County Bancorp (ICBK)

Timothy Schneider President and Chief Executive Officer
Glen Stiteley Chief Financial Officer and Treasurer
John Fillingim Chief Credit Officer
Dave Coggins Chief Banking Officer
Jeff Rulis D.A. Davidson
Brendan Nosal Piper Sandler
Terry McEvoy Stephens Inc.
Call transcript
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Good day, and welcome to the County Bancorp, Inc. June 30 2020, Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tim Schneider, President of County Bancorp. sir. ahead go Please

Timothy Schneider

our for to of second XXXX. earnings everyone the call quarter Welcome

we on our forward-looking a have As reminder, disclosure Slide of statements X the our presentation. on of uses

X. Slide to Moving

Board We the Steimle of of been have new independent both working a Birschbach, board Chairman estate real attorney the in on Founding and a Partner both Company is Chairman director changes been forward. since looking made with XXXX of more an Directors. Steimle, He has business I who a is moving few great LLC. Andrew Wisconsin practicing be has and with Bank’s He our will boards. am our and directly selected and as forward him to

Former of am contributions the as remain We the and are our his His Chairman success. and communities Bill’s XX our also will its years. unwavering both employees support Bank. on I company focus been happy boards to and grateful the vital for the past has strategic leadership excellence our on over that Bank, as the Censky, well for William

So moving I that am a will forward. our of very vital member remain happy Board he

we Board been to over our of Director, like Vicki we’d Chair Vicki forward Directors well few Kathi appointed their committee look have and that Chair to served Board Seifert as as Lastly, the compensation the Director governance committee. of the and of expanded nominating recognize contribution. and and has Leinbach years Kathi last

well; customers loan SBA’s share. and a million; due amazed be of the net of responded income our COVID-XX in included XXXX our against well-being income to up in The provision to to response from of clients $X.X shift which crisis; our to and interest credit loss this increase There approved a several million to were top investments to to in quarter how net able be Now decrease interest-bearing bit to financials initiatives. our in employees per or client increase safety priority talk in in income PPP and I’ll our deposits remains that about reflects $XXX have continue I’ll team $X.XX support an X. talk resulted growth which $X.X positive about our loyal we to has quality safely health overview employee diluted $XXX.X loans to COVID-XX million Slide balances million holding X. deposit through $X.X million, and And significant $X.X to serve an moving Slide our communities. overall non-interest one Those little execution investment impacts our securities, with of the million, strategic to finally the in improvements quarter I trends to partially and made COVID-XX. moving a a

next local During the in plan evaluate in our will we’ll bring approximately of our We trends productivity. and employees XX% timing workforce the monitor back phase back that brought first the and office currently announced from quarter, we drop the the phases. home We which just together phases. infection with we a of as no to rates working game have

measures several including on We barriers masks, guidance continued and safety instituted protective have also education.

again, beat service our and very these difficult in and without excellent safety of to the our work efforts around united collective a through of to remains communities. team customers Our I’ve times been provision proud missing

Next Slide.

by on will opened we to as Slide up first an Moving this on you with initiatives supported to numerous safety slide. customers X, our locations see have emphasis

market, we’ll I continue million local customers had as able a an online will simplify continue we recently John to SBA to that help the program. pleased to the our our communication which forgiveness speed team person quarter, company in have we our we the new Officer for support Chief over partnered to for Our $XXX well loved customers, now in see PPP forward. bring and safety the the move that to the as have update has with to In required to customers customers. XXX getting as technology also but PPP effort am to Because impacted during by note prioritize with credit. applications been applications have on of through processed and John? process benefit steps pandemic. to And be communities Fillingim, needs next I it for to educational will the great of we our have for Credit were an PPP a customers on ongoing turn again,

John Fillingim

and Thank everyone. morning Tim, good you,

to an provide metrics. Moving payment to to like X, our relief COVID update I’d Slide

On side, affected initially days commercial relief requested customers payment negatively the we to of provided it pandemic. were who the XX by and

issued been uncertainty surrounding initial March interagency was the business guidelines of XXXX term given taken the required have the by impacted borrowers in of longevity impact potential their shutdowns. to by crisis. While the the COVID longer that the and XX-day approach the payment provide The businesses request for relief, serve

