INSBANK Parent InsCorp Reports First Quarter Results and Declares Quarterly Cash Dividend

Rhea-AI Summary

InsCorp (IBTN) reported a net profit of $1,763,000 in Q1 2024, with an EPS of $0.61, down from $2,267,000 and $0.79 respectively in Q4 2023. ROA was 1.06% and ROE 9.5% in Q1 2024. Revenue declined slightly to $6,170,000, while the net interest margin decreased to 2.94% in the same period. The bank declared a quarterly cash dividend of $0.10 per share, representing a 17.6% increase from 2023.

Positive

• Strong tangible book value growth of 9.5% annually.

• Increased loan yields and loan originations on a year-over-year basis.

• Healthy asset quality measures with an allowance for credit losses above peer levels.

• Decline in nonperforming assets except for assisted living and memory care sector.

• Approval of a quarterly dividend with a 17.6% increase from 2023.

Negative

• Decline in revenue by 0.5% year-over-year in Q1 2024.

• Decrease in net interest margin to 2.94% in Q1 2024.

• Reduction in loan growth due to elevated pay-off activity.

• Increase in CDs cost impacting the net interest margin.

• Increase in nonperforming assets to 1.11% of loans compared to 0.32% a year ago.

NASHVILLE, Tenn., May 7, 2024 /PRNewswire/ -- InsCorp (OTCQX: IBTN) reported a net profit of $1,763,000, or $0.61 per share, in the first quarter of 2024 compared to $2,267,000, or $0.79 per share, in the fourth quarter of 2023 and respective levels of $2,050,000 and $0.71 for the first quarter of 2023. InsCorp generated a ROA of 1.06% and ROE of 9.5% in the first quarter of 2024 compared to 1.28% and 11.1%, respectively, in the first quarter of 2023.

Excluding gains and losses from hedging activities, operating EPS of $0.68 in the first quarter of 2024 was consistent with $0.69 in the year ago quarter. A higher tax rate in the first quarter of 2024 adversely affected EPS in the quarter by $0.10 compared to the fourth quarter of 2023 and by $0.01 compared to the first quarter of 2023.  Excluding gains and losses from hedging activities, pretax income of $2.6 million in the first quarter of 2024 was 1% higher than the previous quarter and 1% lower than the year ago quarter. The mark-to-market pretax adjustment to interest rate floor contracts was ($252,000) in the first quarter of 2024 in contrast to $53,000 in the fourth quarter of 2023 and $66,000 in the first quarter of 2023, which reflected changes in the futures market for interest rates during the quarter. These hedging contracts remain as an insurance policy against an unexpected drop in rates.

As of March 31, 2024, construction and development loans decreased to approximately 77% of total capital and commercial real estate declined to 285% of capital, positioning the bank to take advantage of growth opportunities in the vibrant middle-Tennessee market. The decline in these ratios was due in part to payoffs and paydowns as well as growth in capital of 43% over the past three years, which exceeded the growth in non-farm, non-residential real estate of 28% over the same period.  "While not apparent from a snapshot of quarter-end loan and deposit balances, our bankers were busy building and moving our pipelines forward," said Jim Rieniets, President & CEO of INSBANK. "Our business owner clients continue to adjust to the new norm of interest rates, as they have for the last two years. For many this means selling assets or re-deploying liquid assets into their enterprises, and this has the effect of imparting some volatility to the trajectory of our growth."

Like the fourth quarter of 2023, the bank continued to experience elevated pay-off activity in the first quarter of 2024, which restrained loan growth to 2.5% year-over-year and -2.4% on a linked-quarter annualized basis. Medquity, INSBANK's healthcare business, continues to provide solid growth and diversification given its national focus and reduced sensitivity to economic and real estate cycles; specifically, Medquity reported loan growth of 10% on a year-over-year basis and linked-quarter annualized basis to $206 million, lifting the segment's loans to 30% of total loans.

In the first quarter, bank-wide loan originations returned to a more seasonally typical pattern, as originations of $23 million compared to $48 million in the fourth quarter of 2023 and $26 million in the third quarter of 2023. The pipeline increased to $67 million as of March 31, 2024, compared to $53 million a quarter earlier. "With a business model emphasizing efficiencies, we remain bullish on opportunity in this environment, albeit with a cautious and steady hand," Rieniets continued. "In addition to budgeted growth, this year will see our company investing in more talent, pursuant to our plans for continued development of business lines such as healthcare and private banking, as well as new hires to accelerate leveraging technologies." 

