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Isabella Bank Corporation Announces First Quarter 2022 Earnings

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Isabella Bank Corporation (OTCQX: ISBA) reported solid first-quarter earnings for 2022, posting a net income of $4.7 million and earnings per share of $0.63. Key highlights include a 3.1% growth in deposits, totaling $1.8 billion, and a strong credit quality with nonperforming loans at 0.06% of gross loans. Net interest income improved by $278,000 year-over-year, despite a decline in interest income. The corporation maintained a 4.18% annualized cash dividend yield, reflecting its commitment to shareholder returns.

Positive
  • Net income of $4.7 million for Q1 2022.
  • 3.1% growth in deposits to $1.8 billion.
  • Nonperforming loans at only 0.06% of gross loans.
  • Annualized cash dividend yield of 4.18%.
Negative
  • Net income decreased from $5.4 million in Q1 2021.
  • Gross loans declined by $82.7 million, largely from a reduction in mortgage broker advances.
  • Increased noninterest expenses by $503,000 due to higher compensation and community spending.

Solid start to 2022 with net income of $4.7 million

MT. PLEASANT, Mich., April 21, 2022 /PRNewswire/ -- Isabella Bank Corporation (the "Corporation") (OTCQX: ISBA) has released solid earnings results for the first quarter of 2022. The Corporation reported net income of $4.7 million and earnings per common share of $0.63.

First quarter 2022 highlights include:

  • Net interest income improved, compared to first quarter 2021, as interest expense declined 39%.
  • Credit quality remained strong, with nonperforming loans representing only 0.06% of gross loans.
  • Deposits grew $53.8 million, or 3.1% compared to December 31, 2021, largely driven by new customer accounts.
  • Shareholders earned a cash dividend of $0.27 per share, with an annualized dividend yield of 4.18%, as of March 31, 2022.

"We have started the year with solid financial results for the first quarter," said Jae A. Evans, President & CEO. "As we look ahead, there are concerns about the impact inflation and events in other parts of the world may have on the financial services industry. However, as the Federal Reserve considers additional interest rate hikes throughout 2022 and beyond, we expect the yield on loans and investments to rise, enhancing the Bank's net interest margin.

"Amidst this uncertainty, our longstanding focus remains the same - invest in our communities, and in advanced technology that enhances the customer experience while actively pursuing strategies that reward our shareholders with an attractive dividend," Evans added.

Operating Results

Net income: Net income for the first quarter 2022 was $4.7 million, compared to $5.4 million in the first quarter of 2021, largely as the result of changes in loan provision and mortgage originations, as described below.

Net interest income: Net interest income for first quarter 2022 increased $278,000 compared to the same period in 2021. While interest income declined $528,000 due to low interest rates and a decrease in the Paycheck Protection Program fee income, interest expense also decreased $806,000, or 38.6%, largely due to a reduction in higher-cost borrowings over the last year. During the first quarter, a $37,000 provision for loan losses expense was recorded, compared to a $523,000 provision reversal in the first quarter 2021 as our initial concerns over potential credit quality issues related to the onset of the pandemic did not materialize.

Noninterest income and expenses: Noninterest income increased $15,000 during the first quarter of 2022, compared to the same period in 2021. A $514,000 increase in service charges and fees nearly offset a $521,000 reduction in gain on sale of loans as residential mortgage originations declined by over 60%. Noninterest expenses for the first quarter increased $503,000, as a result of increased compensation and professional services as well as donations and community relations expenses as charitable organizations resumed activities and events.

Net yield on interest earning assets: The Corporation's fully taxable equivalent net yield on interest earning assets was 2.86% for the first quarter of 2022, flat with the fourth quarter of 2021 and down from 2.98% compared to  the same period in 2021.  As rates began to decline in 2020, the implementation of strategic programs focused on improving the net yield, which included enhanced loan pricing and a reduced reliance on higher-cost borrowed funds and brokered deposits as funding sources, helped to minimize further declines in our net interest margin. If rates rise as expected, margin improvement is likely.

