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Highlights

• Record net income of $5.7 million for the third quarter of 2019; $13.1 million for the nine months ended September 30, 2019
• Diluted earnings per share of $0.82 for the third quarter of 2019; $1.89 for the nine months ended September 30, 2019
• Book value per share of $23.89 as of September 30, 2019, an increase of $0.86, or 3.7%, since June 30, 2019, and an increase of $2.39, or 11.1%, since December 31, 2018
• Adverse classified asset ratio improved to 45.67% at September 30, 2019 from 53.21% at June 30, 2019.
• Non-performing assets decreased $0.8 million, an improvement of 2.6%, since June 30, 2019, and decreased $7.7 million, or 21.6%, since September 30, 2018
• Client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018.
• Brokered and national deposits decreased $81.5 million during the third quarter of 2019, a reduction of 20.1%, and decreased $166.2 million, or 33.9%, since September 30, 2018

MANITOWOC, Wis., Oct. 17, 2019 (GLOBE NEWSWIRE) — County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), an agricultural and commercial community bank headquartered in Manitowoc, Wisconsin, reported net income of $5.7 million, or $0.82 diluted earnings per share, for the third quarter of 2019, compared to net income of $3.7 million, or $0.53 diluted earnings per share, for the second quarter of 2019 and $3.5 million, or $0.50 diluted earnings per share, for the third quarter of 2018.  This represents an annualized return on average assets of 1.57% for the three months ended September 30, 2019, compared to 0.94% for the three months ended September 30, 2018.  The annualized return on average assets for the nine months ended September 30, 2019 was 1.19% compared to 1.04% for the same period of 2018.  Third quarter earnings were largely impacted by a credit to provision for loan losses of $1.2 million for third quarter of 2019 compared to a $0.9 million provision expense for the second quarter of 2019, and a $1.0 million provision expense for the third quarter of 2018.

“We are very pleased with the improvement we have seen in our credit portfolio this quarter,” stated Tim Schneider, President of the Company and CEO of the Bank.  “We continue to see an improved milk price environment: the 12-month forward looking average for class III milk increased from $15.88 to $17.12 per hundredweight on the Chicago Mercantile Exchange from December 31, 2018 to September 30, 2019. These trends are encouraging, but still have work to do to continue to improve our asset quality.”

Schneider continued, “As previously announced, we are still committed to reducing our wholesale funding.  We were able to make significant progress this quarter and year-over-year, primarily through the additional liquidity from selling loan participations, which has also led to solid growth in our loan servicing income. We are also very pleased with our client deposit growth year-over-year and during the quarter.”

Loans and Total Assets

Total assets at September 30, 2019 were $1.4 billion, a decrease of $69.7 million, or 4.7%, and a decrease of $100.0 million, or 6.6%, over total assets as of June 30, 2019 and September 30, 2018, respectively.  Total loans were $1.1 billion at September 30, 2019, which represents a $67.0 million, or 5.8%, decrease over total loans at June 30, 2019, and a decrease of $122.2 million, or 10.2%, over total loans at September 30, 2018.

The decrease in total loans and assets was the result of our continued focus on reducing loans on our balance sheet through the sale of loan participations during 2019.  Participated loans that the Company continued to service were $736.8 million at September 30, 2019, which was an increase of $41.2 million, or 5.9%, and $91.9 million, or 14.3%, over participated loans that the Company serviced at June 30, 2019 and September 30, 2018, respectively.  By increasing the amount of loans participated, the Company is reducing credit risk from its balance sheet and increasing non-interest revenue streams.

Deposits

Total deposits at September 30, 2019 were $1.1 billion, a decrease of $62.4 million, or 5.2%, and a decrease of $66.0 million, or 5.5%, over total deposits as of June 30, 2019 and September 30, 2018, respectively.  Despite the decline in total deposits, client deposits (demand deposits, money market accounts, and certificates of deposit) increased $19.1 million, or 2.4%, since June 30, 2019, and increased $100.2 million, or 13.9%, since September 30, 2018. 

