County Bancorp, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EX-32.1 - County Bancorp, Inc.	icbk-ex321_9.htm
EX-31.2 - EX-31.2 - County Bancorp, Inc.	icbk-ex312_7.htm
EX-32.2 - EX-32.2 - County Bancorp, Inc.	icbk-ex322_6.htm
EX-31.1 - EX-31.1 - County Bancorp, Inc.	icbk-ex311_8.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 September 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 smaller reporting company)	Smaller 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 November 10, 2015, the registrant had 5,751,579 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	21
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

September 30, 2015 and December 31, 2014

(Unaudited)

	September 30, 2015			December 31, 2014
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	13,026		$	10,480
Securities available-for-sale, at fair value		85,783			81,282
FHLB Stock, at cost		3,507			1,252
Loans held for sale		13,712			4,114
Loans, net of allowance for loan losses of $9,833 as of September 30, 2015; $10,603 as of December 31, 2014		694,196			637,519
Premises and equipment, net		5,771			4,596
Loan servicing rights		7,721			7,746
Other real estate owned, net		3,024			7,137
Cash surrender value of bank owned life insurance		11,082			10,863
Deferred tax asset, net		2,047			2,321
Accrued interest receivable and other assets		4,922			4,446
Total assets	$	844,791		$	771,756

LIABILITIES
Deposits:
Noninterest-bearing	$	60,685		$	81,534
Interest-bearing		575,536			523,935
Total deposits		636,221			605,469
Other borrowings		4,383			23,857
Advances from FHLB		64,000			28,000
Subordinated debentures		12,372			12,372
Accrued interest payable and other liabilities		8,379			7,015
Total liabilities		725,355			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 September 30, 2015 and 4,908,560 shares issued and 4,498,790 shares outstanding at December 31, 2014		18			5
Surplus		34,118			16,970
Retained earnings		66,274			59,254
Treasury stock, at cost, 409,770 shares at September 30, 2015 and December 31, 2014		(4,572	)		(4,572	)
Accumulated other comprehensive income		598			386
Total shareholders' equity		104,436			80,043
Total liabilities and shareholders' equity	$	844,791		$	771,756

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2015			2014		2015			2014
	(dollars in thousands except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	8,393		$	7,225	$	23,687		$	21,704
Taxable securities		251			217		715			662
Tax-exempt securities		109			117		322			364
Federal funds sold and other		11			23		41			90
Total interest and dividend income		8,764			7,582		24,765			22,820

INTEREST EXPENSE
Deposits		1,575			1,549		4,541			4,666
FHLB advances and other borrowed funds		219			108		624			695
Subordinated debentures		99			120		339			360
Total interest expense		1,893			1,777		5,504			5,721
Net interest income		6,871			5,805		19,261			17,099
Provision for loan losses		(867	)		—		(1,325	)		—
Net interest income after provision for loan losses		7,738			5,805		20,586			17,099
Non-interest income:
Services charges		238			388		744			559
Gain on sale of loans, net		44			69		166			251
Loan servicing fees		1,185			1,267		3,623			3,634
Other		256			74		777			723
Total non-interest income		1,723			1,798		5,310			5,167
Non-interest expense:
Employee compensation and benefits		2,643			2,570		8,232			7,628
Occupancy		100			75		260			229
Write-down of other real estate owned		-			44		182			729
Other		1,392			1,575		4,309			4,149
Total non-interest expense		4,135			4,264		12,983			12,735
Income before income taxes		5,326			3,339		12,913			9,531
Income tax expense		1,996			1,068		4,839			3,403
NET INCOME	$	3,330		$	2,271	$	8,074		$	6,128

NET INCOME PER SHARE:
Basic	$	0.56		$	0.48	$	1.37		$	1.29
Diluted	$	0.55		$	0.47	$	1.34		$	1.26
Dividends paid per share	$	0.04		$	-	$	0.12		$	-

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, 2015 and 2014

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(dollars in thousands)
Net income	$	3,330		$	2,271		$	8,074		$	6,128
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale		524			(155	)		347			549
Income tax (expense) benefit		(204	)		61			(135	)		(216	)
Total other comprehensive income (loss)		320			(94	)		212			333
Comprehensive income	$	3,650		$	2,177		$	8,286		$	6,461

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2015 and 2014

(Unaudited)

	Preferred Stock		Common Stock		Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(dollars in thousands)
Balance at December 31, 2013	$	8,000	$	5	$	16,004	$	51,514		$	(3,683	)	$	(31	)	$	71,809
Net income		—		—		—		6,128			—			—			6,128
Other comprehensive income		—		—		—		—			—			333			333
Stock compensation expense, net of tax		—		—		110		—			—			—			110
Purchase of treasury stock (44,790 shares)		—		—		—		—			(812	)		—			(812	)
Cash dividends declared on preferred stock		—		—		—		(239	)		—			—			(239	)
Cash dividends declared on SBLF preferred stock		—		—		—		(113	)		—			—			(113	)
Proceeds from sale of common stock (44,790 shares)		—		—		506		—			—			—			506
Balance at September 30, 2014	$	8,000	$	5	$	16,620	$	57,290		$	(4,495	)	$	302		$	77,722

