ICBK - County Bancorp Inc. Announces Third Quarter of 2021 Earnings

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

Highlights

Net income was $4.1 million for the third quarter of 2021, or $0.65 per diluted share
A recovery of provision for loan losses of $0.6 million was recognized in the third quarter of 2021
Cost of funds decreased by seven basis points sequentially to 0.99%, a decline of 53 basis points year-over-year
Substandard loans decreased by $14.0 million during the third quarter of 2021, an improvement of 24.2 %

MANITOWOC, Wis., Oct. 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 third quarter of 2021. Net income was $4.1 million, or $0.65 per diluted share, for the third quarter of 2021, compared to net income of $6.7 million, or $1.07 per diluted share, and $3.4 million, or $0.52 per diluted share, for the second quarter of 2021 and the third quarter of 2020, respectively. For the nine months ended September 30, 2021, net income was $14.8 million, or $2.34 per diluted share, compared to net income of $1.0 million, or a $0.10 per diluted share, for the nine months ended September 30, 2020. The 2020 net income included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share.

"We reported another solid quarter as the economy continues to rebound, resulting in increased customer confidence, improved asset quality and in turn, a lower loan loss provision," said Tim Schneider, President of County Bancorp, Inc. "Additionally, our adverse classified asset ratio (a non-GAAP metric) continues to decline and is less than half of what it was at the start of 2021. Finally, the previously announced merger with Nicolet remains on track. We still expect the merger to close on December 3, 2021, and we remain excited about the opportunities that Nicolet’s business model and other product offerings present to our agriculture customers and our community."

Loans

Total loans increased sequentially by $3.1 million, or 0.3%, to $1.0 billion during the third quarter of 2021. Gross loan growth of $24.9 million was partially offset by $21.8 million in Paycheck Protection Program (“PPP”) loans that were forgiven by the Small Business Administration (“SBA”) during the quarter. The following table sets forth the total PPP loans at the dates indicated:



September 30, 2021


June 30, 2021



# of Loans


Balance


Deferred Fee Income


# of Loans


Balance


Deferred Fee Income



(dollars in thousands)

PPP 1oans - Round 1


9


$
265


$
6



69


$
3,285


$
82

PPP loans - Round 2


107



11,353



490



391



30,115



1,576

Total PPP loans


116


$
11,618


$
496



460


$
33,400


$
1,658

% of Total loans






1.16
%










3.33
%

As of September 30, 2021, there were two customer relationships with loan balances totaling $0.2 million in payment deferral associated with COVID-19 customer support programs, a reduction of $2.7 million since June 30, 2021.

Deposits and Funding Sources

Total deposits as of September 30, 2021, were $1.2 billion, an increase of $45.8 million, or 4.0%, from June 30, 2021, and an increase of $131.3 million, or 12.5%, since September 30, 2020.
Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased by $49.6 million, or 5.2%, from June 30, 2021, to $1.0 billion. Year-over-year, client deposits increased $110.0 million, or 12.3%, since September 30, 2020.
The Company decreased its reliance on wholesale funding (brokered deposits, national certificate of deposits, and FHLB funding) by $6.8 million, or 2.6%, during the third quarter of 2021. Wholesale funding represented 20.4% of all funding sources at September 30, 2021 compared to 21.7% and 20.9% at June 30, 2021 and September 30, 2020, respectively.

Shareholders’ Equity

Book value per share increased to $27.97 per share on September 30, 2021, from $27.68 on June 30, 2021, and $25.71 on September 30, 2020.

Net Interest Income and Margin

Net interest margin for the quarter ended September 30, 2021, was 2.93%, a decrease of 29 basis points compared to the sequential quarter and an increase of 53 basis points year-over-year. The following table shows the accretive effect the SBA PPP loans had on net interest margin for the periods indicated.



