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County Bancorp, Inc. Announces Record 3rd Quarter Net Income of $3.6 Million

Third Quarter Highlights

  • Net income of $3.6 million for the third quarter of 2017, an increase of 16.2% over the third quarter of 2016
  • Book value per share of $19.79 and tangible book value per share of $18.87 as of September 30, 2017, an increase of $1.07, or 5.7%, and $1.13, or 6.4%, respectively, since December 31, 2016
  • Loan growth of $50.9 million in the third quarter of 2017
  • Deposit growth of $72.4 million, or 7.3%, in the third quarter of 2017

MANITOWOC, Wis., Oct. 20, 2017 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (NASDAQ:ICBK), the holding company of Investors Community Bank, a commercial bank headquartered in Manitowoc, Wisconsin, reported net income of $3.6 million, or $0.52 diluted earnings per share, for the third quarter of 2017, compared to net income of $3.1 million, or $0.46 diluted earnings per share, for the third quarter of 2016, which represents a 16.2% increase to net income year-over-year. This represents a return on average assets of 1.11% for the three months ended September 30, 2017, compared to 1.04% for the three months ended September 30, 2016.

“Our third quarter results were positive, with solid loan growth from both the agricultural and commercial banking teams,” stated Timothy J. Schneider, President of County Bancorp, Inc. and CEO of Investors Community Bank. “Our net income for the quarter was also better than the first two quarters, primarily due to increased non-interest income that was driven by a pickup in secondary market loan sales, as well as a decrease in provision for loan loss expense.”

“Our loan pipeline for both commercial and ag continues to be solid. We remain confident in our ability to continue to develop loan growth in both sectors,” added Schneider. “With regard to credit quality, our non-performing assets as a percent of total assets improved slightly for the quarter. The dairy sector, although improved from last year due to an increase in milk prices, is still feeling some of the effects of lower prices from 2015 and 2016. As always, we are diligently working with our dairy customers through these challenges and closely monitoring credits in the industry. Additionally, we continue to add key talent to our staff in all of our markets to fill open positions. Attracting top level talent has been a significant focus of our organization, and we feel very good about our team.”

Loans and Total Assets

Total assets at September 30, 2017 were $1.4 billion, an increase of $117.3 million, or 9.4%, over total assets as of December 31, 2016, and an increase of $142.8 million, or 11.7%, over total assets as of September 30, 2016. Total loans were $1.1 billion at September 30, 2017, which represents a $96.1 million, or 9.3%, increase over total loans at December 31, 2016, and a $134.1 million, or 13.5% increase over total loans at September 30, 2016. We have seen increased loan demand in our market areas; agricultural loans have increased $52.6 million and commercial loans have increased $45.1 million in 2017.

Deposits

Total deposits at September 30, 2017 were $1.1 billion, an increase of $88.6 million, or 9.1%, over total deposits as of December 31, 2016, and an increase of $136.6 million, or 14.7%, over total deposits as of September 30, 2016. While core deposit generation remains challenging in this ultra-competitive environment, we have been able to supplement our deposit needs with wholesale deposits from our brokered relationships. Brokered deposits increased $87.6 million, or 45.2%, from $193.6 million at December, 31, 2016 to $281.2 million at September 30, 2017.

Net Interest Income and Margin

As the result of increased wholesale deposits and other borrowings to fund the loan volume, net interest income decreased $0.2 million to $10.0 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. For the nine months ended September 30, 2017, net interest income increased $3.3 million to $28.7 million from $25.4 million for the nine months ended September 30, 2016.

Net interest margin decreased to 3.17% for the three months ended September 30, 2017, compared to 3.57% for the three months ended September 30, 2016. For the nine months ended September 30, 2017, net interest margin decreased to 3.12%, compared to 3.38% for the nine months ended September 30, 2016. The decrease in margin is the result of market-driven rate compression on new loans of 0.12% and increased funding costs of 0.14%.

The net interest margin for the three and nine months ended September 30, 2016 was positively impacted by 0.25% and 0.10%, respectively, for the accretion of a fair value discount resulting from the acquisition of The Business Bank, which closed on May 13, 2016. The accretion adjustment for 2017 is immaterial.