During customers encouraged additional contacted the COVID-XX. only relief. their days five the an this are we have due relief last XX find payment determine impact quarter, XX requested time, the of degree our requested to At payment to commercial to of of highly original customers commercial that the bankers have that

for risk changes, that national to financial any unemployment update servicing borrower beyond encouraged plans. that days the the rate XX the of an and requests We All original and rate also is can X.X% so action as the provide ratings determine require are payment necessary to XX%. modifications plan Wisconsin’s we compared

are of request by surrounding we long-term additional for payment While COVID-XX, uncertainty remains the impact there reliefs. encouraged minimum of the number still

like would highlight to metrics. I our of X, Slide to credit Moving key some

restaurants construction. our to continue including and and high industries We hotels, housing, bars, risk focus multi-family office, that student heavily include, retail, on

credit XX.XX% year. credits and Our commercial sub-standard. largely adverse where one migrating increased was Ag the which four to quarter-over-quarter, classified ratio to increase began is we The due

satisfactory upgraded low relationships to from eight On watch. mention dairy upgraded the dairy and watch substandard from we and special three to relationships positive side, saw

property. parcels we the from Additionally, of acquired OREO reduced our sale exposure of two

concern our monitoring on report the by Ag, watch substandard follow-on have basis high that worth additional our on on their quarterly bankers this anticipate not ensure and to at dollar annual credits completed of We’ve downgrades and reviews and watch time. continue in We accounts. rate any on XX% proper do these to credits and of significant book

provided our contact customers impact and commercial outlook mentioned, the their stay COVID-XX to Ag as substantial we milk improved the of our previously for government that’s of portfolio. to the determine we environment, assistance are And producers, ultimate been encouraged Given continue to overall that the dairy price our with on in close amount businesses.

a well-capitalized and operator supported million SBA Slide varied risk had by is to it XXXX, leasing service is multi-family XXX of to Moving of X, to limited awaiting by project This loan a loans as a financing. the to owner that is that’s seen and project we construction $X.X conversion a permanent franchise is particular million activity. in The complete in is million exposure supported represents to have Bank. related the risk outstanding. related restaurant QX minimal and $X.X $XX.X

on commercial you can see left and this the real XX, the of slide. based that Slide breakdown well occupied diversified to estate owner on C&I portfolio is Moving our

to loans detailed banking LTVs satisfactory as the closely continue of high on slide and the the carries ratings right-side Additionally, monitored are that industries and by included risk teams. in be risk the our

real Moving higher have you’ll Slide as to industry, commercial as identified breakdown those the our we of as risk. XX, see investor estate well by industries

exposure limited retail, do have to living we As you’ll see, operations. and assisted hotels

and ratings to the However, to Dave it’s Ag like At that note comfortable on this on it to overall risk environment. Officer levels Banking Dave? these Coggins an Chief update turn credits. LTVs to give important we time, of our I’d have over

Dave Coggins

John. Thanks,

created Moving the second a Slide started customers. Food is to that temporary in shutdown substantial of and done problem. dairy our oversupply March, quarter service provided much dramatic, hotels volatility sector. shutdown but When orders through consumption XX, essentially for the dairy it

if who to with and positions wasn’t dump started couldn’t. some that Class facing marketing plants protected production farmers III milk dairy headwinds. requiring Some cutback plummeted or customer their strong any futures knock were they

Fortunately, in in to from this as short April $XX.XX for situation $XX.X went lived prices was June. Class III

the solid substantially actual for average the This first and most puts the the six futures our of good was a prices months above cases. forecasted outlook of with combination Our for in for in futures, XXXX customers looks current XXXX with pretty of $XX.XX. for last most balance six months place breakeven

dry the sales been have for to been have McDonald’s, better trade is nicely limited that lot created expected. stars driven up a is Some and the continue consumption now of of limited An two important have Dominos this opening of up May to were Retail places and much of restaurants they as service stock consideration and export service some improvement. Exports result significant dairy between include, significant the agreement of to dairy has nonfat that ramp their and and to China cheese the solid. improvement milk much of developed be quick economy more that countries. buying than our recovered very a commitment establishments like the service Cheese restaurants. type the drive drivers demand

be Many margins protect price there tools months have component Feed that because forecasts - and the and tool a were melting have some the looking Some a farmers is as affecting and the expenses U.S. factors primarily quarter positive the a That’s dairy are continue energy of them. at suggest every lot do impact price that’s that’s in to also and putting ethanol and has buyer to of and has limits many collapses that is producers a input been, affordable our customers, do expand have farm the the to utilized products active China of some dairy Expectations supported. few industry milk price had trying with forecast cost an been calling of of expense them. prices. production predicted a been available have really the farm’s drive of that’s and that’s regarding expect and statement frequency to the to something cutbacks things high And an this energy have portion important been rate which we slower happen on continues price high going predict that plants more have that in their very on A buying of that next continuing impact. to prices deal finally, management are much other softened their two a dairy them still risk due dairy to government disruptions. has hurt to near. global lot the income impact cost. were forward an on through are to And programs on their at for export but

factor As Wisconsin which customers around, called you very The III for a basis result lived. supply of milk some Class program a And get price when but Class producer than create something to assisted differential, has short in now, and that problem some and are I. There rules is generally this cropping negative should our strong are PPP drive feed many temporary that’s conditions prices marketing be right order a the federal a a fall. plants. that’s in good dairy higher expected SBA of

performance. to developed for Finally, of Financial over provided or I’d Stiteley, on Program Assistance Glen Chief to Officer Food financial most like now Coronavirus rest it a producers. an that the for big And our update guided CFAP boost USDA government the our Glen? has the turn

