Isabella Bank Corporation Reports First Quarter 2024 Results
- Total commercial loan growth of 8% annualized
- Earning asset yield increased to 4.45%
- Wealth management income grew by 19%
- Nonperforming loans to total loans ratio of 0.09%
- Total loans grew to $1.37 billion
- Total assets remained at $2.06 billion
- Securities available for sale decreased to $517.6 million
- Unrealized losses on securities totaled $34.8 million
- Allowance for credit losses increased to $13.4 million
- Decline in net income compared to Q1 2023
- Decrease in securities available for sale
- Increase in nonaccruing loans to $1.3 million
- Past due accounts between 30 to 89 days increased to 0.62%
Loan, Deposit and Wealth Asset Growth continue in 2024
FIRST QUARTER 2024 HIGHLIGHTS (compared to first quarter 2023, unless otherwise stated)
- Total commercial loan growth of
8% annualized, compared to0.4% - Earning asset yield of
4.45% , compared to3.89% - Wealth management income increased
19% - Nonperforming loans to total loans ratio of
0.09%
"Earnings declined year-over-year because of continued interest rate pressure. However, the bank recorded positive results in loans, deposits and wealth management assets as a result of continuing to attract new customers while retaining strong loyalty among our current customers," according to Chief Executive Officer Jerome Schwind. "We've also maintained excellent liquidity and strong credit quality among loan customers, factors that fuel our underlying strength and resilience during continued high interest rates.
"As previously announced, the corporation paid a quarterly cash dividend of
FINANCIAL CONDITION (March 31, 2024 compared to December 31, 2023)
Total assets were
Total loans grew
Securities available for sale decreased
The allowance for credit losses increased
Total deposits increased
The Company's tangible book value per share was
The Bank is considered a "well-capitalized" institution, as its capital ratios exceeded the minimum designated requirements. As of March 31, 2024, the Bank's Tier 1 Leverage Ratio was
RESULTS OF OPERATIONS (March 31, 2024 to March 31, 2023 quarterly comparison)
Net interest margin was
The provision for credit losses was
Noninterest income was
Noninterest expense was
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) | |||
March 31 | December 31 | ||
ASSETS | |||
Cash and cash equivalents | |||
Cash and demand deposits due from banks | $ 22,987 | $ 25,628 | |
Fed Funds sold and interest bearing balances due from banks | 2,231 | 8,044 | |
Total cash and cash equivalents | 25,218 | 33,672 | |
Available-for-sale securities, at fair value | 517,585 | 528,148 | |
Mortgage loans available-for-sale | 366 | — | |
Loans | 1,365,508 | 1,349,463 | |
Less allowance for credit losses | 13,390 | 13,108 | |
Net loans | 1,352,118 | 1,336,355 | |
Premises and equipment | 27,951 | 27,639 | |
Bank owned life insurance policies | 34,131 | 33,892 | |
Equity securities without readily determinable fair values | 15,848 | 15,848 | |
Goodwill and other intangible assets | 48,284 | 48,284 | |
Accrued interest receivable and other assets | 36,075 | 35,130 | |
TOTAL ASSETS | $ 2,057,576 | $ 2,058,968 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Deposits | |||
Noninterest bearing | $ 413,272 | $ 428,505 | |
Interest bearing demand deposits | 349,401 | 320,737 | |
