County Bancorp, Inc. Announces Third Quarter Net Income of $3.1 Million

3rd Quarter 2016 Highlights 

  • Total loan growth of $32.2 million
  • Net interest margin of 3.57%
  • Net income of $3.1 million
  • Total deposit growth of $36.9 million

MANITOWOC, Wis., Oct. 20, 2016 (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 $3.1 million, or $0.46 diluted earnings per share, for the third quarter of 2016, compared to net income of $3.3 million, or $0.55 diluted earnings per share, for the third quarter of 2015. This represents a return on average assets of 1.04% for the three months ended September 30, 2016 compared to 1.63% for the three months ended September 30, 2015.

“We’ve completed our first full quarter since acquiring Fox River Valley Bancorp, Inc. and The Business Bank, and our strong performance has been a testament to a successful integration process. As we move forward, we will continue to build brand awareness in the new markets we serve and are very excited about our future growth opportunities,” said Tim Schneider, President of County Bancorp, Inc. and CEO of Investors Community Bank. “Highlights for the quarter include strong net income, stabilization of our non-interest expense as most of the one-time merger expenses occurred in the second quarter, and another period of solid loan growth. We have also made meaningful investments in people and infrastructure that are making positive impacts in our operations and results. We’ve added solid talent to expand our team in all markets we serve, which is aligned with our belief that ‘People Bank with People not with Banks’.”

Total assets at September 30, 2016 were $1.2 billion, an increase of $56.6 million over total assets as of June 30, 2016 and an increase of $372.4 million over total assets as of September 30, 2015. Total loans increased $32.2 million to $992.5 million at September 30, 2016 which represents a 3.3% increase over June 30, 2016. Total deposits at September 30, 2016 were $929.4 million, an increase of $36.9 million over total deposits as of June 30, 2016 and an increase of $293.2 million as of September 30, 2015.

Non-performing assets decreased to $24.8 million at September 30, 2016, from $26.7 million June 30, 2016, which represents a 7.2% improvement.

Net income for the quarters ended September 30, 2016 and 2015 were $3.1 million and $3.3 million, respectively. The decrease in net income of $0.2 million between the third quarters of 2016 and 2015 is primarily the result of a $0.9 million recovery of loan losses recognized as a credit to income during the third quarter of 2015 compared to a provision for loan losses of $1.1 million during the third quarter of 2016. The decrease in net income is also attributable to an increase in non-interest expense. Partially offsetting these effects was a $3.3 million increase in net interest income between the third quarter of 2016 and 2015 primarily the result of the merger. Net interest margin increased to 3.57% for the three months ended September 30, 2016, compared to 3.49% for the three months ended September 30, 2015. 

Net income for the nine months ended September 30, 2016 was $7.2 million compared to $8.1 million for the nine months ended September 30, 2015. This decrease is the result of increased non-interest expense, which includes $2.6 million in merger-related expenses that were incurred during the first nine months of 2016, which had a $1.6 million effect on net income, net of taxes. Net interest income increased 32.0% to $25.4 million for the nine months ended September 30, 2016 from $19.3 million for the nine months ended September 30, 2015.

Earnings for the nine months ended September 30, 2016 were affected by one-time merger-related expenses from the acquisition of Fox River Valley Bancorp, Inc., and its wholly owned subsidiary, The Business Bank, which was completed on May 13, 2016. The non-GAAP information presented below should be read in conjunction with the Company’s balance sheet and statement of operations. After excluding the effects of $2.6 million ($1.6 million net of taxes) of expenses relating to the merger with Fox River Valley Bancorp, Inc., adjusted diluted earnings per share (non-GAAP) for the nine months ended September 30, 2016 were $1.38, compared to $1.34 for the nine months ended September 30, 2015. 

