County Bancorp, Inc. Announces Second Quarter of 2021 Earnings

Continued improvement in credit trends, decreased cost of funds and solid loan sales led to a strong second quarter in 2021

Highlights

  • Net income of $6.7 million for the second quarter of 2021, or $1.07 per diluted share
  • A recovery of provision for loan losses of $4.3 million was recognized in the second quarter of 2021
  • Cost of funds decreased by 17 basis points sequentially to 1.06%, a decline of 61 basis points year-over-year
  • Loans sold with servicing retained increased $11.3 million since March 31, 2021 and $91.1 million since June 30, 2020
  • Watch and worse rated loans decreased by $74.6 million during the second quarter of 2021, an improvement of 67.4 %

MANITOWOC, Wis., July 22, 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 second quarter of 2021. Net income was $6.7 million, or $1.07 per diluted share, for the second quarter of 2021, compared to net income of $2.7 million, or $0.40 per diluted share, for the second quarter of 2020. For the six months ended June 30, 2021, net income was $10.7 million, or $1.69 per diluted share, compared to a net loss of $2.5 million, or a $0.40 loss per diluted share, for the six months ended June 30, 2020. The 2020 net loss included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share.

"The momentum we generated at the beginning of the year continued through the second quarter, reinforcing the unique strengths of our people and franchise," said Tim Schneider, President of County Bancorp, Inc. "In June, we announced the merger with Nicolet Bankshares, a like-minded partner with a similar culture, approach to service, and an unwavering commitment to our people, customers, and community. This transaction will bring together two high-performing and well-respected institutions with unique sector experience and deep community relationships. The combined entity will provide customers greater access to branches, expert bankers, and innovative solutions, while enhancing capabilities and is a natural transition for the team at County Bancorp. As we work towards the merger's close, our focus remains steadfast on delivering value to customers, supporting communities, and caring for colleagues. I am excited about the opportunities ahead and look forward to continuing working with the team here with our new partners at Nicolet. We remain committed to the markets and industries we serve, and above all, keeping banking local.”

Loans and Securities

  • Total loans decreased sequentially by $9.8 million, or 1.0%, to $1.0 billion during the second quarter of 2021. The decrease in total loans was primarily due to $ 15.6 million in Paycheck Protection Program (“PPP”) loans that were forgiven by the Small Business Administration (“SBA”) during the quarter, which was partially offset by $2.7 million in additional PPP originations during the quarter. The following table sets forth the total PPP loans at the dates indicated:
  June 30, 2021  March 31, 2021 
  # of Loans  Balance  Deferred Fee Income  # of Loans  Balance  Deferred Fee Income 
  (dollars in thousands) 
PPP 1oans - Round 1  69  $3,285  $82   127  $13,674  $301 
PPP loans - Round 2  391   30,115   1,576   461   32,595   1,479 
Total PPP loans  460  $33,400  $1,658   588  $46,269  $1,780 
% of Total loans      3.33%          4.57%    
  • Loans sold that the Company continued to service were $853.2 million as of June 30, 2021, an increase of $11.3 million, or 1.3%, compared to March 31, 2021, and an increase of $91.1 million, or 12.0%, compared to June 30, 2020.
  • The Company sold $35.3 million of securities during the second quarter of 2021 in an effort to reduce duration risk, resulting in a loss of $1.5 million. The security sales were partially offset by $3.0 million of security purchases during the second quarter of 2021.
  • As of June 30, 2021, there were four customer relationships with loans in payment deferral associated with COVID-19 customer support programs totaling $2.9 million, a reduction of $3.2 million since March 31, 2021.