Certificates of deposit under | 881,528 | 857,768 | |
Certificates of deposit over | 124,106 | 116,685 | |
Total deposits | 1,768,307 | 1,723,695 | |
Borrowed funds | |||
Federal funds purchased and repurchase agreements | 42,998 | 46,801 | |
Federal Home Loan Bank advances | — | 40,000 | |
Subordinated debt, net of unamortized issuance costs | 29,357 | 29,335 | |
Total borrowed funds | 72,355 | 116,136 | |
Accrued interest payable and other liabilities | 16,240 | 16,735 | |
Total liabilities | 1,856,902 | 1,856,566 | |
Shareholders' equity | |||
Common stock — no par value 15,000,000 shares authorized; issued and outstanding | 126,656 | 127,323 | |
Shares to be issued for deferred compensation obligations | 3,890 | 3,693 | |
Retained earnings | 98,318 | 97,282 | |
Accumulated other comprehensive income (loss) | (28,190) | (25,896) | |
Total shareholders' equity | 200,674 | 202,402 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,057,576 | $ 2,058,968 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||
(Dollars in thousands except per share amounts) | |||
Three Months Ended March 31 | |||
2024 | 2023 | ||
Interest income | |||
Loans, including fees | $ 18,057 | $ 14,889 | |
Available-for-sale securities | |||
Taxable | 2,258 | 2,502 | |
Nontaxable | 626 | 718 | |
Federal funds sold and other | 439 | 486 | |
Total interest income | 21,380 | 18,595 | |
Interest expense | |||
Deposits | 7,163 | 2,829 | |
Borrowings | |||
Federal funds purchased and repurchase agreements | 321 | 149 | |
Federal Home Loan Bank advances | 388 | — | |
Subordinated debt, net of unamortized issuance costs | 266 | 266 | |
Total interest expense | 8,138 | 3,244 | |
Net interest income | 13,242 | 15,351 | |
Provision for credit losses | 392 | 41 | |
Net interest income after provision for credit losses | 12,850 | 15,310 | |
Noninterest income | |||
Service charges and fees | 2,046 | 1,978 | |
Wealth management fees | 939 | 786 | |
Earnings on bank owned life insurance policies | 243 | 226 | |
Net gain on sale of mortgage loans | 34 | 67 | |
Other | 206 | 236 | |
Total noninterest income | 3,468 | 3,293 | |
Noninterest expenses | |||
Compensation and benefits | 7,015 | 6,589 | |
Furniture and equipment | 1,675 | 1,597 | |
Occupancy | 1,031 | 1,005 | |
Other | 2,955 | 3,007 | |
Total noninterest expenses | 12,676 | 12,198 | |
Income before federal income tax expense | 3,642 | 6,405 | |
Federal income tax expense | 511 | 1,084 | |
NET INCOME | $ 3,131 | $ 5,321 | |
Earnings per common share | |||
Basic | $ 0.42 | $ 0.70 | |
Diluted | $ 0.42 | $ 0.70 | |
Cash dividends per common share | $ 0.28 | $ 0.28 |
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 | |||||||||||
March 31, 2024 | March 31, 2023 | ||||||||||
Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | ||||||
INTEREST EARNING ASSETS | |||||||||||
Loans (1) | $ 1,348,749 | $ 18,057 | 5.36 % | $ 1,268,269 | $ 14,889 | 4.70 % | |||||
Taxable investment securities | 467,974 | 2,228 | 1.90 % | 504,889 | 2,471 | 1.96 % | |||||
Nontaxable investment securities | 89,056 | 902 | 4.05 % | 106,240 | 1,021 | 3.84 % | |||||
Fed funds sold | 7 | — | 5.69 % | 17 | — | 4.50 % | |||||
Other | 37,972 | 439 | 4.62 % | 60,583 | 486 | 3.21 % | |||||
Total earning assets | 1,943,758 | 21,626 | 4.45 % | 1,939,998 | 18,867 | 3.89 % | |||||