    3Q16 YTD     Diluted EPS     3Q15 YTD     Diluted EPS  
Net income, excluding merger related expenses   $ 8,826     $ 1.38     $ 8,074     $ 1.34  
Merger related expenses, net of taxes     1,603       0.26              
Net income   $ 7,223     $ 1.12     $ 8,074     $ 1.34  
                                 

Provision for loan losses for the nine months ended September 30, 2016 was $2.4 million compared to a credit provision of $1.3 million for the nine months ended September 30, 2015. The increased provision resulted from a one-time recovery that took place in 2015 and from loan growth in 2016.

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 information 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. In addition, 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 information contained in this press release include those identified in County Bancorp, Inc.’s most recent annual report on Form 10-K and subsequent SEC filings. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

County Bancorp, Inc.
Consolidated Financial Summary (Unaudited)

    September 30,
2016
    June 30,
2016
    March 31,
2016
    September 30,
2015
 
    (dollars in thousands, except per share data)  
Selected Balance Sheet Data:                                
Total assets   $ 1,217,149     $ 1,160,589     $ 909,557     $ 844,791  
Total loans     992,478       960,310       775,848       704,029  
Allowance for loan losses     11,626       10,791       11,218       9,833  
Deposits     929,448       892,535       693,181       636,221  
Shareholders’ equity     128,794       125,789       109,378       104,436  
Common equity     120,794       117,789       101,378       96,436  
                                 
Stock Price Information:                                
High – Year-to-date   $ 22.80     $ 22.80     $ 21.80     $ 20.00  
Low – Year-to-date   $ 18.25     $ 18.25     $ 18.25     $ 16.46  
Market price per common share   $ 20.01     $ 20.62     $ 20.08     $ 19.14  
Common shares outstanding     6,532,776       6,501,031       5,786,701       5,733,919  
                                 
Non-Performing Assets:                                
Nonaccrual loans   $ 22,502     $ 23,942     $ 19,564     $ 11,172  
Other real estate owned     2,299       2,789       2,947       3,024  
Total non-performing assets   $ 24,801     $ 26,731     $ 22,511     $ 14,196  
                                 
Restructured loans not on nonaccrual   $ 4,877     $ 3,583     $ 602     $ 617  
                                 
Non-performing assets as a % of total loans     2.50 %     2.78 %     2.90 %     2.02 %
Non-performing assets as a % of total assets     2.04 %     2.30 %     2.47 %     1.68 %
Allowance for loan losses as a % of nonperforming assets     46.88 %     40.37 %     49.83 %     69.27 %
Allowance for loan losses as a % of total loans     1.17 %     1.12 %     1.45 %     1.40 %
                                 
Net charge-offs (recoveries) year-to-date   $ 1,195     $ 896     $ (1 )   $ (555 )
Provision for loan loss year-to-date   $ 2,416     $ 1,282     $ 812     $ (1,325 )
                                 

    For the Three Months Ended     For the Nine Months Ended  
    September 30,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 
    (dollars in thousands, except per share data)  
Selected Income Statement Data:                                
Net interest income   $ 10,176     $ 6,871     $ 25,417     $ 19,261  
Provision for loan losses     1,134       (867 )     2,416       (1,325 )
Net interest income after provision for loan losses     9,042       7,738       23,001       20,586  
Non-interest income     2,014       1,723       6,709       5,310  
Non-interest expense     6,105       4,135       18,149       12,983  
Income tax expense     1,849       1,996       4,338       4,839  
Net income   $ 3,102     $ 3,330     $ 7,223     $ 8,074  
                                 
Income before provision for loan losses, merger expense, and income tax expense (1)   $ 6,181     $ 4,459     $ 16,543     $ 11,588  
                                 
Return on average assets     1.04 %     1.63 %     0.92 %     1.36 %
Return on average shareholders’ equity     9.63 %     11.32 %     8.09 %     9.44 %
Return on average common shareholders’ equity (1)     10.00 %     13.58 %     9.67 %     11.28 %
Efficiency ratio (1)     48.29 %     48.42 %     55.83 %     51.04 %
                                 
