Earnings Results Analysis: County Bancorp Inc. (NASDAQ: ICBK)

MANITOWOC, Wis., June 21, 2019 – County Bancorp Inc. (ICBK) recently reported net income of $3.80M, or $0.54 diluted earnings per share, for the first quarter of 2019, contrast to net income of $2.80M, or $0.40 diluted earnings per share, for the fourth quarter of 2018 and $4.10M, or $0.58 diluted earnings per share, for the first quarter of 2018. This represents an annualized return on average assets of 1.00% for the three months ended March 31, 2019, contrast to 1.15% for the three months ended March 31, 2018.

Loans and Total Assets:

Total assets at March 31, 2019 were $1.50B, a decrease of $29.40M, or 1.9%, and a boost of $31.10M, or 2.1%, over total assets as of December 31, 2018 and March 31, 2018, respectively.  Total loans were $1.20B at March 31, 2019, which represents a $24.30M, or 2.0%, decrease over total loans at December 31, 2018, and an $18.40M, or 1.6%, increase over total loans at March 31, 2018.

During the first quarter of 2019, take partd loans that we continue to service increased to $675.30M at March 31, 2019, which is a boost of $14.00M, or 2.1%, and $63.90M, or 10.5%, over take partd loans that we serviced at December 31, 2018 and March 31, 2018, respectively.

Deposits:

Total deposits at March 31, 2019 were $1.20B, a decrease of $47.10M, or 3.8%, and a boost of $3.80M, or 0.3%, over total deposits as of December 31, 2018 and March 31, 2018, respectively.  Client deposits (demand deposits, money market accounts, and certificates of deposit) increased $5.20M, or 0.7%, since December 31, 2018, and increased $89.40M, or 13.3%, since March 31, 2018.

Because of the increases in loan participations and client deposit growth, we were able to decrease our reliance on brokered deposits and national certificates of deposit by $52.20M, or 11.1%, from December 31, 2018, to $416.70M at March 31, 2019.  This also represents a decrease or $85.50M, or 17.0%, from March 31, 2018.

Net Interest Income and Margin:

Net interest income was $10.60M for the three months ended March 31, 2019, which was a $0.10M, or 1.7%, decrease from the three months ended December 31, 2018, and a $0.30M, or 2.8%, increase from the three months ended March 31, 2018.  The primary reason for the first quarter decline in net interest income contrast to the preceding quarter was the increase in loan participations that resulted in lower average loan balances during the period.

Non-Interest Income and Expense:

Non-interest income for the three months ended March 31, 2019 increased by $0.50M, or 18.5%, to $2.80M contrast to the three months ended December 31, 2018, mainly because of the reduction of the allowance for unused commitments of $0.50M, included in other non-interest income, in the first quarter.  The Company evaluated the need for this allowance during the first quarter and concluded there was no sufficient evidence that represented credit loss inherent in these commitments to substantiate the necessity of this reserve at March 31, 2019 and concluded to eliminate it.  The Company will continue to evaluate credit risk on these off-balance sheet commitments going forward.  During the first quarter, the Company also reduced a valuation allowance on its loan servicing rights portfolio which resulted in a boost of $0.20M of loan servicing rights.  The reduction of the valuation allowance is expected to continue throughout the remaining quarters of 2019.

Non-interest income for the three months ended March 31, 2019 increased $0.70M, or 34.8%, contrast to $2.00M for the three months ended March 31, 2018.  The year-over-year increase was mainly because of the elimination of the allowance for unused commitments and valuation allowance reduction discussed above and increases in loan servicing fees and rights which were the result of higher volumes of loans being serviced.

Non-interest expense for the three months ended March 31, 2019 reduced by $0.20M, or 3.1%, to $7.30M contrast to the three months ended December 31, 2018, and increased $0.50M, or 7.7%, contrast to the three months ended March 31, 2018.  The quarter-over-quarter decrease was mainly due $0.70M of write-downs on two OREO properties that took place during the fourth quarter of 2018, which was partially offset by a $0.30M, or 6.3% increase in employee compensation and benefits which was mainly the result of a 24.1% increase in the premium cost of employee benefits.

Nurul Atikah

Finance and Tech Contributor