County Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Recovery momentum building as positive credit trends continue to support sequential growth across key performance indicators
Highlights
Net income of $3.4 million, or $0.52 per diluted share, for the third quarter 2020
Loan servicing fees and right origination increased 26.1% to $2.8 million in the third quarter of 2020 due to a $35.8 million increase in loans sold and serviced
Provision for loan losses decreased $1.0 million to $0.1 million in the third quarter of 2020
Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased by $4.1 million and wholesale deposits decreased $26.9 million during the third quarter of 2020
Cost of funds decreased by 15 basis points in the sequential quarter to 1.52%, a decrease of 71 basis points since September 30, 2019
Provision for loan losses decreased $1.0 million to $0.1 million in the third quarter of 2020
Loans in payment deferral associated with COVID-19 customer support programs declined $100.1 million to $100.5 million or 9.3% of loans since June 30, 2020
Capital ratios remain strong with a Total Risk-Based Capital ratio of 20.4% and Tier 1 Leverage of 12.9%
MANITOWOC, Wis., Oct. 22, 2020 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), a community bank headquartered in Manitowoc, Wisconsin, today reported financial results for the third quarter ended September 30, 2020. Net income was $3.4 million, or $0.52 per diluted share, for the third quarter of 2020, compared to net income of $5.7 million, or $0.82 per diluted share, for the third quarter of 2019. For the nine months ended September 30, 2020, net income was $1.0 million, or $0.10 per diluted share, compared to net income of $13.1 million, or $1.89 per share, for the nine months ended September 30, 2019. The net income for the nine months ended September 30, 2020 included a $5.0 million goodwill impairment charge, or $0.76 loss per diluted share in the first quarter of 2020. Excluding that charge, net income for the nine months ended September 30, 2020 would have been $6.0 million, or $0.87 per diluted share.
Tim Schneider, President of County Bancorp, Inc., noted, “We continue to see generally positive credit trends across our loan portfolio and we’re highly encouraged by the momentum of the recovery across our business, as well as across the businesses and communities that we live in and support. Class III milk prices (cwt) continued to improve, ranging from $16.43 to $24.54 during the third quarter of 2020, with fourth quarter futures contracts trading from $17.53 to $19.53, which we believe will improve the credit outlook for many of our dairy borrowers. Loans in payment deferral associated with our customer pandemic support program declined $100.1 million during the third quarter. Loans rated watch or worse decreased by $13.1 million, which resulted in lower loan loss provision this quarter.”
Schneider continued, “The investments we’ve made in our agricultural loan offerings are starting to bear fruit, resulting in an increase in overall loan production activity over the last few months. We saw stronger activity in loan sales resulting in increased loan servicing fees and rights during the third quarter 2020, which contributed to improved noninterest income this quarter. Lastly, we continue to be highly encouraged by a strong loan pipeline moving into the fourth quarter 2020, which should continue to support our momentum.”
Loans and Securities
Total loans decreased $11.6 million, or 1.1%, during the third quarter of 2020, to $1.1 billion, and decreased $4.8 million, or 0.4%, since September 30, 2019.
The decrease was primarily due to the continued focus on long-term liquidity. Loan participations the Company continued to service were $797.8 million at September 30, 2020, an increase of $35.8 million, or 4.7%, compared to the second quarter of 2020, and an increase of $61.0 million, or 8.3%, compared to September 30, 2019.
Loans in payment deferral associated with COVID-19 customer support programs are $100.3 million, or 9.3% of total loans, at September 30, 2020, which is a decrease of 100.1, or 50.0%, million since June 30, 2020.
$4.9 million, or 5.3%, of Paycheck Protection Program (“PPP”) loans provided to our customers were forgiven by the Small Business Administration (“SBA”) during the third quarter of 2020 resulting in the Company having $98.4 million of PPP loans at September 30, 2020. As of September 30, 2020, $3.3 million of SBA origination fees were deferred until the associated loan is forgiven.
During the third quarter of 2020, investments increased by $71.5 million, or 31.5%. Purchases totaling $85.3 million were offset in part by $7.7 million in security sales and $5.8 million in maturities. Gain on the sale of securities was $0.1 million during the third quarter of 2020.
Deposits
Total deposits at September 30, 2020 were $1.1 billion, a decrease of $22.9 million, or 2.1%, from June 30, 2020, and a decrease $92.6 million, or 8.1%, year-over-year.
Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $4.1 million, or 0.5%, from June 30, 2020, to $897.6 million, and increased $79.4 million, or 9.7%, year-over-year.
The Company decreased its reliance on brokered deposits and national certificate of deposits by $26.9 million, or 15.0%, to $152.6 million during the third quarter of 2020, and decreased by $172.0 million, or 53.0% since September 30, 2019.
