County Bancorp, Inc. Announces Second Quarter of 2021 Earnings
07/22/2021 - 04:01 PM
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 Stat e m ents
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.