Highlights
Net income of $3.3 million for the fourth quarter of 2019; $16.5 million for the year 2019
Diluted earnings per share of $0.47 for the fourth quarter of 2019; $2.36 for the year 2019Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased $17.4 million, or 2.1%, since September 30, 2019, and increased $81.2 million, or 10.8%, since December 31, 2018Loans sold with servicing retained increased $90.5 million, or 13.7%, since December 31, 2018, resulting in $10.0 million of non-interest incomeSubstandard loans decreased $11.0 million, or 10.4%, since September 30, 2019MANITOWOC, Wisc., Jan. 23, 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 results for the fourth quarter and year ended December 31, 2019.  Net income was $3.3 million, or $0.47 diluted earnings per share, for the fourth quarter of 2019, compared to net income of $5.7 million, or $0.82 diluted earnings per share, for the third quarter of 2019 and $2.8 million, or $0.40 diluted earnings per share, for the fourth quarter of 2018.    Tim Schneider, President of County Bancorp, Inc., noted, “In 2019, we focused on improving credit quality, reducing wholesale funding, and growing our client deposits. I am pleased to say that our strategic initiatives drove improvements across all three focus areas, resulting in record full-year net profit for County Bancorp. Our business is progressing at a solid pace, but we understand there is more work to be done. Our dairy portfolio continued to strengthen as milk prices improved throughout 2019, and the futures market is the strongest we have seen in years. As trade deals with Mexico, Canada and China near the finish line, we feel more optimistic about the future of agricultural export stability. We made great progress in 2019, which is a testament to the diligent and tireless work of our team, and we look to continue our momentum as we head into 2020.”Loans and Total AssetsTotal assets at December 31, 2019 were $1.4 billion, a decrease of $36.5 million, or 2.6%, and a decrease of $142.5 million, or 9.4%, from total assets as of September 30, 2019 and December 31, 2018, respectively.  Total loans were $1.0 billion at December 31, 2019, which represents a $45.0 million, or 4.2%, decrease from total loans at September 30, 2019, and a decrease of $171.5 million, or 14.2%, from total loans at December 31, 2018.The decrease in total loans and assets were the result of our continued focus on loan participation sales and the resulting reduction in wholesale funding (brokered deposits, national certificates of deposit, and Federal Home Loan Bank (FHLB) advances) on our balance sheet.  Loan participations that the Company continued to service were $751.7 million at December 31, 2019, which was an increase of $14.9 million, or 2.0%, and $90.5 million, or 13.7%, over participated loans that the Company serviced at September 30, 2019 and December 31, 2018, respectively.  By increasing the amount of loans participated, the Company has been reducing credit risk from its balance sheet and increasing non-interest revenue streams.DepositsTotal deposits at December 31, 2019 were $1.1 billion, a decrease of $41.3 million, or 3.6%, and a decrease of $121.9 million, or 10.0%, from total deposits as of September 30, 2019 and December 31, 2018, respectively.  Despite the decline in total deposits, client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $17.4 million, or 2.1%, since September 30, 2019, and increased $81.2 million, or 10.8%, since December 31, 2018. During 2019, the Company focused on reducing its reliance on wholesale funding.  Due to the increases in loan participations and client deposit growth discussed above, the Company was able to decrease its dependence on brokered deposits and national certificates of deposit to $265.8 million at December 31, 2019.  This represents a decrease of $58.7 million, or 18.1%, from September 30, 2019, and a decrease of $203.1 million, or 43.3%, from December 31, 2018. Also during 2019, the Company paid off a portion of its FHLB advances.  At December 31, 2019, advances from the FHLB totaled $44.4 million, which was a decrease of $45.0 million, or 50.3%, since December 31, 2018.Net Interest Income and MarginNet interest income was $9.5 million for the three months ended December 31, 2019, which was a $0.7 million, or 7.0%, decrease from the three months ended September 30, 2019, and a $1.2 million, or 11.6%, decrease from the three months ended December 31, 2018.  For the year ended December 31, 2019, net interest income decreased $1.2 million, or 2.8%, to $40.8 million from the same period in 2018.  The decrease in net interest income in the fourth quarter 2019 was the result of a lower average loan balance due to loan payoffs and the increase in loan participations sold.  This was partially offset by a $58.7 million decrease in brokered deposits and national certificates of deposit and the resulting decrease in interest expense.  The current quarter was also adversely impacted by a $10.2 million increase in nonaccrual loans, as well as a 25 basis point decrease in the Prime rate.Net interest margin was 2.89% for the three months ended December 31, 2019, which was a decrease from 2.95% for the three months ended September 30, 2019.  The decrease in net interest margin was primarily due to the noted increase in nonaccrual loans.  Net interest margin was also impacted during the fourth quarter of 2019 by a 25 basis point decrease in the Prime rate, immediately impacting the yield of the loan portfolio.  This was partially offset by a decrease in rates offered on savings, NOW and money market accounts.The table below presents the effects of changing rates and volumes on our net interest income for the periods indicated.The following tables set forth average balance sheets, average yields and rates, and income and expenses for the period indicated.Average balances are calculated on amortized cost.Includes loan fee income, nonaccruing loan balances, and interest received on such loans.Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.Net interest margin represents net interest income divided by average total interest-earning assets.For the year ended December 31, 2019, net interest margin improved slightly to 2.93% from 2.91% for the year ended December 31, 2018, despite a six basis point decrease in interest rate spread.  The increase in net interest margin in 2019 is due to a 3.2% decrease in the average balance of interest-earning assets.Average balances are calculated on amortized cost.Includes loan fee income, nonaccruing loan balances, and interest received on such loans.Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.Net interest margin represents net interest income divided by average total interest-earning assets.