Due to the increases in loan participations and client deposit growth, the Company was able to further decrease its reliance on brokered deposits and national certificates of deposit to $324.5 million at September 30, 2019.  This represents a decrease of $81.5 million, or 20.1%, from June 30, 2019, and a decrease of $166.2 million, or 33.9%, from September 30, 2018. 

During the third quarter of 2019, the Company continued to pay off portions of its FHLB borrowings.  At September 30, 2019, borrowings from the FHLB totaled $44.4 million, which was a decrease of $15.0 million, or 25.3%, from June 30, 2019, and a decrease of $58.0 million, or 56.6%, from September 30, 2018.

Net Interest Income and Margin

Net interest income was $10.3 million for the three months ended September 30, 2019, which was a $0.1 million, or 1.7%, decrease from the three months ended June 30, 2019, and a $0.4 million, or 3.3%, decrease from the three months ended September 30, 2018.  The decrease in net interest income quarter-over-quarter and year-over-year was the result of a lower average loan balance due to loan payoffs and the increase in loan participations discussed above.

Net interest margin was 2.95% for the three months ended September 30, 2019, which was an increase from 2.92% for the three months ended June 30, 2019, and an increase from 2.89% for the three months ended September 30, 2018.  The increase in net interest margin over the linked quarter was primarily due to a decline in average loans from loan participation sales that took place primarily the last half of the quarter.  Year-over-year third quarter net interest margin increased by six basis points primarily due to a 32 basis point increase in loan yields, which was partially offset by a 29 basis point increase in cost of funds.

	For the Three Months Ended
	September 30, 2019												June 30, 2019												September 30, 2018
	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	$	159,091			$	1,117				2.81	%		$	176,237			$	1,259				2.86	%		$	189,448			$	1,289				2.72	%
Loans (2)		1,126,243				15,030				5.34	%			1,177,071				15,484				5.26	%			1,204,122				15,113				5.02	%
Interest bearing deposits due from other banks		104,253				612				2.35	%			73,769				465				2.52	%			62,560				249				1.59	%
Total interest-earning assets	$	1,389,587			$	16,759				4.82	%		$	1,427,077			$	17,208				4.82	%		$	1,456,130			$	16,651				4.57	%
Allowance for loan losses		(16,209	)											(17,782	)											(15,445	)
Other assets		78,664												76,806												58,921
Total assets	$	1,452,042											$	1,486,101											$	1,499,606
Liabilities
Savings, NOW, money market, interest checking	$	326,592			$	1,276				1.56	%		$	315,940			$	1,316				1.67	%		$	276,468			$	907				1.31	%
Time deposits		745,032				4,298				2.31	%			770,554				4,363				2.26	%			830,168				4,073				1.96	%
Total interest-bearing deposits	$	1,071,624			$	5,574				2.08	%		$	1,086,494			$	5,679				2.09	%		$	1,106,636			$	4,980				1.80	%
Other borrowings		804				9				4.60	%			1,204				13				4.47	%			839				10				4.61	%
FHLB advances		48,857				237				1.94	%			78,653				401				2.04	%			92,443				401				1.74	%
Junior subordinated debentures		44,800				687				6.14	%			44,762				683				6.11	%			44,659				656				5.88	%
Total interest-bearing liabilities	$	1,166,085			$	6,507				2.23	%		$	1,211,113				6,776				2.24	%		$	1,244,577			$	6,047				1.94	%
Non-interest-bearing deposits		105,578												102,432												97,947
Other liabilities		14,801												12,154												9,136
Total liabilities	$	1,286,464											$	1,325,699											$	1,351,660
Shareholders’ equity		165,578												160,402												147,946
Total liabilities and equity	$	1,452,042											$	1,486,101											$	1,499,606
Net interest income					$	10,252											$	10,432											$	10,604
Interest rate spread (3)										2.59	%											2.58	%											2.63	%
Net interest margin (4)										2.95	%											2.92	%											2.89	%
Ratio of interest-earning assets to interest-bearing liabilities		1.19												1.18												1.17
(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.

