County Bancorp, Inc. Announces Fourth Quarter and Year-End 2020 Financial Results

Thursday, 21. January 2021 22:01

Strong execution and growing business momentum drive fourth quarter net income growth of 36% year-over-year Company enters 2021 from a position of strength and with a renewed focus on growth

Highlights

  • Net income of $4.5 million for the fourth quarter of 2020; $5.5 million for the year 2020
  • Diluted earnings per share of $0.70 for the fourth quarter of 2020; $0.79 for the year 2020
  • Loans sold with servicing retained increased $14.7 million since September 30, 2020 and $60.8 million since December 31, 2019
  • Client deposits (demand deposits, NOW, savings, money market accounts, and certificates of deposit) increased $18.4 million during the fourth quarter of 2020 and by $80.4 million since December 31, 2019
  • Net interest margin for the fourth quarter of 2020 increased by 66 basis points to 3.06% compared to the sequential quarter and 17 basis points year-over-year
  • Cost of funds decreased by 10 basis points compared to the sequential quarter to 1.42%, a decrease of 71 basis points since December 31, 2019
  • Loans in payment deferral associated with COVID-19 customer support programs declined $83.7 million to $16.8 million, or 1.7%, of loans since September 30, 2020

MANITOWOC, Wis., Jan. 21, 2021 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), a community bank headquartered in Manitowoc, Wisconsin, today reported financial results for the fourth quarter and year ended December 31, 2020. Net income was $4.5 million, or $0.70 per diluted share, for the fourth quarter of 2020, compared to net income of $3.3 million, or $0.47 per diluted share, for the fourth quarter of 2019. For the year ended December 31, 2020, net income was $5.5 million, or $0.79 per diluted share, compared to net income of $16.5 million, or $2.36 per diluted share, for the year ended December 31, 2019. The net income for the year ended December 31, 2020 included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share, in the first quarter of 2020. Excluding that charge, net income for the year ended December 31, 2020 would have been $10.1 million, or $1.56 per diluted share.  

Tim Schneider, President of County Bancorp, Inc., noted, “I am very proud of what our team accomplished in a challenging year. We transformed the funding side of our balance sheet with 10% growth in client deposits and a 53% reduction in wholesale deposits in 2020. We continued to have strong growth in loans sold and serviced, which has expanded our noninterest income. Additionally, our adverse classified asset ratio improved in the quarter due to sales of OREO properties, and we saw payment deferrals associated with COVID-19 drop to less than 2% of total loans.”

Schneider continued, “As we look to 2021, improvements in milk prices continue to bolster our clients’ cash flows and we expect to see continued improvement in our overall credit metrics. Our strong performance through a challenging 2020 reinforces our faith in our long-term prospects and ability to grow our business, as evidenced by our repurchase of 570,842 shares of our common stock in 2020, including 107,437 shares during the fourth quarter. We believe we have the right strategy to maintain the momentum as we shift our attention to long-term growth in 2021. We look forward to partnering and growing with our commercial, agricultural and consumer customers in 2021 and beyond.”

Loans and Securities

  • Total loans decreased $79.6 million, or 7.4%, during the fourth quarter of 2020, to $1.0 billion, and decreased $39.5 million, or 3.8%, since December 31, 2019, primarily due to $60.6 million of Paycheck Protection Program (“PPP”) loans being forgiven by the Small Business Administration (“SBA”) during the fourth quarter of 2020. This represented 61.6% of PPP loans originated in 2020 and as of December 31, 2020, the Company had $37.8 million of PPP loans remaining in the loan portfolio, and $1.2 million of SBA origination fees were deferred on the balance sheet until the remaining loans are forgiven.
  • Loan participations the Company continued to service were $812.6 million as of December 31, 2020, an increase of $14.7 million, or 1.9%, compared to September 30, 2020, and an increase of $60.8 million, or 8.1%, compared to December 31, 2019.
  • As of December 31, 2020, there were 24 customer relationships with loans in payment deferral associated with COVID-19 customer support programs totaling $16.8 million, or 1.7% of total loans, which is a decrease of $83.7 million, or 83.3%, since September 30, 2020.
  • During the fourth quarter of 2020, investments increased by $54.4 million, or 18.2%, and increased $194.1 million, or 122.3%, since December 31, 2019. For the year ended December 31, 2020 purchases totaling $247.2 million were offset in part by $34.5 million in security sales and $25.7 million in maturities. Gain on sale of securities during 2020 was $0.7 million.