NONEARNING ASSETS | |||||||||||
Allowance for credit losses | (13,100) | (12,660) | |||||||||
Cash and demand deposits due from | 24,018 | 25,039 | |||||||||
Premises and equipment | 28,022 | 25,864 | |||||||||
Accrued income and other assets | 84,059 | 71,063 | |||||||||
Total assets | $ 2,066,757 | $ 2,049,304 | |||||||||
INTEREST BEARING LIABILITIES | |||||||||||
Interest bearing demand deposits | $ 345,842 | 413 | 0.48 % | $ 379,717 | 146 | 0.15 % | |||||
Savings deposits | 633,904 | 3,333 | 2.10 % | 645,987 | 1,466 | 0.91 % | |||||
Time deposits | 357,541 | 3,417 | 3.82 % | 267,463 | 1,217 | 1.82 % | |||||
Federal funds purchased and | 40,623 | 321 | 3.16 % | 39,709 | 149 | 1.50 % | |||||
Federal Home Loan Bank advances | 27,692 | 388 | 5.60 % | — | — | — % | |||||
Subordinated debt, net of | 29,342 | 266 | 3.63 % | 29,253 | 266 | 3.64 % | |||||
Total interest bearing liabilities | 1,434,944 | 8,138 | 2.27 % | 1,362,129 | 3,244 | 0.95 % | |||||
NONINTEREST BEARING | |||||||||||
Demand deposits | 412,228 | 486,491 | |||||||||
Other | 16,151 | 13,094 | |||||||||
Shareholders' equity | 203,434 | 187,590 | |||||||||
Total liabilities and shareholders' | $ 2,066,757 | $ 2,049,304 | |||||||||
Net interest income (FTE) | $ 13,488 | $ 15,623 | |||||||||
Net yield on interest earning | 2.78 % | 3.22 % |
(1) | Includes loans and mortgage loans available-for-sale |
SELECTED FINANCIAL DATA (UNAUDITED) | |||||||||
(Dollars in thousands except per share amounts) | |||||||||
Three Months Ended | |||||||||
March 31 | December 31 | September 30 | June 30 | March 31 | |||||
PER SHARE | |||||||||
Basic earnings | $ 0.42 | $ 0.51 | $ 0.59 | $ 0.62 | $ 0.70 | ||||
Diluted earnings | $ 0.42 | $ 0.51 | $ 0.58 | $ 0.61 | $ 0.70 | ||||
Dividends | $ 0.28 | $ 0.28 | $ 0.28 | $ 0.28 | $ 0.28 | ||||
Tangible book value (1) | $ 20.35 | $ 20.59 | $ 18.27 | $ 18.69 | $ 19.24 | ||||
Quoted market value | |||||||||
High | $ 21.74 | $ 22.00 | $ 23.00 | $ 26.00 | $ 25.10 | ||||
Low | $ 18.25 | $ 19.75 | $ 19.61 | $ 19.13 | $ 22.08 | ||||
Market price (1) | $ 19.40 | $ 21.50 | $ 21.05 | $ 20.50 | $ 24.80 | ||||
Common shares outstanding (1) | 7,488,101 | 7,485,889 | 7,490,557 | 7,496,826 | 7,540,015 | ||||
Average number of common shares | 7,493,334 | 7,492,532 | 7,495,168 | 7,498,584 | 7,556,585 | ||||
Average number of diluted common | 7,507,739 | 7,526,514 | 7,570,374 | 7,567,527 | 7,634,417 | ||||
PERFORMANCE RATIOS | |||||||||
Return on average total assets | 0.61 % | 0.74 % | 0.86 % | 0.91 % | 1.04 % | ||||
Return on average shareholders' equity | 6.16 % | 8.05 % | 9.24 % | 9.47 % | 11.35 % | ||||
Return on average tangible | 8.07 % | 10.82 % | 12.37 % | 12.58 % | 15.28 % | ||||
Net interest margin yield (FTE) | 2.78 % | 2.85 % | 3.02 % | 3.11 % | 3.22 % | ||||
ASSETS UNDER MANAGEMENT (1) | |||||||||
Loans sold with servicing retained | $ 244,829 | $ 248,756 | $ 252,176 | $ 254,934 | $ 259,512 | ||||
Assets managed by Isabella Wealth | $ 660,645 | $ 641,027 | $ 590,666 | $ 593,530 | $ 571,453 | ||||
Total assets under management | $ 2,963,050 | $ 2,948,751 | $ 2,961,332 | $ 2,890,912 | $ 2,915,589 | ||||
ASSET QUALITY (1) | |||||||||
Nonaccrual loans | $ 1,283 | $ 982 | $ 520 | $ 414 | $ 488 | ||||
Foreclosed assets | $ 579 | $ 406 | $ 509 | $ 405 | $ 414 | ||||
Net loan charge-offs (recoveries) | $ 46 | $ 381 | $ (254) | $ (3) | $ (9) | ||||