Net interest income for the nine months ended September 30, 2019 was $31.2 million which was the same as to the nine month ended September 30, 2018, primarily as a result of the combination of a higher average loan yield on a smaller average balance of the loan portfolio.

For the nine months ended September 30, 2019, net interest margin improved slightly to 2.94% from 2.92% for the nine months ended September 30, 2018, primarily as a result of a 40 basis point increase in loan yields that was partially offset by a 46 basis point increase in cost of funds.

Non-Interest Income and Expense

Non-interest income for the three months ended September 30, 2019 increased by $1.1 million, or 39.7%, to $4.0 million compared to the three months ended June 30, 2019, which was primarily the result of an increase of $1.4 million of loan servicing right origination due to the $41.2 million in loans that were sold or participated during the third quarter.  The Company also continued to reduce the valuation allowance on its loan servicing rights portfolio which resulted in an additional servicing rights income of $0.2 million.   

Non-interest income for the three months ended September 30, 2019 increased $1.9 million, or 87.0%, compared to $2.2 million for the three months ended September 30, 2018.  The year-over-year increase was primarily due to the increase in loan participations discussed above.

		For the Three Months Ended
		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except per share data)
Non-Interest Income
Services charges		$	348			$	407			$	353			$	470			$	394
Gain (loss) on sale of loans, net			87				26				(1	)			54				41
Loan servicing fees			1,677				1,563				1,519				1,553				1,521
Loan servicing right origination			1,741				346				228				7				(46	)
Income on OREO			10				40				26				83				96
Gain on sale of securities			–				341				–				–				–
Other			171				164				625				153				151
Total non-interest income		$	4,034			$	2,887			$	2,750			$	2,320			$	2,157

For the nine months ended September 30, 2019, non-interest income improved to $9.7 million, an increase of $3.2 million, or 48.5%, over the nine months ended September 30, 2018.  The increase was primarily due to the increase in servicing fees as the result of the reduction of the servicing right valuation allowance totaling $0.8 million and the increase in fees generated by the $91.9 million of loans that were participated since September 30, 2018.  In addition, the Company eliminated its allowance for unused commitments, which resulted in an increase of $0.5 million in other non-interest income.  The Company evaluated the need for this allowance during the first quarter of 2019 and concluded there was not sufficient evidence that represented credit loss inherent in these commitments to substantiate the necessity of this reserve and concluded to eliminate it.  The Company will continue to evaluate credit risk on these off-balance sheet commitments. 

Non-interest expense for the three months ended September 30, 2019 increased by $0.2 million, or 3.0%, to $7.7 million compared to the three months ended June 30, 2019, and increased $0.6 million, or 9.2%, compared to the three months ended September 30, 2018.  Employee compensation and benefits increased $0.5 million, or 12.8%, in the linked quarter due in part to additional accrual of $0.3 million for incentive compensation related to anticipated current year financial results.  The increased employee compensation and benefits was partially offset by a $0.2 million small bank assessment credit that was received from the FDIC, which reduced other non-interest expense.  This one-time credit was awarded to banks with total assets less than $10 billion due to the FDIC’s Reserve fund exceeding its target balance.  The year-over-year increase was due in part to a $0.2 million loss on the sale an OREO property during the third quarter of 2019 and small increases in information processing, professional fees, and business development.

		For the Three Months Ended
		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except per share data)
Non-Interest Expense
Employee compensation and benefits		$	4,735			$	4,199			$	4,482			$	4,059			$	4,394
Occupancy			313				283				389				245				332
Information processing			683				591				563				641				529
Professional fees			483				417				399				497				351
Business development			351				347				325				259				258
OREO expenses			57				121				51				106				46
Writedown of OREO			–				250				–				688				81
Net loss (gain) on sale of OREO			160				9				(136	)			(54	)			(28	)
Depreciation and amortization			319				328				337				408				302
Other			567				901				895				689				758
Total non-interest expense		$	7,668			$	7,446			$	7,305			$	7,538			$	7,023

Asset Quality

At September 30, 2019, non-performing assets were $28.0 million, a decrease of $0.8 million, or 2.6%, and $7.7 million, or 21.6%, compared to June 30, 2019 and September 30, 2018, respectively.  Non-performing assets as a percent of total assets increased to 1.98% at September 30, 2019, from 1.94% at June 30, 2019, due to the reduction in total assets and decreased from 2.36% at September 30, 2018.  During the third quarter of 2019, two OREO properties were sold, resulting in a decrease of $1.4 million in OREO.