Per Common Share Data:                                
Basic   $ 0.46     $ 0.56     $ 1.13     $ 1.37  
Diluted   $ 0.46     $ 0.55     $ 1.12     $ 1.34  
Dividends declared   $ 0.05     $ 0.04     $ 0.15     $ 0.12  
                                 
(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,
2016
    September 30,
2015
    September 30,
2016
    September 30,
2015
 
    (dollars in thousands)  
Non-interest income:                                
Service charges   $ 288     $ 238     $ 976     $ 744  
Gain on sale of loans     79       44       240       166  
Loan servicing fees     1,404       1,236       4,017       3,648  
Loan servicing rights     54       (51 )     1,020       (25 )
Income on OREO     19       33       33       243  
Other     170       223       423       534  
Total   $ 2,014     $ 1,723     $ 6,709     $ 5,310  
                                 
Non-interest expense:                                
Employee compensation and benefits   $ 3,461     $ 2,643     $ 9,554     $ 8,232  
Occupancy     157       100       364       260  
Information processing     288       183       2,045       527  
Professional fees     304       513       1,337       900  
Business development     167       147       452       371  
FDIC assessment     163       101       424       321  
OREO expenses     60       121       153       261  
Writedown of OREO     250             334       182  
Net loss (gain) on OREO     (32 )     (26 )     (121 )     260  
Other     1,287       353       3,607       1,669  
Total   $ 6,105     $ 4,135     $ 18,149     $ 12,983  
                                 
Non-GAAP Financial Measures                                
                                 
Return on average common shareholders’ equity reconciliation:                                
Return on average shareholders’ equity     9.63 %     11.32 %     8.09 %     9.44 %
Effect of excluding average preferred shareholders’ equity     0.37 %     2.26 %     1.58 %     1.84 %
Return on average common shareholders’ equity     10.00 %     13.58 %     9.67 %     11.28 %
                                 
Efficiency ratio GAAP to non-GAAP reconciliation:                                
Non-interest expense   $ 6,105     $ 4,135     $ 18,149     $ 12,983  
Less: net loss on sales and write-downs of OREO     (218 )     26       (213 )     (442 )
Adjusted non-interest expense (non-GAAP)   $ 5,887     $ 4,161     $ 17,936     $ 12,541  
                                 
Net interest income   $ 10,176     $ 6,871     $ 25,417     $ 19,261  
Non-interest income     2,014       1,723       6,709       5,310  
Operating revenue   $ 12,190     $ 8,594     $ 32,126     $ 24,571  
Efficiency ratio     48.29 %     48.42 %     55.83 %     51.04 %
                                 
Income before provision for loan losses, merger expense, and income tax expense reconciliation:                                
Income before income taxes   $ 4,951     $ 5,326     $ 11,561     $ 12,913  
Provision for loan losses     1,134       (867 )     2,416       (1,325 )
Merger expenses (one-time)     96             2,566        
Income before provision for loan losses, merger expense, and income tax expense   $ 6,181     $ 4,459     $ 16,543     $ 11,588  
                                 

     Three Months Ended  
    September 30, 2016     September 30, 2015  
    Average Balance (1)     Income/ Expense     Yields/ Rates     Average Balance (1)     Income/ Expense     Yields/ Rates  
    (dollars in thousands)  
Assets                                                
Investment securities   $ 126,319     $ 510       1.61 %   $ 84,528     $ 359       1.70 %
Loans (2)     993,156       12,245       4.93 %     691,049       8,393       4.86 %
Interest bearing deposits due from other banks     21,480       48       0.89 %     12,741       11       0.35 %
Total interest-earning assets   $ 1,140,955     $ 12,803       4.49 %   $ 788,318     $ 8,763       4.45 %
                                                 
Allowance for loan losses     (11,499 )                     (10,462 )                
Other assets     63,588                       40,043                  
Total assets   $ 1,193,044                     $ 817,899                  
                                                 
