EX-99.1 2 icbk-ex991_6.htm EX-99.1 icbk-ex991_6.htm

Exhibit 99.1

 


FOR IMMEDIATE RELEASE

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, Wisconsin, October 21, 2021 — 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 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: [email protected]

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.