INSBANK Parent InsCorp Reports Second Quarter Profits

Nashville Lender Produces Consistent Operating Income and Stable Margin

NASHVILLE, Tenn., July 24, 2023 /PRNewswire/ -- Today InsCorp (OTCQX: IBTN), reported a second quarter net profit of $1,776,000 or, $0.62 per share, increasing year-to-date profits to $3,826,000, or $1.33 per share. Net interest income for the quarter totaled $6,234,000, increasing an annualized 7.1% over the most recent quarter. Year-to-date net interest income of $12,359,000 represented a 12.8% increase over the same period for the prior year. Pre-tax operating income for the second quarter, excluding a $306,000 mark-to-market adjustment on hedging activities, was $3,026,000, and represented an increase over the first quarter of 2023. At the bank level, net interest margin for the second quarter was 3.38%, consistent with the first quarter measure of 3.37%. Yield on earning assets increased 29 basis points to 6.11%, while cost of funding increased 45 basis points to 3.05%. "Given historical industry measures of funding costs relative to Fed Funds, and the ease with which depositors can open accounts on their smartphones, we assume that the industry drifts toward commoditization of interest-bearing deposits as rates rise and stay at those levels," said Jim Rieniets, President and CEO of INSBANK. "For these reasons we have historically tried to minimize exposure to long-dated assets and focused on highly efficient operations to sustain earnings as long-term trends will see margin compress, regardless of rate cycles," Rieniets continued.

Lending activities continued during the quarter, with outstanding balances rising to $675 million, which represented an 8.7% annualized growth rate. Real estate loans grew $10 million while C&I loan balances increased $4 million. Deposits also increased during the quarter, rising $28 million, or18.0% annualized.  The mix of deposits continued to experience migration, as depositors sought greater yields by moving funds into money market accounts from non-interest-bearing accounts, and into CD's from money market accounts. While average account balances decreased in non-interest-bearing deposits, the number of active transaction accounts grew at an annualized rate of 12%. "It was a good quarter for on-boarding new clients in all account types, and our existing deposit customers are who we thought they were: informed businesses and consumers who will logically seek to increase their earnings on bank accounts when market rates merit the effort," said Rieniets. "By anticipating customer behaviors, we positioned our balance sheet accordingly."             

Measures of asset quality remain very strong for the company and compare very favorably to recent peer group data. Past due loans as of June 30 were 0.03%, while non-performing assets totaled just 0.18%. There were no charge-offs during the quarter, and the Allowance for Loan and Lease Losses increased to $9,536,000, or 1.41% of total loans. At quarter-end on-balance sheet liquidity was $86 million, which was consistent with the prior quarter, while the estimated uninsured deposits percentage decreased from 24.8% to 19.4%.

Tangible book value increased $0.64 to $22.99 at June 30, which was after semi-annual dividends of $0.17 per share were paid to shareholders, and 22,500 shares of common stock were repurchased at an average price of $19.55. "While a negative mark-to-market adjustment on a series of laddered rate floors impacted GAAP net income, positive AOCI marks on rates-up hedges were of a higher magnitude and contributed to tangible book value growth greater than our earnings per share. We're pleased to have both tangible book value growth as well as a form of insurance against the potential effects of bi-directional volatility," said Rieniets. "These hedging activities are just one component of enterprise risk management, which we employ so that we can continue to move forward in uncertain times."

Highlights of the quarter and year-over-year include:

