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County Bancorp, Inc. Announces Second Quarter 2020 Financial Results

Execution on strategic priorities and stabilizing milk prices drove strong client deposit growth and improved sequential results

Highlights

  • Net income of $2.7 million, or $0.40 per diluted share, for the second quarter 2020
  • Net interest income increased $88,000 during the second quarter of 2020 due to reduction in cost of funds
  • Provision for loan losses decreased $1.1 million to $1.1 million in the second quarter of 2020
  • Loans increased $75.1 million during the second quarter of 2020 primarily due to $106.0 million in Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loan applications approved
  • Average loans sold and serviced increased $8.8 million, and loan fees as a percentage of average loans sold and serviced increased 0.04% to 1.02% during the second quarter 2020
  • Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased $101.9 million, or 12.9%, during the second quarter of 2020
  • Independent director Andrew Steimle selected as Chairman of the Board
  • Capital ratios remain strong with a Total Risk-Based Capital ratio of 20.2% and Tier 1 Leverage of 12.5%

MANITOWOC, Wis., July 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 financial results for the second quarter of 2020.  Net income was $2.7 million, or $0.40 per diluted share, for the second quarter of 2020, compared to net income of $3.7 million, or $0.53 per diluted share, for the second quarter of 2019.  For the six months ended June 30, 2020, there was a net loss of $2.5 million, or a $0.40 loss per diluted share, compared to net income of $7.5 million, or $0.53 per share, for the six months ended June 30, 2019.  The 2020 net loss included a $5.0 million goodwill impairment charge, or $0.76 diluted loss per share.  The Company concluded goodwill was impaired after an estimate of the fair value of the Company considering the uncertainty related to COVID-19 and its potential impact on future earnings, as well as comparable bank valuations.  Excluding that charge, net income for the six months ended June 30, 2020 would have been $2.5 million, or $0.36 per diluted share. 

Tim Schneider, President of County Bancorp, Inc., noted, “I am very pleased with how well our team has worked through the current COVID-19 environment to fulfill our mission as we partner with our local communities and businesses.  With the vast majority of our employees working remotely, we were able to approve $106 million in SBA PPP loans to support our loyal and new customers and more than 14,000 jobs through this crisis.  By executing against our strategic initiatives, we grew our client deposits this quarter expect to invest our excess liquidity during the second half of 2020 as we see increasing signs of stability and health in our operating environment.” 

Schneider continued, “Overall, credit quality has held up well.  However, we believe it will take some time to see the total impact of COVID-19 on overall credit quality and our provisions for loan losses.  While we still have some customers asking for payment deferral related to COVID-19, which now totals $200 million, we witnessed a considerable rebound and stabilization of milk prices during the month of June, which we believe will benefit our agricultural borrowers. More specifically, class III milk prices (cwt) rebounded from the April and May lows of $12 to $13, to $16 to $21 in both June and in the futures for the remainder of 2020.”

Schneider concluded, “Lastly, we successfully raised $17.4 million in subordinated notes at the end of the second quarter 2020.  This opportunistic capital raise reinforces County Bancorp’s value proposition and allows us to take advantage of additional market opportunities for our customers and communities.  As part of our balanced capital allocation approach, we continue to monitor additional pathways to enhance shareholder value. We are pleased with the attractive pricing we received in the fixed income markets and the ability to strengthen our capital structure as we continue to execute against our short- and long-term strategic priorities.  This capital raise allows us to keep our capital ratios strong and will enable us to continue our current dividend payout and common stock buyback plan.  Of note, during the second quarter, we purchased 122,000 shares of common stock.  We are also very proud to rejoin the Russell 2000 and Russell 3000 Indexes during the second quarter of 2020.  This membership is an important milestone for us as we continue to execute our mission and serve our customers and communities. We believe our inclusion will positively impact the liquidity in our stock and create an opportunity to increase our exposure and share our compelling story with a broader investment audience.”

Loans and Securities

Total loans increased $75.1 million, or 7.4%, during the second quarter of 2020 and decreased $60.3 million, or 5.3%, year-over-year to $1.1 billion.  The increase in total loans in the second quarter of 2020 was due primarily to SBA PPP loans totaling $106.0 million as of June 30, 2020.  The decrease in total loans year-over-year was the result of a continued focus on long-term liquidity.  Loan participations the Company continued to service were $762.1 million at June 30, 2020, an increase of $14.5 million, or 1.9%, compared to the first quarter of 2020, and an increase of $66.4 million, or 9.5%, year-over-year.

