More annual reports from County Bancorp, Inc.:
2021 ReportCultivating our Future 2 0 1 9 - 2 0 A N N U A L R E P O R T / I N V E S T O R S . I C B K . C O M Parent company of Investors Community Bank Parent company of Investors Community Bank Cultivating our future We initially started writing this column a few months back, when things were a little different here and in most other parts of the globe as well. COVID-19 was something occurring in another country that no one could’ve imagined would bring such a tsunami of change into our world. But as things evolved, we knew our report to you needed to be on more than just finances. Because what is happening today is less about the bottom line and more about how banks are helping their employees and customers get through this crisis. So in ad- dition to our financial reporting, we wanted to provide an update on how COVID-19 is impacting us and what we are doing about it. We’ll start with that. We have had a pandemic disaster recovery plan in place for a number of years, based on requirements from our regulatory bodies. Until now, we have never known for sure, outside of lim- ited testing, whether it would work. We are pleased to say that we have been enormously successful in this implementation. 90% of our staff has been working remotely for over a month now (as of this writing April 23, 2020). We have seen no drop off in pro- ductivity or customer service with this move. While the personal connections are temporarily lost, we also implemented a Cisco WebEx videoconferencing system about a year ago, and this has been a real game changer for our teams to stay connected and for remotely communicating with our customers. Our job as a community bank has always been to support the communities we do business in. At no other time has this been tested and rang more true than now. Our banking teams, whether it be the front line Tellers and Personal Bankers, the Commercial and Ag Banking teams, the Electronic Banking teams or the Cash Parent company of Investors Community Bank Management and Treasury teams, have all stepped up to this challenge. As you know, the banking system was charged with implementing the US Small Business Administration’s Paycheck Protection Program. ICB has attacked the challenge with limited guidance on the front end to successfully approve and fund nearly $100 million for our business and ag customers in our communities and saved more than 12,000 jobs. This is truly where our teams have shined. At this time, no one can predict what impact COVID-19 will have on our customers’ businesses, and subsequently to our financial performance. We can say that your bank came into this crisis with a very strong capital base, which is always the last line of defense for banks. We have continued to prudently underwrite credit and have maintained a solid level of on-balance sheet liquidity. We have always lived by the philosophy of Soundness, Profitability then Growth. We know that this ultra-low interest rate environ- ment will most likely squeeze our net interest margin and this novel epidemic will probably see some businesses fail. We are pre- pared for that, which is why we bolstered our loan loss provision in the first quarter to protect against increased losses. Depending upon how long this virus impacts economic activity, we may need to do more in future quarters. We will all get through this unprecedented time and hopefully come out the other side better because of it. 2019 performance 2019 was again another record year from a profitability stand- point, outpacing last year’s net income: $16.5 million in 2019 as compared to $14.3 million in 2018. We also grew client deposits CONTINUED William Censky Chairman of the Board County Bancorp, Inc. Timothy Schneider President, County Bancorp, Inc.; CEO, Investors Community Bank Parent company of Investors Community Bank 1 I N V E S T O R S . I C B K . C O M Parent company of Investors Community BankParent company of Investors Community Bank 2 0 1 9 - 2 0 A N N U A L R E P O R T / I N V E S T O R S . I C B K . C O M by $81.2 million and reduced