Highlights

MANITOWOC, Wis., Oct. 22, 2020 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), a community bank headquartered in Manitowoc, Wisconsin, today reported financial results for the third quarter ended September 30, 2020. Net income was $3.4 million, or $0.52 per diluted share, for the third quarter of 2020, compared to net income of $5.7 million, or $0.82 per diluted share, for the third quarter of 2019. For the nine months ended September 30, 2020, net income was $1.0 million, or $0.10 per diluted share, compared to net income of $13.1 million, or $1.89 per share, for the nine months ended September 30, 2019. The net income for the nine months ended September 30, 2020 included a $5.0 million goodwill impairment charge, or $0.76 loss per diluted share in the first quarter of 2020. Excluding that charge, net income for the nine months ended September 30, 2020 would have been $6.0 million, or $0.87 per diluted share.

Tim Schneider, President of County Bancorp, Inc., noted, “We continue to see generally positive credit trends across our loan portfolio and we’re highly encouraged by the momentum of the recovery across our business, as well as across the businesses and communities that we live in and support. Class III milk prices (cwt) continued to improve, ranging from $16.43 to $24.54 during the third quarter of 2020, with fourth quarter futures contracts trading from $17.53 to $19.53, which we believe will improve the credit outlook for many of our dairy borrowers.   Loans in payment deferral associated with our customer pandemic support program declined $100.1 million during the third quarter. Loans rated watch or worse decreased by $13.1 million, which resulted in lower loan loss provision this quarter.”  

Schneider continued, “The investments we’ve made in our agricultural loan offerings are starting to bear fruit, resulting in an increase in overall loan production activity over the last few months. We saw stronger activity in loan sales resulting in increased loan servicing fees and rights during the third quarter 2020, which contributed to improved noninterest income this quarter. Lastly, we continue to be highly encouraged by a strong loan pipeline moving into the fourth quarter 2020, which should continue to support our momentum.”

Loans and Securities

Deposits

Net Interest Income and Margin

The table below presents the effects of changing rates and volumes on net interest income for the periods indicated.

  Three Months Ended September 30, 2020 v.
Three Months Ended June 30, 2020		  Three Months Ended September 30, 2020 v.
Three Months Ended September 30, 2019		 
  Increase (Decrease)
Due to Change in Average		  Increase (Decrease)
Due to Change in Average		 
  Volume  Rate  Net  Volume  Rate  Net 
    
  (dollars in thousands) 
Interest Income:                        
Investment securities $122  $(72) $50  $527  $(150) $377 
Loans  (146)  (391)  (537)  (544)  (2,892)  (3,436)
Federal funds sold and interest-bearing deposits with banks  93   (186)  (93)  (61)  (533)  (594)
Total interest income  69   (649)  (580)  (78)  (3,575)  (3,653)
Interest Expense:                        
Savings, NOW, money market and interest checking $40  $(96) $(56) $431  $(1,238) $(807)
Time deposits  (288)  (464)  (752)  (1,256)  (598)  (1,854)
Other borrowings  12   131   143   150   (1)  149 
FHLB advances  (46)  16   (30)  80   (19)  61 
Junior subordinated debentures  346   —   346   347   48   395 
Total interest expense $64  $(413) $(349) $(248) $(1,808) $(2,056)
Net interest income $5  $(236) $(231) $170  $(1,767) $(1,597)
 

The following table sets forth average balances, average yields and rates, and income and expenses for the period indicated.

  For the Three Months Ended 
  September 30, 2020  June 30, 2020  September 30, 2019 
  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 $256,059  $1,494   2.32% $237,082  $1,444   2.44% $159,091  $1,117   2.81%
Loans (2)  1,083,383   11,594   4.26%  1,098,327   12,131   4.42%  1,126,243   15,030   5.34%
Interest bearing deposits due from other banks  92,701   18   0.08%  64,142   111   0.69%  104,253   612   2.35%
Total interest-earning assets $1,432,143  $13,106   3.64% $1,399,551  $13,686   3.91% $1,389,587  $16,759   4.82%
Allowance for loan losses  (18,641)          (17,844)          (16,209)        
Other assets  86,109           85,716           78,664         
 Total assets $1,499,611          $1,467,423          $1,452,042         
                                     