For the Three Months Ended



September 30, 2021


June 30, 2021


September 30, 2020

Net interest margin excluding PPP loans


2.68
%


3.12
%


2.28
%
Accretion related to PPP loans:












Impact of interest rate on PPP loans


(0.07
)%


(0.03
)%


(0.31
)%
Impact of PPP fee income recognized


0.34
%


0.14
%


0.45
%
Impact of interest expense on PPP Liquidity Facility program


(0.02
)%


(0.01
)%


(0.02
)%
Total accretion related to PPP loans


0.25
%


0.10
%


0.12
%
Total net interest margin


2.93
%


3.22
%


2.40
%

Net interest margin excluding PPP loans decreased 44 basis points to 2.68% for the quarter ended September 30, 2021 compared to the quarter ended June 30, 2021, primarily due to the $0.7 million in interest income that was recovered in connection to a nonaccrual loan participation and the pay-off of a $4.0 nonaccrual commercial real estate customer that took place during the second quarter of 2021.
Total rates paid on interest-bearing deposits decreased by nine basis points to 0.63% for the three months ended September 30, 2021, compared to the three months ended June 30, 2021, and decreased 65 basis points compared to the three months ended September 30, 2020. The steady decline in cost of funds was primarily due to the Company’s focus on gathering lower-cost transactional deposits versus higher cost time deposits and the market-driven drop in the federal funds rates.

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



Three Months Ended September 30, 2021 v. Three Months Ended June 30, 2021


Three Months Ended September 30, 2021 v. Three Months Ended September 30, 2020



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

$
(200
)

$
(191
)

$
(391
)

$
589


$
59


$
648

Loans (excluding PPP)


190



(1,082
)


(892
)


69



(92
)


(23
)
PPP loans - round 1


(1,454
)


1,259



(195
)


412



(1,507
)


(1,095
)
PPP loans - round 2


(93
)


671



578



—



1,015



1,015

Total loans


(1,357
)


848



(509
)


481



(584
)


(103
)
Federal funds sold and interest-bearing deposits with banks


21



8



29



(1
)


16



15

Total interest income


(1,536
)


665



(871
)


1,069



(509
)


560

Interest Expense:
























Savings, NOW, money market and interest checking

$
48


$
(51
)

$
(3
)

$
638


$
(747
)

$
(109
)
Time deposits


(34
)


(89
)


(123
)


(265
)


(949
)


(1,214
)
Other borrowings


(20
)


5



(15
)


(93
)


(37
)


(130
)
FHLB advances


(30
)


—



(30
)


(10
)


(84
)


(94
)
Junior subordinated debentures


(4
)


3



(1
)


(25
)


48



23

Total interest expense

$
(40
)

$
(132
)

$
(172
)

$
245


$
(1,769
)

$
(1,524
)
Net interest income

$
(1,496
)

$
797


$
(699
)

$
824


$
1,260


$
2,084

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



For the Three Months Ended



September 30, 2021


June 30, 2021


September 30, 2020



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

$
352,781


$
2,142



2.41
%

$
386,637


$
2,533



2.63
%

$
256,059


$
1,494



2.32
%
Loans excluding PPP loans ⁽²⁾


992,594



10,389



4.15
%


974,525



11,281



4.64
%


978,954



10,412



4.23
%
PPP loans - Round 1 ⁽²⁾


1,666



87



20.72
%


9,344



282



12.11
%


104,429



1,182



4.50
%
PPP loans - Round 2 ⁽²⁾


21,510



1,015



18.72
%


33,080



437



5.30
%


—



—



—

Total loans ⁽²⁾


1,015,770



11,491



4.49
%


1,016,949



12,000



4.73
%


1,083,383



11,594



4.26
%
Interest bearing deposits due from other banks


84,756



33



0.15
%


22,085



4



0.07
%


92,701



18



0.08
%
Total interest-earning assets

$
1,453,307


$
13,666



3.73
%

$
1,425,671


$
14,537



4.09
%

$
1,432,143


$
13,106



3.64
%
Allowance for loan losses


(11,519
)










(15,305
)










(18,641
)