our Classified Asset levels to 39.85% of our Tier 1 capital. Non-interest income remained strong with a record non-in- terest income year at $13.4 million. To better explain the strategy in 2019, we embarked on reducing our reliance on wholesale funding. This was accom- plished by increasing our client deposits as well as by participating loans, both on the agricultural and commercial side, to reduce this funding reliance. This created an overall decline in our balance sheet levels, which was intentional given the above. Capital levels all remain strong at this point. Since year end, we have announced an increase in our com- mon dividend to 7 cents per share from 5 cents per share last year, an increase of 40%. We also recent- ly announced a share repurchase program. Both of these moves were done to create more shareholder value. The Executive Management team and Board continue to strive for long term shareholder value, as we are collectively 23% owners of the Company. Looking ahead to 2020 (Most of these initiatives will be predicated on a reasonably quick COVID turnaround) As we have moved into 2020, we have three primary goals, not much different than 2019: 1) Increasing core deposit generation to allow for on-balance sheet loan growth, as well as continuing to diversify our reliance on wholesale funding. 2) Further reduc- ing our Classified Assets and Non-Performing asset levels. 3) Continue to drive solid shareholder value through bottom line performance. Here’s how we plan to do this: 1. Core deposit generation: We have had a keen focus on client deposits for at least three years now. Our team has been driving growth in this area by asking more often when these opportunities exist with a client’s business and personal deposits. We have built out a strong Treasury and Cash Management team across our footprint. We understand for the bank to grow in the future it will require a stronger base of core deposits. 2. Reducing Classified Assets and Non-Performing Assets: In early results, based on 2019 financial information as part of our credit review process, we have seen improvement in our credit quality met- rics. We continue to focus on improving our credit quality where we can. Much of this continued trend will depend upon how deep and how long COVID-19 persists. 3. Driving shareholder value through bottom line per- formance: We continue to manage our net interest margin aggressively. One of the tools we are imple- menting is new customer profitability software called Axiom. This will allow us to analyze a client’s full relationship with the bank, which will assist in ensuring appropriate loan pricing. We also had a very strong year in Non-Interest Income generation in 2019, primarily through the origination and sale of secondary market loans as well as participations of mainly ag loans. Our Crop Insurance division also continues to increase crop insurance com- missions year over year. Finally, we continue to manage our non-interest expense with a disciplined approach maintaining a strong efficiency ratio. CONTINUED 2 2 0 1 9 - 2 0 A N N U A L R E P O R T / I N V E S T O R S . I C B K . C O M We recently got back into the residential mortgage business and will be build- ing on that further when we introduce a program called Concierge Banking later this year. We have felt for some time that not having the full suite of ser- vices available to our customers was potentially a barrier to the bank having a full customer relationship. We are excited about the opportunities this will present for new non-interest income as well as gathering more client deposits. Through our strategic planning process our Board has reiterated that we have a very solid niche in agricultural lending, and we want to continue to pursue opportunities in this space, both dairy and other diversified agricul- ture. We have been very successful in the ag marketplace for 23 years and feel we should continue to pursue strong operations in diversified agriculture throughout the state. To accomplish this, we have added additional agri- cultural bankers in the past number