During the second quarter of 2020, investments decreased $19.2 million, or 7.8%, compared to March 31, 2020 due in part to the sale of $27.8 million of securities that resulted in a gain of $0.6 million.

Deposits

Total deposits at June 30, 2020 were $1.1 billion, an increase of $53.1 million, or 5.2%, from March 31, 2020 and decreased $132.1 million, or 11.0%, year-over-year.  Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $101.9 million, or 12.9%, from March 31, 2020 and increased $94.4 million, or 11.8%, year-over-year.  The increase in client deposits from the prior quarter-end was partially driven by customers who participated in the SBA PPP program.  Deposits related to those customers totaled approximately $58 million as of June 30, 2020. 

During the second quarter of 2020, the Company took advantage of the Federal Reserve Bank’s Paycheck Protection Program Liquidity Facility (“PPPLF”) and funded $99.7 million of SBA PPP loans through borrowings under the PPPLF at an interest rate of 0.35%.   The Company’s overall focus remains on funding loan growth with client deposits; however, these borrowings helped bolster the Company’s overall liquidity.  Due to the increases in loan participations and client deposit growth discussed above, the Company decreased its dependence on brokered deposits and national certificates of deposit to $179.5 million at June 30, 2020.  This represents a decrease of $226.5 million, or 55.8%, from June 30, 2019.   

Net Interest Income and Margin

  • Net interest margin decreased both quarter-to-quarter and 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% and the repricing of loans in the declining rate environment. 
  • 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.
  • Loan interest income decreased in the both linked and year-over-year periods as a result of the lower yields on the previously mentioned PPP loans and 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 both in the linked quarter and year-over year due to the market-driven drop in interest rates which contributed to an overall lower cost of funds.
  • Interest expense on time deposits decreased in the linked quarter due to the Company’s continued focus on shifting away from brokered time deposit balances for funding. Year-over-year, time deposits also decreased due to the Company’s shift away from wholesale funding.

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

    Three Months Ended June 30, 2020 v.
Three Months Ended March 31, 2020
    Three Months Ended June 30, 2020 v.
Three Months Ended June 30, 2019
 
    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   $ 238     $ (82 )   $ 156     $ 323     $ (138 )   $ 185  
Loans     1,044       (1,495 )     (451 )     (987 )     (2,366 )     (3,353 )
Federal funds sold and
  interest-bearing
  deposits with banks
    13       (127 )     (114 )     (54 )     (299 )     (353 )
Total interest income     1,295       (1,704 )     (409 )     (718 )     (2,803 )     (3,521 )
Interest Expense:                                                
Savings, NOW, money market
  and interest checking
  $ 126     $ (375 )   $ (249 )   $ 344     $ (1,135 )   $ (791 )
Time deposits     (347 )     (30 )     (377 )     (1,254 )     88       (1,166 )
Other borrowings     3             3       1             1  
FHLB advances     132       (37 )     95       393       (466 )     (73 )
Junior subordinated
  debentures
    3       28       31       5       48       53  
Total interest expense   $ (83 )   $ (414 )   $ (497 )   $ (511 )   $ (1,465 )   $ (1,976 )
Net interest income   $ 1,378     $ (1,290 )   $ 88     $ (207 )   $ (1,338 )   $ (1,545 )
                                                 

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

    For the Three Months Ended  
    June 30, 2020     March 31, 2020     June 30, 2019  
    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   $ 237,082     $ 1,444     2.44 %   $ 196,353     $ 1,289     2.63 %   $ 176,237     $ 1,259     2.86 %
Loans (2)     1,098,327       12,131     4.42 %     1,028,637       12,582     4.89 %     1,177,071       15,484     5.26 %
Interest bearing deposits due from
  other banks
    64,142       111     0.69 %     60,825       225     1.48 %     73,769       465     2.52 %
Total interest-earning assets   $ 1,399,551     $ 13,686     3.91 %   $ 1,285,815     $ 14,096     4.39 %   $ 1,427,077     $ 17,208     4.82 %
Allowance for loan losses     (17,844 )                   (15,330 )                   (17,782 )              
Other assets     85,716                     84,461                     76,806                
Total assets   $ 1,467,423                   $ 1,354,946                   $ 1,486,101                
                                                                   