Deposits

  • Total deposits as of June 30, 2021 were $1.1 billion, an increase of $37.2 million, or 3.4%, from March 31, 2021, and an increase of $62.7 million, or 5.8%, since June 30, 2020.
  • Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased by $44.8 million, or 4.9%, from March 31, 2021, to $958.0 million. Year-over-year, client deposits increased $64.4 million, or 7.2%, since June 30, 2020.
  • The Company decreased its brokered deposits and national certificate of deposits by $7.6 million, or 4.1%, during the second quarter of 2021. Year-over-year, wholesale funding decreased by $1.8 million, or 1.0%, since June 30, 2020.

Shareholders’ Equity

  • During the second quarter of 2021, the Company repurchased 91,453 shares of its common stock, totaling $2.2 million, at a weighted average price of $24.35 per share.
  • Book value per share increased to $27.68 per share on June 30, 2021, from $25.99 on March 31, 2020, and $25.18 on June 30, 2020.

Net Interest Income and Margin

  • Net interest margin for the quarter ended June 30, 2021 was 3.22%, an increase of 27 basis points compared to the sequential quarter and an increase of 68 basis points year-over-year. The following table shows the accretive effect the SBA PPP loans had on net interest margin for the periods indicated.
  For the Three Months Ended 
  June 30,
2021
 March 31,
2021
Net interest margin excluding PPP loans  3.12%  2.74%
Accretion related to PPP loans:        
Impact of interest rate on PPP loans  (0.03)%  (0.06)%
Impact of PPP fee income recognized  0.14%  0.29%
Impact of interest expense on PPP Liquidity Facility program  (0.01)%  (0.02)%
Total accretion related to PPP loans  0.10%  0.21%
Total net interest margin  3.22%  2.95%
  • Net interest margin was positively impacted by approximately 19 basis points during the second quarter of 2021 due to the recovery of $0.7 million in interest income related to a nonaccrual loan participation.
  • Total rates paid on interest-bearing deposits decreased by 19 basis points to 0.72% for the three months ended June 30, 2021, compared to the three months ended March 31, 2021, and decreased 87 basis points compared to the three months ended June 30, 2020. The decrease was primarily due to the Company’s success in gathering lower-cost transactional deposits versus higher cost time deposits and the market-driven drop in the federal funds rates.

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

  Three Months Ended June 30, 2021 v.
Three Months Ended March 31, 2021
 Three Months Ended June 30, 2021 v.
Three Months Ended June 30 2020
  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 $95  $251  $346  $971  $117  $1,088 
Loans (excluding PPP)  65   737   802   (657)  (94)  (751)
PPP loans - round 1  (551)  (129)  (680)     185   185 
PPP loans - round 2  131   223   354      436   436 
Total loans  (355)  831   476   (657)  527   (130)
Federal funds sold and interest-bearing deposits with banks  1   (1)  -   (45)  (62)  (107)
Total interest income  (259)  1,081   822   269   582   851 
Interest Expense:                        
Savings, NOW, money market and interest checking $22  $(39) $(17) $389  $(551) $(162)
Time deposits  37   (374)  (337)  (507)  (1,336)  (1,843)
Other borrowings  (7)  2   (5)  (3)  31   28 
FHLB advances  (40)  1   (39)  (8)  (86)  (94)
Junior subordinated debentures           363   7   370 
Total interest expense $12  $(410) $(398) $234  $(1,935) $(1,701)
Net interest income $(271) $1,491  $1,220  $35  $2,517  $2,552 


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

  For the Three Months Ended 
  June 30, 2021  March 31, 2021  June 30, 2020 
  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 $386,637  $2,533  2.63% $372,235  $2,187  2.38% $237,082  $1,445  2.44%
Loans excluding PPP loans (2)  974,525   11,281  4.64%  969,429   10,479  4.38%  995,010   12,033  4.86%
PPP loans - Round 1 (2)  9,344   282  12.11%  27,252   961  14.30%  103,317   97  0.38%
PPP loans - Round 2 (2)  33,080   437  5.30%  16,857   83  2.01%        
Total loans (2)  1,016,949   12,000  4.73%  1,013,538   11,523  4.61%  1,098,327   12,130  4.42%
Interest bearing deposits due from other banks  22,085   4  0.07%  19,949   5  0.10%  64,142   111  0.69%
Total interest-earning assets $1,425,671  $14,537  4.09% $1,405,722  $13,715  3.96% $1,399,551  $13,686  3.91%
Allowance for loan losses  (15,305)         (14,932)         (17,844)       
Other assets  91,039          90,109          85,716        
Total assets $1,501,405         $1,480,899         $1,467,423        
                                  