Non-Interest Income and ExpenseNon-interest income for the three months ended December 31, 2019 decreased by $0.3 million, or 7.7%, to $3.7 million compared to the three months ended September 30, 2019, which was primarily the result of a decrease of $0.6 million of loan servicing right origination due to the $41.2 million in loans that were sold or participated during the third quarter compared to only $14.9 million in loans that were sold or participated during the fourth quarter. Non-interest income for the three months ended December 31, 2019 increased $1.4 million, or 60.4%, compared to $2.3 million for the three months ended December 31, 2018.  The year-over-year increase was primarily due to the increase in loan participations sold and related loan servicing right origination income compared to the fourth quarter of 2018.Loan servicing right origination and loan serving fee income was positively impacted during the second half of the year in 2019 due to the higher volumes of loan participation sales as well as higher loan servicing fee spreads.Non-interest expense for the three months ended December 31, 2019 increased by $2.6 million, or 33.9%, to $10.3 million compared to the three months ended September 30, 2019.  Employee compensation and benefits increased $1.0 million, or 20.3%, in the linked quarter due to the additional accrual of $0.9 million for incentive compensation related to current year financial results.  The year-over-year increase was also the result of a 5.3% increase in head count and a 21.7% increase in insurance benefits in 2019.  Other non-interest expense increased from impairment recognized from an investment in a historical tax credit project of $1.1 million.  The impairment was offset by a $1.4 million benefit to income tax expense when the credit was earned.  The three months ended December 31, 2019 was also adversely affected by decline in market values of three OREO properties which resulted in write-downs totaling $0.4 million. (1)   This is a non-GAAP financial measure.  A reconciliation to GAAP is included at the end of this earnings releaseSubstandard loans were $94.9 million at December 31, 2019, compared to $105.9 million at September 30, 2019 and $120.9 million at December 31, 2018.  Adverse classified asset ratio (a non-GAAP measure) decreased to 39.85% at December 31, 2019 from 45.67% and 57.12% at September 30, 2019 and December 31, 2018, respectively.  The decrease in substandard loans and the adverse classified ratio were in part the result of improving milk prices.  The average 12-month future price of class III milk on the Chicago Mercantile Exchange rose to $17.40 at December 31, 2019 compared to $17.12 at September 30, 2019 and $15.88 at December 31, 2018.At December 31, 2019, non-performing assets were $36.5 million, an increase of $8.5 million, compared to September 30, 2019.  Non-performing assets as a percent of total assets increased to 2.65% at December 31, 2019, from 1.98% at September 30, 2019.  The increases were primarily due to an increase in non-accrual loans of $10.2 million in the fourth quarter related to one agriculture customer for $6.0 million and one commercial customer for $3.9 million, which was partially offset by two OREO properties that were sold during the fourth quarter of 2019, resulting in a decrease of $1.7 million in OREO.A credit to provision for loan losses of $0.1 million was recorded for the three months ended December 31, 2019 compared to a credit of $1.2 million for the three months ended September 30, 2019.  The credit provision in the fourth quarter of 2019 was primarily a result of the reduction of the size of the loan portfolio, improved economic factors, and upgrades to credit ratings, which was partially offset by a $1.9 million impairment to a substandard commercial credit.  In addition, during the fourth quarter of 2019, the Company recovered a $0.4 million loan that was previously charged-off.   The allowance for loan losses was $15.3 million at December 31, 2019 compared to $16.5 million at December 31, 2018.  The $1.2 million decrease in the allowance during 2019 was the result of a reduction in general reserves due to the decreases in total loans, improvement of economic factors, and the credit upgrades discussed previously.  Despite the decrease in allowance year-over-year, the allowance as a percent of total loans increased from 1.37% at December 31, 2018 to 1.47% at December 31, 2019.Conference CallThe Company will host an earnings call tomorrow, January 24, 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 January 25, 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 StatementsThis press release includes “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.Investor Relations Contact
Glen L. Stiteley
EVP – CFO, Investors Community Bank
Phone: (920) 686-5658
Email: [email protected]     
             (1)               This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
AnnualizedThis is a non-GAAP financial measure.  A reconciliation to GAAP is included below.               
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