Liabilities                                    
Savings, NOW, money market, interest checking $406,888  $469   0.46% $379,991  $525   0.55% $326,592  $1,276   1.56%
Time deposits  499,665   2,444   1.95%  553,616   3,196   2.31%  745,032   4,298   2.31%
Total interest-bearing deposits $906,553  $2,913   1.28% $933,607  $3,721   1.59% $1,071,624  $5,574   2.08%
Other borrowings  101,829   158   0.62%  66,910   15   0.09%  804   9   4.60%
FHLB advances  89,622   298   1.32%  103,916   328   1.26%  48,857   237   1.94%
Junior subordinated debentures  65,903   1,082   6.53%  45,090   736   6.52%  44,800   687   6.14%
Total interest-bearing liabilities $1,163,907  $4,451   1.52% $1,149,523  $4,800   1.67% $1,166,085  $6,507   2.23%
Non-interest bearing deposits  147,595           134,271           105,578         
Other liabilities  18,314           16,749           14,801         
 Total liabilities $1,329,816          $1,300,543          $1,286,464         
                                     
Shareholders' equity  169,795           166,880           165,578         
Total liabilities and equity $1,499,611          $1,467,423          $1,452,042         
                                     
Net interest income     $8,655          $8,886          $10,252     
Interest rate spread (3)          2.12%          2.24%          2.59%
Net interest margin (4)          2.40%          2.54%          2.95%
Ratio of interest-earning assets to interest-bearing liabilities  1.23           1.22           1.19         

(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.


Non-Interest Income

 
  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands) 
    
Non-Interest Income                    
Service charges $379  $368  $342  $549  $348 
Gain on sale of loans, net  17   4   38   34   87 
Loan servicing fees  2,054   1,923   1,831   1,778   1,677 
Loan servicing right origination  717   275   289   1,146   1,741 
Income on OREO  —   3   —   54   10 
Gain on sale of securities  101   570   —   —   — 
Referral fees  110   121   17   20   53 
Other  294   237   203   161   171 
Total non-interest income $3,672  $3,501  $2,720  $3,742  $4,087 


 
  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands) 
Loan servicing rights, end of period $17,203  $16,486  $16,211  $12,509  $11,362 
Loans serviced, end of period  797,819   762,058   747,553   751,738   736,823 
Loan servicing rights as a % of loans serviced  2.16%  2.16%  2.17%  1.66%  1.54%
                     
Total loan servicing fees $2,054  $1,923  $1,831  $1,778  $1,677 
Average loans serviced  779,939   754,806   749,646   744,281   716,226 
Annualized loan servicing fees as a % of average loans serviced  1.05%  1.02%  0.98%  0.96%  0.94%
                     

Non-Interest Expense

 
  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands, except per share data) 
Non-Interest Expense                    
Employee compensation and benefits $4,766  $4,594  $5,260  $5,696  $4,735 
Occupancy  321   305   354   417   313 
Information processing  641   663   670   645   683 
Professional fees  555   480   401   371   483 
Business development  305   333   366   335   351 
OREO expenses  47   44   116   59   57 
Writedown of OREO  —   —   1,360   376   — 
Net loss (gain) on sale of OREO  9   —   4   (231)  160 
Depreciation and amortization  295   303   301   319   319 
Goodwill impairment  —   —   5,038   —   — 
Other  728   743   1,148   2,278   567 
Total non-interest expense $7,667  $7,465  $15,018  $10,265  $7,668 
 

Asset Quality

 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands) 
Loans by risk category(1):                    
Sound/Acceptable/Satisfactory/Low Satisfactory $800,451  $798,945  $706,247  $724,444  $771,567 
Watch  185,254   198,044   219,459   216,098   202,615 
Special Mention  1,851   1,856   15,036   9,239   9,346 
Substandard Performing  41,577   47,741   34,179   49,774   71,133 
Substandard Impaired  46,793   40,938   37,515   36,218   26,106 
Total loans $1,075,926  $1,087,524  $1,012,436  $1,035,773  $1,080,767 
Adverse classified asset ratio (2)  42.64%  41.73%  32.35%  39.85%  45.67%
 

(1) Troubled debt restructurings are presented in their internal risk rating category rather than reclassified to substandard impaired. Prior quarters have been reclassified to reflect this change.

(2) This is a non-GAAP financial measure. A reconciliation to GAAP is included at the end of this earnings release.


