Isabella Bank Corporation Announces Fourth Quarter and 2023 Earnings
- None.
- Net income decreased in the fourth quarter and year-end 2023 compared to 2022 due to rising interest expenses.
- Net interest income declined in the fourth quarter and year-end 2023, mainly from increased interest rates on deposits.
- Noninterest expenses increased by $2.5 million in 2023, driven by rising compensation, equipment expenses, and other losses.
- Deposits decreased by $20.6 million in 2023, with a decline in demand deposits due to Federal Reserve actions.
- The net yield on interest earning assets decreased in 2023 compared to 2022, impacted by rising interest rates and increased borrowings.
Continued growth in loans, Isabella Wealth; outpaced by continued interest rate pressure
Among the 2023 highlights:
- Gross loans increased more than
, or$85 million 7% . - Isabella Wealth assets grew
25% to , leading to an increase in wealth management fees of$641 million , or$552,000 18% , over 2022. - Interest income increased
, or$13.8 million 21% , over 2022, offset by an increase in interest expense of .$16.4 million - Shareholders earned a cash dividend of
per share in 2023, with an annualized dividend yield of$1.12 5.21% .
"Our 2023 financial results demonstrate Isabella Bank's ability to come out of a tough year still delivering strong results for shareholders," said Jerome E. Schwind, President and Chief Executive Officer. "Our liquidity and capital ratios remain strong and we delivered results against our strategic plan based on our strength in the marketplace.
"We continued to grow our footprint — including adding our eighth mid-Michigan county — and customers continued to turn to Isabella Bank, driving our growth in loans and our wealth management business," he added.
Operating Results
Net income: Net income for the fourth quarter of 2023 was
Net interest income, fourth quarter 2023: Net interest income for the fourth quarter 2023 declined
Net interest income, year-end 2023: Net interest income for the year ended December 31, 2023 decreased
Noninterest income and expenses, fourth quarter 2023: Noninterest income increased
Noninterest income and expenses, year-end 2023: Noninterest income for the year ended December 31, 2023 increased
Net yield on interest earning assets: The Corporation's fully taxable equivalent net yield on interest earning assets was
Balance Sheet
Assets: Total assets were
Loans: Loans outstanding as of December 31, 2023 totaled
Deposits: Deposits were
Capital: The Bank continues to be considered a "well-capitalized" institution, as its capital ratios exceeded the minimum designated requirements. As of December 31, 2023, the Bank's Tier 1 Leverage Ratio was
Dividend: The Corporation paid a
About the Corporation
Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state-chartered community bank headquartered in
For more information about Isabella Bank Corporation, visit the Investor Relations 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 investor relations firm is Stonegate Capital Partners, Inc. (www.stonegateinc.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) | |||
December 31 | December 31 | ||
ASSETS | |||
Cash and cash equivalents | |||
Cash and demand deposits due from banks | $ 25,628 | $ 27,420 | |
Fed Funds sold and interest bearing balances due from banks | 8,044 | 11,504 | |
Total cash and cash equivalents | 33,672 | 38,924 | |
Available-for-sale securities, at fair value | 528,148 | 580,481 | |
Mortgage loans available-for-sale | — | 379 | |
Loans | 1,349,463 | 1,264,173 | |
Less allowance for credit losses | 13,108 | 9,850 | |