Balance Sheet

Assets: The Corporation had $2.1 billion in total assets and $2.8 billion of assets under management as of March 31, 2022.  Managed assets included loans sold and serviced of $275.6 million and $501.8 million in investment and trust assets managed by Isabella Wealth.

Loans: Loans outstanding as of March 31, 2022 total $1.2 billion.  During the first quarter, gross loans declined $82.7 million, largely driven by a $72 million reduction in advances to mortgage brokers, which is included within the commercial loan portfolio.

Deposits: Total deposits climbed to $1.8 billion as of March 31, 2022, an increase of $53.8 million, or 3.1%, since December 31, 2021.  Growth in the first quarter is largely the result of new customer accounts.

Capital: The Bank is considered a "well-capitalized" institution, as its capital ratios exceeded the minimum designated requirements. As of March 31, 2022, the Bank's Tier 1 Leverage Ratio was 8.74%, Tier 1 Capital Ratio was 13.83% and Total Capital Ratio was 14.56%. The minimum requirements to be considered well capitalized are a Tier 1 Leverage Ratio of 5.0%, Tier 1 Capital Ratio of 8.0% and Total Capital Ratio of 10.0%.

Dividend: During the first quarter of 2022, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation's closing stock price of $25.85 as of March 31, 2022, the annualized cash dividend yield was 4.18%.

About the Corporation

Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state chartered community bank headquartered in Mt. Pleasant, Michigan. Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 119 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services through Isabella Wealth. The Bank has locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.

For more information about Isabella Bank Corporation, visit the investors link at www.isabellabank.com. Isabella Bank Corporation common stock is quoted on the OTCQX tier of the OTC Markets Group, Inc.'s electronic quotation system (www.otcmarkets.com) under the symbol "ISBA." The Corporation's market maker is Boenning & Scattergood, Inc. (www.boenninginc.com) and its investor relations firm is Renmark Financial Communications, Inc. (www.renmarkfinancial.com).

Forward-Looking Statements

This press release includes forward-looking statements. To the extent that the foregoing information refers to matters that may occur in the future, please be aware that such forward-looking statements may differ materially from the actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections titled "Risk Factors" and "Forward Looking Statements" set forth in Isabella Bank Corporation's filings with the Securities and Exchange Commission, which are available from the Securities and Exchange Commission's Public Reference facilities and from its website at www.sec.gov.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)



March 31
2022


December 31
2021

ASSETS




Cash and cash equivalents




     Cash and demand deposits due from banks

$           18,611


$           25,563

     Interest bearing balances due from banks

142,575


79,767

          Total cash and cash equivalents

161,186


105,330

Available-for-sale securities, at fair value

544,919


490,601

Mortgage loans available-for-sale

969


1,735

Loans




     Commercial

727,614


807,439

     Agricultural

88,169


93,955

     Residential real estate

328,559


326,361

     Consumer

74,029


73,282

          Gross loans

1,218,371


1,301,037

          Less allowance for loan and lease losses

9,204


9,103

               Net loans

1,209,167


1,291,934

Premises and equipment

24,339


24,419

Corporate owned life insurance policies

32,341


32,472

Equity securities without readily determinable fair values

15,095


17,383

Goodwill and other intangible assets

48,298


48,302

Accrued interest receivable and other assets

24,619


19,982

                                 TOTAL ASSETS

$      2,060,933


$      2,032,158

LIABILITIES AND SHAREHOLDERS' EQUITY




Deposits




     Noninterest bearing

$         461,473


$         448,352

     Interest bearing demand deposits

387,187


364,563

     Certificates of deposit under $250 and other savings

843,341


818,841

     Certificates of deposit over $250

72,160


78,583

          Total deposits

1,764,161


1,710,339

Borrowed funds




     Federal funds purchased and repurchase agreements

51,353


50,162

     FHLB advances

10,000


20,000

     Subordinated debt, net of unamortized issuance costs

29,181


29,158

          Total borrowed funds

90,534


99,320

Accrued interest payable and other liabilities

10,396


11,451

               Total liabilities

1,865,091


1,821,110

Shareholders' equity




     Common stock — no par value 15,000,000 shares authorized; issued and outstanding
     7,542,758 shares (including 111,482 shares held in the Rabbi Trust) in 2022 and
     7,532,641 shares (including 105,654 shares held in the Rabbi Trust) in 2021