Net Interest Income and Margin
Net interest margin for the quarter ended September 30, 2020 was 2.40%. Net interest margin decreased 14 basis points quarter-to-quarter, and decreased 45 basis points year-over-year due primarily to the SBA PPP loans that were funded during the second quarter of 2020 at annual yield of 1.0%, as well as the repricing of loans in the declining rate environment. The issuance of subordinated debt during 2020 also adversely affected net interest margin by three basis points year-to-date.
Interest income on investment securities increased both quarter-to-quarter and year-over-year due to shifting balances from interest-bearing deposits with banks to investment securities with higher yields.
Loan interest income decreased compared to the sequential quarter and year-over-year periods primarily as a result of the lower yields on the previously mentioned PPP loans. The year-over-year decrease was also affected by the shift from loans held on balance sheet to loans sold and serviced.
Interest expense on savings, NOW, money market, and interest checking accounts decreased, despite the increase in average balance, by nine basis points in the linked quarter and by 110 basis points year-over year due to the market-driven drop in the federal funds rate.
Interest expense on time deposits decreased quarter-over-quarter due in part to the Company’s continued focus on shifting away from brokered time deposit balances for funding. Time deposits decreased year-over-year, primarily due to the Company’s shift away from wholesale funding. Rates paid on time deposits decreased by 36 basis points in both the linked quarter and year-over-year, which also contributed to the overall decrease in cost of funds.
Interest expense on subordinated debt increased quarter-over-quarter and year-over-year due to the $5.1 million of subordinated debt that was issued during the third quarter of 2020 and the $17.4 million of subordinated debt issued on June 30, 2020. Such subordinated debt was issued by the Company to take advantage of attractive market pricing and strengthen the Company's capital structure.
The table below presents the effects of changing rates and volumes on net interest income for the periods indicated.
Three Months Ended September 30, 2020 v. | Three Months Ended September 30, 2020 v. | |||||||||||||||||||||||
Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
Volume | Rate | Net | Volume | Rate | Net | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Interest Income: | ||||||||||||||||||||||||
Investment securities | $ | 122 | $ | (72 | ) | $ | 50 | $ | 527 | $ | (150 | ) | $ | 377 | ||||||||||
Loans | (146 | ) | (391 | ) | (537 | ) | (544 | ) | (2,892 | ) | (3,436 | ) | ||||||||||||
Federal funds sold and interest-bearing deposits with banks | 93 | (186 | ) | (93 | ) | (61 | ) | (533 | ) | (594 | ) | |||||||||||||
Total interest income | 69 | (649 | ) | (580 | ) | (78 | ) | (3,575 | ) | (3,653 | ) | |||||||||||||
Interest Expense: | ||||||||||||||||||||||||
Savings, NOW, money market and interest checking | $ | 40 | $ | (96 | ) | $ | (56 | ) | $ | 431 | $ | (1,238 | ) | $ | (807 | ) | ||||||||
Time deposits | (288 | ) | (464 | ) | (752 | ) | (1,256 | ) | (598 | ) | (1,854 | ) | ||||||||||||
Other borrowings | 12 | 131 | 143 | 150 | (1 | ) | 149 | |||||||||||||||||
FHLB advances | (46 | ) | 16 | (30 | ) | 80 | (19 | ) | 61 | |||||||||||||||
Junior subordinated debentures | 346 | — | 346 | 347 | 48 | 395 | ||||||||||||||||||
Total interest expense | $ | 64 | $ | (413 | ) | $ | (349 | ) | $ | (248 | ) | $ | (1,808 | ) | $ | (2,056 | ) | |||||||
Net interest income | $ | 5 | $ | (236 | ) | $ | (231 | ) | $ | 170 | $ | (1,767 | ) | $ | (1,597 | ) | ||||||||
The following table sets forth average balances, average yields and rates, and income and expenses for the period indicated.