Deposits

  • Total deposits as of December 31, 2020 were $1.0 billion, a decrease of $9.3 million, or 0.9%, from September 30, 2020, and a decrease $60.6 million, or 5.5%, since December 31, 2019.
  • Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased $18.4 million, or 2.1%, from September 30, 2020, to $916.0 million, and increased $80.4 million, or 9.6%, since December 31, 2019.
  • The Company continued to decrease its reliance on brokered deposits and national certificate of deposits by $27.8 million, or 18.2%, to $124.8 million during the fourth quarter of 2020, and decreased by $141.0 million, or 53.1%, since December 31, 2019.

Common Stock Share Repurchase

  • During the fourth quarter of 2020, the Company repurchased 107,437 shares of its common stock at a weighted average price of $22.64 per share.
  • For the year ended December 31, 2020, the Company repurchased 570,842 shares of its common stock at a weighted average price of $21.89 per share.

Net Interest Income and Margin

  • Net interest margin for the quarter ended December 31, 2020 was 3.06%, which was an increase of 66 basis points compared to the sequential quarter and an increase of 17 basis points year-over-year. The SBA PPP origination fees of $3.1 million that were recognized during the fourth quarter of 2020 in connection with the PPP loans that were forgiven accounted for 57 basis points of the total margin increase. The issuance of subordinated debt during 2020 adversely affected net interest margin by 4 and 38 basis points for the quarter ended December 31, 2020 compared to the quarters ended September 30, 2020 and December 31, 2019, respectively.
  • Interest income on investment securities increased $0.5 million and $0.9 million, quarter-to-quarter and year-over-year, respectively, due to shifting balances from interest-bearing deposits with banks to investment securities with higher yields.
  • Loan interest income (including fees) increased $1.1 million compared to the sequential quarter primarily due to the previously mentioned SBA PPP loan origination fees. Year-over-year, loan interest income decreased $1.0 million primarily due to lower yields on the previously mentioned PPP loans.
  • Interest expense on savings, NOW, money market, and interest checking accounts decreased, despite an increase in average balance, by 10 basis points in the sequential quarter and 73 basis points year-over year due to the market-driven drop in the federal funds rates.
  • Interest expense on time deposits decreased quarter-over-quarter due in part to the Company’s continued focus on decreasing reliance on time deposit balances for funding and a decline in the federal funds rate. Rates paid on time deposits decreased by 10 and 52 basis points in the sequential quarter and year-over-year, respectively, which also contributed to the overall decrease in the cost of funds.
  • The Company issued $22.4 million of subordinated debt during 2020 to strengthen the Company’s capital structure. The issuance resulted in an increase in interest expense on subordinated debt year of 38 basis points year-over-year.   

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

 Three Months Ended December 31, 2020 v.
Three Months Ended September 30, 2020 
 Three Months Ended December 31, 2020 v.
Three Months Ended December 31, 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$405  $79  $484  $990  $(118) $872 
Loans (438)  1,581   1,143   (253)  (701)  (954)
Federal funds sold and interest-bearing deposits with banks (22)  14   (8)  (172)  (260)  (432)
Total interest income (55)  1,674   1,619   565   (1,079)  (514)
Interest Expense:                       
Savings, NOW, money market and interest checking$18  $(104) $(86) $422  $(915) $(493)
Time deposits (234)  (111)  (345)  (1,071)  (736)  (1,807)
Other borrowings (35)  (46)  (81)  69   (1)  68 
FHLB advances 27   (40)  (13)  95   (26)  69 
Junior subordinated debentures 19   6   25   368   45   413 
Total interest expense$(205) $(295) $(500) $(117) $(1,633) $(1,750)
Net interest income$150  $1,969  $2,119  $682  $554  $1,236 