Revenue of $6,170,000 in the first quarter of 2024 declined 0.5% year-over-year, as a decline in net interest income of 3% to $5,593,000 in the quarter was mostly offset by noninterest income growth of 35% to $577,000 in the quarter. Expense growth of 3% to $3,559,000 primarily consisted of FDIC expense, as slight increases in personnel and occupancy expenses were mostly offset by a decrease in other expense.

The bank-level net interest margin of 2.94% in the first quarter compared to 3.26% in the fourth quarter of 2023 and 3.44% in the first quarter of 2023. Although the Company benefited from an increase in loan yields of 85 basis points on a year-over-year basis and of 7 basis points on a linked-quarter basis to 6.73% in the quarter, the cost of CDs increased 154 basis points on a year-over-year basis and 21 basis points on a linked-quarter basis to 4.65% in the first quarter. Also, a decrease in the mix of interest-bearing cash relative to investment securities adversely affected the margin in the quarter. Going forward, the net interest margin will likely reflect pressure for another quarter or so given the change in deposit mix favoring certificates of deposit and higher renewal rates on certificates of deposit. Given current interest rate expectations, these headwinds will be partially offset by improving loan yields.

Asset quality measures remain healthy, with net charge offs of 0.00% recorded during the quarter, which was unchanged compared to the fourth quarter and first quarter of 2023. The allowance for credit losses represented 1.37% of loans, which remained above peer. Loans 30-days past due represented 0.01% of loans, as of March 31, compared to 0.03% a quarter ago and 0.05% a year ago. Provision for credit losses totaled $25,000 in the quarter compared to $150,000 in the fourth quarter and $125,000 in the year ago quarter. The aggregate level of watch list loans continued to decline in the most recent quarter and has returned to pre-pandemic levels.

Relative to the prior year, nonperforming assets increased to 1.11% of loans versus 0.32% a year ago, which reflected a 93 basis point contribution from the migration of one real-estate secured credit from the bank's watch list. Virtually all nonperforming assets are real estate-secured, for which specific reserves are relatively low. "Our bank is known to have a robust CRE risk management program, and those portfolio analytics continue to demonstrate durability," said Rieniets. "Thus far in this cycle, the only observable sector in our portfolio experiencing stress is assisted living and memory care, where the pandemic reduced occupancy while increasing healthcare labor costs. Fortunately, both trends seem to be improving for operators in the sector, and this segment only accounts for 3.6% of our loan portfolio," Rieniets continued.

Measures of liquidity risk remain healthy, as on-balance sheet liquidity ended the quarter at approximately $110 million compared to $116 million a quarter ago and $86 million a year ago.  Estimated uninsured deposits were approximately 21% of total deposits at quarter-end compared to 25% a year ago. Balance sheet liquidity and $120 million in reciprocal deposit capacity provide ample risk mitigation strategies.

Tangible book value increased 9.5%, or $2.13 per share, on a year-over-year basis, and 9.2% annualized, or $0.55 per share, on a linked-quarter basis to $24.48, as of March 31, 2024. IBTN's tangible common equity ratio increased to 8.52%, as of March 31, 2024, versus 8.23% a quarter ago and 8.20% a year earlier. Accumulated Other Comprehensive Income was ($1,005,000), or approximately 1.1% of bank-level tier-1 capital of $94,652,000. INSBANK remains well capitalized with a tier-1 leverage ratio of 11.55%, a common equity tier-1 capital ratio of 12.63%, and a total risk-based capital ratio of 13.86%. INSBANK's risk-based capital ratios increased by approximately 80 basis points on a year-over-year basis and by more than 30 basis points on a linked-quarter basis.

With continued growth and positive trajectory, the Company's board of directors recently approved the payment of a quarterly dividend. Shareholders of record on May 17, 2024, will receive a dividend of $0.10 per common share payable on June 7, 2024. The annualized quarterly dividend rate of $0.40 represents an increase in the annualized rate of 17.6% compared to dividends paid of $0.34 per share in 2023. "While we remain focused on deploying capital through organic growth of our community banking and healthcare focused businesses, we are pleased to provide an attractive cash dividend to our shareholders, too," Rieniets stated.