Liabilities                                                
Savings, NOW, money market, interest checking   $ 245,001       333       0.54 %   $ 162,719       194       0.48 %
Time deposits     565,899       1,767       1.25 %     395,967       1,381       1.40 %
Total interest-bearing deposits   $ 810,900     $ 2,100       1.04 %   $ 558,686     $ 1,575       1.13 %
Other borrowings     2,287       35       6.15 %     8,830       63       2.83 %
FHLB advances     133,815       373       1.11 %     52,058       157       1.20 %
Junior subordinated debentures     15,407       119       3.09 %     12,372       99       3.21 %
Total interest-bearing liabilities   $ 962,409     $ 2,627       1.09 %   $ 631,946     $ 1,894       1.20 %
                                                 
Non-interest-bearing deposits     93,758                       60,196                  
Other liabilities     8,041                       8,099                  
Total liabilities   $ 1,064,208                     $ 700,241                  
                                                 
SBLF preferred stock (3)                           15,000                  
Shareholders’ equity     128,836                       102,658                  
Total liabilities and equity   $ 1,193,044                     $ 817,899                  
                                                 
Net interest income           $ 10,176                     $ 6,869          
Interest rate spread (4)                     3.40 %                     3.25 %
Net interest margin (5)                     3.57 %                     3.49 %
Ratio of interest-earning assets to interest-bearing liabilities     1.19                       1.25                  
                                                 

(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.

     Nine Months Ended  
    September 30, 2016     September 30, 2015  
    Average Balance (1)     Income/ Expense     Yields/ Rates     Average Balance (1)     Income/ Expense     Yields/ Rates  
    (dollars in thousands)  
Assets                                                
Investment securities   $ 104,021     $ 1,304       1.67 %   $ 82,187     $ 1,037       1.68 %
Loans (2)     879,471       31,180       4.73 %     661,797       23,687       4.77 %
Interest bearing deposits due from other banks     18,664       137       0.98 %     17,715       41       0.31 %
Total interest-earning assets   $ 1,002,156     $ 32,621       4.34 %   $ 761,699     $ 24,765       4.34 %
                                                 
Allowance for loan losses     (11,203 )                     (10,438 )                
Other assets     54,853                       42,010                  
Total assets   $ 1,045,806                     $ 793,271                  
                                                 
Liabilities                                                
Savings, NOW, money market, interest checking   $ 198,428       774       0.52 %   $ 154,046       543       0.47 %
Time deposits     511,452       5,133       1.34 %     395,005       3,998       1.35 %
Total interest-bearing deposits   $ 709,880     $ 5,907       1.11 %   $ 549,051     $ 4,541       1.10 %
Other borrowings     3,094       128       5.52 %     9,369       221       3.15 %
FHLB advances     107,538       915       1.13 %     39,276       403       1.37 %
Junior subordinated debentures     13,917       254       2.43 %     12,372       339       3.66 %
Total interest-bearing liabilities   $ 834,429     $ 7,204       1.15 %   $ 610,068     $ 5,504       1.20 %
                                                 
Non-interest-bearing deposits     81,480                       61,236                  
Other liabilities     7,995                       7,900                  
Total liabilities   $ 923,904                     $ 679,204                  
                                                 
SBLF preferred stock (3)     2,912                       15,000                  
Shareholders’ equity     118,990                       99,067                  
Total liabilities and equity   $ 1,045,806                     $ 793,271                  
                                                 
Net interest income           $ 25,417                     $ 19,261          
Interest rate spread (4)                     3.19 %                     3.14 %
Net interest margin (5)                     3.38 %                     3.37 %
Ratio of interest-earning assets to interest-bearing liabilities     1.20                       1.25                  
                                                 

(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. 

CONTACT: Investor Relations Contact
Timothy J. Schneider
CEO, Investors Community Bank
Phone: (920) 686-5604 
Email: tschneider@investorscommunitybank.com