Liabilities                                                                  
Savings, NOW, money market,
  interest checking
  $ 379,991     $ 525     0.55 %   $ 334,740     $ 774     0.92 %   $ 315,940     $ 1,316     1.67 %
Time deposits     553,616       3,196     2.31 %     613,753       3,574     2.33 %     770,554       4,363     2.26 %
Total interest-bearing deposits   $ 933,607     $ 3,721     1.59 %   $ 948,493     $ 4,348     1.83 %   $ 1,086,494     $ 5,679     2.09 %
Other borrowings     66,910       15     0.09 %     1,259       11     3.49 %     1,204       13     4.47 %
FHLB advances     103,916       328     1.26 %     56,708       233     1.65 %     78,653       401     2.04 %
Junior subordinated debentures     45,090       737     6.53 %     44,871       706     6.29 %     44,762       683     6.11 %
Total interest-bearing liabilities   $ 1,149,523     $ 4,800     1.67 %   $ 1,051,331     $ 5,298     2.02 %   $ 1,211,113     $ 6,776     2.24 %
Non-interest bearing deposits     134,271                     113,351                     102,432                
Other liabilities     16,749                     16,877                     12,154                
Total liabilities   $ 1,300,543                   $ 1,181,559                   $ 1,325,699                
                                                                   
Shareholders' equity     166,880                     173,387                     160,402                
Total liabilities and equity   $ 1,467,423                   $ 1,354,946                   $ 1,486,101                
                                                                   
Net interest income           $ 8,886                   $ 8,798                   $ 10,432        
Interest rate spread (3)                   2.24 %                   2.37 %                   2.59 %
Net interest margin (4)                   2.54 %                   2.74 %                   2.92 %
Ratio of interest-earning assets to
  interest-bearing liabilities
    1.22                     1.22                     1.18                

(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 in the linked quarter due primarily to a 0.03% increase in loan servicing fees as a percent of average loans serviced during the second quarter. Year-over-year, loan servicing fees increased due primarily to a 0.10% increase in loan servicing fees as a percent of average loans serviced and an increase in loans serviced.
  • Loan servicing right origination decreased in the linked quarter and year-over-year; however, loan servicing rights as a percent of loans serviced increased to 2.14% at June 30, 2020 from 1.38% at June 30, 2019.
  • $27.8 million of securities were sold during the second quarter of 2020 which resulted in a $0.6 million gain.
    For the Three Months Ended  
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands)  
Non-Interest Income                                        
Service charges   $ 368     $ 342     $ 549     $ 348     $ 407  
Gain on sale of loans, net     4       38       34       87       26  
Loan servicing fees     1,923       1,831       1,778       1,677       1,563  
Loan servicing right origination     275       289       1,146       1,741       346  
Income on OREO     3             54       10       40  
Gain on sale of securities     570                         341  
Other     237       203       161       171       164  
Total non-interest income   $ 3,380     $ 2,703     $ 3,722     $ 4,034     $ 2,887  


    For the Three Months Ended  
    June 30, 2020     March 31, 2020     December 31, 2019     September 30, 2019     June 30, 2019  
       
    (dollars in thousands)  
Loan servicing rights, end of period   $ 16,486     $ 16,211     $ 12,509     $ 11,362     $ 9,621  
Loans serviced, end of period     762,058       747,553       751,738       736,823       695,629  
Loan servicing rights as a % of loans serviced     2.16 %     2.17 %     1.66 %     1.54 %     1.38 %
                                         
Total loan servicing fees   $ 1,923     $ 1,831     $ 1,778     $ 1,677     $ 1,563  
Average loans serviced     754,806       749,646       744,281       716,226       685,449  
Annualized loan servicing fees as a
  % of average loans serviced
    1.02 %     0.98 %     0.96 %     0.94 %     0.91 %

