Highlights

Net income was $4.1 million for the third quarter of 2021, or $0.65 per diluted share
A recovery of provision for loan losses of $0.6 million was recognized in the third quarter of 2021
Cost of funds decreased by seven basis points sequentially to 0.99%, a decline of 53 basis points year-over-year
Substandard loans decreased by $14.0 million during the third quarter of 2021, an improvement of 24.2 %

MANITOWOC, Wis., Oct. 21, 2021 (GLOBE NEWSWIRE) -- County Bancorp, Inc. ((the "Company", NASDAQ:ICBK), the holding company of Investors Community Bank (the "Bank"), a community bank headquartered in Manitowoc, Wisconsin, today reported financial results for the third quarter of 2021. Net income was $4.1 million, or $0.65 per diluted share, for the third quarter of 2021, compared to net income of $6.7 million, or $1.07 per diluted share, and $3.4 million, or $0.52 per diluted share, for the second quarter of 2021 and the third quarter of 2020, respectively. For the nine months ended September 30, 2021, net income was $14.8 million, or $2.34 per diluted share, compared to net income of $1.0 million, or a $0.10 per diluted share, for the nine months ended September 30, 2020. The 2020 net income included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share.

"We reported another solid quarter as the economy continues to rebound, resulting in increased customer confidence, improved asset quality and in turn, a lower loan loss provision," said Tim Schneider, President of County Bancorp, Inc. "Additionally, our adverse classified asset ratio (a non-GAAP metric) continues to decline and is less than half of what it was at the start of 2021. Finally, the previously announced merger with Nicolet remains on track. We still expect the merger to close on December 3, 2021, and we remain excited about the opportunities that Nicolet's business model and other product offerings present to our agriculture customers and our community."

Loans

Total loans increased sequentially by $3.1 million, or 0.3%, to $1.0 billion during the third quarter of 2021. Gross loan growth of $24.9 million was partially offset by $21.8 million in Paycheck Protection Program ("PPP") loans that were forgiven by the Small Business Administration ("SBA") during the quarter. The following table sets forth the total PPP loans at the dates indicated:

	September 30, 2021							June 30, 2021
	# of Loans		Balance			Deferred Fee Income		# of Loans		Balance			Deferred Fee Income
	(dollars in thousands)
PPP 1oans - Round 1		9	$	265		$	6		69	$	3,285		$	82
PPP loans - Round 2		107		11,353			490		391		30,115			1,576
Total PPP loans		116	$	11,618		$	496		460	$	33,400		$	1,658
% of Total loans				1.16	%						3.33	%

As of September 30, 2021, there were two customer relationships with loan balances totaling $0.2 million in payment deferral associated with COVID-19 customer support programs, a reduction of $2.7 million since June 30, 2021.

Deposits and Funding Sources

Total deposits as of September 30, 2021, were $1.2 billion, an increase of $45.8 million, or 4.0%, from June 30, 2021, and an increase of $131.3 million, or 12.5%, since September 30, 2020.
Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased by $49.6 million, or 5.2%, from June 30, 2021, to $1.0 billion. Year-over-year, client deposits increased $110.0 million, or 12.3%, since September 30, 2020.
The Company decreased its reliance on wholesale funding (brokered deposits, national certificate of deposits, and FHLB funding) by $6.8 million, or 2.6%, during the third quarter of 2021. Wholesale funding represented 20.4% of all funding sources at September 30, 2021 compared to 21.7% and 20.9% at June 30, 2021 and September 30, 2020, respectively.

Shareholders' Equity

Book value per share increased to $27.97 per share on September 30, 2021, from $27.68 on June 30, 2021, and $25.71 on September 30, 2020.