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

 For the Three Months Ended 
 December 31, 2020  September 30, 2020  December 31, 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$322,706  $1,978 2.44% $256,059  $1,494 2.32% $159,202  $1,106 2.78%
Loans (2) 1,040,080   12,737 4.87%  1,083,383   11,594 4.26%  1,061,432   13,691 5.16%
Interest bearing deposits due from other banks 37,385   10 0.11%  92,701   18 0.08%  98,848   441 1.79%
Total interest-earning assets$1,400,171  $14,725 4.18% $1,432,143  $13,106 3.64% $1,319,482  $15,238 4.62%
Allowance for loan losses (18,535)        (18,641)        (14,868)      
Other assets 87,785         86,109         77,934       
Total assets$1,469,421        $1,499,611        $1,382,548       
                              
Liabilities                             
Savings, NOW, money market, interest checking$421,969  $383 0.36% $406,888  $469 0.46% $322,629  $876 1.09%
Time deposits 450,193   2,099 1.85%  499,665   2,444 1.95%  658,864   3,905 2.37%
Total interest-bearing deposits$872,162  $2,482 1.13% $906,553  $2,913 1.28% $981,493  $4,781 1.95%
Other borrowings 75,341   77 0.41%  101,829   158 0.62%  799   9 4.60%
FHLB advances 96,191   285 1.18%  89,622   298 1.32%  44,400   216 1.94%
Junior subordinated debentures 67,055   1,107 6.57%  65,903   1,082 6.53%  44,839   694 6.19%
Total interest-bearing liabilities$1,110,749  $3,951 1.42% $1,163,907  $4,451 1.52% $1,071,531  $5,700 2.13%
Non-interest-bearing deposits 168,765         147,595         123,541       
Other liabilities 18,758         18,314         16,749       
Total liabilities$1,298,272        $1,329,816        $1,211,821       
                              
Shareholders' equity 171,149         169,795         170,727       
Total liabilities and equity$1,469,421        $1,499,611        $1,382,548       
                              
Net interest income    $10,774        $8,655        $9,538   
Interest rate spread (3)       2.76%        2.12%        2.49%
Net interest margin (4)       3.06%        2.40%        2.89%
Ratio of interest-earning assets to interest-bearing liabilities 1.26         1.23         1.23       

  

(1)Average balances are calculated on amortized cost.
(2)Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3)Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4)Net interest margin represents net interest income divided by average total interest-earning assets.

Non-Interest Income

  • Loan servicing fees decreased quarter-over-quarter primarily due a decrease servicing income spread. Loan servicing fees as a percent of average loans serviced decreased seven basis points in the fourth quarter. Year-over-year, loan servicing fees increased due primarily to a two 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 quarter-over-quarter and year-over-year. The increase quarter-over-quarter was primarily due to the $14.7 million increase in loans sold. Loan servicing rights as a percent of loans serviced increased to 2.26% at December 31, 2020 from 2.16% at September 30, 2020. The year-over-year increase from 1.66% of loan servicing rights as a percent of loans serviced at December 31, 2019 was due in part to loans being recorded at fair value in 2020 versus amortized cost in 2019.
 For the Three Months Ended
 December 31,
2020
 September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
          
 (dollars in thousands)
Non-Interest Income              
Service charges$108 $108 $139 $113 $117
Crop insurance commission 517  271  229  229  432
Gain on sale of loans, net 219  17  4  38  34
Loan servicing fees 1,974  2,054  1,923  1,831  1,778
Loan servicing right origination 1,193  717  275  289  1,146
Income on OREO     3    54
Gain on sale of securities   101  570    
Referral fees 64  110  121  17  20
Other 283  294  237  203  161
Total non-interest income$4,358 $3,672 $3,501 $2,720 $3,742


 For the Three Months Ended 
 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
               
 (dollars in thousands) 
Loan servicing rights, end of period$18,396  $17,203  $16,486  $16,211  $12,509 
Loans serviced, end of period 812,560   797,819   762,058   747,553   751,738 
Loan servicing rights as a % of loans serviced 2.26%  2.16%  2.16%  2.17%  1.66%
                    
