8-K
ISABELLA BANK CORP (ISBA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2022
ISABELLA BANK CORPORATION
(Exact name of registrant as specified in its charter)
| Michigan | 000-18415 | 38-2830092 | |||||
|---|---|---|---|---|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) | 401 North Main Street | Mt. Pleasant | Michigan | 48858-1649 | |
| --- | --- | --- | --- | ||||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (989) 772-9471
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-l2) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240.l4d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.l3e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On October 20, 2022, Isabella Bank Corporation issued a press release announcing its results of for the three and nine months ended September 30, 2022.
A copy of the press release is filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing made by the registrant under the Securities Act of 1933, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issuedOctober20, 2022 |
| 104 | Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ISABELLA BANK CORPORATION | |||
|---|---|---|---|
| Dated: | October 20, 2022 | By: | /s/ Jae A. Evans |
| Jae A. Evans, President & CEO |
INDEX TO EXHIBITS
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issuedOctober20, 2022 |
| 104 | Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document |
Document
Exhibit 99.1
For Immediate Release
Isabella Bank Corporation
401 North Main Street
Mt. Pleasant, MI 48858-1649
FOR MORE INFORMATION CONTACT:
Trish Tomczak, Director of Marketing
Phone: 989-779-6333 Fax: 989-775-5501
Isabella Bank Corporation Announces Further Earnings Growth in Third Quarter
Record net income up 26% over third quarter 2021
Mt. Pleasant, Michigan, October 20, 2022 — Isabella Bank Corporation (the “Corporation”) (OTCQX: ISBA) reported a record net income of $5.9 million for the third quarter of 2022 and $15.9 million for the nine-month period ended September 30, 2022. Earnings per common share were $0.78 in the third quarter and $2.11 for the first nine months of 2022.
Third-quarter 2022 highlights, compared to the same period in 2021, include:
•Net income increased 25.6% to $5.9 million.
•Net interest income improved $2.5 million, or 19%, aided by a 34% decline in interest expense.
•Net interest margin yield increased 43 basis points.
•Earnings per share improved 32% to $0.78.
Additionally, deposits grew $31.2 million during the third quarter, up $80.7 million year to date, an increase of nearly 5%.
"Isabella Bank continued to deliver strong financial results this quarter. The Federal Reserve's 2022 rate decisions contributed to a significant gain in net interest income and improvement in our net interest margin," said Jae A. Evans, President & CEO. "Further improvement is expected through the remainder of 2022.
“What's more, our commitment to shareholders, communities and customers continues to be seen through active implementation of multiple strategic initiatives," Evans said. "Construction is well underway on a third full-service branch in Saginaw, and customer response to our new, enhanced online banking system and mobile app has been tremendous."
Operating Results
Net income: Net income for third quarter 2022 was $5.9 million, a 25.6% increase compared to $4.7 million in the third quarter of 2021. For the first nine months of 2022, net income was $15.9 million, compared to $14.7 million in the same period of 2021.
Net interest income: Net interest income for the third quarter 2022 improved by $2.5 million or 19% compared to the third quarter of 2021. For the first nine months of 2022, net interest income increased $5.0 million or 12.7% compared to the same period in 2021. While Paycheck Protection Program loan fees declined during the period, rising interest rates within the loan portfolio and growth in investment securities led to a $2.8 million increase in gross interest income during the nine-month period ended September 30, 2022, compared to the same period in 2021. The Corporation continued to benefit from a strategic reduction in higher-cost borrowings as interest expense on deposits and borrowings decreased $2.2 million, or 37.1%, for the nine-month period ended September 30, 2022, compared to the same period in 2021. The provision for loan loss for the first nine months of 2022 was $540,000 compared to a $599,000 provision reversal during the same period in 2021, when initial concerns over potential credit quality issues related to the onset of the pandemic did not materialize.
Noninterest income and expenses: Noninterest income increased $180,000 during the first nine months of this year, compared to the same period in 2021. A $1.1 million increase in service charges and fees including $605,000 of income related to mortgage servicing rights was offset by a $891,000 reduction in gain on sale of loans as residential mortgage originations declined in comparison to 2021. Noninterest expenses for the first nine months of 2022 increased $2.4 million, as a result of increased compensation and benefits cost, other losses, consulting, donations and community relations expenses.
Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 3.28% and 2.85% for the three months ended September 30, 2022 and 2021, an increase of 43 basis points. The net yield was 3.10% for the nine-month period ended September 30, 2022, compared to 2.87% for the same period in 2021. Considering the rate increases during the first nine months of 2022 and the anticipation of future rate increases in the remainder of the year, the Corporation expects continued improvement in the net yield on interest earning assets.
Balance Sheet
Assets: The Corporation had $2.06 billion in total assets and $2.8 billion of assets under management as of September 30, 2022. Managed assets included loans sold and serviced of $268.9 million and $464.1 million in investment and trust assets managed by Isabella Wealth.
Loans: Loans outstanding as of September 30, 2022 totaled $1.2 billion. Gross loans declined $64.9 million since December 31, 2021 due to a decrease in the amount of $70.5 million in advances to mortgage brokers, which is included within the commercial loan portfolio, however, is not considered a component of the Corporation's core
lending business. Credit quality remained strong as evidenced by total past due and nonaccrual loans which were 0.32% of gross loans as of September 30, 2022.
Deposits: Total deposits were $1.8 billion as of September 30, 2022, an increase of $80.7 million, or 4.7%, since December 31, 2021. Growth in accounts from new customers is the driving factor behind this increase.
Capital: The Bank is considered a “well-capitalized” institution, as its capital ratios exceeded the minimum designated requirements. As of September 30, 2022, the Bank’s Tier 1 Leverage Ratio was 9.07%, Tier 1 Capital Ratio was 14.10% and Total Capital Ratio was 14.83%. 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 third quarter of 2022, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation’s closing stock price of $21.40 as of September 30, 2022, the annualized cash dividend yield was 5.05%.
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.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
| September 30<br>2022 | December 31<br>2021 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | ||||
| Cash and demand deposits due from banks | $ | 26,763 | $ | 25,563 |
| Fed Funds sold and interest bearing balances due from banks | 72,149 | 79,767 | ||
| Total cash and cash equivalents | 98,912 | 105,330 | ||
| Available-for-sale securities, at fair value | 581,233 | 490,601 | ||
| Mortgage loans available-for-sale | 934 | 1,735 | ||
| Loans | ||||
| Commercial | 730,504 | 807,439 | ||
| Agricultural | 96,850 | 93,955 | ||
| Residential real estate | 334,412 | 326,361 | ||
| Consumer | 74,385 | 73,282 | ||
| Gross loans | 1,236,151 | 1,301,037 | ||
| Less allowance for loan and lease losses | 9,677 | 9,103 | ||
| Net loans | 1,226,474 | 1,291,934 | ||
| Premises and equipment | 25,107 | 24,419 | ||
| Corporate owned life insurance policies | 32,764 | 32,472 | ||
| Equity securities without readily determinable fair values | 15,496 | 17,383 | ||
| Goodwill and other intangible assets | 48,290 | 48,302 | ||
| Accrued interest receivable and other assets | 34,767 | 19,982 | ||
| TOTAL ASSETS | $ | 2,063,977 | $ | 2,032,158 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Deposits | ||||
| Noninterest bearing | $ | 510,127 | $ | 448,352 |
| Interest bearing demand deposits | 368,537 | 364,563 | ||
| Certificates of deposit under $250 and other savings | 842,081 | 818,841 | ||
| Certificates of deposit over $250 | 70,288 | 78,583 | ||
| Total deposits | 1,791,033 | 1,710,339 | ||
| Borrowed funds | ||||
| Federal funds purchased and repurchase agreements | 52,479 | 50,162 | ||
| Federal Home Loan Bank advances | — | 20,000 | ||