Net Interest Income and Margin

Net interest margin for the quarter ended September 30, 2021, was 2.93%, a decrease of 29 basis points compared to the sequential quarter and an increase of 53 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
	September 30, 2021			June 30, 2021			September 30, 2020
Net interest margin excluding PPP loans		2.68	%		3.12	%		2.28	%
Accretion related to PPP loans:
Impact of interest rate on PPP loans		(0.07	)%		(0.03	)%		(0.31	)%
Impact of PPP fee income recognized		0.34	%		0.14	%		0.45	%
Impact of interest expense on PPP Liquidity Facility program		(0.02	)%		(0.01	)%		(0.02	)%
Total accretion related to PPP loans		0.25	%		0.10	%		0.12	%
Total net interest margin		2.93	%		3.22	%		2.40	%

Net interest margin excluding PPP loans decreased 44 basis points to 2.68% for the quarter ended September 30, 2021 compared to the quarter ended June 30, 2021, primarily due to the $0.7 million in interest income that was recovered in connection to a nonaccrual loan participation and the pay-off of a $4.0 nonaccrual commercial real estate customer that took place during the second quarter of 2021.
Total rates paid on interest-bearing deposits decreased by nine basis points to 0.63% for the three months ended September 30, 2021, compared to the three months ended June 30, 2021, and decreased 65 basis points compared to the three months ended September 30, 2020. The steady decline in cost of funds was primarily due to the Company's focus on 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 September 30, 2021 v. Three Months Ended June 30, 2021									Three Months Ended September 30, 2021 v. Three Months Ended September 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	$	(200	)	$	(191	)	$	(391	)	$	589		$	59		$	648
Loans (excluding PPP)		190			(1,082	)		(892	)		69			(92	)		(23	)
PPP loans - round 1		(1,454	)		1,259			(195	)		412			(1,507	)		(1,095	)
PPP loans - round 2		(93	)		671			578			—			1,015			1,015
Total loans		(1,357	)		848			(509	)		481			(584	)		(103	)
Federal funds sold and interest-bearing deposits with banks		21			8			29			(1	)		16			15
Total interest income		(1,536	)		665			(871	)		1,069			(509	)		560
Interest Expense:
Savings, NOW, money market and interest checking	$	48		$	(51	)	$	(3	)	$	638		$	(747	)	$	(109	)
Time deposits		(34	)		(89	)		(123	)		(265	)		(949	)		(1,214	)
Other borrowings		(20	)		5			(15	)		(93	)		(37	)		(130	)
FHLB advances		(30	)		—			(30	)		(10	)		(84	)		(94	)
Junior subordinated debentures		(4	)		3			(1	)		(25	)		48			23
Total interest expense	$	(40	)	$	(132	)	$	(172	)	$	245		$	(1,769	)	$	(1,524	)
Net interest income	$	(1,496	)	$	797		$	(699	)	$	824		$	1,260		$	2,084

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

	For the Three Months Ended
	September 30, 2021								June 30, 2021								September 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	$	352,781		$	2,142		2.41	%	$	386,637		$	2,533		2.63	%	$	256,059		$	1,494		2.32	%
Loans excluding PPP loans ⁽²⁾		992,594			10,389		4.15	%		974,525			11,281		4.64	%		978,954			10,412		4.23	%
PPP loans - Round 1⁽²⁾		1,666			87		20.72	%		9,344			282		12.11	%		104,429			1,182		4.50	%
PPP loans - Round 2 ⁽²⁾		21,510			1,015		18.72	%		33,080			437		5.30	%		—			—		—
Total loans⁽²⁾		1,015,770			11,491		4.49	%		1,016,949			12,000		4.73	%		1,083,383			11,594		4.26	%
Interest bearing deposits due from other banks		84,756			33		0.15	%		22,085			4		0.07	%		92,701			18		0.08	%
Total interest-earning assets	$	1,453,307		$	13,666		3.73	%	$	1,425,671		$	14,537		4.09	%	$	1,432,143		$	13,106		3.64	%
Allowance for loan losses		(11,519	)							(15,305	)							(18,641	)
Other assets		94,892								91,039								86,109
Total assets	$	1,536,680							$	1,501,405							$	1,499,611