Liabilities                                 
Savings, NOW, money market, interest checking $507,089  $363  0.29% $477,159  $380  0.32% $379,991  $525  0.55%
Time deposits  452,443   1,353  1.20%  442,626   1,690  1.55%  553,616   3,196  2.31%
Total interest-bearing deposits $959,532  $1,716  0.72% $919,785  $2,070  0.91% $933,607  $3,721  1.59%
Other borrowings  43,803   43  0.39%  51,220   48  0.38%  66,910   15  0.09%
FHLB advances  101,352   234  0.93%  116,311   273  0.95%  103,916   328  1.27%
Junior subordinated debentures  67,213   1,106  6.60%  67,123   1,106  6.68%  45,090   736  6.52%
Total interest-bearing liabilities $1,171,900  $3,099  1.06% $1,154,439  $3,497  1.23% $1,149,523  $4,800  1.67%
Non-interest-bearing deposits  146,242          138,814          134,271        
Other liabilities  12,741          15,190          16,749        
Total liabilities $1,330,883         $1,308,443         $1,300,543        
                                  
Shareholders' equity  170,522          172,456          166,880        
Total liabilities and equity $1,501,405         $1,480,899         $1,467,423        
                                  
Net interest income     $11,438         $10,218         $8,886    
Interest rate spread (3)         3.03%         2.73%         2.24%
Net interest margin (4)         3.22%         2.95%         2.54%
Ratio of interest-earning assets to interest-bearing liabilities  1.22          1.22          1.22        

      (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.

Provision for Loan Losses

  • A recovery of provision for loan losses of $4.3 million was recorded for the three months ended June 30, 2021, compared to a provision for loan losses of $0.2 million for the three months ended March 31, 2021. The recovery of provision during for the second quarter was primarily the result of a $30.0 million decrease in substandard rated loans and corresponding release of specific reserves, and the upgrade of $44.6 million of watch rated loans to a pass rating.
  • During the second quarter of 2021, the Company eliminated the qualitative factor for industries affected by COVID-19, and implemented an economic factor tied to Wisconsin unemployment. This change accounted for $0.3 million of the reduction in the allowance for loan losses.
  • Year-over-over, provision for loan losses decreased $5.4 million, or 474.6%, compared to the three months ended June 30, 2020. The reduction was primarily the result of the improvement in asset quality and the reduction in the inherent risk associated with COVID-19.

Non-Interest Income

  • Total non-interest income for the three months ended June 30, 2021 decreased $1.5 million, or 39.4%, to $2.3 million from the three months ended March 31, 2021, and decreased $1.3 million, or 35.7%, from the three months ended June 30, 2020, primarily due to the loss on security sales discussed above.
  • Loan servicing fees increased quarter-over-quarter and year-over-year primarily due a four and six basis point increase, respectively in weighted average servicing fees. In addition, loans sold with servicing retained increased $11.3 million, or 1.3%, and $91.1 million, or 12.0%, from March 31, 2021 and June 30, 2020, respectively.