Net loans | 1,336,355 | 1,254,323 | |
Premises and equipment | 27,639 | 25,553 | |
Corporate owned life insurance policies | 33,892 | 32,988 | |
Equity securities without readily determinable fair values | 15,848 | 15,746 | |
Goodwill and other intangible assets | 48,284 | 48,287 | |
Accrued interest receivable and other assets | 35,130 | 33,586 | |
TOTAL ASSETS | $ 2,058,968 | $ 2,030,267 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Deposits | |||
Noninterest bearing | $ 428,505 | $ 494,346 | |
Interest bearing demand deposits | 320,737 | 372,155 | |
Certificates of deposit under | 857,768 | 810,642 | |
Certificates of deposit over | 116,685 | 67,132 | |
Total deposits | 1,723,695 | 1,744,275 | |
Borrowed funds | |||
Federal funds purchased and repurchase agreements | 46,801 | 57,771 | |
Federal Home Loan Bank advances | 40,000 | — | |
Subordinated debt, net of unamortized issuance costs | 29,335 | 29,245 | |
Total borrowed funds | 116,136 | 87,016 | |
Accrued interest payable and other liabilities | 16,735 | 12,766 | |
Total liabilities | 1,856,566 | 1,844,057 | |
Shareholders' equity | |||
Common stock — no par value 15,000,000 shares authorized; issued and outstanding | 127,323 | 128,651 | |
Shares to be issued for deferred compensation obligations | 3,693 | 5,005 | |
Retained earnings | 97,282 | 89,748 | |
Accumulated other comprehensive income (loss) | (25,896) | (37,194) | |
Total shareholders' equity | 202,402 | 186,210 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,058,968 | $ 2,030,267 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||
(Dollars in thousands except per share amounts) | |||||||
Three Months Ended December 31 | Year Ended December 31 | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Interest income | |||||||
Loans, including fees | $ 17,580 | $ 14,163 | $ 65,670 | $ 53,283 | |||
Available-for-sale securities | |||||||
Taxable | 2,303 | 2,512 | 9,514 | 8,363 | |||
Nontaxable | 623 | 718 | 2,642 | 2,808 | |||
Federal funds sold and other | 550 | 522 | 1,805 | 1,344 | |||
Total interest income | 21,056 | 17,915 | 79,631 | 65,798 | |||
Interest expense | |||||||
Deposits | 6,399 | 1,323 | 18,352 | 4,021 | |||
Borrowings | |||||||
Federal funds purchased and repurchase agreements | 357 | 53 | 961 | 79 | |||
Federal Home Loan Bank advances | 422 | — | 1,309 | 152 | |||
Subordinated debt, net of unamortized issuance costs | 266 | 267 | 1,065 | 1,065 | |||
Total interest expense | 7,444 | 1,643 | 21,687 | 5,317 | |||
Net interest income | 13,612 | 16,272 | 57,944 | 60,481 | |||
Provision for credit losses | 684 | (57) | 629 | 483 | |||
Net interest income after provision for credit losses | 12,928 | 16,329 | 57,315 | 59,998 | |||
Noninterest income | |||||||
Service charges and fees | 2,212 | 2,115 | 8,297 | 8,730 | |||
Wealth management fees | 932 | 788 | 3,557 | 3,005 | |||
Earnings on corporate owned life insurance policies | 239 | 229 | 920 | 884 | |||
Net gain on sale of mortgage loans | 85 | 63 | 317 | 631 | |||
Other | 48 | 77 | 736 | 416 | |||
Total noninterest income | 3,516 | 3,272 | 13,827 | 13,666 | |||
Noninterest expenses | |||||||
Compensation and benefits | 6,116 | 6,407 | 25,905 | 24,887 | |||
Furniture and equipment | 1,697 | 1,624 | 6,519 | 6,006 | |||
Occupancy | 857 | 878 | 3,778 | 3,691 | |||
Other | 3,245 | 3,013 | 13,108 | 12,236 | |||
Total noninterest expenses | 11,915 | 11,922 | 49,310 | 46,820 | |||
Income before federal income tax expense | 4,529 | 7,679 | 21,832 | 26,844 | |||
Federal income tax expense | 726 | 1,357 | 3,665 | 4,606 | |||
NET INCOME | $ 3,803 | $ 6,322 | $ 18,167 | $ 22,238 | |||