129,189


129,052

     Shares to be issued for deferred compensation obligations

4,691


4,545

     Retained earnings

78,295


75,592

     Accumulated other comprehensive income (loss)

(16,333)


1,859

               Total shareholders' equity

195,842


211,048

                    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$      2,060,933


$      2,032,158

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)



Three Months Ended 

 March 31


2022


2021

Interest income




     Loans, including fees

$           12,378


$           13,097

     Available-for-sale securities




          Taxable

1,615


1,165

          Nontaxable

660


865

     Federal funds sold and other

109


163

               Total interest income

14,762


15,290

Interest expense




     Deposits

936


1,668

     Borrowings




          Federal funds purchased and repurchase agreements

9


16

          FHLB advances

72


405

          Subordinated debt, net of unamortized issuance costs

266


               Total interest expense

1,283


2,089

               Net interest income

13,479


13,201

Provision for loan losses

37


(523)

               Net interest income after provision for loan losses

13,442


13,724

Noninterest income




     Service charges and fees

2,209


1,695

     Wealth management fees

754


696

     Net gain on sale of mortgage loans

224


745

     Earnings on corporate owned life insurance policies

210


186

     Gains from redemption of corporate owned life insurance policies

52


146

     Other

98


64

               Total noninterest income

3,547


3,532

Noninterest expenses




     Compensation and benefits

6,074


5,877

     Furniture and equipment

1,450


1,373

     Occupancy

966


945

     Other

2,830


2,622

               Total noninterest expenses

11,320


10,817

               Income before federal income tax expense

5,669


6,439

Federal income tax expense

935


1,041

               NET INCOME

$              4,734


$              5,398

Earnings per common share




     Basic

$                0.63


$                0.68

     Diluted

$                0.62


$                0.67

Cash dividends per common share

$                0.27


$                0.27

 

AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED)
(Dollars in thousands)

The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB) restricted equity holdings are included in other interest earning assets.


Three Months Ended


March 31, 2022


March 31, 2021


Average

Balance


Tax

Equivalent

Interest


Average

Yield /

Rate


Average

Balance


Tax

Equivalent

Interest


Average

Yield /

Rate

INTEREST EARNING ASSETS












     Loans

$    1,235,788


$         12,378


4.01  %


$    1,201,693


$         13,097


4.36  %

     Taxable investment securities

421,503


1,615


1.53  %


190,450


1,165


2.45  %

     Nontaxable investment securities

101,604


920


3.62  %


131,850


1,194


3.62  %

     Fed funds sold

3



0.06  %


2



0.01  %

     Other

163,353


109


0.27  %


295,104


163


0.22  %

          Total earning assets

1,922,251


15,022


3.13  %


1,819,099


15,619


3.43  %

NONEARNING ASSETS












     Allowance for loan losses

(9,128)






(9,833)





     Cash and demand deposits due from banks

26,839






28,944





     Premises and equipment

24,461






25,151





     Accrued income and other assets

102,805






113,101





          Total assets

$    2,067,228






$    1,976,462

















INTEREST BEARING LIABILITIES












     Interest bearing demand deposits

$       383,474


$                50


0.05  %


$       315,189


$                77


0.10  %

     Savings deposits

615,335


159


0.10  %


531,302


149


0.11  %

     Time deposits

290,146


727


1.00  %


367,892


1,442


1.57  %

     Federal funds purchased and repurchase agreements

49,058


9


0.07  %


54,145


16


0.12  %

     FHLB advances

14,889


72


1.93  %


90,000


405


1.80  %

     Subordinated debt, net of unamortized issuance costs

29,166


266


3.65  %




—  %

          Total interest bearing liabilities

1,382,068


1,283


0.37  %


1,358,528


2,089


0.62  %

NONINTEREST BEARING LIABILITIES












     Demand deposits

458,343






383,189





     Other

16,898






13,910





     Shareholders' equity

209,919






220,835





          Total liabilities and shareholders' equity

$    2,067,228






$    1,976,462





Net interest income (FTE)