Substandard loans were $105.9 million at September 30, 2019, compared to $117.8 million at June 30, 2019 and $118.4 million at September 30, 2018.  Adverse classified asset ratio (a non-GAAP measure) decreased to 45.67% at September 30, 2019 from 53.21% and 51.89% at June 30, 2019 and September 30, 2018, respectively.  The decrease in substandard loans and the adverse classified ratio was in part the result of a combination of an improving milk price outlook and concerted efforts by our dairy customers to manage their expenses wherever they reasonably can.  We are actively managing these credits, and we are optimistic about the industry’s outlook as there was a 4.7% increase in the 12-month future price of class III milk on the Chicago Mercantile Exchange from June 30, 2019 to September 30, 2019.

A credit to provision for loan losses of $1.2 million was recorded for the three months ended September 30, 2019 compared to a provision of $0.9 million for the three months ended June 30, 2019, and a provision of $1.0 million for the three months ended September 30, 2018.  For the nine months ended September 30, 2019, a provision for loan losses was $0.5 million compared to $1.6 million for the nine months ended September 30, 2018.  The decrease in provision in the linked quarter and year-over- year was directly related to the decrease in the dairy loan portfolio as the result of the increase in loan participations, improvements in milk price, and upgrade to credit ratings.  The upgrade of $26.1 million of substandard performing and special mention loans to the watch risk category in the third quarter resulted in $0.8 million reduction to the allowance for loan losses. 

		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands)
Loans by risk category:
Sound/Acceptable/Satisfactory/Low Satisfactory		$	771,568			$	836,988			$	896,328			$	908,172			$	901,643
Watch			193,942				167,824				174,642				171,670				171,890
Special Mention			9,346				25,255				4,501				6,566				11,036
Substandard Performing			44,183				56,336				46,075				65,501				61,851
Substandard Impaired			61,728				61,429				61,417				55,386				56,517
Total loans		$	1,080,767			$	1,147,832			$	1,182,963			$	1,207,295			$	1,202,937

The allowance for loan losses was $15.1 million at September 30, 2019 compared to $16.5 million at December 31, 2018.  The $1.4 million decrease in the allowance during the first nine months of 2019 was the result of a reduction in general reserves due to the decreases in total loans and the credit upgrades discussed previously.

Conference Call

The Company will host an earnings call tomorrow, October 18, 2019, at 8:30 a.m., CDT, conducted by Timothy J. Schneider, President, and Glen L. Stiteley, CFO.  The earnings call will be broadcast over the Internet on the Company’s website at http://investors.icbk.com.  From the top menu, select “News”, then “Event Calendar.”  In addition, you may listen to the Company’s earnings call via telephone by dialing (844) 835-9984.  Investors should visit the Company’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.  

A replay of the earnings call will be available until October 18, 2020, by visiting the Company’s website at http://investors.icbk.com.