Other assets


94,892











91,039











86,109









Total assets

$
1,536,680










$
1,501,405










$
1,499,611














































Liabilities




































Savings, NOW, money market, interest checking

$
561,715


$
365



0.26
%

$
507,089


$
363



0.29
%

$
406,888


$
469



0.46
%
Time deposits


439,640



1,225



1.11
%


452,443



1,353



1.20
%


499,665



2,444



1.95
%
Total interest-bearing deposits

$
1,001,355


$
1,590



0.63
%

$
959,532


$
1,716



0.72
%

$
906,553


$
2,913



1.28
%
Other borrowings


25,534



28



0.44
%


43,803



43



0.39
%


101,829



158



0.62
%
FHLB advances


86,500



204



0.94
%


101,352



234



0.93
%


89,622



298



1.32
%
Junior subordinated debentures


64,546



1,105



6.79
%


67,213



1,106



6.60
%


65,903



1,082



6.53
%
Total interest-bearing liabilities

$
1,177,935


$
2,927



0.99
%

$
1,171,900


$
3,099



1.06
%

$
1,163,907


$
4,451



1.52
%
Non-interest-bearing deposits


160,980











146,242











147,595









Other liabilities


19,566











12,741











18,314









Total liabilities

$
1,358,481










$
1,330,883










$
1,329,816














































Shareholders' equity


178,199











170,522











169,795









Total liabilities and equity

$
1,536,680










$
1,501,405










$
1,499,611














































Net interest income





$
10,739










$
11,438










$
8,655





Interest rate spread ⁽³⁾










2.74
%










3.03
%










2.12
%
Net interest margin ⁽⁴⁾










2.93
%










3.22
%










2.40
%
Ratio of interest-earning assets to interest-bearing liabilities


1.23











1.22











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.

Provision for Loan Losses

A recovery of provision for loan losses of $0.6 million was recorded for the three months ended September 30, 2021, compared to a recovery of provision for loan losses of $4.3 million for the three months ended June 30, 2021. The recovery of provision during for the third quarter was primarily the result of a $14.0 million decrease in substandard rated loans and corresponding reserves related to the inherent risk associated with those loans.
Year-over-over, provision for loan losses decreased $0.7 million compared to the three months ended September 30, 2020. The reduction was primarily the result of the improvement in asset quality and the reduction in the inherent risk in the loan portfolio associated with COVID-19.

Non-Interest Income

Total non-interest income for the three months ended September 30, 2021, increased $1.0 million, or 42.4%, to $3.2 million from the three months ended June 30, 2021, primarily due to the $1.5 million loss on security sales in the second quarter. Year-over-year non-interest income decreased $0.5 million, or 12.7%, from the three months ended September 30, 2020, primarily due to fewer loans sold on the secondary market during the quarter and loans paying off resulting in a loss in loan serving rights.
Loan servicing fees quarter-over-quarter were virtually unchanged and increased $0.2 million year-over-year. The weighted average servicing fees were unchanged from the three months ended June 30, 2021 and increased three basis points from the quarter ended September 30, 2020. In addition, loans sold with servicing retained decreased $13.8 million, or 1.6%, and increased $41.5 million, or 5.2%, from June 30, 2021 and September 30, 2020, respectively.



For the Three Months Ended



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

Non-Interest Income




















Service charges

$
137


$
165


$
119


$
108


$
108

Crop insurance commission


309



291



301



517



271

Gain on sale of residential loans, net


69



89



93



219



17

Loan servicing fees


2,287



2,278



2,158



1,974



2,054

Gain on sale of service-retained loans, net


1,631



1,784



1,587



1,828



1,268

Loan servicing right pay-down losses


(1,696
)


(1,162
)


(1,119
)


(635
)


(551
)
Total loan servicing right income


(65
)


622



468



1,193



717

Gain (loss) on sale of securities


—



(1,453
)


—



—



101

Referral fees


—



—



319



64



110

Other


469



259



254



283



294

Total non-interest income

$
3,206


$
2,251


$
3,712


$
4,358


$
3,672

Loans sold that the Company continued to service were $839.4 million as of September 30, 2021, a decrease of $13.8 million, or 1.6%, compared to June 30, 2021. The decrease was primarily the result of excess liquidity which resulted in the need for fewer loans to be sold on the secondary market. Loans sold and continued to service increased $41.5 million, or 5.2%, compared to September 30, 2020.



