County Bancorp Inc (NASDAQ:ICBK) Q4 2019 Earnings Conference Call - Final Transcript
Jan 24, 2020 • 09:30 am ET
Thank you. [Operator Instructions] And the first question will come from Brendan Nosal with Piper Sandler. Please go ahead.
Hey, good morning guys, how are you?
Good Brendan, how are you?
Good, thanks. Just want to start off here on the two classified loans that moved into non-accrual in the quarter. I guess just one any more detail you can provide and color as to kind of what drove that. And then I guess specifically on the dairy credit, I guess I was a little surprised to see the negative migration, just given that we have higher milk prices today. So what was kind of the tipping point on that credit?
Yes, this particular credit was a credit that expanded right after the prices started to decline and had some challenges with the operation throughout this lower milk price environment. And ultimately has decided that they are going to file Chapter 12 bankruptcy, which we feel is a good thing as they should be able to flush their accounts payable and hopefully give them some longer-term viability.
This particular deal has strong FSA guarantee usage and we do not expect any true loss in this operation, if it should fail. But we're much more confident that that operation will be able to succeed moving forward.
All right, perfect. Thank you. And then on credit more broadly, I guess there were some mixed signals this quarter. On the one hand, no charge-offs, no provision and classified assets improved. And then on the other hand, negative migration within classified into non-accrual. So I guess at a top level, just update us how you're thinking on credit more broadly just as we contemplate these crosscurrents.
Well it's -- obviously, we're in a much better milk price environment. The particular credit that you asked about, I think is potentially an outlier. But there are some operations that have dug themselves some fairly big holes and need to be able to dig out at this point. We think pretty optimistically about the future of our operations and we think we're going to see continued improvement in our portfolio.
We're already seeing some early reviews that are coming through in the numbers for 2019 are much -- looking much more solid from a performance perspective. So we feel pretty good about it. We do have some additional activity that's occurring in our ORE bucket that should see some more sales that should occur this first quarter. And in overall, we're feeling much better about the portfolio at this point, especially if milk prices are maintained.
All right. Fantastic. That's helpful. And then last one from me and then I'll step back. Just thinking about the margin you alluded to, putting some cash to work throughout the year, which could result in some expansion. Just curious in terms of magnitude, what do you think that opportunity can do for the NIM?
Brendan, this is Glen. So I think it's going to be probably about a 15 basis point