Non-Interest Expense

  • The decrease in employee compensation and benefits expense in the linked quarter was the result of an increase in deferred loan costs (which is comprised primarily of salary expenses) associated with the PPP loans that were capitalized during the second quarter.  The year-over-year increase in employee compensation and benefits expense was mainly the result of a 7.1% increase in headcount.
  • Goodwill was considered impaired and fully written-off in the first quarter 2020.
  • There was no write-down of OREO properties in the second quarter of 2020 compared to writedowns in the linked quarter and year-over-year.
  • The decrease in other non-interest expense in the linked quarter was primarily is the result of a loss of $0.3 million recognized on the sale-leaseback of the Manitowoc branch in the first quarter and reduced travel and education expenses as a result of the COVID-19 pandemic.
    For the Three Months Ended  
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands, except per share data)  
Non-Interest Expense                                        
Employee compensation and
  benefits
  $ 4,594     $ 5,260     $ 5,696     $ 4,735     $ 4,199  
Occupancy     305       354       417       313       283  
Information processing     663       670       645       683       591  
Professional fees     480       401       371       483       417  
Business development     333       366       335       351       347  
OREO expenses     44       116       59       57       121  
Writedown of OREO           1,360       376             250  
Net loss (gain) on sale of OREO           4       (231 )     160       9  
Depreciation and amortization     303       301       319       319       328  
Goodwill impairment           5,038                    
Other     743       1,148       2,278       567       901  
Total non-interest expense   $ 7,465     $ 15,018     $ 10,265     $ 7,668     $ 7,446  

Asset Quality

  • The increase in substandard loans and the adverse classified asset ratio in the linked quarter were primarily due to the downgrade of four agricultural customers and a single hotel customer.
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands)  
Loans by risk category(1):                                        
Sound/Acceptable/Satisfactory/
  Low Satisfactory
  $ 798,945     $ 706,247     $ 724,444     $ 771,567     $ 837,094  
Watch     198,044       219,459       216,098       202,615       175,995  
Special Mention     1,856       15,036       9,239       9,346       25,254  
Substandard Performing     47,741       34,179       49,774       71,133       83,992  
Substandard Impaired     40,938       37,515       36,218       26,106       25,497  
Total loans   $ 1,087,524     $ 1,012,436     $ 1,035,773     $ 1,080,767     $ 1,147,832  
Adverse classified asset ratio (2)     41.73 %     32.35 %     39.85 %     45.67 %     53.21 %

(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 linked quarter by $2.8 million, or 7.9%, sequentially.  Year-over-year, non-performing assets increased $9.3 million, or 32.3%, due to a $5.8 million increase in non-accrual agricultural loans and a $9.6 million increase in non-accrual commercial loans, which were partially offset by a $6.1 million decrease in OREO properties.
  • A provision for loan losses of $1.1 million was recorded for the three months ended June 30, 2020 compared to a provision of $0.9 million for the three months ended June 30, 2019.  The increase in provision was the result of the increase in substandard impaired loans.
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands)  
Non-Performing Assets:                                        
Nonaccrual loans   $ 35,456     $ 32,051     $ 30,968     $ 20,776     $ 20,096  
Other real estate owned     2,629       3,247       5,521       7,252       8,693  
Total non-performing assets   $ 38,085     $ 35,298     $ 36,489     $ 28,028     $ 28,789  
                                         
Performing TDRs not on
  nonaccrual
  $ 21,986     $ 21,853     $ 21,784     $ 28,520     $ 28,892  
                                         
Non-performing assets as a % of total
  loans
    3.50 %     3.49 %     3.52 %     2.59 %     2.51 %
Non-performing assets as a % of total
  assets
    2.52 %     2.61 %     2.65 %     1.98 %     1.94 %
Allowance for loan losses as a % of
  total loans
    1.71 %     1.73 %     1.47 %     1.39 %     1.42 %
Net charge-offs (recoveries) quarter-
  to-date
  $ 120     $ (62 )   $ (253 )   $ 39     $ 2,111  

Corporate Updates

At the annual organizational meeting of the Company’s and the Bank’s boards of directors, Chair William Censky informed the boards that he did not wish to seek re-election as chair of the Company and the Bank. Censky, who is one of the Company's co-founders, has served as chair since the Company's inception in 1996 and will remain a director on the boards of directors of both the Company and the Bank.

According to Timothy Schneider, CEO of Investors Community Bank and President of County Bancorp, Inc., "We are grateful for Bill's leadership and strategic contributions over the past 23 years. His focus on excellence as well as his unwavering support for the bank, its employees and our communities has been vital to our success."

On July 21, 2020, the respective boards appointed current independent director Andrew Steimle as the new chair of the boards of directors of both the Company and the Bank. Steimle has served on both boards of directors since April 2008. He is a business and real estate attorney practicing in Wisconsin and is a founding partner of Steimle Birschbach LLC.  Additionally, the Company’s board of directors appointed director Kathi P. Seifert as Chair of the Nominating and Governance Committee and director Vicki L. Leinbach as Chair of the Compensation Committee.

