County Bancorp Inc (NASDAQ:ICBK) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 09:30 am ET


County Bancorp Inc (NASDAQ:ICBK) Q4 2019 Earnings Conference Call - Final Transcript


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Tim Schneider

$6 million and one classified commercial customer totaling $3.9 million, both split into non-accrual. But this was offset by the pay-off of -- on one commercial classified loan, as well as several ORE -- OREO sales.

Now I'll turn the call over to Glen to walk through our financials.

Glen Stiteley

Thanks, Tim.

Moving to Slide 5. As we announced during our fourth quarter 2018 conference call, we continue to focus on deleveraging our balance sheet in the fourth quarter of '19 by continuing to use loan participation sales with servicing income attached. This initiative has allowed us to continue to maintain profitability while also improving the funding mix on the right side of our balance sheet.

Increased loans sold and serviced by $14.9 million this quarter. This combined with $17.8 million in client deposit growth allowed us to continue to reduce wholesale funding by $58.7 million this quarter.

As Tim noted, we are really pleased with the change in our funding mix, but we are still very focused on growing client deposits. Wholesale funding is now down $248.1 million and client deposits were up $81.2 million in 2019. Our client deposit funding now represents 73% of total funding, compared to 57%, a year ago.

We believe our overall focus on reducing wholesale funding will [Indecipherable] 2020. Now in the future, we're going to look to utilize wholesales, liquidity and interest rate management tool and not [Phonetic] primary growth tool. We currently like the optionality of callable brokered CDs, three-year -- three-month callable brokered are at about 1.85% compared to one-year bonds at 1.7%. FHLB advances are at 1.79% for one-year and 1.73% for three years. We really like the optionality with the lower cost of call protection that's currently offered.

Turning to Slide 6, our net interest income decreased this quarter due to non-accrual activity on the loan side as well as continued loan participations moving balances off our balance sheet. The Fed rate cut in Q4 also impacted overall loan yields. However, we were able to continue to cut rates offered in all deposit products with an immediate impact to interest bearing accounts, such as NOW, savings and money market. We also had positive impacts to the net interest income from our reduction of national CDs and brokered deposits during the quarter.

Turning to Slide 7. Loans sold and serviced increased $14.9 million this quarter as I mentioned, which helped our loan servicing fee income increase to $1.8 million for this quarter. We were also able to increase our loan servicing spread from 94 basis points to 96 basis points in the fourth quarter. Our increase in loans sold and serviced in the fourth quarter also attributed to $1.1 million of loan servicing right origination income.

Turning to Slide 8. During the quarter, we had a historical tax credit, which resulted in a $0.3 million positive impact to net income. The accounting for this required us to record a $1.4 million in credits to income tax expense, which was off