  For the Three Months Ended 
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
 
  (dollars in thousands) 
Non-Interest Income                    
Service charges $165  $119  $108  $108  $139 
Crop insurance commission  291   301   517   271   229 
Gain on sale of residential loans, net  89   93   219   17   4 
Loan servicing fees  2,278   2,158   1,974   2,054   1,923 
Gain on sale of service-retained loans, net  1,784   1,587   1,828   1,268   1,041 
Loan servicing right pay-down losses  (1,162)  (1,119)  (635)  (551)  (766)
Total loan servicing right income  622   468   1,193   717   275 
Gain (loss) on sale of securities  (1,453)        101   570 
Referral fees     319   64   110   121 
Other  259   254   283   294   240 
Total non-interest income $2,251  $3,712  $4,358  $3,672  $3,501 


  For the Three Months Ended 
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
 
  (dollars in thousands) 
Loan servicing rights, end of period $19,478  $18,864  $18,396  $17,203  $16,486 
Loans serviced, end of period  853,176   841,893   812,560   797,819   762,058 
Loan servicing rights as a % of loans serviced  2.28%  2.24%  2.26%  2.16%  2.16%
                     
Total loan servicing fees $2,278  $2,158  $1,974  $2,054  $1,923 
Average loans serviced  847,535   827,227   805,190   779,939   754,806 
Annualized loan servicing fees as a % of average loans serviced  1.08%  1.04%  0.98%  1.05%  1.02%

Non-Interest Expense

  • Total non-interest expense for the three months ended June 30, 2021, was virtually unchanged from the first quarter of 2021 at $8.8 million, and increased $1.3 million, or 17.4%, from the three months ended June 30, 2020.
  • Employee compensation and benefits expense increased for the three months ended June 30, 2021, by $0.8 million to $6.4 million compared to the three months ended March 31, 2021. The change was primarily the result of an additional accrual of $0.9 million related to additional benefits.
  • During the three months ended June 30, 2021, the Company sold the excess land in Appleton, Wisconsin, that surrounded the location of its new branch that is currently under construction. As a result of the sale, the Company recorded a gain on fixed assets of $1.1 million.

  For the Three Months Ended 
  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands) 
Non-Interest Expense                    
Employee compensation and benefits $6,426  $5,582  $6,687  $4,766  $4,594 
Occupancy  293   279   297   321   305 
Information processing  664   661   656   641   663 
Professional fees  450   802   582   555   480 
Business development  289   307   136   305   333 
OREO expenses  52   23   20   47   44 
Writedown of OREO        148       
Net loss (gain) on sale of OREO     17   (326)  9    
Net loss (gain) on sale of fixed assets  (1,075)  (6)  9   (2)  (1)
Merger expenses  385             
Depreciation and amortization  484   257   289   295   303 
Other  797   842   996   730   744 
Total non-interest expense $8,765  $8,764  $9,494  $7,667  $7,465 

Asset Quality

  • Through the annual review process and the improved agricultural economy, during the second quarter of 2021, watch rated loans decreased by $44.6 million, or 26.9%, and $76.8 million, or 38.8%, compared to March 31, 2021 and June 30, 2020, respectively, primarily as the result of 34 dairy customers upgraded to a low satisfactory rating. This improvement in asset quality is expected to continue throughout 2021 as we complete the annual review process.
  • Substandard performing loans decreased by $11.2 million, or 28.8%, to $27.7 million at June 30, 2021, compared to March 31, 2021 due to the upgrade of 2 customer relationships.
  • Substandard impaired loans decreased by $18.7 million, or 38.2%, to $30.4 million at June 30, 2021, compared to March 31, 2021 due to the upgrade of five agriculture customer relationships. The following table presents loan balances by credit grade as of the dates indicated:
  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands) 
Loans by risk category:                    
Sound/Acceptable/Satisfactory/Low Satisfactory $821,970  $757,160  $716,313  $800,451  $798,945 
Watch  121,242   165,823   190,101   185,254   198,044 
Special Mention  566   605   2,501   1,851   1,856 
Substandard Performing  27,742   38,961   40,420   41,577   47,741 
Substandard Impaired  30,370   49,115   46,950   46,793   40,938 
Total loans $1,001,890  $1,011,664  $996,285  $1,075,926  $1,087,524 
Adverse classified asset ratio (1)  24.72%  39.61%  39.43%  42.64%  41.73%