Non-Interest Income and Expense

Non-interest income for the third quarter of 2017 increased $0.1 million to $2.1 million compared to the third quarter of 2016 and decreased $1.0 million to $5.7 million for the nine months ended September 30, 2017. The year-to-date decrease is primarily due to a $1.3 million decrease in loan servicing rights during the first three quarters of 2017. The decrease in loan servicing rights resulted from lower volumes of secondary market sales and participations due to changes in Farm Service Agency regulations.

Non-interest expense for the third quarter of 2017 increased $0.2 million to $6.3 million from the third quarter of 2016 primarily as the result of a $0.4 million increase in employee compensation and benefits expense partially offset by a $0.2 million reduction in OREO writedowns from the third quarter of 2016.

Non-interest expense year-over-year has increased from $18.1 million for the nine months ended September 30, 2016 to $18.8 million for the nine months ended September 30, 2017. The increase is related to a $2.2 million increase in employee compensation and benefits related to a 9.7% increase in headcount since September 30, 2016. This increase was partially offset by a $0.8 million reduction in information processing expenses and a $0.5 million reduction in OREO writedowns and losses on OREO sales from the same period in 2016.

Asset Quality

Non-performing assets as a percent of total assets continued to improve and decreased to 1.43% at September 30, 2017 from 1.84% at December 31, 2016 and 2.04% at September 30, 2016.

Net charge-offs for the nine months ended September 30, 2017 were $1.3 million which is a decrease of $0.1 million from the nine months ended September 30, 2016. The net charge-offs for 2017 primarily consisted of one commercial real estate relationship that was fully reserved for in the allowance for loan losses; there is no further exposure to this customer.

Provision for loan losses for the three months ended September 30, 2017 was $33,000 compared to $1.1 million for the three months ended September 30, 2016. The decreased provision is primarily the result of improved historical charge-off factors and a more stable agricultural economy which offset the 2017 loan growth.

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and our 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 we have developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending. We also serve business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin. Our customers are served from our full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and our 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 our control. We caution you that the forward-looking statements presented in this press release is 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 County Bancorp, Inc.’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 we do 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
Timothy J. Schneider
CEO, Investors Community Bank
Phone: (920) 686-5604
Email: tschneider@investorscommunitybank.com


County Bancorp, Inc.
Consolidated Financial Summary (Unaudited)

September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
(dollars in thousands, except per share data)
Selected Balance Sheet Data:
Total assets $1,359,325 $1,286,634 $1,251,414 $1,242,670 $1,217,149
Total loans 1,126,601 1,075,668 1,049,009 1,030,486 992,478
Allowance for loan losses (13,625) (13,503) (13,428) (12,645) (11,626)
Securities available for sale, at fair value 107,242 115,148 115,431 123,437 124,442
Goodwill 5,038 5,038 5,038 5,038 5,038
Core deposit intangible, net of
amortization
1,038 1,165 1,300 1,441 1,590
Deposits 1,066,094 993,663 981,317 977,518 929,448
Shareholders' equity 139,729 136,254 134,074 131,288 128,794
Common equity 131,729 128,254 126,074 123,288 120,794
Stock Price Information:
High - Year-to-date $35.89 $35.89 $35.89 $26.97 $22.80
Low - Year-to-date $22.73 $22.73 $24.70 $18.25 $18.25
Market price per common share $30.05 $24.00 $29.06 $26.97 $20.01
Book value per share $19.79 $19.31 $19.06 $18.72 $18.49
Tangible book value per share (1) $18.87 $18.38 $18.10 $17.74 $17.48
Average diluted shares of common stock
year-to-date
6,742,648 6,701,578 6,727,502 6,415,204 6,257,002
Common shares outstanding 6,657,601 6,641,159 6,615,232 6,586,335 6,532,776
Non-Performing Assets:
Nonaccrual loans $12,862 $12,412 $15,263 $20,107 $22,502
Other real estate owned 6,576 6,520 6,597 2,763 2,299
Total non-performing assets $19,438 $18,932 $21,860 $22,870 $24,801
Restructured loans not on nonaccrual $8,087 $4,523 $4,446 $4,300 $4,877
Non-performing assets as a % of total assets 1.43% 1.47% 1.75% 1.84% 2.04%
Allowance for loan losses as a % of
nonaccrual loans
105.93% 108.79% 87.98% 62.89% 51.67%
Allowance for loan losses as a % of total
loans
1.21% 1.26% 1.28% 1.23% 1.17%
Net charge-offs (recoveries) year-to-date $1,338 $1,428 $(22) $719 $1,195
Provision for loan loss year-to-date $2,318 $2,285 $761 $2,959 $2,416