Non-Performing Assets

 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands) 
Non-Performing Assets:                    
Nonaccrual loans $41,351  $35,456  $32,051  $30,968  $20,776 
Other real estate owned  3,064   2,629   3,247   5,521   7,252 
Total non-performing assets $44,415  $38,085  $35,298  $36,489  $28,028 
                     
Performing TDRs not on nonaccrual $19,036  $21,986  $21,853  $21,784  $28,520 
                     
Non-performing assets as a % of total loans  4.13%  3.50%  3.49%  3.52%  2.59%
Non-performing assets as a % of total assets  2.98%  2.52%  2.61%  2.65%  1.98%
Allowance for loan losses as a % of total loans  1.73%  1.71%  1.73%  1.47%  1.39%
Net charge-offs (recoveries) quarter-to-date $(1) $120  $(62) $(253) $39 
                     

Conference Call

The Company will host an earnings call tomorrow, October 23, 2020, 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 Investors.ICBK.com. 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 23, 2021, by visiting the Company’s website at Investors.ICBK.com/QuarterlyResults.

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, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as, any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic. 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,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands, except per share data) 
Period-End Balance Sheet:                    
Assets                    
Cash and cash equivalents $53,283  $127,432  $21,545  $129,011  $120,845 
Securities available-for-sale, at fair value  298,476   226,971   246,148   158,733   154,962 
Loans held for sale  2,593   11,847   14,388   2,151   4,192 
Agricultural loans  619,617   624,340   642,066   659,725   673,742 
Commercial loans  317,782   328,368   325,310   331,723   360,132 
Paycheck Protection Plan loans  98,421   103,317   —   —   — 
Multi-family real estate loans  35,496   30,439   42,198   41,070   43,487 
Residential real estate loans  4,489   975   2,753   2,888   3,183 
Installment and consumer other  121   85   109   367   223 
Total loans  1,075,926   1,087,524   1,012,436   1,035,773   1,080,767 
Allowance for loan losses  (18,649)  (18,569)  (17,547)  (15,267)  (15,065)
Net loans  1,057,277   1,068,955   994,889   1,020,506   1,065,702 
Other assets  80,426   78,712   78,004   68,378   69,263 
Total Assets $1,492,055  $1,513,917  $1,354,974  $1,378,779  $1,414,964 
                     
Liabilities and Shareholders' Equity                    
Demand deposits $158,798  $149,963  $117,434  $138,489  $117,224 
NOW accounts and interest checking  78,026   81,656   64,873   63,781   56,637 
Savings  11,900   8,369   6,566   15,708   6,981 
Money market accounts  325,900   307,083   237,889   242,539   248,608 
Time deposits  322,992   346,482   364,930   375,100   388,759 
Brokered deposits  101,808   121,503   161,882   166,340   206,474 
National time deposits  50,747   57,997   66,386   99,485   118,070 
Total deposits  1,050,171   1,073,053   1,019,960   1,101,442   1,142,753 
Federal Reserve Discount Window advances  99,693   99,693   —   —   — 
FHLB advances  84,600   93,400   109,400   44,400   44,400 
Subordinated debentures  67,025   61,910   44,896   44,858   44,820 
Other liabilities  20,656   17,336   15,672   16,050   14,239 
Total Liabilities  1,322,145   1,345,392   1,189,928   1,206,750   1,246,212 
                     
Shareholders' equity  169,910   168,525   165,046   172,029   168,752 
Total Liabilities and Shareholders' Equity $1,492,055  $1,513,917  $1,354,974  $1,378,779  $1,414,964 
                     
Stock Price Information:                    
High - Quarter-to-date $22.00  $24.67  $27.19  $27.98  $20.99 
Low - Quarter-to-date $17.04  $17.13  $13.55  $18.76  $16.80 
Market price - Quarter-end $18.80  $20.93  $18.50  $25.63  $19.62 
Book value per share $25.72  $25.18  $24.17  $24.32  $23.89 
Tangible book value per share (1) $25.71  $25.16  $24.15  $23.58  $23.10 
Common shares outstanding  6,294,675   6,375,150   6,496,790   6,734,132   6,727,908 

(1) This is a non-GAAP financial measure. A reconciliation to GAAP is included below.