Total loan servicing fees$1,974  $2,054  $1,923  $1,831  $1,778 
Average loans serviced 805,190   779,939   754,806   749,646   744,281 
Annualized loan servicing fees as a % of average loans serviced 0.98%  1.05%  1.02%  0.98%  0.96%

Non-Interest Expense

  • The increase in employee compensation and benefits expense of $1.9 million in the fourth quarter of 2020 compared to the prior quarter was primarily the result of an additional accrual of $1.6 million for incentive compensation related to 2020 financial results. The $2.2 million increase for the year ended December 31, 2020 compared to the prior year was primarily the result of a 13.9% increase in headcount.
  • During the fourth quarter of 2020, three properties in other real estate owned totaling $2.0 million were sold for a gain of $0.3 million. During 2020, six properties in other real estate owned totaling $3.5 million were sold for a gain of $0.3 million.
 For the Three Months Ended 
 December 31,
2020 
 September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019 
            
 (dollars in thousands, except per share data) 
Non-Interest Expense                
Employee compensation and benefits$6,687  $4,766 $4,594 $5,260 $5,696 
Occupancy 297   321  305  354  417 
Information processing 656   641  663  670  645 
Professional fees 582   555  480  401  371 
Business development 136   305  333  366  335 
OREO expenses 20   47  44  116  59 
Writedown of OREO 148       1,360  376 
Net loss (gain) on sale of OREO (326)  9    4  (231)
Depreciation and amortization 289   295  303  301  319 
Goodwill impairment        5,038   
Other 1,005   728  743  1,148  2,278 
Total non-interest expense$9,494  $7,667 $7,465 $15,018 $10,265 

Asset Quality

  • The decrease in substandard loans and the adverse classified asset ratio in the quarter were primarily due to the charge-off of $3.4 million of commercial loans.
 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
               
 (dollars in thousands) 
Loans by risk category(1):                   
Sound/Acceptable/Satisfactory/Low Satisfactory$716,313  $800,451  $798,945  $706,247  $724,444 
Watch 190,101   185,254   198,044   219,459   216,098 
Special Mention 2,501   1,851   1,856   15,036   9,239 
Substandard Performing 40,420   41,577   47,741   34,179   49,774 
Substandard Impaired 46,950   46,793   40,938   37,515   36,218 
Total loans$996,285  $1,075,926  $1,087,524  $1,012,436  $1,035,773 
Adverse classified asset ratio (2) 39.43%  42.64%  41.73%  32.35%  39.85%


(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

  • A recovery of loan loss provisions of $0.5 million was recorded for the three months ended December 31, 2020 compared to a provision of $0.1 million for the three months ended September 30, 2020. The decrease in the provision relative to the previous quarter was driven by a reduction of qualitative risk factors related to industries at risk due to COVID-19, which was partially offset by general reserve increases due to actual loss rates incurred.
  • Non-performing assets decreased in the quarter by $1.7 million, or 3.9%, sequentially compared to the third quarter of 2020. Year-over-year, non-performing assets increased $6.2 million, or 17.0%, due to a $8.7 million increase in non-accrual agricultural loans from one customer and a $2.0 million increase in non-accrual commercial loans, which were partially offset by a $4.4 million decrease in OREO properties.
 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
          
 (dollars in thousands) 
Non-Performing Assets:                   
Nonaccrual loans$41,624  $41,351  $35,456  $32,051  $30,968 
Other real estate owned 1,077   3,064   2,629   3,247   5,521 
Total non-performing assets$42,701  $44,415  $38,085  $35,298  $36,489 
                    
Performing TDRs not on nonaccrual$18,592  $19,036  $21,986  $21,853  $21,784 
                    
Non-performing assets as a % of total loans 4.29%  4.13%  3.50%  3.49%  3.52%
Non-performing assets as a % of total assets 2.90%  2.98%  2.52%  2.61%  2.65%
Allowance for loan losses as a % of total loans 1.49%  1.73%  1.71%  1.73%  1.47%
Net charge-offs (recoveries) quarter-to-date$3,386  $(1) $120  $(62) $(253)

