP is included below. |
| For the Three Months Ended |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except per share data) |
| Selected Income Statement Data: |
| Interest and Dividend Income |
| Loans, including fees |
| $ |
| 15,030 |
| $ |
| 15,484 |
| $ |
| 15,501 |
| $ |
| 15,536 |
| $ |
| 15,113 |
| Taxable securities |
| 1,117 |
| 1,177 |
| 1,186 |
| 1,168 |
| 945 |
| Tax-exempt securities |
| - |
| 82 |
| 175 |
| 183 |
| 344 |
| Federal funds sold and other |
| 612 |
| 465 |
| 264 |
| 223 |
| 249 |
| Total interest and dividend income |
| 16,759 |
| 17,208 |
| 17,126 |
| 17,110 |
| 16,651 |
| Interest Expense |
| Deposits |
| 5,574 |
| 5,678 |
| 5,424 |
| 5,273 |
| 4,980 |
| FHLB advances and other borrowed funds |
| 246 |
| 415 |
| 464 |
| 427 |
| 411 |
| Subordinated debentures |
| 687 |
| 683 |
| 678 |
| 667 |
| 656 |
| Total interest expense |
| 6,507 |
| 6,776 |
| 6,566 |
| 6,367 |
| 6,047 |
| Net interest income |
| 10,252 |
| 10,432 |
| 10,560 |
| 10,743 |
| 10,604 |
| Provision for loan losses |
| (1,154 |
| ) |
| 876 |
| 752 |
| 1,572 |
| 993 |
| Net interest income after provision for loan losses |
| 11,406 |
| 9,556 |
| 9,808 |
| 9,171 |
| 9,611 |
| Non-Interest Income |
| Services charges |
| 348 |
| 407 |
| 353 |
| 470 |
| 394 |
| Gain (loss) on sale of loans, net |
| 87 |
| 26 |
| (1 |
| ) |
| 54 |
| 41 |
| Loan servicing fees |
| 1,677 |
| 1,563 |
| 1,519 |
| 1,553 |
| 1,521 |
| Loan servicing right origination |
| 1,741 |
| 346 |
| 228 |
| 7 |
| (46 |
| ) |
| Income on OREO |
| 10 |
| 40 |
| 26 |
| 83 |
| 96 |
| Gain on sale of securities |
| - |
| 341 |
| - |
| - |
| - |
| Other |
| 171 |
| 164 |
| 625 |
| 153 |
| 151 |
| Total non-interest income |
| 4,034 |
| 2,887 |
| 2,750 |
| 2,320 |
| 2,157 |
| Non-Interest Expense |
| Employee compensation and benefits |
| 4,735 |
| 4,199 |
| 4,482 |
| 4,059 |
| 4,394 |
| Occupancy |
| 313 |
| 283 |
| 389 |
| 245 |
| 332 |
| Information processing |
| 683 |
| 591 |
| 563 |
| 641 |
| 529 |
| Professional fees |
| 483 |
| 417 |
| 399 |
| 497 |
| 351 |
| Business development |
| 351 |
| 347 |
| 325 |
| 259 |
| 258 |
| OREO expenses |
| 57 |
| 121 |
| 51 |
| 106 |
| 46 |
| Writedown of OREO |
| - |
| 250 |
| - |
| 688 |
| 81 |
| Net loss (gain) on sale of OREO |
| 160 |
| 9 |
| (136 |
| ) |
| (54 |
| ) |
| (28 |
| ) |
| Depreciation and amortization |
| 319 |
| 328 |
| 337 |
| 408 |
| 302 |
| Other |
| 567 |
| 901 |
| 895 |
| 689 |
| 758 |
| Total non-interest expense |
| 7,668 |
| 7,446 |
| 7,305 |
| 7,538 |
| 7,023 |
| Income before income taxes |
| 7,772 |
| 4,997 |
| 5,253 |
| 3,953 |
| 4,745 |
| Income tax expense |
| 2,090 |
| 1,293 |
| 1,491 |
| 1,123 |
| 1,228 |
| NET INCOME |
| $ |
| 5,682 |
| $ |
| 3,704 |
| $ |
| 3,762 |
| $ |
| 2,830 |
| $ |
| 3,517 |
| Basic |
| $ |
| 0.82 |
| $ |
| 0.53 |
| $ |
| 0.54 |
| $ |
| 0.41 |
| $ |
| 0.51 |
| Diluted |
| $ |
| 0.82 |
| $ |
| 0.53 |
| $ |
| 0.54 |
| $ |
| 0.40 |
| $ |
| 0.50 |
| Dividends declared |
| $ |
| 0.05 |
| $ |
| 0.05 |
| $ |
| 0.05 |
| $ |
| 0.07 |
| $ |
| 0.07 |