(1)   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 decreased in the second quarter of 2021 by $13.7 million, or 30.7%, compared to the first quarter of 2021 due to $9.4 million of agricultural loans being restored to accrual status and the payoff of a $4.0 million commercial real estate relationship.
  • Performing troubled debt restructurings (“TDRs”) not on nonaccrual decreased $5.9 million, or 43.4%, to $7.6 million on June 30, 2021 from March 31, 2021. The decrease was primarily due to five agriculture customers that had loans that were re-underwritten and were no longer a TDR due to improved performance and financial trends.

  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands) 
Non-Performing Assets:                    
Nonaccrual loans $30,071  $43,973  $41,624  $41,351  $35,456 
Other real estate owned  914   739   1,077   3,064   2,629 
Total non-performing assets $30,985  $44,712  $42,701  $44,415  $38,085 
                     
Performing TDRs not on nonaccrual $7,641  $13,495  $18,592  $19,036  $21,986 
                     
Non-performing assets as a % of total loans  3.09%  4.42%  4.29%  4.13%  3.50%
Non-performing assets as a % of total assets  2.04%  3.00%  2.90%  2.98%  2.52%
Allowance for loan losses as a % of total loans  1.14%  1.49%  1.49%  1.73%  1.71%
Net charge-offs (recoveries) quarter-to-date $(662) $(32) $3,386  $(1) $120 

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 (1) the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; (2) the risk that integration of the Company’s operations with those of Nicolet will be materially delayed or will be more costly or difficult than expected; (3) the parties’ inability to meet expectations regarding the timing of the proposed merger; (4) changes to tax legislation and their potential effects on the accounting for the merger; (5) the inability to complete the proposed merger due to the failure of Nicolet’s or the Company’s shareholders to adopt the Merger Agreement; (6) the failure to satisfy other conditions to completion of the proposed merger, including receipt of required regulatory and other approvals; (7) the failure of the proposed merger to close for any other reason; (8) diversion of management’s attention from ongoing business operations and opportunities due to the proposed merger; (9) the challenges of integrating and retaining key employees; (10) the effect of the announcement of the proposed merger on Nicolet’s, the Company’s or the combined company’s respective customer and employee relationships and operating results; (11) the possibility that the proposed merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (12) dilution caused by Nicolet’s issuance of additional shares of Nicolet common stock in connection with the merger; (13) risks and uncertainties relating to Nicolet’s proposed acquisition of Mackinac Financial Corporation (“Mackinac”), including but not limited to the failure of the proposed acquisition to close for any reason and risks and uncertainties relating to the Mackinac’s business, the combined business of Mackinac and Nicolet, and the combined businesses of Nicolet, the Company and Mackinac; and (14) the effects of the COVID-19 pandemic and its 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.

Important Information and Where to Find It

Certain communications in this release relate to the proposed merger transaction involving Nicolet and the Company. In connection with the proposed merger, Nicolet and the Company will file a joint proxy statement/prospectus on Form S-4 and other relevant documents concerning the merger with the Securities and Exchange Commission (the “SEC”). BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NICOLET, THE COMPANY AND THE PROPOSED MERGER. When available, the joint proxy statement/prospectus will be delivered to shareholders of Nicolet and the Company. Investors may obtain copies of the joint proxy statement/prospectus and other relevant documents (as they become available) free of charge at the SEC’s website (www.sec.gov). Copies of the documents filed with the SEC by Nicolet will be available free of charge on Nicolet’s website at www.nicoletbank.com. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at Investors.ICBK.com/documents.