For the Three Months Ended



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

Loan servicing rights, end of period

$
19,413


$
19,478


$
18,864


$
18,396


$
17,203

Loans serviced, end of period


839,357



853,176



841,893



812,560



797,819

Loan servicing rights as a % of loans serviced


2.31
%


2.28
%


2.24
%


2.26
%


2.16
%





















Total loan servicing fees

$
2,287


$
2,278


$
2,158


$
1,974


$
2,054

Average loans serviced


846,267



847,535



827,227



805,190



779,939

Annualized loan servicing fees as a % of average loans serviced


1.08
%


1.08
%


1.04
%


0.98
%


1.05
%

Non-Interest Expense

Total non-interest expense for the three months ended September 30, 2021, increased $0.3 million, or 3.1%, from the second quarter of 2021 to $9.0 million, and increased $1.4 million, or 17.9%, from the three months ended September 30, 2020.
Employee compensation and benefits expense decreased for the three months ended September 30, 2021, by $0.6 million, or 9.0%, to $5.8 million compared to the three months ended June 30, 2021. The change was primarily the result of adjustments made to employee benefit programs as a result of the merger that was announced in the second quarter of 2021.
During the three months ended September 30, 2021, the Company made a $0.3 million one-time charitable contribution to further agricultural education in addition to normal giving.



For the Three Months Ended



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

Non-Interest Expense




















Employee compensation and benefits

$
5,846


$
6,426


$
5,582


$
6,687


$
4,766

Occupancy


331



293



279



297



321

Information processing


640



664



661



656



641

Professional fees


503



450



802



582



555

Business development


227



289



307



136



305

Charitable contributions


301



50



50



41



47

OREO expenses (income)


(2
)


52



23



20



47

Writedown of OREO


—



—



—



148



—

Net loss (gain) on sale of OREO


—



—



17



(326
)


9

Net loss (gain) on sale of fixed assets


(7
)


(1,075
)


(6
)


9



(2
)
Merger expenses


322



385



—



—



—

Depreciation and amortization


211



484



257



289



295

Other


665



747



792



955



683

Total non-interest expense

$
9,037


$
8,765


$
8,764


$
9,494


$
7,667

Asset Quality

Asset quality continued to improve during the third quarter of 2021. Substandard performing loans decreased by $11.6 million, or 41.7%, to $16.2 million at September 30, 2021, compared to June 30, 2021, primarily due to the pay-off of 4 customer relationships.
Substandard impaired loans decreased by $2.5 million, or 8.2%, to $27.9 million at September 30, 2021, compared to June 30, 2021, primarily due to the payoff from one commercial customer relationship. The following table presents loan balances by credit grade as of the dates indicated:



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

Loans by risk category:




















Sound/Acceptable/Satisfactory/Low Satisfactory

$
828,794


$
821,970


$
757,160


$
716,313


$
800,451

Watch


124,625



121,242



165,823



190,101



185,254

Special Mention


7,465



566



605



2,501



1,851

Substandard Performing


16,181



27,742



38,961



40,420



41,577

Substandard Impaired


27,892



30,370



49,115



46,950



46,793

Total loans

$
1,004,957


$
1,001,890


$
1,011,664


$
996,285


$
1,075,926

Adverse classified asset ratio ⁽¹⁾


19.02
%


24.72
%


39.61
%


39.43
%


42.64
%

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

Non-Performing Assets

Non-performing assets decreased in the third quarter of 2021 by $2.2 million, or 7.0%, primarily due to the $2.5 million substandard impaired loan pay-off discussed above.
Performing troubled debt restructurings (“TDRs”) not on nonaccrual decreased $1.0 million, or 12.5%, in the third quarter of 2021 to $6.7 million on September 30, 2021 from June 30, 2021. The decrease was primarily due to one commercial customer that had loans that were re-underwritten and were no longer a TDR due to improved performance and financial trends.