Balance at December 31, 2014	$	8,000	$	5	$	16,970	$	59,254		$	(4,572	)	$	386		$	80,043
Net income		—		—		—		8,074			—			—			8,074
Other comprehensive income		—		—		—		—			—			212			212
Stock compensation expense, net of tax		—		—		266		—			—			—			266
Cash dividends declared on common stock		—		—		—		(687	)		—			—			(687	)
Cash dividends declared on preferred stock		—		—		—		(239	)		—			—			(239	)
Cash dividends declared on SBLF preferred stock		—		—		—		(128	)		—			—			(128	)
Proceeds from sale of common stock (1,220,750 shares)		—		13		16,882		—			—			—			16,895
Balance at September 30, 2015	$	8,000	$	18	$	34,118	$	66,274		$	(4,572	)	$	598		$	104,436

See accompanying notes to consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2015 and 2014

(Unaudited)

	September 30, 2015			September 30, 2014
	(dollars in thousands)
Cash flows from operating activities
Net income	$	8,074		$	6,128
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of premises and equipment		444			461
Recovery of loan losses		(1,325	)		—
Realized loss on sales of other real estate owned		260			235
Write-down of other real estate owned		182			729
Realized loss (gain) on sales of premises and equipment		4			(1	)
Increase in cash surrender value of bank owned life insurance		(219	)		(213	)
Deferred income tax expense		136			672
Stock compensation expense, net		266			110
Net amortization of securities		431			374
Net change in:
Accrued interest receivable and other assets		(476	)		48
Loans held for sale		(9,598	)		5,972
Loan servicing rights		25			(115	)
Accrued interest payable and other liabilities		1,363			484
Net cash provided by (used in) operating activities		(433	)		14,884
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available for sale		6,691			8,352
Purchases of securities available for sale		(11,274	)		(12,843	)
Purchases of FHLB stock		(2,255	)		—
Loan originations and principal collections, net		(56,882	)		(23,928	)
Proceeds from sales of premises and equipment		—			25
Purchases of premises and equipment		(1,623	)		(978	)
Capitalized additions to other real estate owned		(39	)		(423	)
Proceeds from sales of other real estate owned		5,240			8,714
Net cash used in investing activities		(60,142	)		(21,081	)
Cash flows from financing activities
Net increase (decrease) in demand and savings deposits		(521	)		24,580
Net increase (decrease) in certificates of deposits		31,274			(40,957	)
Net change in other borrowings		(19,473	)		(4,822	)
Proceeds from FHLB Advances		404,500			5,000
Repayment of FHLB Advances		(368,500	)		(5,000	)
Payments to acquire treasury stock		—			(812	)
Proceeds from issuance of common stock		16,895			506
Dividends paid on common stock		(687	)		—
Dividends paid on preferred stock		(239	)		(239	)
Dividends paid on SBLF preferred stock		(128	)		(113	)
Net cash provided by (used in) financing activities		63,121			(21,857	)
Net change in cash and cash equivalents		2,546			(28,054	)
Cash and cash equivalents, beginning of period		10,480			71,780
Cash and cash equivalents, end of period	$	13,026		$	43,726

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	5,516		$	5,674
Income taxes		3,960			2,925
Noncash investing activities:
Transfer from loans to other real estate owned	$	1,530		$	1,321
Loans charged off		1,894			218

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 nine months ended September 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 (“GAAP”). Certain information in footnote disclosure normally included in financial statements prepared in accordance with GAAP has 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, as amended (the “Securities Act”), 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 Nine Months Ended
	September 30,				September 30,
	2015		2014*		2015		2014*
Net income from continuing operations	$	3,330	$	2,271	$	8,074	$	6,128
Less: preferred stock dividends including SBLF		118		116		367		352
Income available to common shareholders for basic EPS	$	3,212	$	2,155	$	7,707	$	5,776

Average number of common shares issued		6,545		5,248		6,428		5,247
Less: weighted average treasury shares		410		380		410		365
Less: weighted average nonvested equity incentive plan shares		401		404		383		417
Weighted average number of common shares outstanding		5,734		4,464		5,635		4,465
Effect of dilutive options		124		115		119		118
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		5,858		4,579		5,754		4,583

* Adjusted for 10-for-1 stock split on April 4, 2014

NOTE 3 – SECURITIES AVAILABLE FOR SALE

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

Amortized

Unrealized

Fair

Cost

Gains

Losses

Value

September 30, 2015

U.S. government and agency securities

2,004

County Bancorp, Inc. - FORM 10-Q - November 10, 2015

Attached files