County Bancorp, Inc. Announces Third Quarter of 2021 Earnings
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 | # of Loans | Balance | Deferred Fee | |||||||||||||||||||
(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, | June 30, | September 30, | ||||||||||
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 September 30, 2021 v. | |||||||||||||||||||||||
Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
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 | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ | Yields/ | ||||||||||||||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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 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, 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. | September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(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.