Liabilities
Savings, NOW, money market, interest checking	$	561,715		$	365		0.26	%	$	507,089		$	363		0.29	%	$	406,888		$	469		0.46	%
Time deposits		439,640			1,225		1.11	%		452,443			1,353		1.20	%		499,665			2,444		1.95	%
Total interest-bearing deposits	$	1,001,355		$	1,590		0.63	%	$	959,532		$	1,716		0.72	%	$	906,553		$	2,913		1.28	%
Other borrowings		25,534			28		0.44	%		43,803			43		0.39	%		101,829			158		0.62	%
FHLB advances		86,500			204		0.94	%		101,352			234		0.93	%		89,622			298		1.32	%
Junior subordinated debentures		64,546			1,105		6.79	%		67,213			1,106		6.60	%		65,903			1,082		6.53	%
Total interest-bearing liabilities	$	1,177,935		$	2,927		0.99	%	$	1,171,900		$	3,099		1.06	%	$	1,163,907		$	4,451		1.52	%
Non-interest-bearing deposits		160,980								146,242								147,595
Other liabilities		19,566								12,741								18,314
Total liabilities	$	1,358,481							$	1,330,883							$	1,329,816

Shareholders' equity		178,199								170,522								169,795
Total liabilities and equity	$	1,536,680							$	1,501,405							$	1,499,611

Net interest income				$	10,739							$	11,438							$	8,655
Interest rate spread ⁽³⁾							2.74	%							3.03	%							2.12	%
Net interest margin ⁽⁴⁾							2.93	%							3.22	%							2.40	%
Ratio of interest-earning assets to interest-bearing liabilities		1.23								1.22								1.23

(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 $0.6 million was recorded for the three months ended September 30, 2021, compared to a recovery of provision for loan losses of $4.3 million for the three months ended June 30, 2021. The recovery of provision during for the third quarter was primarily the result of a $14.0 million decrease in substandard rated loans and corresponding reserves related to the inherent risk associated with those loans.
Year-over-over, provision for loan losses decreased $0.7 million compared to the three months ended September 30, 2020. The reduction was primarily the result of the improvement in asset quality and the reduction in the inherent risk in the loan portfolio associated with COVID-19.

Non-Interest Income

Total non-interest income for the three months ended September 30, 2021, increased $1.0 million, or 42.4%, to $3.2 million from the three months ended June 30, 2021, primarily due to the $1.5 million loss on security sales in the second quarter. Year-over-year non-interest income decreased $0.5 million, or 12.7%, from the three months ended September 30, 2020, primarily due to fewer loans sold on the secondary market during the quarter and loans paying off resulting in a loss in loan serving rights.
Loan servicing fees quarter-over-quarter were virtually unchanged and increased $0.2 million year-over-year. The weighted average servicing fees were unchanged from the three months ended June 30, 2021 and increased three basis points from the quarter ended September 30, 2020. In addition, loans sold with servicing retained decreased $13.8 million, or 1.6%, and increased $41.5 million, or 5.2%, from June 30, 2021 and September 30, 2020, respectively.

	For the Three Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Non-Interest Income
Service charges	$	137		$	165		$	119		$	108		$	108
Crop insurance commission		309			291			301			517			271
Gain on sale of residential loans, net		69			89			93			219			17
Loan servicing fees		2,287			2,278			2,158			1,974			2,054
Gain on sale of service-retained loans, net		1,631			1,784			1,587			1,828			1,268
Loan servicing right pay-down losses		(1,696	)		(1,162	)		(1,119	)		(635	)		(551	)
Total loan servicing right income		(65	)		622			468			1,193			717
Gain (loss) on sale of securities		—			(1,453	)		—			—			101
Referral fees		—			—			319			64			110
Other		469			259			254			283			294
Total non-interest income	$	3,206		$	2,251		$	3,712		$	4,358		$	3,672

Loans sold that the Company continued to service were $839.4 million as of September 30, 2021, a decrease of $13.8 million, or 1.6%, compared to June 30, 2021. The decrease was primarily the result of excess liquidity which resulted in the need for fewer loans to be sold on the secondary market. Loans sold and continued to service increased $41.5 million, or 5.2%, compared to September 30, 2020.