• Loans grew $78.4 million or 13.1% as of June 30, 2023, compared to June 30, 2022.
• Total assets grew $96.2 million or 13.4% as of June 30, 2023, compared to June 30, 2022.
• Total deposits grew $91.9 million or 16.3% during the 12 months ended June 30, 2023.
• Non-Interest Expense to Total Average Assets was 1.76% for the quarter ended June 30, 2023, slightly lower than 1.79% for the same period in 2022 and compared favorably to the bank's FDIC peer group average of 2.44%.
• Assets per employee remained strong at $14.0 million, compared to the FDIC peer group of $7.0 million.
• Cost of all interest-bearing funding was 3.45% for the three months ended June 30, 2023, increasing from 0.70% for the same period in 2022.
• YTD Net income before taxes, at the bank level, was $6.2 million after excluding interest rate hedges at June 30, 2023, compared to $5.0 million at June 30, 2022.
• Quarterly earnings per share were $0.62 for the quarter ended June 30, 2023, compared to $0.78 for the quarter ended June 30, 2022.
• Annualized return on tangible common equity was 11.9% for the six months ended June 30, 2023.
• The percentage of loans past due and non-accrual to gross loans was 0.18% compared to peer of 0.34%.
• The allowance for loan and lease losses was 1.41%, inclusive of a $493,000 CECL adoption adjustment in the first quarter.
• Estimated uninsured deposits less brokered at June 30 were 19.4% of total deposits.
• Deposits placed in reciprocal programs totaled $54 million as of June 30. The bank maintains an additional capacity of $90 million for placing depositors' funds in reciprocal arrangements. 
• Accumulated Other Comprehensive Income (AOCI) reflected a loss on the securities portfolio substantially offset by gains on interest rate swaps held by the bank for interest rate risk purposes, resulting in a $678,000 increase in AOCI for the six months ended June 30, 2023.
• Tangible book value increased to $22.99 on June 30, 2023, from $20.38 at June 30, 2022.
• Equity to Assets was 11.06% at the bank level
• Consolidated Tangible Common Equity was 8.10%

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)
							June 30,				June 30,
							2023				2022
Assets
Cash and Cash Equivalents							$                         4,237				$                         3,542
Interest Bearing Deposits							39,416				43,927
Securities							53,264				35,087
Loans							675,627				597,190
Allowance for Loan Losses							(9,536)				(8,552)
Net Loans							666,091				588,638
Premises and Equipment, net							12,879				13,167
Bank Owned Life Insurance							13,888				13,557
Restricted Equity Securities							8,758				10,152
Goodwill and Related Intangibles, net							1,091				1,091
Other Assets							13,904				8,172
Total Assets							$                     813,528				$                     717,333
Liabilities and Shareholders' Equity
Liabilities
Deposits
	Non-interest-bearing						$                       75,624				$                       91,175
	Interest-bearing						580,025				472,536
	Total Deposits						655,649				563,711
Federal Home Loan Bank Advances							58,000				58,010
Subordinated Debentures							17,500				17,500
Line of Credit							8,250				5,000
Federal Funds Purchased							-				10,562
Other Liabilities							7,182				2,769
Total Liabilities							746,581				657,552
Shareholders' Equity
	Common Stock						32,906				32,426
	Treasury Stock						(3,857)				(3,180)
	Accumulated Retained Earnings						37,633				30,354
	Accumulated Other Comprehensive Income						265				181
	Total Stockholders' Equity						66,947				59,781
Total Liabilities & Shareholders' Equity							$                     813,528				$                     717,333
Tangible Book Value							$                         22.99				$                         20.38

 

InsCorp, Inc.
Consolidated Statements of Income
(000's)
(Unaudited)
					Three Months Ended				Six Months Ended
					June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Interest Income					$                       11,548		$                         6,849		$                       21,934		$                       12,862
Interest Expense					5,314		966		9,575		1,901
Net Interest Income					6,234		5,883		12,359		10,961
Provision for Loan Losses					140		300		265		445
Non-Interest Income
	Service Charges on Deposit Accounts				51		54		98		111
	Bank Owned Life Insurance				85		80		167		159
	Gain on Security Sales				-		-		-		-
	Other				294		279		592		500
Non-Interest Expense
	Salaries and Benefits				2,232		1,913		4,483		3,948
	Occupancy and equipment				374		402		747		835
	Data Processing				116		167		215		321
	Marketing and Advertising				160		129		276		257
	Other				616		548		1,237		1,115
Net income from Operations					3,026		2,837		5,993		4,810
Gain (Loss) on Interest Rate Hedges					(304)		323		(238)		2,839
Interest Expense-Holding Co. Debt					380		238		733		471
Income Before Income Taxes					2,342		2,922		5,022		7,178
Income Tax Expense					(566)		(675)		(1,196)		(1,727)
Net Income					$                         1,776		$                         2,247		$                         3,826		$                         5,451
Return on Weighted Average Common Shares					$                           0.62		$                           0.78		$                           1.33		$                           1.90

 

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SOURCE INSBANK