Conference Call

The Company will host an earnings call tomorrow, January 22, 2021 at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President; Glen L. Stiteley, Chief Financial Officer; David C. Coggins, Chief Banking Officer; John R. Fillingim, Chief Credit Officer; and Matthew R. Lemke, Chief Retail and Deposit Officer. 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 22, 2022, 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)
December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
          
 (dollars in thousands, except per share data) 
Period-End Balance Sheet:                   
Assets                   
Cash and cash equivalents$19,500  $53,283  $127,432  $21,545  $129,011 
Securities available-for-sale, at fair value 352,854   298,476   226,971   246,148   158,733 
Loans held for sale 35,976   2,593   11,847   14,388   2,151 
Agricultural loans 606,881   619,617   624,340   642,066   659,725 
Commercial loans 313,265   317,782   328,368   325,310   331,723 
Paycheck Protection Plan loans 37,790   98,421   103,317       
Multi-family real estate loans 33,457   35,496   30,439   42,198   41,070 
Residential real estate loans 4,627   4,489   975   2,753   2,888 
Installment and consumer other 265   121   85   109   367 
Total loans 996,285   1,075,926   1,087,524   1,012,436   1,035,773 
Allowance for loan losses (14,808)  (18,649)  (18,569)  (17,547)  (15,267)
Net loans 981,477   1,057,277   1,068,955   994,889   1,020,506 
Other assets 82,551   80,426   78,712   78,004   68,378 
Total Assets$1,472,358  $1,492,055  $1,513,917  $1,354,974  $1,378,779 
                    
Liabilities and Shareholders' Equity                   
Demand deposits$163,202  $158,798  $149,963  $117,434  $138,489 
NOW accounts and interest checking 96,624   78,026   81,656   64,873   63,781 
Savings 7,367   11,900   8,369   6,566   15,708 
Money market accounts 344,250   325,900   307,083   237,889   242,539 
Time deposits 304,580   322,992   346,482   364,930   375,100 
Brokered deposits 80,456   101,808   121,503   161,882   166,340 
National time deposits 44,347   50,747   57,997   66,386   99,485 
Total deposits 1,040,826   1,050,171   1,073,053   1,019,960   1,101,442 
Federal Reserve Discount Window advances 47,531   99,693   99,693       
FHLB advances 129,000   84,600   93,400   109,400   44,400 
Subordinated debentures 67,111   67,025   61,910   44,896   44,858 
Other liabilities 16,114   20,656   17,336   15,672   16,050 
Total Liabilities 1,300,582   1,322,145   1,345,392   1,189,928   1,206,750 
                    
Shareholders' equity 171,776   169,910   168,525   165,046   172,029 
Total Liabilities and Shareholders' Equity$1,472,358  $1,492,055  $1,513,917  $1,354,974  $1,378,779 
                    
Stock Price Information:                   
High - Quarter-to-date$23.72  $22.00  $24.67  $27.19  $27.98 
Low - Quarter-to-date$18.20  $17.04  $17.13  $13.55  $18.76 
Market price - Quarter-end$22.08  $18.80  $20.93  $18.50  $25.63 
Book value per share$26.42  $25.72  $25.18  $24.17  $24.32 
Tangible book value per share (1)$26.42  $25.71  $25.16  $24.15  $23.58 
Common shares outstanding 6,197,965   6,294,675   6,375,150   6,496,790   6,734,132 


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


 For the Three Months Ended 
 December 31,
2020 
 September 30,
2020
 June 30,
2020
 March 31,
2020 
 December 31,
2019 
             
 (dollars in thousands, except per share data) 
Selected Income Statement Data:                 
Interest and Dividend Income                 
Loans, including fees(1)$12,737  $11,594 $12,009 $12,565  $13,671 
Taxable securities 1,777   1,293  1,283  1,282   1,106 
Tax-exempt securities 201   167  162  6    
Federal funds sold and other 10   52  111  225   442 
Total interest and dividend income 14,725   13,106  13,565  14,078   15,219 
                  