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.  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, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except per share data)
Period-End Balance Sheet:
Assets
Cash and cash equivalents		$	120,845			$	116,251			$	62,426			$	61,087			$	49,996
Securities available for sale, at fair value			154,962				158,561				192,210				195,945				190,185
Loans held for sale			4,192				7,448				2,750				2,949				13,770
Agricultural loans			673,742				713,602				722,107				724,508				714,310
Commercial loans			360,132				383,542				403,490				415,672				417,146
Multi-family real estate loans			43,487				46,683				52,974				62,321				66,403
Residential real estate loans			3,183				3,753				4,172				4,522				4,965
Installment and consumer other			223				252				220				272				113
Total loans			1,080,767				1,147,832				1,182,963				1,207,295				1,202,937
Allowance for loan losses			(15,065	)			(16,258	)			(17,493	)			(16,505	)			(16,143	)
Net loans			1,065,702				1,131,574				1,165,470				1,190,790				1,186,794
Other assets			69,263				70,812				68,532				70,256				74,223
Total Assets		$	1,414,964			$	1,484,646			$	1,491,388			$	1,521,027			$	1,514,968
Liabilities and Shareholders’ Equity
Demand deposits		$	117,224			$	111,022			$	101,434			$	121,436			$	103,862
NOW accounts and interest checking			56,637				54,253				49,902				51,779				46,811
Savings			6,981				6,621				6,210				5,770				6,616
Money market accounts			248,608				239,337				225,975				218,929				208,233
Time deposits			388,759				387,899				376,034				356,484				352,531
Brokered deposits			206,474				256,475				269,917				308,504				317,291
National time deposits			118,070				149,570				146,805				160,445				173,440
Total deposits			1,142,753				1,205,177				1,176,277				1,223,347				1,208,784
FHLB advances			44,400				59,400				100,400				89,400				102,400
Subordinated debentures			44,820				44,781				44,742				44,703				44,663
Other liabilities			14,239				12,564				11,952				11,492				11,134
Total Liabilities			1,246,212				1,321,922				1,333,371				1,368,942				1,366,981
Shareholders’ equity			168,752				162,724				158,017				152,085				147,987
Total Liabilities and Shareholders’ Equity		$	1,414,964			$	1,484,646			$	1,491,388			$	1,521,027			$	1,514,968
Stock Price Information:
High – Quarter-to-date		$	20.99			$	18.92			$	19.69			$	26.00			$	28.20
Low – Quarter-to-date		$	16.80			$	16.24			$	16.74			$	17.37			$	24.29
Market price – Quarter-end		$	19.62			$	17.09			$	17.60			$	17.37			$	25.10
Book value per share		$	23.89			$	23.03			$	22.36			$	21.50			$	20.91
Tangible book value per share (1)		$	23.10			$	22.23			$	21.54			$	20.68			$	20.07
Common shares outstanding			6,727,908				6,717,908				6,709,254				6,709,480				6,694,230
(1)  This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands)
Loans by risk category:
Sound/Acceptable/Satisfactory/Low Satisfactory		$	771,568			$	836,988			$	896,328			$	908,172			$	901,643
Watch			193,942				167,824				174,642				171,670				171,890
Special Mention			9,346				25,255				4,501				6,566				11,036
Substandard Performing			44,183				56,336				46,075				65,501				61,851
Substandard Impaired			61,728				61,429				61,417				55,386				56,517
Total loans			1,080,767				1,147,832				1,182,963				1,207,295				1,202,937
Loans sold with servicing retained			736,823				695,629				675,268				661,257				644,879
Total loans and loans sold with servicing retained		$	1,817,590			$	1,843,461			$	1,858,231			$	1,868,552			$	1,847,816
Non-Performing Assets:
Nonaccrual loans		$	20,776			$	20,096			$	25,880			$	22,983			$	27,881
Other real estate owned (1)			7,252				8,693				5,019				6,568				7,851
Total non-performing assets		$	28,028			$	28,789			$	30,899			$	29,551			$	35,732
Performing TDRs not on nonaccrual		$	28,520			$	28,892			$	21,111			$	18,258			$	11,863
Non-performing assets as a % of total loans			2.59	%			2.51	%			2.61	%			2.45	%			2.97	%
Non-performing assets as a % of total assets			1.98	%			1.94	%			2.07	%			1.94	%			2.36	%
Adverse classified asset ratio (2)			45.67	%			53.21	%			48.59	%			57.12	%			51.89	%
Allowance for loan losses as a % of nonaccrual loans			72.51	%			80.90	%			67.59	%			71.81	%			57.90	%
Allowance for loan losses as a % of total loans			1.39	%			1.42	%			1.48	%			1.37	%			1.34	%
Net charge-offs (recoveries) quarter-to-date		$	39			$	2,111			$	(236	)		$	1,210			$	(21	)
Provision for loan loss quarter-to-date		$	(1,154	)		$	876			$	752			$	1,572			$	993
(1) The quarter ended September 30, 2018, does not include $0.4 million of bank property transferred from premises and equipment, which is not considered a non-performing asset.  For the quarter ended December 31, 2018, and all subsequent quarters, that bank property was considered classified due to the length of the holding period.
(2) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