| Subordinated debt, net of unamortized issuance costs | 29,225 | 29,158 | ||
| Total borrowed funds | 81,704 | 99,320 | ||
| Accrued interest payable and other liabilities | 14,628 | 11,451 | ||
| Total liabilities | 1,887,365 | 1,821,110 | ||
| Shareholders’ equity | ||||
| Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,564,348 shares (including 139,084 shares held in the Rabbi Trust) in 2022 and 7,532,641 shares (including 105,654 shares held in the Rabbi Trust) in 2021 | 129,094 | 129,052 | ||
| Shares to be issued for deferred compensation obligations | 4,888 | 4,545 | ||
| Retained earnings | 85,497 | 75,592 | ||
| Accumulated other comprehensive income (loss) | (42,867) | 1,859 | ||
| Total shareholders’ equity | 176,612 | 211,048 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,063,977 | $ | 2,032,158 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended <br> September 30 | Nine Months Ended <br> September 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Interest income | ||||||||
| Loans, including fees | $ | 13,563 | $ | 13,033 | $ | 39,120 | $ | 38,634 |
| Available-for-sale securities | ||||||||
| Taxable | 2,209 | 1,224 | 5,851 | 3,529 | ||||
| Nontaxable | 726 | 725 | 2,090 | 2,393 | ||||
| Federal funds sold and other | 521 | 160 | 822 | 516 | ||||
| Total interest income | 17,019 | 15,142 | 47,883 | 45,072 | ||||
| Interest expense | ||||||||
| Deposits | 908 | 1,251 | 2,698 | 4,363 | ||||
| Borrowings | ||||||||
| Federal funds purchased and repurchase agreements | 9 | 13 | 26 | 40 | ||||
| Federal Home Loan Bank advances | 33 | 299 | 152 | 1,093 | ||||
| Subordinated debt, net of unamortized issuance costs | 266 | 266 | 798 | 349 | ||||
| Total interest expense | 1,216 | 1,829 | 3,674 | 5,845 | ||||
| Net interest income | 15,803 | 13,313 | 44,209 | 39,227 | ||||
| Provision for loan losses | 18 | (107) | 540 | (599) | ||||
| Net interest income after provision for loan losses | 15,785 | 13,420 | 43,669 | 39,826 | ||||
| Noninterest income | ||||||||
| Service charges and fees | 2,122 | 1,964 | 6,615 | 5,489 | ||||
| Wealth management fees | 679 | 772 | 2,217 | 2,274 | ||||
| Earnings on corporate owned life insurance policies | 223 | 201 | 655 | 577 | ||||
| Net gain on sale of mortgage loans | 174 | 339 | 568 | 1,459 | ||||
| Other | 54 | 91 | 339 | 415 | ||||
| Total noninterest income | 3,252 | 3,367 | 10,394 | 10,214 | ||||
| Noninterest expenses | ||||||||
| Compensation and benefits | 6,369 | 6,116 | 18,480 | 17,693 | ||||
| Furniture and equipment | 1,490 | 1,349 | 4,382 | 4,049 | ||||
| Occupancy | 918 | 866 | 2,813 | 2,726 | ||||
| Other | 3,140 | 2,854 | 9,223 | 8,029 | ||||
| Total noninterest expenses | 11,917 | 11,185 | 34,898 | 32,497 | ||||
| Income before federal income tax expense | 7,120 | 5,602 | 19,165 | 17,543 | ||||
| Federal income tax expense | 1,233 | 916 | 3,249 | 2,838 | ||||
| NET INCOME | $ | 5,887 | $ | 4,686 | $ | 15,916 | $ | 14,705 |
| Earnings per common share | ||||||||
| Basic | $ | 0.78 | $ | 0.59 | $ | 2.11 | $ | 1.85 |
| Diluted | $ | 0.77 | $ | 0.58 | $ | 2.08 | $ | 1.82 |
| Cash dividends per common share | $ | 0.27 | $ | 0.27 | $ | 0.81 | $ | 0.81 |
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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2022 | September 30, 2021 | |||||||||||
| Average<br>Balance | Tax<br>Equivalent<br>Interest | Average<br>Yield /<br>Rate | Average<br>Balance | Tax<br>Equivalent<br>Interest | Average<br>Yield /<br>Rate | |||||||
| INTEREST EARNING ASSETS | ||||||||||||
| Loans | $ | 1,256,723 | $ | 13,563 | 4.32 | % | $ | 1,203,468 | $ | 13,033 | 4.33 | % |
| Taxable investment securities | 490,751 | 2,190 | 1.79 | % | 332,056 | 1,224 | 1.47 | % | ||||