Conference Call

The Company will host an earnings call tomorrow, July 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 July 24, 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.
Consolidated Financial Summary
(Unaudited)
  June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands, except per share data)  
Period-End Balance Sheet:                                        
Assets                                        
Cash and cash equivalents   $ 127,432     $ 21,545     $ 129,011     $ 120,845     $ 116,251  
Securities available for sale, at fair
  value
    226,971       246,148       158,733       154,962       158,561  
Loans held for sale     11,847       14,388       2,151       4,192       7,448  
Agricultural loans     624,340       642,066       659,725       673,742       713,602  
Commercial loans     328,368       325,310       331,723       360,132       383,542  
Paycheck Protection Plan loans     103,317                          
Multi-family real estate loans     30,439       42,198       41,070       43,487       46,683  
Residential real estate loans     975       2,753       2,888       3,183       3,753  
Installment and consumer other     85       109       367       223       252  
Total loans     1,087,524       1,012,436       1,035,773       1,080,767       1,147,832  
Allowance for loan losses     (18,569 )     (17,547 )     (15,267 )     (15,065 )     (16,258 )
Net loans     1,068,955       994,889       1,020,506       1,065,702       1,131,574  
Other assets     78,712       78,004       68,378       69,263       70,812  
Total Assets   $ 1,513,917     $ 1,354,974     $ 1,378,779     $ 1,414,964     $ 1,484,646  
                                         
Liabilities and Shareholders' Equity                                        
Demand deposits   $ 149,963     $ 117,434     $ 138,489     $ 117,224     $ 111,022  
NOW accounts and interest checking     81,656       64,873       63,781       56,637       54,253  
Savings     8,369       6,566       15,708       6,981       6,621  
Money market accounts     307,083       237,889       242,539       248,608       239,337  
Time deposits     346,482       364,930       375,100       388,759       387,899  
Brokered deposits     121,503       161,882       166,340       206,474       256,475  
National time deposits     57,997       66,386       99,485       118,070       149,570  
Total deposits     1,073,053       1,019,960       1,101,442       1,142,753       1,205,177  
Federal Reserve Discount Window
  advances
    99,693                          
FHLB advances     93,400       109,400       44,400       44,400       59,400  
Subordinated debentures     61,910       44,896       44,858       44,820       44,781  
Other liabilities     17,336       15,672       16,050       14,239       12,564  
Total Liabilities     1,345,392       1,189,928       1,206,750       1,246,212       1,321,922  
                                         
Shareholders' equity     168,525       165,046       172,029       168,752       162,724  
Total Liabilities and Shareholders'
  Equity
  $ 1,513,917     $ 1,354,974     $ 1,378,779     $ 1,414,964     $ 1,484,646  
                                         
Stock Price Information:                                        
High - Quarter-to-date   $ 24.67     $ 27.19     $ 27.98     $ 20.99     $ 18.92  
Low - Quarter-to-date   $ 17.13     $ 13.55     $ 18.76     $ 16.80     $ 16.24  
Market price - Quarter-end   $ 20.93     $ 18.50     $ 25.63     $ 19.62     $ 17.09  
Book value per share   $ 25.18     $ 24.17     $ 24.32     $ 23.89     $ 23.03  
Tangible book value per share (1)   $ 25.16     $ 24.15     $ 23.58     $ 23.10     $ 22.23  
Common shares outstanding     6,375,150       6,496,790       6,734,132       6,727,908       6,717,908  

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

       
    For the Three Months Ended  
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands, except per share data)  
Selected Income Statement Data:                                        
Interest and Dividend Income                                        
Loans, including fees   $ 12,130     $ 12,582     $ 13,691     $ 15,030     $ 15,484  
Taxable securities     1,283       1,282       1,106       1,117       1,177  
Tax-exempt securities     162       6                   82  
Federal funds sold and other     111       225       442       612       465  
Total interest and dividend
  income
    13,686       14,095       15,239       16,759       17,208  
                                         
Interest Expense                                        
Deposits     3,721       4,347       4,781       5,574       5,678  
FHLB advances and other
  borrowed funds
    343       244       225       246       415  
Subordinated debentures     736       706       695       687       683  
Total interest expense     4,800       5,297       5,701       6,507       6,776  
Net interest income     8,886       8,798       9,538       10,252       10,432  
Provision for loan losses     1,142       2,218       (51 )     (1,154 )     876  
Net interest income after provision
  for loan losses
    7,744       6,580       9,589       11,406       9,556  
                                         