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


For the Three Months Ended
For the Nine Months Ended
September 30,
2017
September 30,
2016
September 30,
2017
September 30,
2016
(dollars in thousands, except per share data)
Selected Income Statement Data:
Net interest income $9,961 $10,176 $28,716 $25,417
Provision for loan losses 33 1,134 2,318 2,416
Net interest income after provision for
loan losses
9,928 9,042 26,398 23,001
Non-interest income 2,087 2,014 5,659 6,709
Non-interest expense 6,291 6,105 18,827 18,149
Income tax expense 2,120 1,849 4,936 4,338
Net income $3,604 $3,102 $8,294 $7,223
Return on average assets 1.11% 1.04% 0.87% 0.92%
Return on average shareholders' equity 10.36% 9.63% 8.10% 8.09%
Return on average common shareholders'
equity (1)
10.72% 10.00% 8.34% 9.67%
Efficiency ratio (1) 51.83% 48.29% 55.58% 55.83%
Per Common Share Data:
Basic $0.53 $0.46 $1.21 $1.13
Diluted $0.52 $0.46 $1.19 $1.12
Dividends declared $0.06 $0.05 $0.18 $0.15


Non-Interest Income:
Service charges $350 $288 $1,074 $976
Gain on sale of loans 47 79 96 240
Loan servicing fees 1,469 1,404 4,316 4,017
Loan servicing rights 94 54 (278) 1,020
Income on OREO 20 19 57 33
Other 107 170 394 423
Total $2,087 $2,014 $5,659 $6,709
Non-Interest Expense:
Employee compensation and benefits $3,845 $3,461 $11,735 $9,554
Occupancy 162 157 519 364
Information processing 450 288 1,209 2,045
Professional fees 414 304 1,251 1,337
Business development 275 167 731 452
FDIC assessment 99 163 287 424
OREO expenses 50 60 157 153
Writedown of OREO 8 250 85 334
Net loss (gain) on OREO 39 (32) (363) (121)
Depreciation and amortization 323 419 988 707
Other 626 868 2,228 2,900
Total $6,291 $6,105 $18,827 $18,149

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


Non-GAAP Financial Measures:

For the Three Months Ended
For the Nine Months Ended
September 30,
2017
September 30,
2016
September 30,
2017
September 30,
2016
(dollars in thousands)
Return on average common shareholders'
equity reconciliation:
Return on average shareholders' equity 10.36% 9.63% 8.10% 8.09%
Effect of excluding average preferred
shareholders' equity
0.36% 0.37% 0.24% 1.58%
Return on average common shareholders'
equity
10.72% 10.00% 8.34% 9.67%
Efficiency ratio GAAP to non-GAAP
reconciliation:
Non-interest expense $6,291 $6,105 $18,827 $18,149
Less: net gain (loss) on sales and write-
downs of OREO
(47) (218) 278 (213)
Adjusted non-interest expense
(non-GAAP)
$6,244 $5,887 $19,105 $17,936
Net interest income $9,961 $10,176 $28,716 $25,417
Non-interest income 2,087 2,014 5,659 6,709
Operating revenue $12,048 $12,190 $34,375 $32,126
Efficiency ratio 51.83% 48.29% 55.58% 55.83%
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
(dollars in thousands, except per share data)
Tangible book value per share reconciliation:
Common equity $131,729 $128,254 $126,074 $123,288 $120,794
Less: Goodwill 5,038 5,038 5,038 5,038 5,038
Less: Core deposit intangible, net of
amortization
1,038 1,165 1,300 1,441 1,590
Tangible common equity (non-GAAP) $125,653 $122,051 $119,736 $116,809 $114,166
Common shares outstanding 6,657,601 6,641,159 6,615,232 6,586,335 6,532,776
Tangible book value per share $18.87 $18.38 $18.10 $17.74 $17.48


