icbk-ex991

Manitowoc, Wisconsin, October 17, 2019 – 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.”

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.

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 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

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 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 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

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.

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.

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.

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.

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.

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

	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

	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

	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	%