For the Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||
Average | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ | Yields/ | ||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Investment securities | $ | 256,059 | $ | 1,494 | 2.32 | % | $ | 237,082 | $ | 1,444 | 2.44 | % | $ | 159,091 | $ | 1,117 | 2.81 | % | ||||||||||||||||||
Loans (2) | 1,083,383 | 11,594 | 4.26 | % | 1,098,327 | 12,131 | 4.42 | % | 1,126,243 | 15,030 | 5.34 | % | ||||||||||||||||||||||||
Interest bearing deposits due from other banks | 92,701 | 18 | 0.08 | % | 64,142 | 111 | 0.69 | % | 104,253 | 612 | 2.35 | % | ||||||||||||||||||||||||
Total interest-earning assets | $ | 1,432,143 | $ | 13,106 | 3.64 | % | $ | 1,399,551 | $ | 13,686 | 3.91 | % | $ | 1,389,587 | $ | 16,759 | 4.82 | % | ||||||||||||||||||
Allowance for loan losses | (18,641 | ) | (17,844 | ) | (16,209 | ) | ||||||||||||||||||||||||||||||
Other assets | 86,109 | 85,716 | 78,664 | |||||||||||||||||||||||||||||||||
Total assets | $ | 1,499,611 | $ | 1,467,423 | $ | 1,452,042 | ||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||
Savings, NOW, money market, interest checking | $ | 406,888 | $ | 469 | 0.46 | % | $ | 379,991 | $ | 525 | 0.55 | % | $ | 326,592 | $ | 1,276 | 1.56 | % | ||||||||||||||||||
Time deposits | 499,665 | 2,444 | 1.95 | % | 553,616 | 3,196 | 2.31 | % | 745,032 | 4,298 | 2.31 | % | ||||||||||||||||||||||||
Total interest-bearing deposits | $ | 906,553 | $ | 2,913 | 1.28 | % | $ | 933,607 | $ | 3,721 | 1.59 | % | $ | 1,071,624 | $ | 5,574 | 2.08 | % | ||||||||||||||||||
Other borrowings | 101,829 | 158 | 0.62 | % | 66,910 | 15 | 0.09 | % | 804 | 9 | 4.60 | % | ||||||||||||||||||||||||
FHLB advances | 89,622 | 298 | 1.32 | % | 103,916 | 328 | 1.26 | % | 48,857 | 237 | 1.94 | % | ||||||||||||||||||||||||
Junior subordinated debentures | 65,903 | 1,082 | 6.53 | % | 45,090 | 736 | 6.52 | % | 44,800 | 687 | 6.14 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 1,163,907 | $ | 4,451 | 1.52 | % | $ | 1,149,523 | $ | 4,800 | 1.67 | % | $ | 1,166,085 | $ | 6,507 | 2.23 | % | ||||||||||||||||||
Non-interest bearing deposits | 147,595 | 134,271 | 105,578 | |||||||||||||||||||||||||||||||||
Other liabilities | 18,314 | 16,749 | 14,801 | |||||||||||||||||||||||||||||||||
Total liabilities | $ | 1,329,816 | $ | 1,300,543 | $ | 1,286,464 | ||||||||||||||||||||||||||||||
Shareholders' equity | 169,795 | 166,880 | 165,578 | |||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 1,499,611 | $ | 1,467,423 | $ | 1,452,042 | ||||||||||||||||||||||||||||||
Net interest income | $ | 8,655 | $ | 8,886 | $ | 10,252 | ||||||||||||||||||||||||||||||
Interest rate spread (3) | 2.12 | % | 2.24 | % | 2.59 | % | ||||||||||||||||||||||||||||||
Net interest margin (4) | 2.40 | % | 2.54 | % | 2.95 | % | ||||||||||||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities | 1.23 | 1.22 | 1.19 | |||||||||||||||||||||||||||||||||
(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.
Non-Interest Income
Loan servicing income increased quarter-over-quarter primarily due to a three basis points increase in loan servicing fees as a percent of average loans serviced for the third quarter and a $35.8 million increase total loans serviced. Year-over-year, loan servicing fees increased due primarily to an 11 basis point increase in loan servicing fees as a percent of average loans serviced and an increase in loans serviced.
Loan servicing right origination increased both quarter-over-quarter and decreased year-over-year. The increase in the quarter was primarily due to an increase in loans sold and serviced. The loan servicing rights as a percent of loans serviced remained at 2.16% since June 30, 2020. The year-over-year increase from 1.54% at September 30, 2019 is due to loans being recorded at fair value in 2020 versus amortized cost in 2019.
$7.7 million of securities were sold during the third quarter of 2020, which resulted in a $0.1 million gain.
For the Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-Interest Income | ||||||||||||||||||||
Service charges | $ | 379 | $ | 368 | $ | 342 | $ | 549 | $ | 348 | ||||||||||
Gain on sale of loans, net | 17 | 4 | 38 | 34 | 87 | |||||||||||||||
Loan servicing fees | 2,054 | 1,923 | 1,831 | 1,778 | 1,677 | |||||||||||||||
Loan servicing right origination | 717 | 275 | 289 | 1,146 | 1,741 | |||||||||||||||
Income on OREO | — | 3 | — | 54 | 10 | |||||||||||||||
Gain on sale of securities | 101 | 570 | — | — | — | |||||||||||||||
Referral fees | 110 | 121 | 17 | 20 | 53 | |||||||||||||||
Other | 294 | 237 | 203 | 161 | 171 | |||||||||||||||
Total non-interest income | $ | 3,672 | $ | 3,501 | $ | 2,720 | $ | 3,742 | $ | 4,087 | ||||||||||
For the Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Loan servicing rights, end of period | $ | 17,203 | $ | 16,486 | $ | 16,211 | $ | 12,509 | $ | 11,362 | ||||||||||
Loans serviced, end of period | 797,819 | 762,058 | 747,553 | 751,738 | 736,823 | |||||||||||||||
Loan servicing rights as a % of loans serviced | 2.16 | % | 2.16 | % | 2.17 | % | 1.66 | % | 1.54 | % | ||||||||||
Total loan servicing fees | $ | 2,054 | $ | 1,923 | $ | 1,831 | $ | 1,778 | $ | 1,677 | ||||||||||
Average loans serviced | 779,939 | 754,806 | 749,646 | 744,281 | 716,226 | |||||||||||||||
Annualized loan servicing fees as a % of average loans serviced | 1.05 | % | 1.02 | % | 0.98 | % | 0.96 | % | 0.94 | % | ||||||||||
Non-Interest Expense
The increase in employee compensation and benefits expense in the quarter was primarily the result of a 4.2% increase in headcount.