Earnings per common share | |||||||
Basic | $ 0.51 | $ 0.84 | $ 2.42 | $ 2.95 | |||
Diluted | $ 0.51 | $ 0.83 | $ 2.40 | $ 2.91 | |||
Cash dividends per common share | $ 0.28 | $ 0.28 | $ 1.12 | $ 1.09 |
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
Three Months Ended | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | ||||||
INTEREST EARNING ASSETS | |||||||||||
Loans (1) | $ 1,340,271 | $ 17,580 | 5.25 % | $ 1,244,972 | $ 14,163 | 4.55 % | |||||
Taxable investment securities | 473,660 | 2,274 | 1.92 % | 520,139 | 2,499 | 1.92 % | |||||
Nontaxable investment securities | 90,408 | 899 | 3.98 % | 107,508 | 999 | 3.72 % | |||||
Fed funds sold | 13 | — | 5.76 % | 14 | — | 4.00 % | |||||
Other | 39,585 | 549 | 5.55 % | 56,142 | 522 | 3.72 % | |||||
Total earning assets | 1,943,937 | 21,302 | 4.38 % | 1,928,775 | 18,183 | 3.77 % | |||||
NONEARNING ASSETS | |||||||||||
Allowance for credit losses | (12,780) | (9,792) | |||||||||
Cash and demand deposits due from banks | 23,244 | 24,312 | |||||||||
Premises and equipment | 27,444 | 25,382 | |||||||||
Accrued income and other assets | 71,592 | 63,553 | |||||||||
Total assets | $ 2,053,437 | $ 2,032,230 | |||||||||
INTEREST BEARING LIABILITIES | |||||||||||
Interest bearing demand deposits | $ 317,996 | $ 504 | 0.63 % | $ 358,809 | $ 104 | 0.12 % | |||||
Savings deposits | 634,539 | 2,819 | 1.78 % | 635,771 | 535 | 0.34 % | |||||
Time deposits | 338,852 | 3,076 | 3.63 % | 254,604 | 684 | 1.07 % | |||||
Federal funds purchased and repurchase agreements | 50,049 | 357 | 2.85 % | 55,478 | 53 | 0.38 % | |||||
Federal Home Loan Bank advances | 29,674 | 422 | 5.69 % | — | — | — % | |||||
Subordinated debt, net of unamortized issuance costs | 29,320 | 266 | 3.63 % | 29,233 | 267 | 3.65 % | |||||
Total interest bearing liabilities | 1,400,430 | 7,444 | 2.13 % | 1,333,895 | 1,643 | 0.49 % | |||||
NONINTEREST BEARING LIABILITIES | |||||||||||
Demand deposits | 446,747 | 504,791 | |||||||||
Other | 17,302 | 13,103 | |||||||||
Shareholders' equity | 188,958 | 180,441 | |||||||||
Total liabilities and shareholders' equity | $ 2,053,437 | $ 2,032,230 | |||||||||
Net interest income (FTE) | $ 13,858 | $ 16,540 | |||||||||
Net yield on interest earning assets (FTE) | 2.85 % | 3.43 % |
(1) Includes loans and mortgage loans available-for-sale |
Year Ended | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | ||||||
INTEREST EARNING ASSETS | |||||||||||
Loans (1) | $ 1,308,891 | $ 65,670 | 5.02 % | $ 1,249,634 | $ 53,283 | 4.26 % | |||||
Taxable investment securities | 485,718 | 9,399 | 1.94 % | 477,159 | 8,294 | 1.74 % | |||||
Nontaxable investment securities | 96,845 | 3,780 | 3.90 % | 107,158 | 3,933 | 3.67 % | |||||
Fed funds sold | 12 | 1 | 5.04 % | 10 | — | 2.42 % | |||||
Other | 41,965 | 1,804 | 4.30 % | 99,301 | 1,344 | 1.35 % | |||||
Total earning assets | 1,933,431 | 80,654 | 4.17 % | 1,933,262 | 66,854 | 3.46 % | |||||
NONEARNING ASSETS | |||||||||||
Allowance for credit losses | (12,784) | (9,477) | |||||||||
Cash and demand deposits due from banks | 24,592 | 24,708 | |||||||||
Premises and equipment | 26,589 | 24,648 | |||||||||
Accrued income and other assets | 74,319 | 81,823 | |||||||||
Total assets | $ 2,046,147 | $ 2,054,964 | |||||||||
INTEREST BEARING LIABILITIES | |||||||||||
Interest bearing demand deposits | $ 346,875 | $ 1,086 | 0.31 % | $ 374,623 | $ 274 | 0.07 % | |||||
Savings deposits | 626,027 | 8,290 | 1.32 % | 630,574 | 1,135 | 0.18 % | |||||
Time deposits | 308,699 | 8,976 | 2.91 % | 270,296 | 2,612 | 0.97 % | |||||