Glen Stiteley

Dave. Thanks,

outset January on Moving year. rate plan are an to returning this of levels on decided Based though announced a capital. $XX.X offensive to we in debt of X% years. raise we with recently additional in continuing at credit caution Slide with million common Even strong, after sub of fixed our ratios abundance five callable that stock capital very we and with plan we the our our too XX, capital capital metrics, current an quality repurchase this raised

change quarter. XXX,XXX We opportunistic be average always our per this to $XX.XX a management and adjust against know shares of the of our in more have balancing weighted Board from we program, plans the capital COVID-XX. be to currently for no dividend desire about purchased we in plans While as with credit our continuing price as at our share will prudent and the a impacts paid risk profile

$X.X the quarter. see factor it’s how million this for XX, COVID-XX of our totaled is Slide relating we as added specific to you see, made in allowance quarter Turning our also and up We you’ll with qualitative to see will $X.X of one million relationship. this commercial which reserves breakout

continued included which funding growth who we Similar last deposit mitigate the can of to $XXX to where client environment. strong lengthen we growth the million, wholesale Turning XX, rate quarter risks interest maturities overall customers PPP of estimated advantage $XX liquidity quarter, had from to an Slide in and during to we took take our loans. million lower

Turning SBA PPP impacted by to Slide XX yields are rate loans, as was as loan cuts the impact well about the basis points first to XX, margin. in being Fed quarter, which

to incurred We haven’t we the to cut but CDs a cash going have rate have begin We higher impact should excess will invest so rates. forward quarter, aggressively some during deposit third on calling XXXX. into seen rates penalty that interest [Indiscernible] our which net to refinanced We did lower margin our a positive we brokered interest

improvement basis sold loans loans and increased Slide the $XX.X spreads. serviced point to X along Turning million servicing during quarter a with in XX,

as origination to due income an rights well increased quarter as servicing servicing loan the increase this in originations Our spreads.

XX, non-interest related the an quarter to expense and the goodwill in noise due our that first this quarter Slide in quarter. first some to improvement had in impairment of happened we OREO to Turning the write-down in

to as QX education deferred decreased to Salaries SBA well continue cost opportunities. for from benefits see due loans. with clients, the cost employees impact the lower especially PPP traveling as We work in and

in to a loans. quarter Turning Slide we to think what going and little wanted of related PPP the bit and to on happens XX, XXXX the to into fourth is give third color

funded had $X.X at with on As yield deferred with of which a fee of Federal XX We X%, cost had points. largely at the a basis quarter, income our end and – we are deferred of books $X.X funding million our $XXX of million. of the reserve loans loan a million of

cost think on loans quarter the and XX% looking loan on expect of this a $XX September balances quarter Deferred are to forward, on color forgiven remaining we XX% based XXXX. throughout this the a to and fees what through being loan and related with of being interest the Average little assumptions. to the XXXX As forgiven be amortize income in balances bit we will of and about Slide December we help were monthly at giving income amounts the were second could XX% forgiveness we those are as with the fees $XX,XXX for million PPP in basis modeling.

proud Tim’s organization. conclude, we I are reiterate comments would of to So earlier, this some extremely of

our importantly, to role to to the the and people forward Our up supporting safety most same these and third quarter strong quarter and and this customers communities, the we with but performance, navigated I’d And times. knows drove look our questions. like our open play support truly customers to now team We difficult challenge in the local but new dedication passion. them, service their it to attacking in help to


comes question D.A. with first Jeff go Please Today’s Instructions] [Operator from Rulis ahead. Davidson.