During the third quarter of 2020, two properties in other real estate owned totaling $0.3 million were sold for a loss of $9 thousand.
For the Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Non-Interest Expense | ||||||||||||||||||||
Employee compensation and benefits | $ | 4,766 | $ | 4,594 | $ | 5,260 | $ | 5,696 | $ | 4,735 | ||||||||||
Occupancy | 321 | 305 | 354 | 417 | 313 | |||||||||||||||
Information processing | 641 | 663 | 670 | 645 | 683 | |||||||||||||||
Professional fees | 555 | 480 | 401 | 371 | 483 | |||||||||||||||
Business development | 305 | 333 | 366 | 335 | 351 | |||||||||||||||
OREO expenses | 47 | 44 | 116 | 59 | 57 | |||||||||||||||
Writedown of OREO | — | — | 1,360 | 376 | — | |||||||||||||||
Net loss (gain) on sale of OREO | 9 | — | 4 | (231 | ) | 160 | ||||||||||||||
Depreciation and amortization | 295 | 303 | 301 | 319 | 319 | |||||||||||||||
Goodwill impairment | — | — | 5,038 | — | — | |||||||||||||||
Other | 728 | 743 | 1,148 | 2,278 | 567 | |||||||||||||||
Total non-interest expense | $ | 7,667 | $ | 7,465 | $ | 15,018 | $ | 10,265 | $ | 7,668 | ||||||||||
Asset Quality
Watch rated loans improved $12.8 million quarter-over-quarter and $17.4 million year-over-year.
The increase in substandard loans and the adverse classified asset ratio in the quarter were primarily due to the downgrade of one agricultural customer.
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Loans by risk category(1): | ||||||||||||||||||||
Sound/Acceptable/Satisfactory/Low Satisfactory | $ | 800,451 | $ | 798,945 | $ | 706,247 | $ | 724,444 | $ | 771,567 | ||||||||||
Watch | 185,254 | 198,044 | 219,459 | 216,098 | 202,615 | |||||||||||||||
Special Mention | 1,851 | 1,856 | 15,036 | 9,239 | 9,346 | |||||||||||||||
Substandard Performing | 41,577 | 47,741 | 34,179 | 49,774 | 71,133 | |||||||||||||||
Substandard Impaired | 46,793 | 40,938 | 37,515 | 36,218 | 26,106 | |||||||||||||||
Total loans | $ | 1,075,926 | $ | 1,087,524 | $ | 1,012,436 | $ | 1,035,773 | $ | 1,080,767 | ||||||||||
Adverse classified asset ratio (2) | 42.64 | % | 41.73 | % | 32.35 | % | 39.85 | % | 45.67 | % | ||||||||||
(1) Troubled debt restructurings are presented in their internal risk rating category rather than reclassified to substandard impaired. Prior quarters have been reclassified to reflect this change.
(2) 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 increased in the quarter by $6.3 million, or 16.6%, sequentially compared to the second quarter of 2020. Year-over-year, non-performing assets increased $16.4 million, or 58.5%, due to a $11.1 million increase in non-accrual agricultural loans and a $9.5 million increase in non-accrual commercial loans, which were partially offset by a $4.2 million decrease in OREO properties.
A provision for loan losses of $0.1 million was recorded for the three months ended September 30, 2020 compared to a provision of $ 1.1 million for the three months ended June 30, 2020. The decrease in provision in the linked quarter was primarily the result of the improvement of watch and substandard performing rated credits, which was only partially offset by the increase in specific impairments on impaired credits.
