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

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 growthHighlightsNet income of $4.5 million for the fourth quarter of 2020; $5.5 million for the year 2020Diluted earnings per share of $0.70 for the fourth quarter of 2020; $0.79 for the year 2020Loans sold with servicing retained increased $14.7 million since September 30, 2020 and $60.8 million since December 31, 2019Client 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, 2019Net 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-yearCost of funds decreased by 10 basis points compared to the sequential quarter to 1.42%, a decrease of 71 basis points since December 31, 2019Loans 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 SecuritiesTotal 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.DepositsTotal 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 RepurchaseDuring 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 MarginNet 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.The following table sets forth average balances, average yields and rates, and income and expenses for the periods indicated.  Non-Interest IncomeLoan 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.
Non-Interest ExpenseThe 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.Asset QualityThe 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.
Non-Performing AssetsA 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.Conference CallThe 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 StatementsThis press release includes “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission, 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        



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