	For the Three Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Loan servicing rights, end of period	$	19,413		$	19,478		$	18,864		$	18,396		$	17,203
Loans serviced, end of period		839,357			853,176			841,893			812,560			797,819
Loan servicing rights as a % of loans serviced		2.31	%		2.28	%		2.24	%		2.26	%		2.16	%

Total loan servicing fees	$	2,287		$	2,278		$	2,158		$	1,974		$	2,054
Average loans serviced		846,267			847,535			827,227			805,190			779,939
Annualized loan servicing fees as a % of average loans serviced		1.08	%		1.08	%		1.04	%		0.98	%		1.05	%

Non-Interest Expense

Total non-interest expense for the three months ended September 30, 2021, increased $0.3 million, or 3.1%, from the second quarter of 2021 to $9.0 million, and increased $1.4 million, or 17.9%, from the three months ended September 30, 2020.
Employee compensation and benefits expense decreased for the three months ended September 30, 2021, by $0.6 million, or 9.0%, to $5.8 million compared to the three months ended June 30, 2021. The change was primarily the result of adjustments made to employee benefit programs as a result of the merger that was announced in the second quarter of 2021.
During the three months ended September 30, 2021, the Company made a $0.3 million one-time charitable contribution to further agricultural education in addition to normal giving.

	For the Three Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Non-Interest Expense
Employee compensation and benefits	$	5,846		$	6,426		$	5,582		$	6,687		$	4,766
Occupancy		331			293			279			297			321
Information processing		640			664			661			656			641
Professional fees		503			450			802			582			555
Business development		227			289			307			136			305
Charitable contributions		301			50			50			41			47
OREO expenses (income)		(2	)		52			23			20			47
Writedown of OREO		—			—			—			148			—
Net loss (gain) on sale of OREO		—			—			17			(326	)		9
Net loss (gain) on sale of fixed assets		(7	)		(1,075	)		(6	)		9			(2	)
Merger expenses		322			385			—			—			—
Depreciation and amortization		211			484			257			289			295
Other		665			747			792			955			683
Total non-interest expense	$	9,037		$	8,765		$	8,764		$	9,494		$	7,667

Asset Quality

Asset quality continued to improve during the third quarter of 2021. Substandard performing loans decreased by $11.6 million, or 41.7%, to $16.2 million at September 30, 2021, compared to June 30, 2021, primarily due to the pay-off of 4 customer relationships.
Substandard impaired loans decreased by $2.5 million, or 8.2%, to $27.9 million at September 30, 2021, compared to June 30, 2021, primarily due to the payoff from one commercial customer relationship. The following table presents loan balances by credit grade as of the dates indicated:

	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Loans by risk category:
Sound/Acceptable/Satisfactory/Low Satisfactory	$	828,794		$	821,970		$	757,160		$	716,313		$	800,451
Watch		124,625			121,242			165,823			190,101			185,254
Special Mention		7,465			566			605			2,501			1,851
Substandard Performing		16,181			27,742			38,961			40,420			41,577
Substandard Impaired		27,892			30,370			49,115			46,950			46,793
Total loans	$	1,004,957		$	1,001,890		$	1,011,664		$	996,285		$	1,075,926
Adverse classified asset ratio ⁽¹⁾		19.02	%		24.72	%		39.61	%		39.43	%		42.64	%

(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 third quarter of 2021 by $2.2 million, or 7.0%, primarily due to the $2.5 million substandard impaired loan pay-off discussed above.
Performing troubled debt restructurings ("TDRs") not on nonaccrual decreased $1.0 million, or 12.5%, in the third quarter of 2021 to $6.7 million on September 30, 2021 from June 30, 2021. The decrease was primarily due to one commercial customer that had loans that were re-underwritten and were no longer a TDR due to improved performance and financial trends.

