County Bancorp, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - EX-31.1 - County Bancorp, Inc.	icbk-ex311_8.htm
EX-32.1 - EX-32.1 - County Bancorp, Inc.	icbk-ex321_6.htm
EX-32.2 - EX-32.2 - County Bancorp, Inc.	icbk-ex322_7.htm
EX-31.2 - EX-31.2 - County Bancorp, Inc.	icbk-ex312_9.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 001-36808

COUNTY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Wisconsin	39-1850431
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

860 North Rapids Road Manitowoc, WI	54221
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (920) 686-9998

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o (Do not check if a small reporting company)	Small reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of August 14, 2015, the registrant had 5,733,919 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36
Exhibit Index		37

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2015 and December 31, 2014

(Unaudited)

	June 30, 2015			December 31, 2014
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	14,103		$	10,480
Securities available-for-sale, at fair value		83,729			81,282
FHLB Stock, at cost		1,470			1,252
Loans held for sale		4,211			4,114
Loans, net of allowance for loan losses of $9,897 in 2015; $10,603 in 2014		644,492			637,519
Premises and equipment, net		4,454			4,596
Loan servicing rights		7,772			7,746
Other real estate owned, net		3,211			7,137
Cash surrender value of bank owned life insurance		11,008			10,863
Deferred tax asset, net		2,188			2,321
Accrued interest receivable and other assets		4,479			4,446
Total assets	$	781,117		$	771,756

LIABILITIES
Deposits:
Noninterest-bearing	$	65,812		$	81,534
Interest-bearing		542,759			523,935
Total deposits		608,571			605,469
Other borrowings		4,894			23,857
Advances from FHLB		33,000			28,000
Subordinated debentures		12,372			12,372
Accrued interest payable and other liabilities		6,256			7,015
Total liabilities		665,093			676,713

Small Business Lending Fund redeemable preferred stock-variable rate, noncumulative, nonparticipating, $1,000 stated value; 15,000 shares authorized and issued, $15,000 redemption amount	$	15,000		$	15,000

SHAREHOLDERS' EQUITY
Preferred stock-variable rate, non-cumulative, nonparticipating,$1,000 stated value; 15,000 shares authorized; 8,000 shares issued		8,000			8,000
Common stock - $0.01 par value; 50,000,000 authorized; 6,143,689 shares issued and 5,733,919 shares outstanding at June 30, 2015 and 4,908,560 shares issued and 4,498,790 shares outstanding at December 31, 2014		18			5
Surplus		34,009			16,970
Retained earnings		63,291			59,254
Treasury stock, at cost, 409,770 shares at June 30, 2015 and December 31, 2014		(4,572	)		(4,572	)
Accumulated other comprehensive income		278			386
Total shareholders' equity		101,024			80,043
Total liabilities and shareholders' equity	$	781,117		$	771,756

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015			2014
	(dollars in thousands except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	7,666	$	7,397	$	15,294		$	14,479
Taxable securities		235		217		464			445
Tax-exempt securities		107		121		213			247
Federal funds sold and other		12		41		30			67
Total interest and dividend income		8,020		7,776		16,001			15,238

INTEREST EXPENSE
Deposits		1,488		1,559		2,966			3,117
Federal funds purchased, FHLB advances, and other borrowed funds		187		267		405			587
Subordinated debentures		120		120		240			240
Total interest expense		1,795		1,946		3,611			3,944
Net interest income		6,225		5,830		12,390			11,294
Provision for (recovery of) loan losses		144		—		(458	)		—
Net interest income after provision for loan losses		6,081		5,830		12,848			11,294
Non-interest income:
Services charges		286		76		506			171
Gain on sale of loans, net		29		94		122			182
Loan servicing fees		1,186		1,068		2,438			2,367
Other		212		321		521			649
Total non-interest income		1,713		1,559		3,587			3,369
Non-interest expense:
Employee compensation and benefits		2,869		2,477		5,589			5,058
Occupancy		79		74		160			154
Write-down of other real estate owned		-		-		182			685
Other		1,282		1,339		2,917			2,574
Total non-interest expense		4,230		3,890		8,848			8,471
Income before income taxes		3,564		3,499		7,587			6,192
Income tax expense		1,345		1,332		2,843			2,335
NET INCOME	$	2,219	$	2,167	$	4,744		$	3,857

NET INCOME PER SHARE:
Basic	$	0.36	$	0.46	$	0.80		$	0.81
Diluted	$	0.36	$	0.45	$	0.79		$	0.79

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended June 30, 2015 and 2014

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(dollars in thousands)
Net income	$	2,219		$	2,167		$	4,744		$	3,857
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale		(656	)		381			(177	)		704
Income tax (expense) benefit		257			(150	)		69			(277	)
Total other comprehensive income (loss)		(399	)		231			(108	)		427
Comprehensive income	$	1,820		$	2,398		$	4,636		$	4,284

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the six months ended June 30, 2015 and 2014

(Unaudited)

	Preferred Stock		Common Stock		Surplus		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(dollars in thousands)
Balance at December 31, 2013	$	8,000	$	5	$	16,004	$	(3,683	)	$	51,514		$	(31	)	$	71,809
Net income		—		—		—		—			3,857			—			3,857
Other comprehensive income		—		—		—		—			—			427			427
Stock compensation expense, net of tax		—		—		59		—			—			—			59
Purchase of treasury stock (10,000 shares)		—		—		—		(125	)		—			—			(125	)
Cash dividends declared on preferred stock		—		—		—		—			(160	)		—			(160	)
Cash dividends declared on SBLF preferred stock		—		—		—		—			(76	)		—			(76	)
Balance at June 30, 2014	$	8,000	$	5	$	16,063	$	(3,808	)	$	55,135		$	396		$	75,791