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-Performing Assets: | ||||||||||||||||||||
Nonaccrual loans | $ | 41,351 | $ | 35,456 | $ | 32,051 | $ | 30,968 | $ | 20,776 | ||||||||||
Other real estate owned | 3,064 | 2,629 | 3,247 | 5,521 | 7,252 | |||||||||||||||
Total non-performing assets | $ | 44,415 | $ | 38,085 | $ | 35,298 | $ | 36,489 | $ | 28,028 | ||||||||||
Performing TDRs not on nonaccrual | $ | 19,036 | $ | 21,986 | $ | 21,853 | $ | 21,784 | $ | 28,520 | ||||||||||
Non-performing assets as a % of total loans | 4.13 | % | 3.50 | % | 3.49 | % | 3.52 | % | 2.59 | % | ||||||||||
Non-performing assets as a % of total assets | 2.98 | % | 2.52 | % | 2.61 | % | 2.65 | % | 1.98 | % | ||||||||||
Allowance for loan losses as a % of total loans | 1.73 | % | 1.71 | % | 1.73 | % | 1.47 | % | 1.39 | % | ||||||||||
Net charge-offs (recoveries) quarter-to-date | $ | (1 | ) | $ | 120 | $ | (62 | ) | $ | (253 | ) | $ | 39 | |||||||
Conference Call
The Company will host an earnings call tomorrow, October 23, 2020, at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President, and Glen L. Stiteley, CFO. The earnings call will be broadcast over the Internet on the Company’s website at Investors.ICBK.com. In addition, you may listen to the Company’s earnings call via telephone by dialing (844) 835-9984. Investors should visit the Company’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.
A replay of the earnings call will be available until October 23, 2021, by visiting the Company’s website at Investors.ICBK.com/QuarterlyResults.
About County Bancorp, Inc.
County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and its wholly owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin. The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches it has developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending. It also serves business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin. Its customers are served from its full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and its loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.
Forward-Looking Statements
This press release includes "forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission, including the effects of the COVID-19 pandemic and its potential 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 | $ | 53,283 | $ | 127,432 | $ | 21,545 | $ | 129,011 | $ | 120,845 | ||||||||||
Securities available-for-sale, at fair value | 298,476 | 226,971 | 246,148 | 158,733 | 154,962 | |||||||||||||||
Loans held for sale | 2,593 | 11,847 | 14,388 | 2,151 | 4,192 | |||||||||||||||
Agricultural loans | 619,617 | 624,340 | 642,066 | 659,725 | 673,742 | |||||||||||||||
Commercial loans | 317,782 | 328,368 | 325,310 | 331,723 | 360,132 | |||||||||||||||
Paycheck Protection Plan loans | 98,421 | 103,317 | — | — | — | |||||||||||||||
Multi-family real estate loans | 35,496 | 30,439 | 42,198 | 41,070 | 43,487 | |||||||||||||||
Residential real estate loans | 4,489 | 975 | 2,753 | 2,888 | 3,183 | |||||||||||||||
Installment and consumer other | 121 | 85 | 109 | 367 | 223 | |||||||||||||||
Total loans | 1,075,926 | 1,087,524 | 1,012,436 | 1,035,773 | 1,080,767 | |||||||||||||||
Allowance for loan losses | (18,649 | ) | (18,569 | ) | (17,547 | ) | (15,267 | ) | (15,065 | ) | ||||||||||
Net loans | 1,057,277 | 1,068,955 | 994,889 | 1,020,506 | 1,065,702 | |||||||||||||||
Other assets | 80,426 | 78,712 | 78,004 | 68,378 | 69,263 | |||||||||||||||
Total Assets | $ | 1,492,055 | $ | 1,513,917 | $ | 1,354,974 | $ | 1,378,779 | $ | 1,414,964 | ||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||
Demand deposits | $ | 158,798 | $ | 149,963 | $ | 117,434 | $ | 138,489 | $ | 117,224 | ||||||||||
NOW accounts and interest checking | 78,026 | 81,656 | 64,873 | 63,781 | 56,637 | |||||||||||||||
Savings | 11,900 | 8,369 | 6,566 | 15,708 | 6,981 | |||||||||||||||