Interest Expense                 
Deposits 2,482   2,914  3,721  4,347   4,781 
FHLB advances and other borrowed funds 362   456  343  244   225 
Subordinated debentures 1,107   1,082  736  706   695 
Total interest expense 3,951   4,452  4,800  5,297   5,701 
Net interest income 10,774   8,654  8,765  8,781   9,518 
Provision for loan losses (455)  79  1,142  2,218   (51)
Net interest income after provision for loan losses 11,229   8,575  7,623  6,563   9,569 
                  
Non-Interest Income                 
Services charges 108   108  139  113   117 
Crop insurance commission 517   271  229  229   432 
Gain on sale of loans, net 219   17  4  38   34 
Loan servicing fees 1,974   2,054  1,923  1,831   1,778 
Loan servicing right origination 1,193   717  275  289   1,146 
Income on OREO      3     54 
Gain on sale of securities    101  570      
Referral fees 64   110  121  17   20 
Other 283   294  237  203   161 
Total non-interest income 4,358   3,672  3,501  2,720   3,742 
                  
Non-Interest Expense                 
Employee compensation and benefits 6,687   4,766  4,594  5,260   5,696 
Occupancy 297   321  305  354   417 
Information processing 656   641  663  670   645 
Professional fees 582   555  480  401   371 
Business development 136   305  333  366   335 
OREO expenses 20   47  44  116   59 
Writedown of OREO 148       1,360   376 
Net loss (gain) on sale of OREO (326)  9    4   (231)
Depreciation and amortization 289   295  303  301   319 
Goodwill impairment        5,038    
Other 1,005   728  743  1,148   2,278 
Total non-interest expense 9,494   7,667  7,465  15,018   10,265 
Income before income taxes 6,093   4,580  3,659  (5,735)  3,046 
Income tax expense (benefit) 1,575   1,164  926  (547)  (258)
NET INCOME (LOSS)$4,518  $3,416 $2,733 $(5,188) $3,304 
                  
Basic earnings (loss) per share$0.70  $0.52 $0.40 $(0.79) $0.47 
Diluted earnings (loss) per share$0.70  $0.52 $0.40 $(0.78) $0.47 
Dividends declared per share$0.10  $0.07 $0.07 $0.07  $0.05 



(1)Referral fees in prior quarters reclassed to non-interest income to match current classification


 For the Three Months Ended 
 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
 (dollars in thousands, except share data) 
Other Data:                   
Return on average assets (1) 1.23%  0.91%  0.74%  (1.53)%  0.96%
Return on average shareholders' equity (1) 10.56%  8.05%  6.55%  (11.97)%  7.74%
Return on average common shareholders' equity (1)(2) 10.88%  8.25%  6.63%  (12.81)%  7.83%
Efficiency ratio (1)(2) 63.92%  62.64%  63.83%  74.92%  67.65%
Equity to assets ratio 11.67%  11.39%  11.13%  12.18%  12.48%
Tangible common equity to tangible assets (2) 11.12%  10.85%  10.60%  11.58%  11.56%
                    
Common Share Data:                   
Net income from continuing operations$4,518  $3,416  $2,733  $(5,188) $3,304 
Less: Preferred stock dividends 80   80   99   108   117 
Income available to common shareholders$4,438  $3,336  $2,634  $(5,296) $3,187 
                    
Weighted average number of common shares issued 7,206,238   7,202,000   7,198,901   7,182,945   7,173,290 
Less: Weighted average treasury shares 957,573   882,153   759,294   518,740   443,920 
Plus: Weighted average non-vested restricted stock units 67,529   66,492   65,291   39,785   32,125 
Weighted average number of common shares outstanding 6,316,194   6,386,339   6,504,898   6,703,990   6,761,495 
Effect of dilutive options 28,025   20,915   28,511   49,072   44,630 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share 6,344,219   6,407,254   6,533,409   6,753,062   6,806,125 

         

(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 
 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
          