Nicolet, the Company and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Nicolet and the shareholders of the Company in connection with the proposed merger. Information about the directors and executive officers of Nicolet and the Company will be included in the joint proxy statement/prospectus for the proposed transaction filed with the SEC. Information about the directors and executive officers of Nicolet is also included in the proxy statement for its 2021 annual meeting of shareholders, which was filed with the SEC on March 2, 2021. Information about the directors and executive officers of the Company is also included in the proxy statement for its 2021 annual meeting of shareholders, which was filed with the SEC on April 5, 2021. Additional information regarding the interests of such participants and other persons who may be deemed participants in the transaction will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.

No Offer or Solicitation

This release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands, except per share data) 
Period-End Balance Sheet:                    
Assets                    
Cash and cash equivalents $72,745  $17,820  $19,500  $53,283  $127,432 
Securities available-for-sale, at fair value  349,334   385,240   352,854   298,476   226,971 
Loans held for sale  15,805   5,789   35,976   2,593   11,847 
Agricultural loans  613,514   609,482   606,881   619,617   624,340 
Commercial loans  319,878   317,625   313,265   317,782   328,368 
Paycheck Protection Plan loans  33,400   46,249   37,790   98,421   103,317 
Multi-family real estate loans  30,310   33,287   33,457   35,496   30,439 
Residential real estate loans  4,563   4,776   4,627   4,489   975 
Installment and consumer other  225   245   265   121   85 
Total loans  1,001,890   1,011,664   996,285   1,075,926   1,087,524 
Allowance for loan losses  (11,466)  (15,082)  (14,808)  (18,649)  (18,569)
Net loans  990,424   996,582   981,477   1,057,277   1,068,955 
Other assets  88,764   85,897   82,551   80,426   78,712 
         Total Assets $1,517,072  $1,491,328  $1,472,358  $1,492,055  $1,513,917 
                     
Liabilities and Shareholders' Equity                    
Demand deposits $158,880  $139,838  $163,202  $158,798  $149,963 
NOW accounts and interest checking  136,180   95,591   96,624   78,026   81,656 
Savings  9,059   8,431   7,367   11,900   8,369 
Money market accounts  394,486   390,741   344,250   325,900   307,083 
Time deposits  259,386   278,591   304,580   322,992   346,482 
Brokered deposits  159,087   159,034   80,456   101,808   121,503 
National time deposits  18,648   26,302   44,347   50,747   57,997 
Total deposits  1,135,726   1,098,528   1,040,826   1,050,171   1,073,053 
Federal Reserve Discount Window
advances
  34,174   47,255   47,531   99,693   99,693 
FHLB advances  88,000   100,000   129,000   84,600   93,400 
Subordinated debentures  67,519   67,179   67,111   67,025   61,910 
Other liabilities  16,841   12,028   16,114   20,656   17,336 
         Total Liabilities  1,342,260   1,324,990   1,300,582   1,322,145   1,345,392 
                     
Shareholders' equity  174,812   166,338   171,776   169,910   168,525 
         Total Liabilities and Shareholders' Equity $1,517,072  $1,491,328  $1,472,358  $1,492,055  $1,513,917 
                     
Stock Price Information:                    
High - Quarter-to-date $35.82  $26.46  $23.72  $22.00  $24.67 
Low - Quarter-to-date $22.85  $19.66  $18.20  $17.04  $17.13 
Market price - Quarter-end $33.96  $23.97  $22.08  $18.80  $20.93 
Book value per share $27.68  $25.99  $26.42  $25.72  $25.18 
Tangible book value per share (1) $27.68  $25.98  $25.71  $25.16  $24.15 
Common shares outstanding  6,026,748   6,094,450   6,197,965   6,294,675   6,375,150 

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

 
  For the Three Months Ended 
  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands, except per share data) 
Selected Income Statement Data:                    
Interest and Dividend Income                    
Loans, including fees $12,000  $11,523  $12,737  $11,594  $12,009 
Taxable securities  2,205   1,887   1,777   1,293   1,283 
Tax-exempt securities  261   246   201   167   162 
Federal funds sold and other  71   58   10   52   111 
Total interest and dividend income  14,537   13,714   14,725   13,106   13,565 
                     