Non-Interest Income                                        
Services charges     368       342       549       348       407  
Gain on sale of loans, net     4       38       34       87       26  
Loan servicing fees     1,923       1,831       1,778       1,677       1,563  
Loan servicing right origination     275       289       1,146       1,741       346  
Income on OREO     3             54       10       40  
Gain on sale of securities     570                         341  
Other     237       203       161       171       164  
Total non-interest income     3,380       2,703       3,722       4,034       2,887  
                                         
Non-Interest Expense                                        
Employee compensation and
  benefits
    4,594       5,260       5,696       4,735       4,199  
Occupancy     305       354       417       313       283  
Information processing     663       670       645       683       591  
Professional fees     480       401       371       483       417  
Business development     333       366       335       351       347  
OREO expenses     44       116       59       57       121  
Writedown of OREO           1,360       376             250  
Net loss (gain) on sale of OREO           4       (231 )     160       9  
Depreciation and amortization     303       301       319       319       328  
Goodwill impairment           5,038                    
Other     743       1,148       2,278       567       901  
Total non-interest expense     7,465       15,018       10,265       7,668       7,446  
Income before income taxes     3,659       (5,735 )     3,046       7,772       4,997  
Income tax expense     926       (547 )     (258 )     2,090       1,293  
NET INCOME (LOSS)   $ 2,733     $ (5,188 )   $ 3,304     $ 5,682     $ 3,704  
                                         
Basic earnings (loss) per share   $ 0.40     $ (0.79 )   $ 0.47     $ 0.82     $ 0.53  
Diluted earnings (loss) per share   $ 0.40     $ (0.78 )   $ 0.47     $ 0.82     $ 0.53  
Dividends declared per share   $ 0.07     $ 0.07     $ 0.05     $ 0.05     $ 0.05  


    For the Three Months Ended  
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands, except share data)  
Other Data:                                        
Return on average assets(1)     0.74 %     (1.53 )%     0.96 %     1.57 %     1.00 %
Return on average
  shareholders' equity(1)
    6.55 %     (11.97 )%     7.74 %     13.73 %     9.24 %
Return on average common
  shareholders' equity (1)(2)
    6.63 %     (12.81 )%     7.83 %     14.14 %     9.41 %
Efficiency ratio (1)(2)     63.83 %     74.92 %     76.32 %     52.55 %     55.38 %
Tangible common equity to
  tangible assets (2)
    10.60 %     11.58 %     11.56 %     11.03 %     10.10 %
                                         
Common Share Data:                                        
Net income from continuing
  operations
  $ 2,733     $ (5,188 )   $ 3,304     $ 5,682     $ 3,704  
Less:  Preferred stock
  dividends
    99       108       117       120       118  
Income available to common
  shareholders
  $ 2,634     $ (5,296 )   $ 3,187     $ 5,562     $ 3,586  
                                         
Weighted average number of
  common shares issued
    7,198,901       7,182,945       7,173,290       7,168,785       7,159,072  
Less: Weighted average
  treasury shares
    759,294       518,740       443,920       443,920       443,920  
Plus: Weighted average non-
  vested restricted stock units
    65,291       39,785       32,125       32,125       30,483  
Weighted average number of
  common shares outstanding
    6,504,898       6,703,990       6,761,495       6,756,990       6,745,635  
Effect of dilutive options     28,511       49,072       44,630       19,160       20,731  
Weighted average number
  of common shares
  outstanding used to
  calculate diluted earnings
  per common share
    6,533,409       6,753,062       6,806,125       6,776,150       6,766,366  
                                         

(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  
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands)  
       
Return on average common
  shareholders' equity
  reconciliation(1):
                                       
Return on average
  shareholders' equity
    6.55 %     (11.97 )%     7.74 %     13.73 %     9.24 %
Effect of excluding average
  preferred shareholders'
  equity
    0.08 %     (0.84 )%     0.09 %     0.41 %     0.17 %
Return on average common
  shareholders' equity
    6.63 %     (12.81 )%     7.83 %     14.14 %     9.41 %
                                         