		For the Three Months Ended
		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except per share data)
Selected Income Statement Data:
Interest and Dividend Income
Loans, including fees		$	15,030			$	15,484			$	15,501			$	15,536			$	15,113
Taxable securities			1,117				1,177				1,186				1,168				945
Tax-exempt securities			–				82				175				183				344
Federal funds sold and other			612				465				264				223				249
Total interest and dividend income			16,759				17,208				17,126				17,110				16,651
Interest Expense
Deposits			5,574				5,678				5,424				5,273				4,980
FHLB advances and other borrowed funds			246				415				464				427				411
Subordinated debentures			687				683				678				667				656
Total interest expense			6,507				6,776				6,566				6,367				6,047
Net interest income			10,252				10,432				10,560				10,743				10,604
Provision for loan losses			(1,154	)			876				752				1,572				993
Net interest income after provision for loan losses			11,406				9,556				9,808				9,171				9,611
Non-Interest Income
Services charges			348				407				353				470				394
Gain (loss) on sale of loans, net			87				26				(1	)			54				41
Loan servicing fees			1,677				1,563				1,519				1,553				1,521
Loan servicing right origination			1,741				346				228				7				(46	)
Income on OREO			10				40				26				83				96
Gain on sale of securities			–				341				–				–				–
Other			171				164				625				153				151
Total non-interest income			4,034				2,887				2,750				2,320				2,157
Non-Interest Expense
Employee compensation and benefits			4,735				4,199				4,482				4,059				4,394
Occupancy			313				283				389				245				332
Information processing			683				591				563				641				529
Professional fees			483				417				399				497				351
Business development			351				347				325				259				258
OREO expenses			57				121				51				106				46
Writedown of OREO			–				250				–				688				81
Net loss (gain) on sale of OREO			160				9				(136	)			(54	)			(28	)
Depreciation and amortization			319				328				337				408				302
Other			567				901				895				689				758
Total non-interest expense			7,668				7,446				7,305				7,538				7,023
Income before income taxes			7,772				4,997				5,253				3,953				4,745
Income tax expense			2,090				1,293				1,491				1,123				1,228
NET INCOME		$	5,682			$	3,704			$	3,762			$	2,830			$	3,517
Basic		$	0.82			$	0.53			$	0.54			$	0.41			$	0.51
Diluted		$	0.82			$	0.53			$	0.54			$	0.40			$	0.50
Dividends declared		$	0.05			$	0.05			$	0.05			$	0.07			$	0.07

		For the Three Months Ended
		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except share data)
Other Data:
Return on average assets(1)			1.57	%			1.00	%			1.00	%			0.75	%			0.94	%
Return on average shareholders’ equity(1)			13.73	%			9.24	%			9.78	%			7.58	%			9.51	%
Return on average common shareholders’ equity (1)(2)			14.14	%			9.41	%			9.99	%			7.70	%			9.75	%
Efficiency ratio (1)(2)			52.55	%			55.38	%			55.91	%			52.85	%			55.39	%
Tangible common equity to tangible assets (2)			11.03	%			10.10	%			9.73	%			9.15	%			8.90	%
Common Share Data:
Net income from continuing operations		$	5,682			$	3,704			$	3,762			$	2,830			$	3,517
Less:  Preferred stock dividends			120				118				117				111				106
Income available to common shareholders		$	5,562			$	3,586			$	3,645			$	2,719			$	3,411
Weighted average number of common shares issued			7,168,785				7,159,072				7,153,174				7,177,212				7,108,202
Less: Weighted average treasury shares			443,920				443,920				443,729				442,206				443,140
Less: Weighted average non-vested restricted units awards			32,125				30,483				16,260				30,955				29,537
Weighted average number of common shares outstanding			6,756,990				6,745,635				6,712,551				6,704,051				6,694,599
Effect of dilutive options			19,160				20,731				21,323				68,876				63,346
Weighted average number of common shares outstanding used to calculate diluted earnings per common share			6,776,150				6,766,366				6,733,874				6,772,927				6,757,945
(1)  Annualized
(2) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