Nonperforming loans to gross loans | 0.09 % | 0.08 % | 0.04 % | 0.04 % | 0.04 % | ||||
Nonperforming assets to total assets | 0.09 % | 0.07 % | 0.05 % | 0.05 % | 0.05 % | ||||
Allowance for credit losses to gross loans | 0.98 % | 0.97 % | 0.96 % | 0.96 % | 0.99 % | ||||
CAPITAL RATIOS (1) | |||||||||
Shareholders' equity to assets | 9.75 % | 9.83 % | 8.74 % | 9.23 % | 9.27 % | ||||
Tier 1 leverage | 8.80 % | 8.76 % | 8.77 % | 8.70 % | 8.58 % | ||||
Common equity tier 1 capital | 12.36 % | 12.54 % | 12.43 % | 12.39 % | 12.71 % | ||||
Tier 1 risk-based capital | 12.36 % | 12.54 % | 12.43 % | 12.39 % | 12.71 % | ||||
Total risk-based capital | 15.31 % | 15.52 % | 15.39 % | 15.37 % | 15.77 % |
(1) | At end of period |
SELECTED FINANCIAL DATA (UNAUDITED) | |||||
(Dollars in thousands except per share amounts) | |||||
Three Months Ended | |||||
March 31 | March 31 | March 31 | |||
PER SHARE | |||||
Basic earnings | $ 0.42 | $ 0.70 | $ 0.63 | ||
Diluted earnings | $ 0.42 | $ 0.70 | $ 0.62 | ||
Dividends | $ 0.28 | $ 0.28 | $ 0.27 | ||
Tangible book value (1) | $ 20.35 | $ 19.24 | $ 19.56 | ||
Quoted market value | |||||
High | $ 21.74 | $ 25.10 | $ 26.00 | ||
Low | $ 18.25 | $ 22.08 | $ 24.50 | ||
Market price (1) | $ 19.40 | $ 24.80 | $ 25.85 | ||
Common shares outstanding (1) | 7,488,101 | 7,540,015 | 7,542,758 | ||
Average number of common shares outstanding | 7,493,334 | 7,556,585 | 7,533,711 | ||
Average number of diluted common shares outstanding | 7,507,739 | 7,634,417 | 7,639,688 | ||
PERFORMANCE RATIOS | |||||
Return on average total assets | 0.61 % | 1.04 % | 0.92 % | ||
Return on average shareholders' equity | 6.16 % | 11.35 % | 9.02 % | ||
Return on average tangible shareholders' equity | 8.07 % | 15.28 % | 11.72 % | ||
Net interest margin yield (FTE) | 2.78 % | 3.22 % | 2.86 % | ||
ASSETS UNDER MANAGEMENT (1) | |||||
Loans sold with servicing retained | $ 244,829 | $ 259,512 | $ 275,556 | ||
Assets managed by Isabella Wealth | $ 660,645 | $ 571,453 | $ 501,829 | ||
Total assets under management | $ 2,963,050 | $ 2,915,589 | $ 2,838,318 | ||
ASSET QUALITY (1) | |||||
Nonaccrual loans | $ 1,283 | $ 488 | $ 747 | ||
Foreclosed assets | $ 579 | $ 414 | $ 187 | ||
Net loan charge-offs (recoveries) | $ 46 | $ (9) | $ (64) | ||
Nonperforming loans to gross loans | 0.09 % | 0.04 % | 0.06 % | ||
Nonperforming assets to total assets | 0.09 % | 0.05 % | 0.05 % | ||
Allowance for credit losses to gross loans | 0.98 % | 0.99 % | 0.76 % | ||
CAPITAL RATIOS (1) | |||||
Shareholders' equity to assets | 9.75 % | 9.27 % | 9.50 % | ||
Tier 1 leverage | 8.80 % | 8.58 % | 8.12 % | ||
Common equity tier 1 capital | 12.36 % | 12.71 % | 12.83 % | ||
Tier 1 risk-based capital | 12.36 % | 12.71 % | 12.83 % | ||
Total risk-based capital | 15.31 % | 15.77 % | 15.84 % |
(1) | At end of period |
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED) | |||||||||
(Dollars in thousands) | |||||||||
March 31 | December 31 | September 30 | June 30 | March 31 | |||||
Commercial and industrial | $ 226,281 | $ 209,738 | $ 195,814 | $ 194,914 | $ 189,185 | ||||
Commercial real estate | 561,123 | 564,244 | 566,639 | 564,254 | 566,410 | ||||
Advances to mortgage brokers | 29,688 | 18,541 | 24,807 | 39,099 | — | ||||
Agricultural | 93,695 | 99,994 | 99,233 | 96,689 | 94,760 | ||||