Federal funds purchased and repurchase agreements | 43,061 | 961 | 2.23 % | 49,974 | 79 | 0.16 % | |||||
Federal Home Loan Bank advances | 23,699 | 1,309 | 5.52 % | 7,863 | 152 | 1.93 % | |||||
Subordinated debt, net of unamortized issuance costs | 29,287 | 1,065 | 3.64 % | 29,200 | 1,065 | 3.65 % | |||||
Total interest bearing liabilities | 1,377,648 | 21,687 | 1.57 % | 1,362,530 | 5,317 | 0.39 % | |||||
NONINTEREST BEARING LIABILITIES | |||||||||||
Demand deposits | 461,689 | 482,781 | |||||||||
Other | 16,043 | 14,695 | |||||||||
Shareholders' equity | 190,767 | 194,958 | |||||||||
Total liabilities and shareholders' equity | $ 2,046,147 | $ 2,054,964 | |||||||||
Net interest income (FTE) | $ 58,967 | $ 61,537 | |||||||||
Net yield on interest earning assets (FTE) | 3.05 % | 3.18 % |
(1) Includes loans and mortgage loans available-for-sale |
SELECTED FINANCIAL DATA (UNAUDITED) | |||||
(Dollars in thousands except per share amounts) | |||||
Year Ended | |||||
December 31 | December 31 | December 31 | |||
PER SHARE | |||||
Basic earnings | $ 2.42 | $ 2.95 | $ 2.48 | ||
Diluted earnings | $ 2.40 | $ 2.91 | $ 2.45 | ||
Dividends | $ 1.12 | $ 1.09 | $ 1.08 | ||
Tangible book value | $ 20.59 | $ 18.25 | $ 21.61 | ||
Quoted market value | |||||
High | $ 26.00 | $ 26.25 | $ 29.00 | ||
Low | $ 19.13 | $ 21.00 | $ 19.45 | ||
Close (1) | $ 21.50 | $ 23.50 | $ 25.50 | ||
Common shares outstanding (1) | 7,485,889 | 7,559,421 | 7,532,641 | ||
Average number of common shares outstanding | 7,511,591 | 7,549,878 | 7,853,398 | ||
Average number of diluted common shares outstanding | 7,575,492 | 7,647,612 | 7,965,961 | ||
PERFORMANCE RATIOS | |||||
Return on average total assets | 0.89 % | 1.08 % | 0.96 % | ||
Return on average shareholders' equity | 9.52 % | 11.41 % | 8.83 % | ||
Return on average tangible shareholders' equity | 12.75 % | 15.17 % | 11.31 % | ||
Net interest margin yield (FTE) | 3.05 % | 3.18 % | 2.87 % | ||
ASSETS UNDER MANAGEMENT (1) | |||||
Loans sold with servicing retained | $ 248,756 | $ 264,206 | $ 278,844 | ||
Assets managed by Isabella Wealth | $ 641,027 | $ 513,918 | $ 516,243 | ||
Total assets under management | $ 2,948,751 | $ 2,808,391 | $ 2,827,245 | ||
ASSET QUALITY (1) | |||||
Nonaccrual loans | $ 982 | $ 457 | $ 1,245 | ||
Foreclosed assets | $ 406 | $ 439 | $ 211 | ||
Net loan charge-offs (recoveries) | $ 115 | $ (264) | $ 123 | ||
Nonperforming loans to gross loans | 0.08 % | 0.04 % | 0.10 % | ||
Nonperforming assets to total assets | 0.07 % | 0.05 % | 0.08 % | ||
Allowance for credit losses to gross loans | 0.97 % | 0.78 % | 0.70 % | ||
CAPITAL RATIOS (1) | |||||
Shareholders' equity to assets | 9.83 % | 9.17 % | 10.39 % | ||
Tier 1 leverage | 8.76 % | 8.61 % | 7.97 % | ||
Common equity tier 1 capital | 12.54 % | 12.91 % | 12.07 % | ||
Tier 1 risk-based capital | 12.54 % | 12.91 % | 12.07 % | ||
Total risk-based capital | 15.52 % | 15.79 % | 14.94 % |
(1) At end of period |
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED) | |||||||||
(Dollars in thousands) | |||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||
Commercial and industrial | $ 209,738 | $ 195,814 | $ 194,914 | $ 189,185 | $ 178,428 | ||||
Commercial real estate | 564,244 | 566,639 | 564,254 | 566,410 | 566,012 | ||||
Advances to mortgage brokers | 18,541 | 24,807 | 39,099 | — | — | ||||
Agricultural | 99,994 | 99,233 | 96,689 | 94,760 | 104,985 | ||||
Residential real estate | 356,418 | 348,196 | 343,474 | 336,186 | 336,694 | ||||
Consumer | 100,528 | 99,985 | 95,972 | 84,110 | 78,054 | ||||
Gross loans | $ 1,349,463 | $ 1,334,674 | $ 1,334,402 | $ 1,270,651 | $ 1,264,173 | ||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||