		For the Three Months Ended
Non-GAAP Financial Measures:		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands)
Return on average common shareholders’ equity reconciliation:
Return on average shareholders’ equity			13.73	%			9.24	%			9.78	%			7.58	%			9.51	%
Effect of excluding average preferred shareholders’ equity			0.41	%			0.17	%			0.21	%			0.12	%			0.24	%
Return on average common shareholders’ equity			14.14	%			9.41	%			9.99	%			7.70	%			9.75	%
Efficiency ratio GAAP to non-GAAP reconciliation:
Non-interest expense		$	7,668			$	7,446			$	7,305			$	7,538			$	7,023
Less: net gain (loss) on sales and write-downs of OREO			(160	)			(259	)			136				(634	)			45
Adjusted non-interest expense (non-GAAP)		$	7,508			$	7,187			$	7,441			$	6,904			$	7,068
Net interest income		$	10,252			$	10,432			$	10,560			$	10,743			$	10,604
Non-interest income			4,034				2,887				2,750				2,320				2,157
Less: net gain on sales of securities			–				(341	)			–				–				–
Operating revenue		$	14,286			$	12,978			$	13,310			$	13,063			$	12,761
Efficiency ratio			52.55	%			55.38	%			55.91	%			52.85	%			55.39	%

               

		September 30, 2019				June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018
		(dollars in thousands, except per share data)
Tangible book value per share and tangible common equity to tangible assets reconciliation:
Common equity		$	160,752			$	154,724			$	150,017			$	144,284			$	139,987
Less: Goodwill			5,038				5,038				5,038				5,038				5,038
Less: Core deposit intangible, net of amortization			286				354				430				513				603
Tangible common equity (non-GAAP)		$	155,428			$	149,332			$	144,549			$	138,733			$	134,346
Common shares outstanding			6,727,908				6,717,908				6,709,254				6,709,480				6,694,230
Tangible book value per share		$	23.10			$	22.23			$	21.54			$	20.68			$	20.07
Total assets		$	1,414,964			$	1,484,646			$	1,491,388			$	1,521,027			$	1,514,968
Less: Goodwill			5,038				5,038				5,038				5,038				5,038
Less: Core deposit intangible, net of amortization			286				354				430				603				701
Tangible assets (non-GAAP)		$	1,409,640			$	1,479,254			$	1,485,920			$	1,515,386			$	1,509,229
Tangible common equity to tangible assets			11.03	%			10.10	%			9.73	%			9.15	%			8.90	%
Adverse classified asset ratio:
Substandard loans		$	105,911			$	117,765			$	107,492			$	120,887			$	118,368
Less: Impaired performing restructured loans			(8,672	)			(8,276	)			(6,382	)			(5,078	)			(13,657	)
Net substandard loans		$	97,239			$	109,489			$	101,110			$	115,809			$	104,711
Other real estate owned			7,252				8,693				5,019				6,568				7,851
Substandard unused commitments			991				1,458				976				1,625				1,191
Less: Substandard government guarantees			(7,746	)			(7,821	)			(5,864	)			(7,111	)			(9,374	)
Total adverse classified assets (non-GAAP)		$	97,736			$	111,819			$	101,241			$	116,891			$	104,379
Total equity (Bank)		$	201,967			$	196,036			$	191,287			$	185,458			$	180,359
Accumulated other comprehensive loss (gain) on available for sale securities			(3,016	)			(2,166	)			(436	)			2,221				4,152
Allowance for loan losses			15,065				16,258				17,493				16,505				16,143
Allowance for unused commitments			–				–				–				475				510
Adjusted total equity (non-GAAP)		$	214,016			$	210,128			$	208,344			$	204,659			$	201,164
Adverse classified asset ratio			45.67	%			53.21	%			48.59	%			57.12	%			51.89	%