| For the Three Months Ended |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except share data) |
| Other Data: |
| Return on average assets(1) |
| 1.57 |
| % |
| 1.00 |
| % |
| 1.00 |
| % |
| 0.75 |
| % |
| 0.94 |
| % |
| Return on average shareholders' equity(1) |
| 13.73 |
| % |
| 9.24 |
| % |
| 9.78 |
| % |
| 7.58 |
| % |
| 9.51 |
| % |
| Return on average common shareholders' equity (1)(2) |
| 14.14 |
| % |
| 9.41 |
| % |
| 9.99 |
| % |
| 7.70 |
| % |
| 9.75 |
| % |
| Efficiency ratio (1)(2) |
| 52.55 |
| % |
| 55.38 |
| % |
| 55.91 |
| % |
| 52.85 |
| % |
| 55.39 |
| % |
| Tangible common equity to tangible assets (2) |
| 11.03 |
| % |
| 10.10 |
| % |
| 9.73 |
| % |
| 9.15 |
| % |
| 8.90 |
| % |
| Common Share Data: |
| Net income from continuing operations |
| $ |
| 5,682 |
| $ |
| 3,704 |
| $ |
| 3,762 |
| $ |
| 2,830 |
| $ |
| 3,517 |
| Less: Preferred stock dividends |
| 120 |
| 118 |
| 117 |
| 111 |
| 106 |
| Income available to common shareholders |
| $ |
| 5,562 |
| $ |
| 3,586 |
| $ |
| 3,645 |
| $ |
| 2,719 |
| $ |
| 3,411 |
| Weighted average number of common shares issued |
| 7,168,785 |
| 7,159,072 |
| 7,153,174 |
| 7,177,212 |
| 7,108,202 |
| Less: Weighted average treasury shares |
| 443,920 |
| 443,920 |
| 443,729 |
| 442,206 |
| 443,140 |
| Less: Weighted average non-vested restricted units awards |
| 32,125 |
| 30,483 |
| 16,260 |
| 30,955 |
| 29,537 |
| Weighted average number of common shares outstanding |
| 6,756,990 |
| 6,745,635 |
| 6,712,551 |
| 6,704,051 |
| 6,694,599 |
| Effect of dilutive options |
| 19,160 |
| 20,731 |
| 21,323 |
| 68,876 |
| 63,346 |
| Weighted average number of common shares outstanding used to calculate diluted earnings per common share |
| 6,776,150 |
| 6,766,366 |
| 6,733,874 |
| 6,772,927 |
| 6,757,945 |
| (1) Annualized |
| (2) This is a non-GAAP financial measure. A reconciliation to GAAP is included below. |
| For the Three Months Ended |
| Non-GAAP Financial Measures: |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands) |
| Return on average common shareholders' equity reconciliation: |
| Return on average shareholders' equity |
| 13.73 |
| % |
| 9.24 |
| % |
| 9.78 |
| % |
| 7.58 |
| % |
| 9.51 |
| % |
| Effect of excluding average preferred shareholders' equity |
| 0.41 |
| % |
| 0.17 |
| % |
| 0.21 |
| % |
| 0.12 |
| % |
| 0.24 |
| % |
| Return on average common shareholders' equity |
| 14.14 |
| % |
| 9.41 |
| % |
| 9.99 |
| % |
| 7.70 |
| % |
| 9.75 |
| % |
| Efficiency ratio GAAP to non-GAAP reconciliation: |
| Non-interest expense |
| $ |
| 7,668 |
| $ |
| 7,446 |
| $ |
| 7,305 |
| $ |
| 7,538 |
| $ |
| 7,023 |
| Less: net gain (loss) on sales and write-downs of OREO |
| (160 |
| ) |
| (259 |
| ) |
| 136 |
| (634 |
| ) |
| 45 |
| Adjusted non-interest expense (non-GAAP) |
| $ |
| 7,508 |
| $ |
| 7,187 |
| $ |
| 7,441 |
| $ |
| 6,904 |
| $ |
| 7,068 |
| Net interest income |
| $ |
| 10,252 |
| $ |
| 10,432 |
| $ |
| 10,560 |
| $ |
| 10,743 |
| $ |
| 10,604 |
| Non-interest income |
| 4,034 |
| 2,887 |
| 2,750 |
| 2,320 |
| 2,157 |
| Less: net gain on sales of securities |
| - |
| (341 |
| ) |
| - |
| - |