	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Non-Performing Assets:
Nonaccrual loans	$	27,892		$	30,071		$	43,973		$	41,624		$	41,351
Other real estate owned		914			914			739			1,077			3,064
Total non-performing assets	$	28,806		$	30,985		$	44,712		$	42,701		$	44,415

Performing TDRs not on nonaccrual	$	6,686		$	7,641		$	13,495		$	18,592		$	19,036

Non-performing assets as a % of total loans		2.87	%		3.09	%		4.42	%		4.29	%		4.13	%
Non-performing assets as a % of total assets		1.87	%		2.04	%		3.00	%		2.90	%		2.98	%
Allowance for loan losses as a % of total loans		1.07	%		1.14	%		1.49	%		1.49	%		1.73	%
Net charge-offs (recoveries) quarter-to-date	$	118		$	(662	)	$	(32	)	$	3,386		$	(1	)

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 failure to satisfy conditions to completion of the proposed merger; (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; and (13) 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.

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)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands, except per share data)
Period-End Balance Sheet:
Assets
Cash and cash equivalents	$	105,548		$	72,745		$	17,820		$	19,500		$	53,283
Securities available-for-sale, at fair value		338,211			349,334			385,240			352,854			298,476
Loans held for sale		11,139			15,805			5,789			35,976			2,593
Agricultural loans		631,833			613,514			609,482			606,881			619,617
Commercial loans		322,715			319,878			317,625			313,265			317,782
Paycheck Protection Plan loans		11,618			33,400			46,249			37,790			98,421
Multi-family real estate loans		31,885			30,310			33,287			33,457			35,496
Residential real estate loans		4,988			4,563			4,776			4,627			4,489
Installment and consumer other		1,918			225			245			265			121
Total loans		1,004,957			1,001,890			1,011,664			996,285			1,075,926
Allowance for loan losses		(10,715	)		(11,466	)		(15,082	)		(14,808	)		(18,649	)
Net loans		994,242			990,424			996,582			981,477			1,057,277
Other assets		90,854			88,764			85,897			82,551			80,426
Total Assets	$	1,539,994		$	1,517,072		$	1,491,328		$	1,472,358		$	1,492,055

Liabilities and Shareholders' Equity
Demand deposits	$	168,008		$	158,880		$	139,838		$	163,202		$	158,798
NOW accounts and interest checking		143,843			136,180			95,591			96,624			78,026
Savings		17,258			9,059			8,431			7,367			11,900
Money market accounts		415,813			394,486			390,741			344,250			325,900
Time deposits		262,658			259,386			278,591			304,580			322,992
Brokered deposits		157,583			159,087			159,034			80,456			101,808
National time deposits		16,333			18,648			26,302			44,347			50,747
Total deposits		1,181,496			1,135,726			1,098,528			1,040,826			1,050,171
Federal Reserve Discount Window advances		11,497			34,174			47,255			47,531			99,693
FHLB advances		85,000			88,000			100,000			129,000			84,600
Subordinated debentures		67,598			67,519			67,179			67,111			67,025
Other liabilities		17,083			16,841			12,028			16,114			20,656
Total Liabilities		1,362,674			1,342,260			1,324,990			1,300,582			1,322,145

Shareholders' equity		177,320			174,812			166,338			171,776			169,910
Total Liabilities and Shareholders' Equity	$	1,539,994		$	1,517,072		$	1,491,328		$	1,472,358		$	1,492,055

Stock Price Information:
High - Quarter-to-date	$	37.24		$	35.82		$	26.46		$	23.72		$	22.00
Low - Quarter-to-date	$	32.29		$	22.85		$	19.66		$	18.20		$	17.04
Market price - Quarter-end	$	36.06		$	33.96		$	23.97		$	22.08		$	18.80
Book value per share	$	27.97		$	27.68		$	25.99		$	26.42		$	25.72
Tangible book value per share ⁽¹⁾	$	27.97		$	27.68		$	25.98		$	26.42		$	25.71
Common shares outstanding		6,053,369			6,026,748			6,094,450			6,197,965			6,294,675