Efficiency ratio (2):                                        
Non-interest expense   $ 7,465     $ 15,018     $ 10,265     $ 7,668     $ 7,446  
Less: goodwill impairment           (5,038 )                  
Less: net loss on sales
  and write-downs of OREO
          (1,364 )     (145 )     (160 )     (259 )
Adjusted non-interest
  expense (non-GAAP)
  $ 7,465     $ 8,616     $ 10,120     $ 7,508     $ 7,187  
                                         
Net interest income   $ 8,886     $ 8,798     $ 9,538     $ 10,252     $ 10,432  
Non-interest income     3,380       2,703       3,722       4,034       2,887  
Less: net gain on sales of
  securities
    (570 )                       (341 )
Operating revenue   $ 11,696     $ 11,501     $ 13,260     $ 14,286     $ 12,978  
Efficiency ratio     63.83 %     74.92 %     76.32 %     52.55 %     55.38 %


    For the Three Months Ended     For the Six Months Ended  
    June 30,
2020
    June 30,
2019
    June 30,
2020
    June 30,
2019
 
       
    (dollars in thousands, except per share data)  
Adjusted diluted earnings per share(3):                                
Net income (loss) from continuing operations   $ 2,733     $ 3,704     $ (2,454 )   $ 7,466  
Less:  preferred stock dividends     (99 )     (118 )     (207 )     (235 )
Plus: Goodwill impairment                 5,038        
Adjusted income available to common shareholders
  for basic earnings per common share
  $ 2,634     $ 3,586     $ 2,377     $ 7,231  
                                 
Weighted average number of common shares
  outstanding
    6,504,898       6,745,635       6,604,187       6,735,725  
Effect of dilutive options     28,511       20,731       39,548       21,170  
Weighted average number of common shares  outstanding used to calculate diluted earnings
  per common share
    6,533,409       6,766,366       6,643,735       6,756,895  
                                 
Adjusted diluted earnings per share   $ 0.40     $ 0.53     $ 0.36     $ 1.07  

(1) Management uses the return on average common shareholders’ equity in order 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):

 

  June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
       
    (dollars in thousands, except per share data)  
Tangible book value per share and
  tangible common equity to tangible
  assets reconciliation(1):
                                       
Common equity   $ 160,526     $ 157,046     $ 164,029     $ 160,752     $ 154,724  
Less: Goodwill                 5,038       5,038       5,038  
Less: Core deposit intangible, net of
  amortization
    125       171       225       286       354  
Tangible common equity
  (non-GAAP)
  $ 160,401     $ 156,875     $ 158,766     $ 155,428     $ 149,332  
Common shares outstanding     6,375,150       6,496,790       6,734,132       6,727,908       6,717,908  
Tangible book value per share   $ 25.16     $ 24.15     $ 23.58     $ 23.10     $ 22.23  
                                         
Total assets   $ 1,513,917     $ 1,354,974     $ 1,378,779     $ 1,414,964     $ 1,484,646  
Less: Goodwill                 5,038       5,038       5,038  
Less: Core deposit intangible, net of
  amortization
    125       171       225       603       701  
Tangible assets (non-GAAP)   $ 1,513,792     $ 1,354,803     $ 1,373,516     $ 1,409,323     $ 1,478,907  
Tangible common equity to tangible
  assets
    10.60 %     11.58 %     11.56 %     11.03 %     10.10 %
                                         
Adverse classified asset ratio(2):                                        
Substandard loans   $ 88,680     $ 71,694     $ 85,992     $ 97,239     $ 109,489  
Other real estate owned     2,629       3,247       5,521       7,252       8,693  
Substandard unused commitments     3,230       2,840       2,849       991       1,458  
Less: Substandard government
  guarantees
    (6,336 )     (7,699 )     (7,892 )     (7,746 )     (7,821 )
Total adverse classified assets
  (non-GAAP)
  $ 88,203     $ 70,082     $ 86,470     $ 97,736     $ 111,819  
                                         
Total equity (Bank)   $ 201,507     $ 204,089     $ 204,240     $ 201,967     $ 196,036  
Accumulated other comprehensive loss
  (gain) on available for sale securities
    (8,734 )     (5,012 )     (2,505 )     (3,016 )     (2,166 )
Allowance for loan losses     18,569       17,547       15,267       15,065       16,258  
Adjusted total equity (non-GAAP)   $ 211,342     $ 216,624     $ 217,002     $ 214,016     $ 210,128  
Adverse classified asset ratio     41.73 %     32.35 %     39.85 %     45.67 %     53.21 %

(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.  

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