Jeff Rulis

the appreciate Certainly morning. deck. Good the Thanks. detail on slide

for that. thanks So,

only XX, the side, right deferral there the that the that that On was there of extensions was beyond out number did that extensions or five it? five or I that requested follow are

John Fillingim

And days John have of all customers – out those are point and XX at we’ve payment ones maturities part those those only Lot days five there an reached for the to of Fillingim. July. allow this June either the of that No, customers back. additional XX to first original have This only relief. point, at again this or those is in come initial are been Yes. XX

Jeff Rulis

at deferral So that declined in of that the has million then? the and/or quarter, number come of $XXX end

John Fillingim

has, yes. It

Jeff Rulis

go on timeline, so, but maybe the any activity, approached before early it. back Got while requested status. deferrals, six on to on those by the maybe see we indication payment folks any then, Okay. that of Ag And a months actual

Timothy Schneider

Tim alluded have. to expensive room. At prices of May low crops the basically them in milk we This It’s the breathing that question. month and that putting didn’t respond price a I’ll saw – environment some providing that very time the very months give that Schneider, heavy Yes. is like given to those to of see of and the Dave through expense they the we proactive point, deferral in guidance to were couple rising just really we six April year ground. regulatory in

period, for have anticipate further to not the would as for this after we’ve said would Yet ask that month many I futures we milk are additional holds. So going a initial extension. borrowers six market today

John Fillingim

government there liquidity. some build This would addition is I the then, has programs rebuild I from in to allowed that has mean, to John Fillingim, some have be just able PPP to several to add working funds, the capital our that, been and dairy – customers deferrals, since there been

we during price pretty milk where And so, our time, dairy with now right the are. as they the mentioned – we with about again, book really support, encouraged is a that’s are where this

of So, on. that book side any if additional we anticipate on need it’s don’t the

Jeff Rulis

Got it. detail. That’s good

margin mentioned, PPP side, a was you XX basis headwind to you the On quarter? point Glen, this I margin think said the

Glen Stiteley

Yes. Correct.

Jeff Rulis

I And pieces we had and from CDs cash of as up moving investments what that put calls in of any of of a to kind and to guess, outlook on here? commentary look Okay. there, type look perm you lot margin, forward, kind if expect into and kind you

Glen Stiteley

Jeff. Yes,

moving predict you parts kind forecast said, getting so is of now. to margin really Just it. to and challenging right It’s our like there many

PPP help what challenged with am our – this and trying So, that going do we that. kind predict that with is quarter. to you to margin are we kind next I it’s have But gave of to especially the detail of maybe

try We So, away deposit impacts. because hoping is help impacted haven’t of rates. rate going everybody. our headwinds, some investments There some still be to to the the aggressively going cut to and cash take fully is cuts

rates. to you it’s to be margins. some recent have should into to predict though, continuing uptick cuts it’s back But the are be look somewhat income. interest on know, just at forgiven are loans going will because going challenging those that deposit pull as to We We –

– to it’s ride, the be rest going of year. the of So, it’s unfortunately, kind but bumpy margin a

Jeff Rulis

we at off it Right. core than we mitigate of but a bit. maybe to little magnitude sort On bit, in – of going side, settle large, was volatility a fair? change in the a jump might that, rates assume safe less to is that saw QX Is on least QX

Glen Stiteley

you introduce PPP Yes. Well, – you that yes, the check it’s if index, once

Jeff Rulis

That PPP?

Glen Stiteley

going it’s going to jump, so. Yes, – be it’s to

Jeff Rulis

I’ll step right. All enough. Fair Thanks. back.


Today’s next with Please Piper question comes Brendan from Sandler. ahead. go Nosal

Brendan Nosal

morning are everybody. good you? How Hey,

Timothy Schneider

you? Good. morning, are How Good Brendan.

Brendan Nosal

Good. Thanks.

follow-up to want Just deferrals. on

deferral end the but of basing of I know So is lower lot telling than your what balance number Just the what at watched quarter kind better in long number such the million, is? because release. was sounds closely $XXX and a Do a it’s was have it the of you kind lot kind commentary, you on a it’s current like are today. number of

Timothy Schneider

we but have on with don’t at on We Brendan, and our this call. number definitely follow-up others can that you fingertips, that

Brendan Nosal

And Okay. the elevated and guys. guess, on you have today are the levels hand, you of Great. higher size I the kind today. course one guess, you want on to hand, on about further other just anything then, need speaking one reserves of I your builds. for I of reserve to the more for back-end are move allowance in of the then

reserving what your out quarters is terms? So, need next you for sense for further over the the as just look few