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


	For the Three Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands, except per share data)
Selected Income Statement Data:
Interest and Dividend Income
Loans, including fees	$	11,491		$	12,000		$	11,523		$	12,737		$	11,594
Taxable securities		1,821			2,205			1,887			1,777			1,293
Tax-exempt securities		260			261			246			201			167
Federal funds sold and other		94			71			58			10			52
Total interest and dividend income		13,666			14,537			13,714			14,725			13,106

Interest Expense
Deposits		1,590			1,716			2,069			2,482			2,914
FHLB advances and other borrowed funds		232			277			321			362			456
Subordinated debentures		1,106			1,106			1,106			1,107			1,082
Total interest expense		2,928			3,099			3,496			3,951			4,452
Net interest income		10,738			11,438			10,218			10,774			8,654
Provision for loan losses		(634	)		(4,278	)		242			(455	)		79
Net interest income after provision for loan losses		11,372			15,716			9,976			11,229			8,575

Non-Interest Income
Services charges		137			165			119			108			108
Crop insurance commission		309			291			301			517			271
Gain on sale of residential loans, net		69			89			93			219			17
Loan servicing fees		2,287			2,278			2,158			1,974			2,054
Gain on sale of service-retained loans, net		1,631			1,784			1,587			1,828			1,268
Loan servicing right pay-down losses		(1,696	)		(1,162	)		(1,119	)		(635	)		(551	)
Total loan servicing right income		(65	)		622			468			1,193			717
Gain (loss) on sale of securities		—			(1,453	)		—			—			101
Referral fees ⁽¹⁾		—			—			319			64			110
Other		469			259			254			283			294
Total non-interest income		3,206			2,251			3,712			4,358			3,672

Non-Interest Expense
Employee compensation and benefits		5,846			6,426			5,582			6,687			4,766
Occupancy		331			293			279			297			321
Information processing		640			664			661			656			641
Professional fees		503			450			802			582			555
Business development		227			289			307			136			305
Contributions		301			50			50			41			47
OREO expenses (income)		(2	)		52			23			20			47
Writedown of OREO		—			—			—			148			—
Net loss (gain) on sale of OREO		—			—			17			(326	)		9
Net loss (gain) on sale of fixed assets		(7	)		(1,075	)		(6	)		9			(2	)
Merger expenses		322			385			—			—			—
Depreciation and amortization		211			484			257			289			295
Other		665			747			792			955			683
Total non-interest expense		9,037			8,765			8,764			9,494			7,667
Income before income taxes		5,541			9,202			4,924			6,093			4,580
Income tax expense		1,433			2,459			996			1,575			1,164
NET INCOME	$	4,108		$	6,743		$	3,928		$	4,518		$	3,416

Basic earnings per share	$	0.66		$	1.08		$	0.62		$	0.70		$	0.52
Diluted earnings per share	$	0.65		$	1.07		$	0.62		$	0.70		$	0.52
Dividends declared per share	$	0.10		$	0.10		$	0.10		$	0.10		$	0.07

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


	For the Three Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands, except share data)
Other Data:
Return on average assets ⁽¹⁾		1.07	%		1.80	%		1.06	%		1.23	%		0.91	%
Return on average shareholders' equity ⁽¹⁾		9.22	%		15.82	%		9.11	%		10.56	%		8.05	%
Return on average common shareholders' equity⁽¹⁾⁽²⁾		9.47	%		16.40	%		9.29	%		10.88	%		8.25	%
Efficiency ratio ⁽¹⁾⁽²⁾		64.86	%		64.98	%		62.84	%		63.86	%		62.66	%
Equity to assets ratio		11.51	%		11.52	%		11.15	%		11.67	%		11.39	%
Tangible common equity to tangible assets ⁽²⁾		10.99	%		10.99	%		10.62	%		11.12	%		10.85	%

Common Share Data:
Net income from continuing operations	$	4,108		$	6,743		$	3,928		$	4,518		$	3,416
Less: Preferred stock dividends		80			79			81			80			80
Income available to common shareholders	$	4,028		$	6,664		$	3,847		$	4,438		$	3,336