Money market accounts | 325,900 | 307,083 | 237,889 | 242,539 | 248,608 | |||||||||||||||
Time deposits | 322,992 | 346,482 | 364,930 | 375,100 | 388,759 | |||||||||||||||
Brokered deposits | 101,808 | 121,503 | 161,882 | 166,340 | 206,474 | |||||||||||||||
National time deposits | 50,747 | 57,997 | 66,386 | 99,485 | 118,070 | |||||||||||||||
Total deposits | 1,050,171 | 1,073,053 | 1,019,960 | 1,101,442 | 1,142,753 | |||||||||||||||
Federal Reserve Discount Window advances | 99,693 | 99,693 | — | — | — | |||||||||||||||
FHLB advances | 84,600 | 93,400 | 109,400 | 44,400 | 44,400 | |||||||||||||||
Subordinated debentures | 67,025 | 61,910 | 44,896 | 44,858 | 44,820 | |||||||||||||||
Other liabilities | 20,656 | 17,336 | 15,672 | 16,050 | 14,239 | |||||||||||||||
Total Liabilities | 1,322,145 | 1,345,392 | 1,189,928 | 1,206,750 | 1,246,212 | |||||||||||||||
Shareholders' equity | 169,910 | 168,525 | 165,046 | 172,029 | 168,752 | |||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,492,055 | $ | 1,513,917 | $ | 1,354,974 | $ | 1,378,779 | $ | 1,414,964 | ||||||||||
Stock Price Information: | ||||||||||||||||||||
High - Quarter-to-date | $ | 22.00 | $ | 24.67 | $ | 27.19 | $ | 27.98 | $ | 20.99 | ||||||||||
Low - Quarter-to-date | $ | 17.04 | $ | 17.13 | $ | 13.55 | $ | 18.76 | $ | 16.80 | ||||||||||
Market price - Quarter-end | $ | 18.80 | $ | 20.93 | $ | 18.50 | $ | 25.63 | $ | 19.62 | ||||||||||
Book value per share | $ | 25.72 | $ | 25.18 | $ | 24.17 | $ | 24.32 | $ | 23.89 | ||||||||||
Tangible book value per share (1) | $ | 25.71 | $ | 25.16 | $ | 24.15 | $ | 23.58 | $ | 23.10 | ||||||||||
Common shares outstanding | 6,294,675 | 6,375,150 | 6,496,790 | 6,734,132 | 6,727,908 | |||||||||||||||
(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(1) | $ | 11,594 | $ | 12,009 | $ | 12,565 | $ | 13,671 | $ | 14,977 | ||||||||||
Taxable securities | 1,293 | 1,283 | 1,282 | 1,106 | 1,117 | |||||||||||||||
Tax-exempt securities | 167 | 162 | 6 | — | — | |||||||||||||||
Federal funds sold and other | 52 | 111 | 225 | 442 | 612 | |||||||||||||||
Total interest and dividend income | 13,106 | 13,565 | 14,078 | 15,219 | 16,706 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Deposits | 2,914 | 3,721 | 4,347 | 4,781 | 5,574 | |||||||||||||||
FHLB advances and other borrowed funds | 456 | 343 | 244 | 225 | 246 | |||||||||||||||
Subordinated debentures | 1,082 | 736 | 706 | 695 | 687 | |||||||||||||||
Total interest expense | 4,452 | 4,800 | 5,297 | 5,701 | 6,507 | |||||||||||||||
Net interest income | 8,654 | 8,765 | 8,781 | 9,518 | 10,199 | |||||||||||||||
Provision for loan losses | 79 | 1,142 | 2,218 | (51 | ) | (1,154 | ) | |||||||||||||
Net interest income after provision for loan losses | 8,575 | 7,623 | 6,563 | 9,569 | 11,353 | |||||||||||||||
Non-Interest Income | ||||||||||||||||||||
Services charges | 379 | 368 | 342 | 549 | 348 | |||||||||||||||
Gain on sale of loans, net | 17 | 4 | 38 | 34 | 87 | |||||||||||||||
Loan servicing fees | 2,054 | 1,923 | 1,831 | 1,778 | 1,677 | |||||||||||||||
Loan servicing right origination | 717 | 275 | 289 | 1,146 | 1,741 | |||||||||||||||
Income on OREO | — | 3 | — | 54 | 10 | |||||||||||||||
Gain on sale of securities | 101 | 570 | — | — | — | |||||||||||||||
Referral fees | 110 | 121 | 17 | 20 | 53 | |||||||||||||||
Other | 294 | 237 | 203 | 161 | 171 | |||||||||||||||
Total non-interest income | 3,672 | 3,501 | 2,720 | 3,742 | 4,087 | |||||||||||||||
Non-Interest Expense | ||||||||||||||||||||
Employee compensation and benefits | 4,766 | 4,594 | 5,260 | 5,696 | 4,735 | |||||||||||||||
Occupancy | 321 | 305 | 354 | 417 | 313 | |||||||||||||||
Information processing | 641 | 663 | 670 | 645 | 683 | |||||||||||||||
Professional fees | 555 | 480 | 401 | 371 | 483 | |||||||||||||||
Business development | 305 | 333 | 366 | 335 | 351 | |||||||||||||||