Interest Expense                    
Deposits  1,716   2,069   2,482   2,914   3,721 
FHLB advances and other borrowed funds  277   321   362   456   343 
Subordinated debentures  1,106   1,106   1,107   1,082   736 
Total interest expense  3,099   3,496   3,951   4,452   4,800 
Net interest income  11,438   10,218   10,774   8,654   8,765 
Provision for loan losses  (4,278)  242   (455)  79   1,142 
Net interest income after provision for loan losses  15,716   9,976   11,229   8,575   7,623 
                     
Non-Interest Income                    
Services charges  165   119   108   108   139 
Crop insurance commission  291   301   517   271   229 
Gain on sale of residential loans, net  89   93   219   17   4 
Loan servicing fees  2,278   2,158   1,974   2,054   1,923 
Gain on sale of service-retained loans, net  1,784   1,587   1,828   1,268   1,041 
Loan servicing right pay-down losses  (1,162)  (1,119)  (635)  (551)  (766)
Total loan servicing right income  622   468   1,193   717   275 
Gain (loss) on sale of securities  (1,453)        101   570 
Referral fees (1)     319   64   110   121 
Other  259   254   283   294   240 
Total non-interest income  2,251   3,712   4,358   3,672   3,501 
                     
Non-Interest Expense                    
Employee compensation and benefits  6,426   5,582   6,687   4,766   4,594 
Occupancy  293   279   297   321   305 
Information processing  664   661   656   641   663 
Professional fees  450   802   582   555   480 
Business development  289   307   136   305   333 
OREO expenses  52   23   20   47   44 
Writedown of OREO        148       
Net loss (gain) on sale of OREO     17   (326)  9    
Net loss (gain) on sale of fixed assets  (1,075)  (6)  9   (2)  (1)
Merger expenses  385             
Depreciation and amortization  484   257   289   295   303 
Other  797   842   996   730   744 
Total non-interest expense  8,765   8,764   9,494   7,667   7,465 
Income before income taxes  9,202   4,924   6,093   4,580   3,659 
Income tax expense  2,459   996   1,575   1,164   926 
NET INCOME $6,743  $3,928  $4,518  $3,416  $2,733 
                     
Basic earnings per share $1.08  $0.62  $0.70  $0.52  $0.40 
Diluted earnings per share $1.07  $0.62  $0.70  $0.52  $0.40 
Dividends declared per share $0.10  $0.10  $0.10  $0.07  $0.07 

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

  For the Three Months Ended 
  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands, except share data) 
Other Data:                    
Return on average assets (1)  1.80%  1.06%  1.23%  0.91%  0.74%
Return on average shareholders' equity (1)  15.82%  9.11%  10.56%  8.05%  6.55%
Return on average common shareholders' equity (1)(2)  16.40%  9.29%  10.88%  8.25%  6.63%
Efficiency ratio (1)(2)  64.98%  62.84%  63.86%  62.66%  63.83%
Equity to assets ratio  11.52%  11.15%  11.67%  11.39%  11.13%
Tangible common equity to tangible assets (2)  10.99%  10.62%  11.12%  10.85%  10.60%
                     
Common Share Data:                    
Net income from continuing operations $6,743  $3,928  $4,518  $3,416  $2,733 
Less: Preferred stock dividends  79   81   80   80   99 
Income available to common shareholders $6,664  $3,847  $4,438  $3,336  $2,634 
                     
Weighted average number of common shares issued  7,242,997   7,218,358   7,206,238   7,202,000   7,198,901 
Less: Weighted average treasury shares  1,179,271   1,080,089   957,573   882,153   759,294 
Plus: Weighted average non-vested restricted stock units  97,915   63,991   67,529   66,492   65,291 
Weighted average number of common shares outstanding  6,161,641   6,202,260   6,316,194   6,386,339   6,504,898 
Effect of dilutive options  46,438   34,465   28,025   20,915   28,511 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share  6,208,079   6,236,725   6,344,219   6,407,254   6,533,409 