 
  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands, except per share data) 
Selected Income Statement Data:                    
Interest and Dividend Income                    
Loans, including fees(1) $11,594  $12,009  $12,565  $13,671  $14,977 
Taxable securities  1,293   1,283   1,282   1,106   1,117 
Tax-exempt securities  167   162   6   —   — 
Federal funds sold and other  52   111   225   442   612 
Total interest and dividend income  13,106   13,565   14,078   15,219   16,706 
                     
Interest Expense                    
Deposits  2,914   3,721   4,347   4,781   5,574 
FHLB advances and other borrowed funds  456   343   244   225   246 
Subordinated debentures  1,082   736   706   695   687 
Total interest expense  4,452   4,800   5,297   5,701   6,507 
Net interest income  8,654   8,765   8,781   9,518   10,199 
Provision for loan losses  79   1,142   2,218   (51)  (1,154)
Net interest income after provision for loan losses  8,575   7,623   6,563   9,569   11,353 
                     
Non-Interest Income                    
Services charges  379   368   342   549   348 
Gain on sale of loans, net  17   4   38   34   87 
Loan servicing fees  2,054   1,923   1,831   1,778   1,677 
Loan servicing right origination  717   275   289   1,146   1,741 
Income on OREO  —   3   —   54   10 
Gain on sale of securities  101   570   —   —   — 
Referral fees  110   121   17   20   53 
Other  294   237   203   161   171 
Total non-interest income  3,672   3,501   2,720   3,742   4,087 
                     
Non-Interest Expense                    
Employee compensation and benefits  4,766   4,594   5,260   5,696   4,735 
Occupancy  321   305   354   417   313 
Information processing  641   663   670   645   683 
Professional fees  555   480   401   371   483 
Business development  305   333   366   335   351 
OREO expenses  47   44   116   59   57 
Writedown of OREO  —   —   1,360   376   — 
Net loss (gain) on sale of OREO  9   —   4   (231)  160 
Depreciation and amortization  295   303   301   319   319 
Goodwill impairment  —   —   5,038   —   — 
Other  728   743   1,148   2,278   567 
Total non-interest expense  7,667   7,465   15,018   10,265   7,668 
Income before income taxes  4,580   3,659   (5,735)  3,046   7,772 
Income tax expense (benefit)  1,164   926   (547)  (258)  2,090 
NET INCOME (LOSS) $3,416  $2,733  $(5,188) $3,304  $5,682 
                     
Basic earnings (loss) per share $0.52  $0.40  $(0.79) $0.47  $0.82 
Diluted earnings (loss) per share $0.52  $0.40  $(0.78) $0.47  $0.82 
Dividends declared per share $0.07  $0.07  $0.07  $0.05  $0.05 

(1) Referral fees reclassed to non-interest income to match current classification

 
  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands, except share data) 
Other Data:                    
Return on average assets (1)  0.91%  0.74%  (1.53)%  0.96%  1.57%
Return on average shareholders' equity (1)  8.05%  6.55%  (11.97)%  7.74%  13.73%
Return on average common shareholders' equity (1)(2)  8.25%  6.63%  (12.81)%  7.83%  14.14%
Efficiency ratio (1)(2)  62.64%  63.83%  74.92%  67.65%  52.55%
Equity to assets ratio  11.39%  11.13%  12.18%  12.48%  11.93%
Tangible common equity to tangible assets (2)  10.85%  10.60%  11.58%  11.56%  11.03%
                     
Common Share Data:                    
Net income from continuing operations $3,416  $2,733  $(5,188) $3,304  $5,682 
Less: Preferred stock dividends  80   99   108   117   120 
Income available to common shareholders $3,336  $2,634  $(5,296) $3,187  $5,562 
                     
Weighted average number of common shares issued  7,202,000   7,198,901   7,182,945   7,173,290   7,168,785 
Less: Weighted average treasury shares  882,153   759,294   518,740   443,920   443,920 
Plus: Weighted average non-vested restricted stock units  66,492   65,291   39,785   32,125   32,125 
Weighted average number of common shares outstanding  6,386,339   6,504,898   6,703,990   6,761,495   6,756,990 
Effect of dilutive options  20,915   28,511   49,072   44,630   19,160 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share  6,407,254   6,533,409   6,753,062   6,806,125   6,776,150 

(1) Annualized
(2) This is a non-GAAP financial measure. A reconciliation to GAAP is included below.


Non-GAAP Financial Measures:

  For the Three Months Ended 
  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands) 
Return on average common shareholders' equity reconciliation (1):                    
Return on average shareholders' equity  8.05%  6.55%  (11.97)%  7.74%  13.73%
Effect of excluding average preferred shareholders' equity  0.20%  0.08%  (0.84)%  0.09%  0.41%
Return on average common shareholders' equity  8.25%  6.63%  (12.81)%  7.83%  14.14%
                     
Efficiency ratio (2):                    
Non-interest expense $7,667  $7,465  $15,018  $10,265  $7,668 
Less: goodwill impairment  —   —   (5,038)  —   — 
Less: historical tax credit investment impairment  —   —   —   (1,149)  — 
Less: net loss on sales and write-downs of OREO  (9)  —   (1,364)  (145)  (160)
Adjusted non-interest expense (non-GAAP) $7,658  $7,465  $8,616  $8,971  $7,508 
                     