Noninterest bearing demand deposits | $ 428,505 | $ 445,043 | $ 458,845 | $ 478,829 | $ 494,346 | ||||
Interest bearing demand deposits | 320,737 | 363,558 | 335,922 | 383,602 | 372,155 | ||||
Savings deposits | 628,079 | 628,795 | 606,644 | 662,495 | 625,734 | ||||
Certificates of deposit | 346,125 | 331,829 | 313,288 | 288,103 | 251,541 | ||||
Internet certificates of deposit | 249 | 249 | 249 | 499 | 499 | ||||
Total deposits | $ 1,723,695 | $ 1,769,474 | $ 1,714,948 | $ 1,813,528 | $ 1,744,275 | ||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||
$ 214,801 | $ 209,182 | $ 209,353 | $ 212,086 | $ 208,701 | |||||
States and political subdivisions | 92,876 | 89,773 | 95,242 | 108,719 | 117,512 | ||||
Auction rate money market preferred | 2,931 | 2,570 | 2,637 | 2,716 | 2,342 | ||||
Mortgage-backed securities | 32,815 | 32,923 | 35,532 | 37,797 | 39,070 | ||||
Collateralized mortgage obligations | 177,775 | 175,630 | 180,996 | 200,252 | 205,728 | ||||
Corporate | 6,950 | 6,819 | 6,737 | 7,080 | 7,128 | ||||
Available-for-sale securities, at fair value | $ 528,148 | $ 516,897 | $ 530,497 | $ 568,650 | $ 580,481 | ||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||
Securities sold under agreements to | $ 46,801 | $ 52,330 | $ 37,102 | $ 31,995 | $ 57,771 | ||||
Federal Home Loan Bank advances | 40,000 | 65,000 | 55,000 | — | — | ||||
Subordinated debt, net of unamortized issuance costs | 29,335 | 29,312 | 29,290 | 29,267 | 29,245 | ||||
Total borrowed funds | $ 116,136 | $ 146,642 | $ 121,392 | $ 61,262 | $ 87,016 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED) | |||||||
(Dollars in thousands) | |||||||
Three Months Ended | Year Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Service charges and fees | |||||||
ATM and debit card fees | $ 1,397 | $ 1,267 | $ 5,051 | $ 4,774 | |||
Service charges and fees on deposit accounts | 616 | 653 | 2,413 | 2,566 | |||
Freddie Mac servicing fee | 155 | 163 | 630 | 669 | |||
Net mortgage servicing rights income (loss) | (40) | (42) | (137) | 435 | |||
Other fees for customer services | 84 | 74 | 340 | 286 | |||
Total service charges and fees | 2,212 | 2,115 | 8,297 | 8,730 | |||
Wealth management fees | 932 | 788 | 3,557 | 3,005 | |||
Earnings on corporate owned life insurance policies | 239 | 229 | 920 | 884 | |||
Net gain on sale of mortgage loans | 85 | 63 | 317 | 631 | |||
Other | 48 | 77 | 736 | 416 | |||
Total noninterest income | $ 3,516 | $ 3,272 | $ 13,827 | $ 13,666 | |||
Three Months Ended | Year Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Compensation and benefits | $ 6,116 | $ 6,407 | $ 25,905 | $ 24,887 | |||
Furniture and equipment | 1,697 | 1,624 | 6,519 | 6,006 | |||
Occupancy | 857 | 878 | 3,778 | 3,691 | |||
Other | |||||||
Audit, consulting, and legal fees | 576 | 609 | 2,340 | 2,358 | |||
ATM and debit card fees | 487 | 424 | 1,767 | 1,909 | |||
Marketing costs | 276 | 244 | 1,159 | 1,056 | |||
Memberships and subscriptions | 313 | 222 | 1,042 | 876 | |||
Loan underwriting fees | 290 | 364 | 927 | 1,004 | |||
FDIC insurance premiums | 233 | 143 | 922 | 537 | |||
Donations and community relations | 223 | 258 | 915 | 923 | |||
Other losses | 101 | 137 | 871 | 546 | |||
Director fees | 183 | 192 | 764 | 790 | |||
All other | 563 | 420 | 2,401 | 2,237 | |||
Total other noninterest expenses | 3,245 | 3,013 | 13,108 | 12,236 | |||
Total noninterest expenses | $ 11,915 | $ 11,922 | $ 49,310 | $ 46,820 |
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SOURCE Isabella Bank Corporation
FAQ
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