(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,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands) 
Return on average common shareholders' equity reconciliation (1):                    
Return on average shareholders' equity  15.82%  9.11%  10.56%  8.05%  6.55%
Effect of excluding average preferred shareholders' equity  0.58%  0.18%  0.32%  0.20%  0.08%
Return on average common shareholders' equity  16.40%  9.29%  10.88%  8.25%  6.63%
                     
Efficiency ratio (2):                    
Non-interest expense $8,765  $8,764  $9,494  $7,667  $7,465 
Net gain (loss) on sales and write-downs of OREO     (17)  178   (9)   
Net gain (loss) on sale of fixed assets  1,075   6   (9)  2   1 
Adjusted non-interest expense (non-GAAP) $9,840  $8,753  $9,663  $7,660  $7,466 
                     
Net interest income $11,438  $10,218  $10,774  $8,654  $8,765 
Non-interest income  2,251   3,712   4,358   3,672   3,501 
Net loss (gain) on sales of securities  1,453         (101)  (570)
Operating revenue $15,142  $13,930  $15,132  $12,225  $11,696 
Efficiency ratio  64.98%  62.84%  63.86%  62.66%  63.83%


  For the Three Months Ended 
  June 30,
2021
  June 30,
2020
 
  (dollars in thousands, except per share data) 
Adjusted diluted earnings per share(3):        
Net income from continuing operations $6,743  $2,733 
Less: preferred stock dividends  (79)  (99)
Plus: goodwill impairment      
Adjusted income available to common shareholders for basic earnings per common share $6,664  $2,634 
Weighted average number of common shares outstanding  6,161,641   6,504,898 
Effect of dilutive options  46,438   28,511 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share  6,208,079   6,533,409 
Adjusted diluted earnings per share $1.07  $0.40 

(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):

  June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
  (dollars in thousands, except per share data) 
Tangible book value per share and tangible common equity to tangible assets reconciliation (1):                    
Common equity $166,812  $158,338  $163,776  $161,910  $160,525 
Less: Core deposit intangible, net of amortization  12   29   54   86   125 
Tangible common equity (non-GAAP) $166,800  $158,309  $163,722  $161,824  $160,400 
Common shares outstanding  6,026,748   6,094,450   6,197,965   6,294,675   6,375,150 
Tangible book value per share $27.68  $25.98  $26.42  $25.71  $25.16 
                     
Total assets $1,517,072  $1,491,328  $1,472,358  $1,492,055  $1,513,917 
Less: Core deposit intangible, net of amortization  12   29   54   86   125 
Tangible assets (non-GAAP) $1,517,060  $1,491,299  $1,472,304  $1,491,969  $1,513,792 
Tangible common equity to tangible assets  10.99%  10.62%  11.12%  10.85%  10.60%
                     
Adverse classified asset ratio (2):                    
Substandard loans $58,112  $88,076  $87,370  $88,370  $88,680 
Other real estate owned  914   739   1,077   3,064   2,629 
Substandard unused commitments  2,130   5,091   4,049   5,124   3,230 
Less: Substandard government guarantees  (8,007)  (8,485)  (8,960)  (7,002)  (6,336)
Total adverse classified assets (non-GAAP) $53,149  $85,421  $83,536  $89,556  $88,203 
                     
Total equity (Bank) $209,416  $202,200  $205,743  $200,011  $201,507 
Accumulated other comprehensive gain on available for sale securities  (5,854)  (1,652)  (8,686)  (8,640)  (8,734)
Allowance for loan losses  11,466   15,082   14,808   18,649   18,569 
Adjusted total equity (non-GAAP) $215,028  $215,630  $211,865  $210,020  $211,342 
Adverse classified asset ratio  24.72%  39.61%  39.43%  42.64%  41.73%

(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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