$         13,739






$         13,530



               Net yield on interest earning assets (FTE)





2.86 %






2.98 %

 

SELECTED FINANCIAL DATA (UNAUDITED)

(Dollars in thousands except per share amounts)



Three Months Ended


March 31
2022


March 31
2021


March 31
2020

PER SHARE






     Basic earnings

$            0.63


$            0.68


$            0.39

     Diluted earnings

$            0.62


$            0.67


$            0.38

     Dividends

$            0.27


$            0.27


$            0.27

     Tangible book value

$          19.56


$          21.35


$          21.10

     Quoted market value






     High

$          26.00


$          22.50


$          24.50

     Low

$          24.50


$          19.45


$          16.00

     Close (1)

$          25.85


$          21.75


$          18.00

     Common shares outstanding (1)

7,542,758


7,958,883


7,921,291

Average number of common shares outstanding

7,533,711


7,969,462


7,892,421

Average number of diluted common shares outstanding

7,639,688


8,088,524


8,055,607

PERFORMANCE RATIOS






     Return on average total assets

0.92 %


1.09 %


0.68 %

     Return on average shareholders' equity

9.02 %


9.78 %


5.68 %

     Return on average tangible shareholders' equity

11.72  %


12.53 %


7.35 %

     Net interest margin yield (FTE)

2.86 %


2.98 %


2.98 %

ASSETS UNDER MANAGEMENT (1)






     Loans sold with servicing retained

$      275,556


$      298,514


$      257,285

     Assets managed by Isabella Wealth

$      501,829


$      454,459


$      359,968

     Total assets under management

$  2,838,318


$  2,768,405


$  2,433,157

ASSET QUALITY (1)






     Nonaccrual status loans

$             747


$          4,532


$          6,913

     Performing troubled debt restructurings

$        22,335


$        28,947


$        20,228

     Foreclosed assets

$             187


$             384


$             564

     Net loan charge-offs (recoveries)

$              (64)


$              (50)


$                30

     Nonperforming loans to gross loans

0.06 %


0.38 %


0.59 %

     Nonperforming assets to total assets

0.05 %


0.26 %


0.43 %

     Allowance for loan and lease losses to gross loans

0.76 %


0.78 %


0.74 %

CAPITAL RATIOS (1)






     Shareholders' equity to assets

9.50 %


10.83 %


11.87  %

     Tier 1 leverage

8.12 %


8.56 %


9.09 %

     Common equity tier 1 capital

12.83 %


13.77 %


12.72 %

     Tier 1 risk-based capital

12.83 %


13.77 %


12.72 %

     Total risk-based capital

15.84 %


14.54 %


13.41 %

(1) At end of period

 

SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)

(Dollars in thousands)



March 31
2022


December 31
2021


September 30
2021


June 30
2021


March 31
2021

Commercial

$         727,614


$         807,439


$         757,993


$         723,888


$         725,540

Agricultural

88,169


93,955


93,782


95,197


91,629

Residential real estate

328,559


326,361


321,620


312,567


305,909

Consumer

74,029


73,282


75,163


75,011


72,840

     Gross loans

$      1,218,371


$      1,301,037


$      1,248,558


$      1,206,663


$      1,195,918

 