of months. These are very experienced bankers in the ag industry and we felt it was time to be opportunistic. We have hired a strong team of commercial bankers as well in all of our markets. They continue to seek commercial relationship opportunities in our footprint and are helping drive much of our client deposit growth. These are just a few of the initiatives for 2020. Rest assured your team at County Bancorp, Inc. and Investors Community Bank are committed to remaining strong and independent and providing solid overall shareholder returns. Thank you for your support over the past 23 years! William Censky Tim Schneider A B O U T C O U N T Y B A N C O R P , I N C . CBI Annual Meeting Virtual meeting on Tuesday, June 16, 2020, 2 PM. Details in the annual meeting notice and proxy. Parent company of Investors Community Bank Corporate Headquarters 2400 S. 44th St., PO Box 700, Manitowoc WI 54221-0700, (920) 686-9998, 1-888-686-9998 Transfer Agent First Illinois Shareholder Services, 225 N. Water St., Decatur, IL 62523, 1-888-740-5512 Stock Listing County Bancorp, Inc. common stock is traded on the Nasdaq Global Market under the symbol ICBK. Shareholder Website Investors.ICBK.com Investor Relations Shareholders, analysts, the news media and others desiring general information about the company or its subsidiaries may contact Glen Stiteley, CFO, at (920) 686-5658 or gstiteley@ICBK.com. Member FDIC Member FDIC 3 S E L E C T E D F I N A N C I A L H I G H L I G H T S * COUNTY BANCORP, INC. AND SUBSIDIARIES December 31, 2019 and 2018 (Unaudited) *Additional financial information is available upon request or can be viewed at Investors. ICBK.com **This is a non-GAAP measure. Refer to our Form 10-K filed with the SEC on March 13, 2020 for a reconciliation to the most comparable GAAP measurement. Cultivating our Future Selected Income Statement Data: Interest income Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income Non-interest expense Income tax expense Net income Per Common Share Data: Basic Diluted Cash dividends per common share Book value per share Tangible book value per share** Weighted average common shares - basic Weighted average common shares - diluted Common shares outstanding, end of period Performance Ratios: Return on average assets Return on average common shareholders’ equity** Equity to assets ratio Net interest margin Interest rate spread Non-interest income to average assets Non-interest expense to average assets Net overhead ratio Efficiency ratio** Dividend payout ratio Asset Quality Ratios: Nonperforming loans to total loans Allowance for loan losses to: Total loans Nonperforming loans Net charge-offs to average loans Nonperforming assets to total assets Capital Ratios: Shareholders’ common equity to assets Total risk-based capital Leverage ratio Tangible common equity to tangible assets** As of and for the year ended December 31, _ 2018 2019 (Dollars in thousands except per share data) $66,332 25,550 40,782 __ 423 40,359 13,393 32,684 4,616 $16,452 $2.37 $2.36 $0.20 $24.32 $23.54 6,747,581 6,768,925 6,734,132 1.13% 10.10% 12.48% 2.93% 2.58% 0.92% 2.25% 1.33% 59.92% 8.47% 2.99% 1.47% 49.30% 0.15% 2.65% 11.90% 18.70% 14.68% 11.54% $64,217 22,262 41,955 3,195 38,760 8,833 28,283 5,059 $14,251 $2.06 $2.04 $0.28 $21.50 $20.68 6,704,051 6,772,927 6,709,480 0.96% 9.50% 10.00% 2.91% 2.64% 0.60% 1.91% 1.31% 54.42% 13.73% 1.90% 1.37% 71.81% (0.01)% 1.94% 9.47% 15.35% 12.44% 9.16% 4 C O N S O L I D AT E D B A L A N C E S H E E T S COUNTY BANCORP, INC. AND SUBSIDIARIES December 31, 2019 and 2018 (Unaudited) ASSETS Cash and cash equivalents Securities available for sale, at fair value FHLB stock, at cost Loans held for sale Loans, net of allowance for loan losses of $16,505 as of December 31, 2018; $13,247 as of December 31, 2017 Premises and equipment, net Loan servicing rights Other real estate owned, net Cash surrender value of bank owned life insurance Deferred tax asset, net Goodwill Core deposit intangible, net of amortization of $1,288 as of December 31, 2018; $882 as of December 31, 2017 Accrued interest receivable and other