For the Three Months Ended
September 30, 2017
September 30, 2016
Average
Balance (1)
Income/
Expense
Yields/
Rates
Average
Balance (1)
Income/
Expense
Yields/
Rates
(dollars in thousands)
Assets
Investment securities $111,306 $543 1.95% $126,319 $510 1.61%
Loans (2) 1,104,259 13,070 4.73% 993,156 12,245 4.93%
Interest bearing deposits due from other
banks
41,187 102 0.99% 21,480 48 0.89%
Total interest-earning assets $1,256,752 $13,715 4.37% $1,140,955 $12,803 4.49%
Allowance for loan losses (13,517) (11,499)
Other assets 59,186 63,588
Total assets $1,302,421 $1,193,044
Liabilities
Savings, NOW, money market, interest
checking
$224,819 387 0.69% $245,001 333 0.54%
Time deposits 679,324 2,721 1.60% 565,899 1,767 1.25%
Total interest-bearing deposits $904,143 $3,108 1.38% $810,900 $2,100 1.04%
Other borrowings 1,384 20 5.82% 2,287 35 6.12%
FHLB advances 136,561 491 1.44% 133,815 373 1.11%
Junior subordinated debentures 15,506 135 3.48% 15,407 119 3.09%
Total interest-bearing liabilities $1,057,594 $3,754 1.42% $962,409 $2,627 1.09%
Non-interest-bearing deposits 96,717 93,758
Other liabilities 8,995 8,041
Total liabilities $1,163,306 $1,064,208
Shareholders' equity 139,115 128,836
Total liabilities and equity $1,302,421 $1,193,044
Net interest income $9,961 $10,176
Interest rate spread (3) 2.95% 3.40%
Net interest margin (4) 3.17% 3.57%
Ratio of interest-earning assets to interest-
bearing liabilities
1.19 1.19

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


For the Nine Months Ended
September 30, 2017
September 30, 2016
Average
Balance (1)
Income/
Expense
Yields/
Rates
Average
Balance (1)
Income/
Expense
Yields/
Rates
(dollars in thousands)
Assets
Investment securities $114,528 $1,608 1.87% $104,021 $1,304 1.67%
Loans (2) 1,070,840 36,952 4.60% 879,471 31,180 4.73%
Interest bearing deposits due from other
banks
40,800 243 0.80% 18,664 137 0.98%
Total interest-earning assets $1,226,168 $38,803 4.22% $1,002,156 $32,621 4.34%
Allowance for loan losses (13,575) (11,203)
Other assets 54,906 54,853
Total assets $1,267,499 $1,045,806
Liabilities
Savings, NOW, money market, interest
checking
$239,365 1,113 0.62% $198,428 774 0.52%
Time deposits 644,472 7,238 1.50% 511,452 5,133 1.34%
Total interest-bearing deposits $883,837 $8,351 1.26% $709,880 $5,907 1.11%
Other borrowings 1,618 71 5.84% 3,094 128 5.52%
FHLB advances 128,093 1,285 1.34% 107,538 915 1.13%
Junior subordinated debentures 15,482 380 3.27% 13,917 254 2.43%
Total interest-bearing liabilities $1,029,030 $10,087 1.30% $834,429 $7,204 1.15%
Non-interest-bearing deposits 93,323 81,480
Other liabilities 8,665 7,995
Total liabilities $1,131,018 $923,904
SBLF preferred stock (3) - 2,912
Shareholders' equity 136,481 118,990
Total liabilities and equity $1,267,499 $1,045,806
Net interest income $28,716 $25,417
Interest rate spread (4) 2.92% 3.19%
Net interest margin (5) 3.12% 3.38%
Ratio of interest-earning assets to interest-
bearing liabilities
1.19 1.20

(1) Average balances are calculated on amortized cost.
(2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3) The SBLF preferred stock refers to our Noncumulative Perpetual Preferred Stock, Series C, issued to the U.S. Treasury through the U.S. Treasury’s Small Business Lending Fund program. This stock was redeemed on February 23, 2016.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Source:County Bancorp, Inc.