| - |
| Operating revenue |
| $ |
| 14,286 |
| $ |
| 12,978 |
| $ |
| 13,310 |
| $ |
| 13,063 |
| $ |
| 12,761 |
| Efficiency ratio |
| 52.55 |
| % |
| 55.38 |
| % |
| 55.91 |
| % |
| 52.85 |
| % |
| 55.39 |
| % |
| September 30, 2019 |
| June 30, 2019 |
| March 31, 2019 |
| December 31, 2018 |
| September 30, 2018 |
| (dollars in thousands, except per share data) |
| Tangible book value per share and tangible common equity to tangible assets reconciliation: |
| Common equity |
| $ |
| 160,752 |
| $ |
| 154,724 |
| $ |
| 150,017 |
| $ |
| 144,284 |
| $ |
| 139,987 |
| Less: Goodwill |
| 5,038 |
| 5,038 |
| 5,038 |
| 5,038 |
| 5,038 |
| Less: Core deposit intangible, net of amortization |
| 286 |
| 354 |
| 430 |
| 513 |
| 603 |
| Tangible common equity (non-GAAP) |
| $ |
| 155,428 |
| $ |
| 149,332 |
| $ |
| 144,549 |
| $ |
| 138,733 |
| $ |
| 134,346 |
| Common shares outstanding |
| 6,727,908 |
| 6,717,908 |
| 6,709,254 |
| 6,709,480 |
| 6,694,230 |
| Tangible book value per share |
| $ |
| 23.10 |
| $ |
| 22.23 |
| $ |
| 21.54 |
| $ |
| 20.68 |
| $ |
| 20.07 |
| Total assets |
| $ |
| 1,414,964 |
| $ |
| 1,484,646 |
| $ |
| 1,491,388 |
| $ |
| 1,521,027 |
| $ |
| 1,514,968 |
| Less: Goodwill |
| 5,038 |
| 5,038 |
| 5,038 |
| 5,038 |
| 5,038 |
| Less: Core deposit intangible, net of amortization |
| 286 |
| 354 |
| 430 |
| 603 |
| 701 |
| Tangible assets (non-GAAP) |
| $ |
| 1,409,640 |
| $ |
| 1,479,254 |
| $ |
| 1,485,920 |
| $ |
| 1,515,386 |
| $ |
| 1,509,229 |
| Tangible common equity to tangible assets |
| 11.03 |
| % |
| 10.10 |
| % |
| 9.73 |
| % |
| 9.15 |
| % |
| 8.90 |
| % |
| Adverse classified asset ratio: |
| Substandard loans |
| $ |
| 105,911 |
| $ |
| 117,765 |
| $ |
| 107,492 |
| $ |
| 120,887 |
| $ |
| 118,368 |
| Less: Impaired performing restructured loans |
| (8,672 |
| ) |
| (8,276 |
| ) |
| (6,382 |
| ) |
| (5,078 |
| ) |
| (13,657 |
| ) |
| Net substandard loans |
| $ |
| 97,239 |
| $ |
| 109,489 |
| $ |
| 101,110 |
| $ |
| 115,809 |
| $ |
| 104,711 |
| Other real estate owned |
| 7,252 |
| 8,693 |
| 5,019 |
| 6,568 |
| 7,851 |
| Substandard unused commitments |
| 991 |
| 1,458 |
| 976 |
| 1,625 |
| 1,191 |
| Less: Substandard government guarantees |
| (7,746 |
| ) |
| (7,821 |
| ) |
| (5,864 |
| ) |
| (7,111 |
| ) |
| (9,374 |
| ) |
| Total adverse classified assets (non-GAAP) |
| $ |
| 97,736 |
| $ |
| 111,819 |
| $ |
| 101,241 |
| $ |
| 116,891 |
| $ |
| 104,379 |
| Total equity (Bank) |
| $ |
| 201,967 |
| $ |
| 196,036 |
| $ |
| 191,287 |
| $ |
| 185,458 |
| $ |
| 180,359 |
| Accumulated other comprehensive loss (gain) on available for sale securities |
| (3,016 |
| ) |
| (2,166 |
| ) |
| (436 |
| ) |
| 2,221 |
| 4,152 |
| Allowance for loan losses |
| 15,065 |
| 16,258 |
| 17,493 |
| 16,505 |
| 16,143 |
| Allowance for unused commitments |
| - |
| - |
| - |
| 475 |
| 510 |
| Adjusted total equity (non-GAAP) |
| $ |
| 214,016 |
| $ |
| 210,128 |
| $ |
| 208,344 |
| $ |
| 204,659 |
| $ |
| 201,164 |
| Adverse classified asset ratio |
| 45.67 |
| % |
| 53.21 |
| % |
| 48.59 |
| % |
| 57.12 |
| % |
| 51.89 |
| % |