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

Non-Performing Assets:




















Nonaccrual loans

$
27,892


$
30,071


$
43,973


$
41,624


$
41,351

Other real estate owned


914



914



739



1,077



3,064

Total non-performing assets

$
28,806


$
30,985


$
44,712


$
42,701


$
44,415






















Performing TDRs not on nonaccrual

$
6,686


$
7,641


$
13,495


$
18,592


$
19,036






















Non-performing assets as a % of total loans


2.87
%


3.09
%


4.42
%


4.29
%


4.13
%
Non-performing assets as a % of total assets


1.87
%


2.04
%


3.00
%


2.90
%


2.98
%
Allowance for loan losses as a % of total loans


1.07
%


1.14
%


1.49
%


1.49
%


1.73
%
Net charge-offs (recoveries) quarter-to-date

$
118


$
(662
)

$
(32
)

$
3,386


$
(1
)

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 (1) the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; (2) the risk that integration of the Company’s operations with those of Nicolet will be materially delayed or will be more costly or difficult than expected; (3) the parties’ inability to meet expectations regarding the timing of the proposed merger; (4) changes to tax legislation and their potential effects on the accounting for the merger; (5) the failure to satisfy conditions to completion of the proposed merger; (7) the failure of the proposed merger to close for any other reason; (8) diversion of management’s attention from ongoing business operations and opportunities due to the proposed merger; (9) the challenges of integrating and retaining key employees; (10) the effect of the announcement of the proposed merger on Nicolet’s, the Company’s or the combined company’s respective customer and employee relationships and operating results; (11) the possibility that the proposed merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (12) dilution caused by Nicolet’s issuance of additional shares of Nicolet common stock in connection with the merger; and (13) the effects of the COVID-19 pandemic and its 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)

September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands, except per share data)

Period-End Balance Sheet:




















Assets




















Cash and cash equivalents

$
105,548


$
72,745


$
17,820


$
19,500


$
53,283

Securities available-for-sale, at fair value


338,211



349,334



385,240



352,854



298,476

Loans held for sale


11,139



15,805



5,789



35,976



2,593

Agricultural loans


631,833



613,514



609,482



606,881



619,617

Commercial loans


322,715



319,878



317,625



313,265



317,782

Paycheck Protection Plan loans


11,618



33,400



46,249



37,790



98,421

Multi-family real estate loans


31,885



30,310



33,287



33,457



35,496

Residential real estate loans


4,988



4,563



4,776



4,627



4,489

Installment and consumer other


1,918



225



245



265



121

Total loans


1,004,957



1,001,890



1,011,664



996,285



1,075,926

Allowance for loan losses


(10,715
)


(11,466
)


(15,082
)


(14,808
)


(18,649
)
Net loans


994,242



990,424



996,582



981,477



1,057,277

Other assets


90,854



88,764



85,897



82,551



80,426

Total Assets

$
1,539,994


$
1,517,072


$
1,491,328


$
1,472,358


$
1,492,055






















Liabilities and Shareholders' Equity




















Demand deposits

$
168,008


$
158,880


$
139,838


$
163,202


$
158,798

NOW accounts and interest checking


143,843



136,180



95,591



96,624



78,026

Savings


17,258



9,059



8,431



7,367



11,900

Money market accounts


415,813



394,486



390,741



344,250



325,900

Time deposits


262,658



259,386



278,591



304,580



322,992

Brokered deposits


157,583



159,087



159,034



80,456



101,808

National time deposits


16,333



18,648



26,302



44,347



50,747

Total deposits


1,181,496



1,135,726



1,098,528



1,040,826



1,050,171

Federal Reserve Discount Window advances


11,497



34,174



47,255



47,531



99,693

FHLB advances


85,000



88,000



100,000



129,000



84,600

Subordinated debentures


67,598



67,519



67,179



67,111



67,025

Other liabilities


17,083



16,841



12,028



16,114



20,656

Total Liabilities


1,362,674



1,342,260



1,324,990



1,300,582



1,322,145






















Shareholders' equity


177,320



174,812



166,338



171,776



169,910

Total Liabilities and Shareholders' Equity

$
1,539,994


$
1,517,072


$
1,491,328


$
1,472,358


$
1,492,055






















Stock Price Information:




















High - Quarter-to-date

$
37.24


$
35.82


$
26.46


$
23.72


$
22.00

Low - Quarter-to-date

$
32.29


$
22.85


$
19.66


$
18.20


$
17.04

Market price - Quarter-end

$
36.06


$
33.96


$
23.97


$
22.08


$
18.80

Book value per share

$
27.97


$
27.68


$
25.99


$
26.42


$
25.72

Tangible book value per share ⁽¹⁾

$
27.97


$
27.68


$
25.98


$
26.42


$
25.71

Common shares outstanding


6,053,369



6,026,748



6,094,450



6,197,965



6,294,675

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




For the Three Months Ended



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands, except per share data)