March 31
2022


December 31
2021


September 30
2021


June 30
2021


March 31
2021

Noninterest bearing demand deposits

$         461,473


$         448,352


$         430,950


$         428,410


$         404,710

Interest bearing demand deposits

387,187


364,563


374,137


326,971


328,440

Savings deposits

635,195


596,662


572,136


549,134


555,688

Certificates of deposit

279,708


297,696


312,027


326,214


331,413

Brokered certificates of deposit





14,029

Internet certificates of deposit

598


3,066


3,066


5,777


9,301

     Total deposits

$      1,764,161


$      1,710,339


$      1,692,316


$      1,636,506


$      1,643,581

 


March 31
2022


December 31
2021


September 30
2021


June 30
2021


March 31
2021

U.S. Treasury

$         218,268


$         209,703


$         192,069


$         132,593


$           29,371

States and political subdivisions

114,015


121,205


128,689


130,960


140,329

Auction rate money market preferred

2,867


3,242


3,246


3,260


3,224

Mortgage-backed securities

49,578


56,148


62,030


68,155


75,835

Collateralized mortgage obligations

152,441


92,301


100,767


109,294


116,865

Corporate

7,750


8,002


7,583


4,192


1,700

     Available-for-sale securities, at
     fair value

$         544,919


$         490,601


$         494,384


$         448,454


$         367,324

 


March 31
2022


December 31
2021


September 30
2021


June 30
2021


March 31
2021

Securities sold under agreements to
repurchase without stated maturity dates

$           51,353


$           50,162


$           67,519


$           62,274


$           51,967

FHLB advances

10,000


20,000


60,000


70,000


90,000

Subordinated debt, net of unamortized
issuance costs

29,181


29,158


29,136


29,121


     Total borrowed funds

$           90,534


$           99,320


$         156,655


$         161,395


$         141,967

 

SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)

(Dollars in thousands)



Three Months Ended March 31


2022


2021

Service charges and fees




     ATM and debit card fees

$              1,093


$                 999

     Service charges and fees on deposit accounts

609


436

     Net OMSR income (loss)

264


(32)

     Freddie Mac servicing fee

171


214

     Other fees for customer services

72


78

          Total service charges and fees

2,209


1,695

Wealth management fees

754


696

Net gain on sale of mortgage loans

224


745

Earnings on corporate owned life insurance policies

210


186

Gains from redemption of corporate owned life insurance policies

52


146

Other

98


64

               Total noninterest income

$              3,547


$              3,532

 


Three Months Ended March 31


2022


2021

Compensation and benefits

$              6,074


$              5,877

Furniture and equipment

1,450


1,373

Occupancy

966


945

Other




     Audit, consulting, and legal fees

549


436

     ATM and debit card fees

434


417

     Donations and community relations

287


146

     Marketing costs

239


209

     Memberships and subscriptions

217


211

     Director fees

201


159

     Loan underwriting fees

182


190

     FDIC insurance premiums

125


231

     All other

596


623

          Total other noninterest expenses

2,830


2,622

               Total noninterest expenses

$           11,320


$           10,817

 

 

Cision View original content:https://www.prnewswire.com/news-releases/isabella-bank-corporation-announces-first-quarter-2022-earnings-301530673.html

SOURCE Isabella Bank Corporation

FAQ

What were Isabella Bank Corporation's earnings results for Q1 2022?

Isabella Bank Corporation reported a net income of $4.7 million and earnings per share of $0.63 for Q1 2022.

How did deposits change for Isabella Bank Corporation in Q1 2022?

Deposits grew by $53.8 million, or 3.1%, reaching a total of $1.8 billion.

What is the nonperforming loan ratio for Isabella Bank Corporation?

The nonperforming loan ratio is 0.06% of gross loans, indicating strong credit quality.

What is the annual cash dividend yield for Isabella Bank Corporation as of March 31, 2022?

The annualized cash dividend yield was 4.18% based on a closing stock price of $25.85.

How did Isabella Bank Corporation's net interest income perform in Q1 2022?

Net interest income increased by $278,000 compared to Q1 2021, despite a decline in interest income.

ISABELLA BANK CORP

OTC:ISBA

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Banks - Regional
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United States of America
Mount Pleasant