About INSBANK 

Since 2000, INSBANK has offered its clients highly personalized service provided by experienced relationship managers, while positioning itself as an innovator, utilizing technologies to deliver those services efficiently and conveniently.  In addition to its commercial focused operation, INSBANK operates three divisions, Medquity, TMA Medical Banking and Finworth.  Medquity offers healthcare banking solutions to physicians, partnerships, and practices nationwide, while TMA Medical Banking provides banking services specifically to members of the Tennessee Medical Association. Finworth offers nationally available virtual private client services for interest bearing deposits.  INSBANK is owned by InsCorp, Inc., a Tennessee bank holding company. The bank is headquartered in Nashville at 2106 Crestmoor Road and has an office in Brentwood at 5614 Franklin Pike Circle. For more information, please visit www.insbank.com.

InsCorp, Inc.
Consolidated Balance Sheets
(000's)
(unaudited)
					March 31,		December 31,		March 31,
					2024		2023		2023
Assets
Cash and Cash Equivalents					$                              4,521		$                                7,688		$                              4,765
Interest Bearing Deposits					44,920		49,757		31,359
Securities					60,149		58,162		50,101
Loans					677,457		681,558		661,226
Allowance for Credit Losses					(9,281)		(9,126)		(9,396)
Net Loans					668,176		672,432		651,830
Premises and Equipment, net					12,620		12,715		12,918
Bank Owned Life Insurance					14,160		14,065		13,803
Restricted Equity Securities					9,349		8,890		8,577
Goodwill and Related Intangibles, net					1,091		1,091		1,091
Other Assets					13,406		12,290		12,303
Total Assets					$                          828,392		$                           837,090		$                          786,747
Liabilities and Shareholders' Equity
Liabilities
Deposits
	Non-interest-bearing				$                            75,966		$                             70,417		$                            85,274
	Interest-bearing				595,666		615,779		542,163
	Total Deposits				671,632		686,196		627,437
Federal Home Loan Bank Advances					45,000		45,000		62,000
Subordinated Debentures					17,500		17,348		17,500
Notes Payable					8,750		8,750		8,000
Other Liabilities					13,922		9,939		6,306
Total Liabilities					756,804		767,233		721,243
Shareholders' Equity
	Common Stock				33,293		33,112		32,775
	Treasury Stock				(3,882)		(3,869)		(3,417)
	Accumulated Retained Earnings				43,182		41,714		36,354
	Accumulated Other Comprehensive Income				(1,005)		(1,100)		(208)
	Total Stockholders' Equity				71,588		69,857		65,504
Total Liabilities & Shareholders' Equity					$                          828,392		$                           837,090		$                          786,747
Tangible Book Value					$                              24.48		$                                23.93		$                              22.35

 

InsCorp, Inc.
Consolidated Statements of Income
(000's)
(Unaudited)
					Three Months Ended		Twelve Months Ended		Three Months Ended
					March 31, 2024		December 31, 2023		March 31, 2023
Interest Income					$                            12,563		$                             46,208		$                            10,386
Interest Expense					6,530		20,778		4,261
Net Interest Income					6,033		25,430		6,125
Provision for Credit Losses					25		315		125
Noninterest Income
	Service Charges on Deposit Accounts				67		252		47
	Bank Owned Life Insurance				95		345		82
	Other				415		1,379		298
Noninterest Expense
	Salaries and Benefits				2,301		9,434		2,251
	Occupancy and equipment				393		1,562		373
	Data Processing				94		382		99
	Marketing and Advertising				119		519		116
	Other				652		2,576		621
Net Income from Operations					3,026		12,618		2,967
Gain in Interest Rate Hedges					(252)		(432)		66
Interest Expense-Subordinated Debt					440		1,509		353
Income Before Income Taxes					2,334		10,677		2,680
Income Tax Expense					(571)		(2,273)		(630)
Net Income					$                              1,763		$                                8,404		$                              2,050
Return on Weighted Average Common Shares					$                                 0.61		$                                  2.92		$                                 0.71

 

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SOURCE INSBANK

FAQ

What was InsCorp's net profit in the first quarter of 2024?

InsCorp reported a net profit of $1,763,000 in Q1 2024.

What was the EPS in the first quarter of 2024 compared to the fourth quarter of 2023?

The EPS in Q1 2024 was $0.61, down from $0.79 in Q4 2023.

What was the ROA and ROE in the first quarter of 2024?

The ROA was 1.06% and ROE was 9.5% in Q1 2024.

What was the revenue in the first quarter of 2024 compared to the previous year?

The revenue was $6,170,000, a 0.5% decline year-over-year in Q1 2024.

What was the quarterly cash dividend declared by InsCorp?

InsCorp declared a quarterly cash dividend of $0.10 per common share for shareholders of record on May 17, 2024.

How much did the tangible book value increase year-over-year?

The tangible book value increased by 9.5% annually for InsCorp.