Residential real estate | 356,658 | 356,418 | 348,196 | 343,474 | 336,186 | ||||
Consumer | 98,063 | 100,528 | 99,985 | 95,972 | 84,110 | ||||
Gross loans | $ 1,365,508 | $ 1,349,463 | $ 1,334,674 | $ 1,334,402 | $ 1,270,651 | ||||
March 31 | December 31 | September 30 | June 30 | March 31 | |||||
Noninterest bearing demand deposits | $ 413,272 | $ 428,505 | $ 445,043 | $ 458,845 | $ 478,829 | ||||
Interest bearing demand deposits | 349,401 | 320,737 | 363,558 | 335,922 | 383,602 | ||||
Savings deposits | 639,491 | 628,079 | 628,795 | 606,644 | 662,495 | ||||
Certificates of deposit | 366,143 | 346,374 | 332,078 | 313,537 | 288,602 | ||||
Internet certificates of deposit | — | — | — | — | — | ||||
Total deposits | $ 1,768,307 | $ 1,723,695 | $ 1,769,474 | $ 1,714,948 | $ 1,813,528 | ||||
March 31 | December 31 | September 30 | June 30 | March 31 | |||||
$ 214,226 | $ 214,801 | $ 209,182 | $ 209,353 | $ 212,086 | |||||
States and political subdivisions | 90,470 | 92,876 | 89,773 | 95,242 | 108,719 | ||||
Auction rate money market preferred | 3,013 | 2,931 | 2,570 | 2,637 | 2,716 | ||||
Mortgage-backed securities | 31,044 | 32,815 | 32,923 | 35,532 | 37,797 | ||||
Collateralized mortgage obligations | 171,831 | 177,775 | 175,630 | 180,996 | 200,252 | ||||
Corporate | 7,001 | 6,950 | 6,819 | 6,737 | 7,080 | ||||
Available-for-sale securities, at | $ 517,585 | $ 528,148 | $ 516,897 | $ 530,497 | $ 568,650 | ||||
March 31 | December 31 | September 30 | June 30 | March 31 | |||||
Securities sold under agreements to | $ 42,998 | $ 46,801 | $ 52,330 | $ 37,102 | $ 31,995 | ||||
Federal Home Loan Bank advances | — | 40,000 | 65,000 | 55,000 | — | ||||
Subordinated debt, net of unamortized | 29,357 | 29,335 | 29,312 | 29,290 | 29,267 | ||||
Total borrowed funds | $ 72,355 | $ 116,136 | $ 146,642 | $ 121,392 | $ 61,262 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED) | |||
(Dollars in thousands) | |||
Three Months Ended March 31 | |||
2024 | 2023 | ||
Service charges and fees | |||
ATM and debit card fees | $ 1,215 | $ 1,160 | |
Service charges and fees on deposit accounts | 614 | 611 | |
Freddie Mac servicing fee | 150 | 159 | |
Net mortgage servicing rights income (loss) | (37) | (36) | |
Other fees for customer services | 104 | 84 | |
Total service charges and fees | 2,046 | 1,978 | |
Wealth management fees | 939 | 786 | |
Earnings on corporate owned life insurance policies | 243 | 226 | |
Net gain on sale of mortgage loans | 34 | 67 | |
Other | 206 | 236 | |
Total noninterest income | $ 3,468 | $ 3,293 | |
Three Months Ended March 31 | |||
2024 | 2023 | ||
Compensation and benefits | $ 7,015 | $ 6,589 | |
Furniture and equipment | 1,675 | 1,597 | |
Occupancy | 1,031 | 1,005 | |
Other | |||
Audit, consulting, and legal fees | 513 | 535 | |
ATM and debit card fees | 469 | 400 | |
FDIC insurance premiums | 252 | 228 | |
Marketing costs | 244 | 245 | |
Memberships and subscriptions | 228 | 240 | |
Loan underwriting fees | 183 | 215 | |
Donations and community relations | 182 | 184 | |
Director fees | 176 | 204 | |
All other | 708 | 756 | |
Total other noninterest expenses | 2,955 | 3,007 | |
Total noninterest expenses | $ 12,676 | $ 12,198 |
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SOURCE Isabella Bank Corporation
FAQ
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