Selected Income Statement Data:




















Interest and Dividend Income




















Loans, including fees

$
11,491


$
12,000


$
11,523


$
12,737


$
11,594

Taxable securities


1,821



2,205



1,887



1,777



1,293

Tax-exempt securities


260



261



246



201



167

Federal funds sold and other


94



71



58



10



52

Total interest and dividend income


13,666



14,537



13,714



14,725



13,106






















Interest Expense




















Deposits


1,590



1,716



2,069



2,482



2,914

FHLB advances and other borrowed funds


232



277



321



362



456

Subordinated debentures


1,106



1,106



1,106



1,107



1,082

Total interest expense


2,928



3,099



3,496



3,951



4,452

Net interest income


10,738



11,438



10,218



10,774



8,654

Provision for loan losses


(634
)


(4,278
)


242



(455
)


79

Net interest income after provision for loan losses


11,372



15,716



9,976



11,229



8,575






















Non-Interest Income




















Services charges


137



165



119



108



108

Crop insurance commission


309



291



301



517



271

Gain on sale of residential loans, net


69



89



93



219



17

Loan servicing fees


2,287



2,278



2,158



1,974



2,054

Gain on sale of service-retained loans, net


1,631



1,784



1,587



1,828



1,268

Loan servicing right pay-down losses


(1,696
)


(1,162
)


(1,119
)


(635
)


(551
)
Total loan servicing right income


(65
)


622



468



1,193



717

Gain (loss) on sale of securities


—



(1,453
)


—



—



101

Referral fees ⁽¹⁾


—



—



319



64



110

Other


469



259



254



283



294

Total non-interest income


3,206



2,251



3,712



4,358



3,672






















Non-Interest Expense




















Employee compensation and benefits


5,846



6,426



5,582



6,687



4,766

Occupancy


331



293



279



297



321

Information processing


640



664



661



656



641

Professional fees


503



450



802



582



555

Business development


227



289



307



136



305

Contributions


301



50



50



41



47

OREO expenses (income)


(2
)


52



23



20



47

Writedown of OREO


—



—



—



148



—

Net loss (gain) on sale of OREO


—



—



17



(326
)


9

Net loss (gain) on sale of fixed assets


(7
)


(1,075
)


(6
)


9



(2
)
Merger expenses


322



385



—



—



—

Depreciation and amortization


211



484



257



289



295

Other


665



747



792



955



683

Total non-interest expense


9,037



8,765



8,764



9,494



7,667

Income before income taxes


5,541



9,202



4,924



6,093



4,580

Income tax expense


1,433



2,459



996



1,575



1,164

NET INCOME

$
4,108


$
6,743


$
3,928


$
4,518


$
3,416






















Basic earnings per share

$
0.66


$
1.08


$
0.62


$
0.70


$
0.52

Diluted earnings per share

$
0.65


$
1.07


$
0.62


$
0.70


$
0.52

Dividends declared per share

$
0.10


$
0.10


$
0.10


$
0.10


$
0.07

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




For the Three Months Ended



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands, except share data)

Other Data:




















Return on average assets ⁽¹⁾


1.07
%


1.80
%


1.06
%


1.23
%


0.91
%
Return on average shareholders' equity ⁽¹⁾


9.22
%


15.82
%


9.11
%


10.56
%


8.05
%
Return on average common shareholders' equity ⁽¹⁾⁽²⁾


9.47
%


16.40
%


9.29
%


10.88
%


8.25
%
Efficiency ratio ⁽¹⁾⁽²⁾


64.86
%


64.98
%


62.84
%


63.86
%


62.66
%
Equity to assets ratio


11.51
%


11.52
%


11.15
%


11.67
%


11.39
%
Tangible common equity to tangible assets ⁽²⁾


10.99
%


10.99
%


10.62
%


11.12
%


10.85
%





















Common Share Data:




