OREO expenses | 47 | 44 | 116 | 59 | 57 | |||||||||||||||
Writedown of OREO | — | — | 1,360 | 376 | — | |||||||||||||||
Net loss (gain) on sale of OREO | 9 | — | 4 | (231 | ) | 160 | ||||||||||||||
Depreciation and amortization | 295 | 303 | 301 | 319 | 319 | |||||||||||||||
Goodwill impairment | — | — | 5,038 | — | — | |||||||||||||||
Other | 728 | 743 | 1,148 | 2,278 | 567 | |||||||||||||||
Total non-interest expense | 7,667 | 7,465 | 15,018 | 10,265 | 7,668 | |||||||||||||||
Income before income taxes | 4,580 | 3,659 | (5,735 | ) | 3,046 | 7,772 | ||||||||||||||
Income tax expense (benefit) | 1,164 | 926 | (547 | ) | (258 | ) | 2,090 | |||||||||||||
NET INCOME (LOSS) | $ | 3,416 | $ | 2,733 | $ | (5,188 | ) | $ | 3,304 | $ | 5,682 | |||||||||
Basic earnings (loss) per share | $ | 0.52 | $ | 0.40 | $ | (0.79 | ) | $ | 0.47 | $ | 0.82 | |||||||||
Diluted earnings (loss) per share | $ | 0.52 | $ | 0.40 | $ | (0.78 | ) | $ | 0.47 | $ | 0.82 | |||||||||
Dividends declared per share | $ | 0.07 | $ | 0.07 | $ | 0.07 | $ | 0.05 | $ | 0.05 | ||||||||||
(1) Referral fees 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) | 0.91 | % | 0.74 | % | (1.53 | )% | 0.96 | % | 1.57 | % | ||||||||||
Return on average shareholders' equity (1) | 8.05 | % | 6.55 | % | (11.97 | )% | 7.74 | % | 13.73 | % | ||||||||||
Return on average common shareholders' equity (1)(2) | 8.25 | % | 6.63 | % | (12.81 | )% | 7.83 | % | 14.14 | % | ||||||||||
Efficiency ratio (1)(2) | 62.64 | % | 63.83 | % | 74.92 | % | 67.65 | % | 52.55 | % | ||||||||||
Equity to assets ratio | 11.39 | % | 11.13 | % | 12.18 | % | 12.48 | % | 11.93 | % | ||||||||||
Tangible common equity to tangible assets (2) | 10.85 | % | 10.60 | % | 11.58 | % | 11.56 | % | 11.03 | % | ||||||||||
Common Share Data: | ||||||||||||||||||||
Net income from continuing operations | $ | 3,416 | $ | 2,733 | $ | (5,188 | ) | $ | 3,304 | $ | 5,682 | |||||||||
Less: Preferred stock dividends | 80 | 99 | 108 | 117 | 120 | |||||||||||||||
Income available to common shareholders | $ | 3,336 | $ | 2,634 | $ | (5,296 | ) | $ | 3,187 | $ | 5,562 | |||||||||
Weighted average number of common shares issued | 7,202,000 | 7,198,901 | 7,182,945 | 7,173,290 | 7,168,785 | |||||||||||||||
Less: Weighted average treasury shares | 882,153 | 759,294 | 518,740 | 443,920 | 443,920 | |||||||||||||||
Plus: Weighted average non-vested restricted stock units | 66,492 | 65,291 | 39,785 | 32,125 | 32,125 | |||||||||||||||
Weighted average number of common shares outstanding | 6,386,339 | 6,504,898 | 6,703,990 | 6,761,495 | 6,756,990 | |||||||||||||||
Effect of dilutive options | 20,915 | 28,511 | 49,072 | 44,630 | 19,160 | |||||||||||||||
Weighted average number of common shares outstanding used to calculate diluted earnings per common share | 6,407,254 | 6,533,409 | 6,753,062 | 6,806,125 | 6,776,150 | |||||||||||||||
(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 | 8.05 | % | 6.55 | % | (11.97 | )% | 7.74 | % | 13.73 | % | ||||||||||
Effect of excluding average preferred shareholders' equity | 0.20 | % | 0.08 | % | (0.84 | )% | 0.09 | % | 0.41 | % | ||||||||||
Return on average common shareholders' equity | 8.25 | % | 6.63 | % | (12.81 | )% | 7.83 | % | 14.14 | % | ||||||||||
Efficiency ratio (2): | ||||||||||||||||||||
Non-interest expense | $ | 7,667 | $ | 7,465 | $ | 15,018 | $ | 10,265 | $ | 7,668 | ||||||||||
Less: goodwill impairment | — | — | (5,038 | ) | — | — | ||||||||||||||
Less: historical tax credit investment impairment | — | — | — | (1,149 | ) | — | ||||||||||||||
Less: net loss on sales and write-downs of OREO | (9 | ) | — | (1,364 | ) | (145 | ) | (160 | ) | |||||||||||
Adjusted non-interest expense (non-GAAP) | $ | 7,658 | $ | 7,465 | $ | 8,616 | $ | 8,971 | $ | 7,508 | ||||||||||
Net interest income | $ | 8,654 | $ | 8,765 | $ | 8,781 | $ | 9,518 | $ | 10,199 | ||||||||||