assets Total assets LIABILITIES Deposits: Noninterest-bearing Interest-bearing Total deposits Other borrowings Advances from FHLB Subordinated debentures Accrued interest payable and other liabilities Total liabilities SHAREHOLDERS’ EQUITY As of December 31, 2019 2018 (Dollars in thousands except per share data) $129,011 158,733 1,628 2,151 1,020,506 13,603 12,509 5,521 18,302 1,453 5,038 225 10,099 $ 1,378,779 $138,489 __ 962,953 1,101,442 794 44,400 44,858 15,256 1,206,750 $61,087 195,945 2,978 2,949 1,190,790 16,075 9,047 6,568 17,842 4,346 5,038 513 7,849 $ 1,521,027 $121,436 1,101,911 1,223,347 827 89,400 44,703 10,466 1,368,743 Preferred stock-variable rate, non-cumulative, nonparticipating, $1,000 stated value; 15,000 shares authorized; 8,000 shares issued Common stock - $0.01 par value; 50,000,000 authorized; 7,153,174 shares issued and 6,709,480 shares outstanding as of December 31, 2018; 7,112,962 shares issued and 6,672,381 shares outstanding as of December 31, 2017 Surplus Retained earnings Treasury stock, at cost, 443,694 and 439,581 shares at December 31, 2018 and 2017, respectively Accumulated other comprehensive loss Total shareholders’ equity Total liabilities and shareholders’ equity 8,000 8,000 28 54,122 113,111 (5,030) __ 1,798 172,029 $1,378,779 28 53,162 98,475 (5,030) (2,351) 152,284 $1,521,027 Cultivating our Future 5 C O N S O L I D AT E D S TAT E M E N T S O F O P E R AT I O N S COUNTY BANCORP, INC. AND SUBSIDIARIES For the year ended December 31, 2019 and 2018 (Unaudited) For the year ended December 31, 2019 2018 (Dollars in thousands except per share data) INTEREST AND DIVIDEND INCOME Loans, including fees Taxable securities Tax-exempt securities Federal funds sold and other Total interest and dividend income INTEREST EXPENSE Deposits FHLB advances and other borrowings Subordinated debentures Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses NON-INTEREST INCOME Services charges Gain on sale of loans, net Loan servicing fees Other Total non-interest income NON-INTEREST EXPENSE Employee compensation and benefits Occupancy Write-down of other real estate owned Other Total non-interest expense Income before income taxes Income tax expense NET INCOME NET INCOME PER SHARE Basic Diluted Dividends paid per share $59,706 4,586 257 1,783 66,332 21,457 1,350 2,743 25,550 40,783 _ 423 40,359 1,657 146 9,998 1,592 13,393 19,112 1,402 873 5,996 32,684 21,068 4,616 $16,452 $2.37 $2.36 $0.20 $58,706 3,727 698 1,086 64,217 18,649 1,809 _ 1,804 22,262 41,955 3,195 38,760 1,674 172 6,110 877 8,833 16,785 1,059 1,087 5,666 28,283 19,310 5,059 $14,251 $2.06 $2.04 $0.28 Cultivating our Future 6 2 0 1 9 - 2 0 A N N U A L R E P O R T / I N V E S T O R S . I C B K . C O M Senior Management of County Bancorp, Inc. William C. Censky, Chairman of the Board Timothy J. Schneider, President Glen L. Stiteley, Chief Financial Officer and Treasurer Mark A. Miller, Secretary and Securities Compliance Officer Board of Directors County Bancorp, Inc. / Investors Community Bank Mark R. Binversie, Investors Community Bank William C. Censky, Investors Community Bank Lynn D. Davis, Ph.D., Nutrition Professionals, Inc. Jacob Eisen, ConnexPay LLC Edson P. Foster, Foster Needle Co., Inc. (Retired) Vicki L. Leinbach, Ariens Company Robert E. Matzke, Financial Services of Northeast Wisconsin Wayne D. Mueller, Investors Community Bank Patrick J. Roe, First Community Financial Partners, Inc. (Retired) Timothy J. Schneider, Investors Community Bank Kathi P. Seifert, Katapult LLC Andrew J. Steimle, Steimle Birschbach LLC Gary J. Ziegelbauer, Triangle Distributing, Inc. Central Wisconsin Regional Consulting Board E. John Buzza, Buzza Dreier & Johnson LLC Jeffery Ebel, Ebel Consulting LLC Richard Okray, Okray Family Farms, Inc. Bill Mullins, Mullins Cheese, Inc. Kenneth Turzinski, TYRI Americas Parent company of Investors Community Bank This report includes “forward-looking statements.” 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 infor- mation presented in this document 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 here. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “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 herein include those identified in County Bancorp, Inc.’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of publication of this annual report, 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. 7 Investors Community Bank Officers (as of 4/21/2020) Trever J. Athorp Nicole M. Bahn Tony J. Betley Mark R. Binversie Julie Blaha William C. Censky Kevin Coffeen David A. Coggins Elsa C. Condon William C. Deppiesse Anne Denissen Thomas D. Detienne Kristina Dewitt David J. Diedrich John R. Fillingim Steven J. Fleming Jennifer L. Foote Curtis L. Gerrits Tracy Gomoluch William C. Hodgkiss Brian J. Hoskens Michael J. Hostak Jeffrey L. Jagodinsky Frank Joachim Matthew K. Kasdorf David D. Kohlmeyer Cari A. Larsen Matthew R. Lemke Mark D. Ludtke Mark C. Maurer Timothy S. McTigue Lori A. Megow Jennifer M. Menzynski Mark A. Miller Thomas J. Pennings Renee A. Petersen Sarah E. Peterson Sandra M. Retzki Craig C. Rogan JoAnn M. Rutta Alison Schaus Amy L. Schmitting Christopher J. Schneider Timothy J. Schneider Scott V. Schroeter Robert A. Seal Roger P. Sinkula Sharon A. Slager James J. Smidel Karl C. Spaay Brooke R. Sprang Katelin R. Steege Mark J. Sterr Kristy L. Stiefvater Glen L. Stiteley Debbie L. Suettinger Rose K. Thompson Susan M. Van De Hey Jason Wery Laura A. Wiegert Cyrene N. Wilke Vice President – Ag & Business Banking Officer Vice President – Senior Special Assets Officer Vice President – Sr. Ag Banking Officer President Sr. Banking Services Support Specialist / Security Officer Chairman of the Board Vice President - Sr. Ag Banking Officer Executive Vice President – Chief Banking Officer Vice President - Ag Banking Officer Vice President – Sr. Business Banking Officer Vice President - Treasury Management Vice President – Market President – SE Region Vice President - Consumer & Mortgage Vice President – Sr. Business Banking Officer Executive Vice President – Chief Credit Officer Vice President – Ag Banking Officer Vice President – Compliance Officer / CRA Officer Assistant Vice President – Ag Banking Officer Assistant Vice President - Ag Credit Manager Senior Vice President – Business Banking Vice President – Sr. Ag Banking Officer Vice President – Information Technology Vice President – Business Banking Officer Vice President - Assistant Treasurer Senior Vice President - Deputy Chief Credit Officer Senior Vice President – Finance Vice President – Controller Senior Vice President – Banking Services Assistant Vice President – Ag Banking Officer Vice President – Sr. Business Banking Officer Senior Vice President – Agricultural Banking Assistant Vice President – Banking Services Manager Assistant Vice President - Sr. Appraisal Manager Executive Vice President – Chief Risk Officer & Bank Counsel / Secretary Vice President – Sr. Business Banking Officer Vice President – Electronic Banking Manager Vice President – Credit Administration Manager Vice President – Sr. Business Banking Officer Vice President - Ag Banking Officer Assistant Vice President – Banking Services Manager Assistant Vice President - Assistant Controller Assistant Vice President - Deposit Operations Manager Vice President – Sr. Ag Banking Officer Chief Executive Officer Assistant Vice President - Ag Banking Officer Vice President – Business Banking Officer Assistant Vice President – Ag Banking Officer Assistant Vice President – Governmental Guarantee Loan Program Assistant Vice President – Ag Banking Officer Assistant Vice President - Business Credit Manager Vice President – Human Resources Assistant Vice President – Ag Credit Officer Vice President – Sr. Business Banking Officer Business Banking Officer Executive Vice President – Chief Financial Officer / Treasurer Assistant Vice President – Sr. Benefits & Compensation Specialist Assistant Vice President - Banking Services Manager Vice President – Loan Operations Manager Assistant Vice President - Banking Services Manager Senior Vice President – Marketing Senior Vice President – Operations
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