Timothy Schneider

with one? Glen, in chime do Maybe that you. I’ll start to you there want

Glen Stiteley

right to that’s million Brendan – tell, I we worst. are it’s question for really now. the mean, preparing and tough Yes, dollar just kind of the that’s

again this. have everybody the think load up. in that’s in loading just need looking, reloaded we but I don’t keep the to up. to were We should quarter, we pointing We second up anything As quarter first was

very asset continue to So, just continue closely, we classified going the are deferrals levels. watch to watch the to

for pointed by, be Let’s state tends level I now has Wisconsin encouraged things, on seen hot to this I of we animal and kind a think think, And unemployment couple in bubble kind lower mean, got of off were out to obviously just load But John macroeconomic we I the a Wisconsin perspective, kind are today. get trying we we of haven’t are about and probably during crisis. nationwide. been kind metrics than that bit to different little the continue Losses lower that in. say, a is of a

as load right could rest we planning pretty metrics as some start different provision are So, those now, the of into of direction. of that on the not the in going change with But year. a big obviously quickly

Brendan Nosal

prepayment that this last Yes. does income I quarter? brokered type then, Got back, through net penalty the a through it. The maybe non-interest one And before just understand. step expense our technique it I question flow interest did or flow on here. CD,

Glen Stiteley

interest income. Net

So, interest expense.

Brendan Nosal

questions. for Thanks taking the


Today’s [Operator Stephens. question Instructions] comes next ahead. with Terry go from McEvoy Please

Terry McEvoy

Good morning.

Timothy Schneider

Terry. morning, Good

Terry McEvoy

went for into all the it. appreciate presentation. thanks the I And that work

is, obviously, farmers, or milk in My the dairy, the on prices starting to prices Just farmers move downside anything other at themselves these in lock is with nice price do can to in protect see the your higher question quarter. should direction?

Timothy Schneider

I’ll to Dave, respond that. you let

You are the expert.

Dave Coggins

in product, available, is, also the it that, – not insurance they sure they’ve but an tools our own corn, like and that can’t beans it livestock sort by Terry, Yes. other year’s tools, things about type lock board unlike the plants programs one hedging. margin a in is just into Protection is couple protects that maybe production once to all insurance advisors as and USDA which of addition, to we Bank then allows because it and you have which just work of in milk calls, a contract are margin contract. just division gross one programs the forward insurance the of of the is is, farmers the strategy make price. and Dairy product certainly got the to there a insurance key Many a is in And talked called margin, was are type including and offered there with protect Revenue Program, offered it previous go those number

moving is You futures have to lock the in month-by-month. and market each month

really for good months in Protection, for are the producers. predominant lot those but of – them are pretty position. the But, the Revenue the do they have tools been that and offered So, newer them involved, of tool yes, – didn’t hurt April been do Most by forward, been USDA. there that and most is two able a can that of shape going Dairy May, those to take that’s strategies has

Terry McEvoy

million on Thank relates question cost thoughts that the operating benefits, are quarter that reduced deferred quarter? $X.X salaries expenses, overall, you as there. on and line? specific And expenses maybe the to of to Glen, a third what third your it And the

Glen Stiteley

Terry. Yes.

So, from we I mean, drafted that, loans. should come the of noise the be – – quarter. as out of It’s originations drastic. It originations and because have every this cost salary that expense PPP just will deferred quarter,

we’ve So, trying that Generally, number in kind as of have are out cost many coming obviously, traveling large We – branches. best we less. people as don’t in the hard to people we QX. manage Again, anticipate I really can. don’t been

So, pretty here. overall, into our cost going maintainable, next should quarters couple be the think I

pretty deferred a think the number. off from good I that’s cost, impact So, again, that back

Terry McEvoy

strong business? Thanks. you volume just out pretty and Culver’s, in one on city, there? extending And here, activity of dollars parking Slide does that – How the then, Walmart mean, right plus the I or the the their is one in is million in mentioned XX the Culver’s loans. drive-through by last lines And your into the here. XX lot

Timothy Schneider

This was heard say? I Is limited restaurants. to you service that relative what the

Terry McEvoy

Yes. Correct. Culver’s Slide The XX. restaurants.

Timothy Schneider

from and we with same mile continuously here Culver’s. the lines relationship good a are the those busy Bank There throughout a Walmart. have we’ve heard in that’s Culver’s outlet Yes. half footprint from Yes. a corporate of And the which in a their Culver’s is

we service COVID-XX. to normal of So, they’ve well hear sales XX% COVID the the through their environment. to with were I drive-through They doing that very responded the through to drive-through. XX% continue think And

- well. quite they’ve Thanks. responded So it’s,

Terry McEvoy

Thanks, everyone.


and the the ladies and any you, it I Thank would remarks. gentlemen. question to team management over This turn final back for session. like concludes answer

Timothy Schneider

us Yes. everyone Thank you for today. joining

you call, a solid have appreciate quarter had I follow-up the to to out given And support you relatively questions, any feel further and free you we COVID to us. again. ask if any your we environment. of think I Thank reach


concludes This call. sir. you, Thank today’s conference

your lines disconnect a wonderful day. now may have You and