Non-interest income | 3,672 | 3,501 | 2,720 | 3,742 | 4,087 | |||||||||||||||
Less: net gain on sales of securities | (101 | ) | (570 | ) | — | — | — | |||||||||||||
Operating revenue | $ | 12,225 | $ | 11,696 | $ | 11,501 | $ | 13,260 | $ | 14,286 | ||||||||||
Efficiency ratio | 62.64 | % | 63.83 | % | 74.92 | % | 67.65 | % | 52.55 | % | ||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
Adjusted diluted earnings per share(3): | ||||||||||||||||
Net income from continuing operations | $ | 3,416 | $ | 5,682 | $ | 961 | $ | 13,148 | ||||||||
Less: preferred stock dividends | (80 | ) | (120 | ) | (286 | ) | (355 | ) | ||||||||
Plus: goodwill impairment | — | — | 5,038 | — | ||||||||||||
Adjusted income available to common shareholders for basic earnings per common share | $ | 3,336 | $ | 5,562 | $ | 5,713 | $ | 12,793 | ||||||||
Weighted average number of common shares outstanding | 6,386,339 | 6,756,990 | 6,531,041 | 6,742,892 | ||||||||||||
Effect of dilutive options | 20,915 | 19,160 | 32,833 | 19,063 | ||||||||||||
Weighted average number of common shares outstanding used to calculate diluted earnings per common share | 6,407,254 | 6,776,150 | 6,563,874 | 6,761,955 | ||||||||||||
Adjusted diluted earnings per share | $ | 0.52 | $ | 0.82 | $ | 0.87 | $ | 1.89 | ||||||||
(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.
(3) In our judgment, the adjustment made to diluted earnings per share allows investors to better assess our income related to core operations by removing the volatility associated with the goodwill impairment which was a one-time, non-cash expense.
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 | $ | 161,910 | $ | 160,525 | $ | 157,046 | $ | 164,029 | $ | 160,752 | ||||||||||
Less: Goodwill | — | — | — | 5,038 | 5,038 | |||||||||||||||
Less: Core deposit intangible, net of amortization | 86 | 125 | 171 | 225 | 286 | |||||||||||||||
Tangible common equity (non-GAAP) | $ | 161,824 | $ | 160,400 | $ | 156,875 | $ | 158,766 | $ | 155,428 | ||||||||||
Common shares outstanding | 6,294,675 | 6,375,150 | 6,496,790 | 6,734,132 | 6,727,908 | |||||||||||||||
Tangible book value per share | $ | 25.71 | $ | 25.16 | $ | 24.15 | $ | 23.58 | $ | 23.10 | ||||||||||
Total assets | $ | 1,492,055 | $ | 1,513,917 | $ | 1,354,974 | $ | 1,378,779 | $ | 1,414,964 | ||||||||||
Less: Goodwill | — | — | — | 5,038 | 5,038 | |||||||||||||||
Less: Core deposit intangible, net of amortization | 86 | 125 | 171 | 603 | 701 | |||||||||||||||
Tangible assets (non-GAAP) | $ | 1,491,969 | $ | 1,513,792 | $ | 1,354,803 | $ | 1,373,138 | $ | 1,409,225 | ||||||||||
Tangible common equity to tangible assets | 10.85 | % | 10.60 | % | 11.58 | % | 11.56 | % | 11.03 | % | ||||||||||
Adverse classified asset ratio(2): | ||||||||||||||||||||
Substandard loans | $ | 88,370 | $ | 88,680 | $ | 71,694 | $ | 85,992 | $ | 97,239 | ||||||||||
Other real estate owned | 3,064 | 2,629 | 3,247 | 5,521 | 7,252 | |||||||||||||||
Substandard unused commitments | 5,124 | 3,230 | 2,840 | 2,849 | 991 | |||||||||||||||
Less: Substandard government guarantees | (7,002 | ) | (6,336 | ) | (7,699 | ) | (7,892 | ) | (7,746 | ) | ||||||||||
Total adverse classified assets (non-GAAP) | $ | 89,556 | $ | 88,203 | $ | 70,082 | $ | 86,470 | $ | 97,736 | ||||||||||
Total equity (Bank) | $ | 200,011 | $ | 201,507 | $ | 204,089 | $ | 204,240 | $ | 201,967 | ||||||||||
Accumulated other comprehensive loss (gain) on available for sale securities | (8,640 | ) | (8,734 | ) | (5,012 | ) | (2,505 | ) | (3,016 | ) | ||||||||||
Allowance for loan losses | 18,649 | 18,569 | 17,547 | 15,267 | 15,065 | |||||||||||||||
Adjusted total equity (non-GAAP) | $ | 210,020 | $ | 211,342 | $ | 216,624 | $ | 217,002 | $ | 214,016 | ||||||||||
Adverse classified asset ratio | 42.64 | % | 41.73 | % | 32.35 | % | 39.85 | % | 45.67 | % | ||||||||||
(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.