Weighted average number of common shares issued		7,260,493			7,242,997			7,218,358			7,206,238			7,202,000
Less: Weighted average treasury shares		1,223,728			1,179,271			1,080,089			957,573			882,153
Plus: Weighted average non-vested restricted stock units		97,891			97,915			63,991			67,529			66,492
Weighted average number of common shares outstanding		6,134,656			6,161,641			6,202,260			6,316,194			6,386,339
Effect of dilutive options		81,216			46,438			34,465			28,025			20,915
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		6,215,872			6,208,079			6,236,725			6,344,219			6,407,254

(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
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
	(dollars in thousands)
Return on average common shareholders' equity reconciliation ⁽¹⁾:
Return on average shareholders' equity		9.22	%		15.82	%		9.11	%		10.56	%		8.05	%
Effect of excluding average preferred shareholders' equity		0.25	%		0.58	%		0.18	%		0.32	%		0.20	%
Return on average common shareholders' equity		9.47	%		16.40	%		9.29	%		10.88	%		8.25	%

Efficiency ratio ⁽²⁾:
Non-interest expense	$	9,037		$	8,765		$	8,764		$	9,494		$	7,667
Net gain (loss) on sales and write-downs of OREO		—			—			(17	)		178			(9	)
Net gain (loss) on sale of fixed assets		7			1,075			6			(9	)		2
Adjusted non-interest expense (non-GAAP)	$	9,044		$	9,840		$	8,753		$	9,663		$	7,660

Net interest income	$	10,738		$	11,438		$	10,218		$	10,774		$	8,654
Non-interest income		3,206			2,251			3,712			4,358			3,672
Net loss (gain) on sales of securities		—			1,453			—			—			(101	)
Operating revenue	$	13,944		$	15,142		$	13,930		$	15,132		$	12,225
Efficiency ratio		64.86	%		64.98	%		62.84	%		63.86	%		62.66	%

(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.

Non-GAAP Financial Measures (continued):

	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 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	$	169,320		$	166,812		$	158,338		$	163,776		$	161,910
Less: Core deposit intangible, net of amortization		2			12			29			54			86
Tangible common equity (non-GAAP)	$	169,318		$	166,800		$	158,309		$	163,722		$	161,824
Common shares outstanding		6,053,369			6,026,748			6,094,450			6,197,965			6,294,675
Tangible book value per share	$	27.97		$	27.68		$	25.98		$	26.42		$	25.71

Total assets	$	1,539,994		$	1,517,072		$	1,491,328		$	1,472,358		$	1,492,055
Less: Core deposit intangible, net of amortization		2			12			29			54			86
Tangible assets (non-GAAP)	$	1,539,992		$	1,517,060		$	1,491,299		$	1,472,304		$	1,491,969
Tangible common equity to tangible assets		10.99	%		10.99	%		10.62	%		11.12	%		10.85	%

Adverse classified asset ratio ⁽²⁾:
Substandard loans	$	44,073		$	58,112		$	88,076		$	87,370		$	88,370
Other real estate owned		914			914			739			1,077			3,064
Substandard unused commitments		1,824			2,130			5,091			4,049			5,124
Less: Substandard government guarantees		(6,162	)		(8,007	)		(8,485	)		(8,960	)		(7,002	)
Total adverse classified assets (non-GAAP)	$	40,649		$	53,149		$	85,421		$	83,536		$	89,556

Total equity (Bank)	$	207,180		$	209,416		$	202,200		$	205,743		$	200,011
Accumulated other comprehensive gain on available for sale securities		(4,129	)		(5,854	)		(1,652	)		(8,686	)		(8,640	)
Allowance for loan losses		10,715			11,466			15,082			14,808			18,649
Adjusted total equity (non-GAAP)	$	213,766		$	215,028		$	215,630		$	211,865		$	210,020
Adverse classified asset ratio		19.02	%		24.72	%		39.61	%		39.43	%		42.64	%

(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.

County Bancorp, Inc. Announces Third Quarter of 2021 Earnings