Balance at December 31, 2014	$	8,000	$	5	$	16,970	$	(4,572	)	$	59,254		$	386		$	80,043
Net income		—		—		—		—			4,744			—			4,744
Other comprehensive loss		—		—		—		—			—			(108	)		(108	)
Stock compensation expense, net of tax		—		—		157		—			—			—			157
Cash dividends declared on common stock		—		—		—		—			(458	)		—			(458	)
Cash dividends declared on preferred stock		—		—		—		—			(159	)		—			(159	)
Cash dividends declared on SBLF preferred stock		—		—		—		—			(90	)		—			(90	)
Proceeds from sale of common stock (1,220,750 shares)		—		13		16,882		—			—			—			16,895
Balance at June 30, 2015	$	8,000	$	18	$	34,009	$	(4,572	)	$	63,291		$	278		$	101,024

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2015 and 2014

(Unaudited)

	June 30, 2015			June 30, 2014
	(dollars in thousands)
Cash flows from operating activities
Net income	$	4,744		$	3,857
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of premises and equipment		298			306
Recovery of loan losses		(458	)		—
Realized loss on sales of other real estate owned		286			62
Write-down of other real estate owned		182			685
Realized loss on sales of premises and equipment		4			—
Increase in cash surrender value of bank owned life insurance		(145	)		(139	)
Deferred income tax expense		201			638
Stock compensation expense, net		157			59
Net amortization of securities		289			240
Net change in:
Accrued interest receivable and other assets		(33	)		317
Loans held for sale		(97	)		4,898
Loan servicing rights		(26	)		(32	)
Accrued interest payable and other liabilities		(759	)		(829	)
Net cash provided by operating activities		4,643			10,062
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available for sale		4,914			5,836
Purchases of securities available for sale		(7,828	)		(7,969	)
Purchases of FHLB stock		(218	)		—
Loan originations and principal collections, net		(6,561	)		(16,794	)
Proceeds from sales of premises and equipment		—			15
Purchases of premises and equipment		(157	)		(889	)
Capitalized additions to other real estate owned		(39	)		(423	)
Proceeds from sales of other real estate owned		3,542			4,314
Net cash used in investing activities		(6,347	)		(15,910	)
Cash flows from financing activities
Net (increase) decrease in demand and savings deposits		(6,281	)		22,344
Net (increase) decrease in certificates of deposits		9,383			(18,014	)
Net change in other borrowings		(18,963	)		(2,568	)
Proceeds from FHLB Advances		15,000			—
Repayment of FHLB Advances		(10,000	)		(5,000	)
Payments to acquire treasury stock		—			(125	)
Proceeds from issuance of common stock		16,895			—
Dividends paid on common stock		(458	)		—
Dividends paid on preferred stock		(159	)		(160	)
Dividends paid on SBLF preferred stock		(90	)		(76	)
Net cash provided by (used in) financing activities		5,327			(3,599	)
Net change in cash and cash equivalents		3,623			(9,447	)
Cash and cash equivalents, beginning of period		10,480			71,780
Cash and cash equivalents, end of period	$	14,103		$	62,333

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	3,721		$	3,788
Income taxes		3,030			2,625
Noncash investing activities:
Transfer from loans to other real estate owned	$	45		$	—
Loans charged off		714			3

See accompanying notes to consolidated financial statements.

County Bancorp, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of County Bancorp, Inc. (the “Company”) and its subsidiaries have been prepared, in the opinion of management, to reflect all adjustments necessary for a fair presentiation of the financial position, results of operations, and cash flows for the interim period. The results of operations for the six months ended June 30, 2015 may not necessarily be indicative of the results to be expected for the entire fiscal year.

Management of the Company is required to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ significantly from those estimates.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information in footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014.

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period.

NOTE 2 – EARNINGS PER SHARE

Earnings per common share ("EPS") is computed using the two-class method. Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share plus the dilutive effect of share-based compensation using the treasury stock method.

	For the three months ended				For the six months ended
	June 30,				June 30,
	2015		2014*		2015		2014*
Net income from continuing operations (for EPS purposes)	$	2,219	$	2,167	$	4,744	$	3,857
Less: preferred stock dividends including SBLF		131		118		249		236
Income available to common shareholders for basic EPS	$	2,088	$	2,049	$	4,495	$	3,621

Average number of common shares issued		6,543		5,245		6,368		5,246
Less: weighted average treasury shares		410		360		410		357
Less: weighted average nonvested equity incentive plan shares		399		422		373		423
Weighted average number of common shares outstanding		5,734		4,463		5,585		4,466
Effect of dilutive options		125		112		118		112
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		5,859		4,575		5,703		4,578

*	10-for-1 Stock split adjusted

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale as of June 30, 2015 and December 31, 2014 are as follows (dollars in thousands):

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
June 30, 2015
U.S. government and agency securities	$	2,004	$	5	$	-		$	2,009
Municipal securities		44,226		217		(81	)		44,362
Mortgage-backed securities		37,040		465		(147	)		37,358
	$	83,270	$	687	$	(228	)	$	83,729
December 31, 2014
U.S. government and agency securities

County Bancorp, Inc. - FORM 10-Q - August 14, 2015

Attached files