 (dollars in thousands) 
Return on average common shareholders' equity reconciliation (1):                   
Return on average shareholders' equity 10.56%  8.05%  6.55%  (11.97)%  7.74%
Effect of excluding average preferred shareholders' equity 0.32%  0.20%  0.08%  (0.84)%  0.09%
Return on average common shareholders' equity 10.88%  8.25%  6.63%  (12.81)%  7.83%
                    
Efficiency ratio (2):                   
Non-interest expense$9,494  $7,667  $7,465  $15,018  $10,265 
Less: goodwill impairment          (5,038)   
Less: historical tax credit investment impairment             (1,149)
Less: net loss on sales and write-downs of OREO 178   (9)     (1,364)  (145)
Adjusted non-interest expense (non-GAAP)$9,672  $7,658  $7,465  $8,616  $8,971 
                    
Net interest income$10,774  $8,654  $8,765  $8,781  $9,518 
Non-interest income 4,358   3,672   3,501   2,720   3,742 
Less: net gain on sales of securities    (101)  (570)      
Operating revenue$15,132  $12,225  $11,696  $11,501  $13,260 
Efficiency ratio 63.92%  62.64%  63.83%  74.92%  67.65%


 For the Three Months Ended  For the Year Ended 
    
 December 31,
2020 
 December 31,
2019 
 December 31,
2020 
 December 31,
2019 
        
 (dollars in thousands, except per share data) 
Adjusted diluted earnings per share(3):               
Net income from continuing operations$4,518  $3,304  $5,478  $16,452 
Less: preferred stock dividends (80)  (117)  (367)  (472)
Plus: goodwill impairment       5,038    
Adjusted income available to common shareholders for basic earnings per common share$4,438  $3,187  $10,149  $15,980 
                
Weighted average number of common shares outstanding 6,316,194   6,761,495   6,477,173   6,747,581 
Effect of dilutive options 28,025   44,630   28,025   21,344 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share 6,344,219   6,806,125   6,505,198   6,768,925 
                
Adjusted diluted earnings per share$0.70  $0.47  $1.56  $2.36 

         

(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):

 December 31,
2020 
 September 30,
2020 
 June 30,
2020 
 March 31,
2020 
 December 31,
2019 
          
 (dollars in thousands, except per share data) 
Tangible book value per share and tangible common equity to tangible assets reconciliation(1):                   
Common equity$163,776  $161,910  $160,525  $157,046  $164,029 
Less: Goodwill             5,038 
Less: Core deposit intangible, net of amortization 54   86   125   171   225 
Tangible common equity (non-GAAP)$163,722  $161,824  $160,400  $156,875  $158,766 
Common shares outstanding 6,197,965   6,294,675   6,375,150   6,496,790   6,734,132 
Tangible book value per share$26.42  $25.71  $25.16  $24.15  $23.58 
                    
Total assets$1,472,358  $1,492,055  $1,513,917  $1,354,974  $1,378,779 
Less: Goodwill             5,038 
Less: Core deposit intangible, net of amortization 54   86   125   171   225 
Tangible assets (non-GAAP)$1,472,304  $1,491,969  $1,513,792  $1,354,803  $1,373,516 
Tangible common equity to tangible assets 11.12%  10.85%  10.60%  11.58%  11.56%
                    
Adverse classified asset ratio(2):                   
Substandard loans$87,370  $88,370  $88,680  $71,694  $85,992 
Other real estate owned 1,077   3,064   2,629   3,247   5,521 
Substandard unused commitments 4,049   5,124   3,230   2,840   2,849 
Less: Substandard government guarantees (8,960)  (7,002)  (6,336)  (7,699)  (7,892)
Total adverse classified assets (non-GAAP)$83,536  $89,556  $88,203  $70,082  $86,470 
                    
Total equity (Bank)$205,743  $200,011  $201,507  $204,089  $204,240 
Accumulated other comprehensive loss (gain) on available for sale securities (8,686)  (8,640)  (8,734)  (5,012)  (2,505)
Allowance for loan losses 14,808   18,649   18,569   17,547   15,267 
Adjusted total equity (non-GAAP)$211,865  $210,020  $211,342  $216,624  $217,002 
Adverse classified asset ratio 39.43%  42.64%  41.73%  32.35%  39.85%

           

(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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