Net income from continuing operations

$
4,108


$
6,743


$
3,928


$
4,518


$
3,416

Less: Preferred stock dividends


80



79



81



80



80

Income available to common shareholders

$
4,028


$
6,664


$
3,847


$
4,438


$
3,336






















Weighted average number of common shares issued


7,260,493



7,242,997



7,218,358



7,206,238



7,202,000

Less: Weighted average treasury shares


1,223,728



1,179,271



1,080,089



957,573



882,153

Plus: Weighted average non-vested restricted stock units


97,891



97,915



63,991



67,529



66,492

Weighted average number of common shares outstanding


6,134,656



6,161,641



6,202,260



6,316,194



6,386,339

Effect of dilutive options


81,216



46,438



34,465



28,025



20,915

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


6,215,872



6,208,079



6,236,725



6,344,219



6,407,254

(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



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands)

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




















Return on average shareholders' equity


9.22
%


15.82
%


9.11
%


10.56
%


8.05
%
Effect of excluding average preferred shareholders' equity


0.25
%


0.58
%


0.18
%


0.32
%


0.20
%
Return on average common shareholders' equity


9.47
%


16.40
%


9.29
%


10.88
%


8.25
%





















Efficiency ratio ⁽²⁾ :




















Non-interest expense

$
9,037


$
8,765


$
8,764


$
9,494


$
7,667

Net gain (loss) on sales and write-downs of OREO


—



—



(17
)


178



(9
)
Net gain (loss) on sale of fixed assets


7



1,075



6



(9
)


2

Adjusted non-interest expense (non-GAAP)

$
9,044


$
9,840


$
8,753


$
9,663


$
7,660






















Net interest income

$
10,738


$
11,438


$
10,218


$
10,774


$
8,654

Non-interest income


3,206



2,251



3,712



4,358



3,672

Net loss (gain) on sales of securities


—



1,453



—



—



(101
)
Operating revenue

$
13,944


$
15,142


$
13,930


$
15,132


$
12,225

Efficiency ratio


64.86
%


64.98
%


62.84
%


63.86
%


62.66
%

(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.

Non-GAAP Financial Measures (continued):



September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020


September 30, 2020



(dollars in thousands, except per share data)

Tangible book value per share and tangible common equity to tangible assets reconciliation ⁽¹⁾ :




















Common equity

$
169,320


$
166,812


$
158,338


$
163,776


$
161,910

Less: Core deposit intangible, net of amortization


2



12



29



54



86

Tangible common equity (non-GAAP)

$
169,318


$
166,800


$
158,309


$
163,722


$
161,824

Common shares outstanding


6,053,369



6,026,748



6,094,450



6,197,965



6,294,675

Tangible book value per share

$
27.97


$
27.68


$
25.98


$
26.42


$
25.71






















Total assets

$
1,539,994


$
1,517,072


$
1,491,328


$
1,472,358


$
1,492,055

Less: Core deposit intangible, net of amortization


2



12



29



54



86

Tangible assets (non-GAAP)

$
1,539,992


$
1,517,060


$
1,491,299


$
1,472,304


$
1,491,969

Tangible common equity to tangible assets


10.99
%


10.99
%


10.62
%


11.12
%


10.85
%





















Adverse classified asset ratio ⁽²⁾ :




















Substandard loans

$
44,073


$
58,112


$
88,076


$
87,370


$
88,370

Other real estate owned


914



914



739



1,077



3,064

Substandard unused commitments


1,824



2,130



5,091



4,049



5,124

Less: Substandard government guarantees


(6,162
)


(8,007
)


(8,485
)


(8,960
)


(7,002
)
Total adverse classified assets (non-GAAP)

$
40,649


$
53,149


$
85,421


$
83,536


$
89,556






















Total equity (Bank)

$
207,180


$
209,416


$
202,200


$
205,743


$
200,011

Accumulated other comprehensive gain on available for sale securities


(4,129
)


(5,854
)


(1,652
)


(8,686
)


(8,640
)
Allowance for loan losses


10,715



11,466



15,082



14,808



18,649

Adjusted total equity (non-GAAP)

$
213,766


$
215,028


$
215,630


$
211,865


$
210,020

Adverse classified asset ratio


19.02
%


24.72
%


39.61
%


39.43
%


42.64
%

(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

Twitter