Net interest income $8,654  $8,765  $8,781  $9,518  $10,199 
Non-interest income  3,672   3,501   2,720   3,742   4,087 
Less: net gain on sales of securities  (101)  (570)  —   —   — 
Operating revenue $12,225  $11,696  $11,501  $13,260  $14,286 
Efficiency ratio  62.64%  63.83%  74.92%  67.65%  52.55%
 


  For the Three Months Ended  For the Nine Months Ended 
  September 30,
2020		  September 30,
2019		  September 30,
2020		  September 30,
2019		 
    
    
  (dollars in thousands, except per share data) 
Adjusted diluted earnings per share(3):                
Net income from continuing operations $3,416  $5,682  $961  $13,148 
Less: preferred stock dividends  (80)  (120)  (286)  (355)
Plus: goodwill impairment  —   —   5,038   — 
Adjusted income available to common shareholders for basic earnings per common share $3,336  $5,562  $5,713  $12,793 
                 
Weighted average number of common shares outstanding  6,386,339   6,756,990   6,531,041   6,742,892 
Effect of dilutive options  20,915   19,160   32,833   19,063 
Weighted average number of common shares outstanding used to calculate diluted earnings per common share  6,407,254   6,776,150   6,563,874   6,761,955 
                 
Adjusted diluted earnings per share $0.52  $0.82  $0.87  $1.89 

(1) Management uses the return on average common shareholders’ equity to review our core operating results and our performance.
(2) In our judgment, the adjustments made to non-interest expense allow investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
(3) In our judgment, the adjustment made to diluted earnings per share allows investors to better assess our income related to core operations by removing the volatility associated with the goodwill impairment which was a one-time, non-cash expense.


Non-GAAP Financial Measures (continued):

  September 30,
2020		  June 30,
2020		  March 31,
2020		  December 31,
2019		  September 30,
2019		 
    
  (dollars in thousands, except per share data) 
Tangible book value per share and tangible common equity to tangible assets reconciliation(1):                    
Common equity $161,910  $160,525  $157,046  $164,029  $160,752 
Less: Goodwill  —   —   —   5,038   5,038 
Less: Core deposit intangible, net of amortization  86   125   171   225   286 
Tangible common equity (non-GAAP) $161,824  $160,400  $156,875  $158,766  $155,428 
Common shares outstanding  6,294,675   6,375,150   6,496,790   6,734,132   6,727,908 
Tangible book value per share $25.71  $25.16  $24.15  $23.58  $23.10 
                     
Total assets $1,492,055  $1,513,917  $1,354,974  $1,378,779  $1,414,964 
Less: Goodwill  —   —   —   5,038   5,038 
Less: Core deposit intangible, net of amortization  86   125   171   603   701 
Tangible assets (non-GAAP) $1,491,969  $1,513,792  $1,354,803  $1,373,138  $1,409,225 
Tangible common equity to tangible assets  10.85%  10.60%  11.58%  11.56%  11.03%
                     
Adverse classified asset ratio(2):                    
Substandard loans $88,370  $88,680  $71,694  $85,992  $97,239 
Other real estate owned  3,064   2,629   3,247   5,521   7,252 
Substandard unused commitments  5,124   3,230   2,840   2,849   991 
Less: Substandard government guarantees  (7,002)  (6,336)  (7,699)  (7,892)  (7,746)
Total adverse classified assets (non-GAAP) $89,556  $88,203  $70,082  $86,470  $97,736 
                     
Total equity (Bank) $200,011  $201,507  $204,089  $204,240  $201,967 
Accumulated other comprehensive loss (gain) on available for sale securities  (8,640)  (8,734)  (5,012)  (2,505)  (3,016)
Allowance for loan losses  18,649   18,569   17,547   15,267   15,065 
Adjusted total equity (non-GAAP) $210,020  $211,342  $216,624  $217,002  $214,016 
Adverse classified asset ratio  42.64%  41.73%  32.35%  39.85%  45.67%

(1) In our judgment, the adjustments made to book value, equity and assets allow investors to better assess our capital adequacy and net worth by removing the effect of goodwill and intangible assets that are unrelated to our core business.
(2) The adjustments made to non-performing assets allow management to better assess asset quality and monitor the amount of capital coverage necessary for non-performing assets.