| Nontaxable investment securities | 110,058 | 1,002 | 3.64 | % | 113,857 | 1,035 | 3.64 | % | ||||
| Fed funds sold | 16 | — | 1.98 | % | 4 | — | 0.02 | % | ||||
| Other | 101,687 | 521 | 2.05 | % | 262,023 | 160 | 0.24 | % | ||||
| Total earning assets | 1,959,235 | 17,276 | 3.53 | % | 1,911,408 | 15,452 | 3.23 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for loan losses | (9,691) | (9,361) | ||||||||||
| Cash and demand deposits due from banks | 24,875 | 30,120 | ||||||||||
| Premises and equipment | 24,475 | 24,540 | ||||||||||
| Accrued income and other assets | 78,151 | 109,750 | ||||||||||
| Total assets | $ | 2,077,045 | $ | 2,066,457 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 381,282 | $ | 64 | 0.07 | % | $ | 366,345 | $ | 46 | 0.05 | % |
| Savings deposits | 642,916 | 270 | 0.17 | % | 565,814 | 161 | 0.11 | % | ||||
| Time deposits | 262,628 | 574 | 0.87 | % | 323,322 | 1,044 | 1.29 | % | ||||
| Federal funds purchased and repurchase agreements | 49,267 | 9 | 0.07 | % | 62,790 | 13 | 0.08 | % | ||||
| Federal Home Loan Bank advances | 6,739 | 33 | 1.96 | % | 62,718 | 299 | 1.91 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,211 | 266 | 3.64 | % | 29,124 | 266 | 3.65 | % | ||||
| Total interest bearing liabilities | 1,372,043 | 1,216 | 0.35 | % | 1,410,113 | 1,829 | 0.52 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 497,215 | 419,017 | ||||||||||
| Other | 13,627 | 12,826 | ||||||||||
| Shareholders’ equity | 194,160 | 224,501 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,077,045 | $ | 2,066,457 | ||||||||
| Net interest income (FTE) | $ | 16,060 | $ | 13,623 | ||||||||
| Net yield on interest earning assets (FTE) | 3.28 | % | 2.85 | % | ||||||||
| Nine Months Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| September 30, 2022 | September 30, 2021 | |||||||||||
| Average<br>Balance | Tax<br>Equivalent<br>Interest | Average<br>Yield /<br>Rate | Average<br>Balance | Tax<br>Equivalent<br>Interest | Average<br>Yield /<br>Rate | |||||||
| INTEREST EARNING ASSETS | ||||||||||||
| Loans | $ | 1,251,206 | $ | 39,120 | 4.17 | % | $ | 1,202,060 | $ | 38,634 | 4.29 | % |
| Taxable investment securities | 462,675 | 5,795 | 1.67 | % | 268,435 | 3,529 | 1.75 | % | ||||
| Nontaxable investment securities | 107,041 | 2,934 | 3.65 | % | 122,675 | 3,346 | 3.64 | % | ||||
| Fed funds sold | 8 | — | 1.69 | % | 3 | — | 0.01 | % | ||||
| Other | 113,847 | 822 | 0.96 | % | 273,997 | 516 | 0.25 | % | ||||
| Total earning assets | 1,934,777 | 48,671 | 3.35 | % | 1,867,170 | 46,025 | 3.29 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for loan losses | (9,372) | (9,502) | ||||||||||
| Cash and demand deposits due from banks | 24,843 | 29,236 | ||||||||||
| Premises and equipment | 24,401 | 24,836 | ||||||||||
| Accrued income and other assets | 87,989 | 109,835 | ||||||||||
| Total assets | $ | 2,062,638 | $ | 2,021,575 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 379,952 | $ | 170 | 0.06 | % | $ | 337,561 | $ | 168 | 0.07 | % |
| Savings deposits | 628,823 | 600 | 0.13 | % | 549,213 | 459 | 0.11 | % | ||||
| Time deposits | 275,586 | 1,928 | 0.93 | % | 345,960 | 3,736 | 1.44 | % | ||||
| Federal funds purchased and repurchase agreements | 48,119 | 26 | 0.07 | % | 56,424 | 40 | 0.09 | % | ||||
| Federal Home Loan Bank advances | 10,513 | 152 | 1.93 | % | 79,048 | 1,093 | 1.84 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,189 | 798 | 3.65 | % | 12,907 | 349 | 3.61 | % | ||||
| Total interest bearing liabilities | 1,372,182 | 3,674 | 0.36 | % | 1,381,113 | 5,845 | 0.56 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 475,373 | 405,046 | ||||||||||
| Other | 15,242 | 13,144 | ||||||||||
| Shareholders’ equity | 199,841 | 222,272 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,062,638 | $ | 2,021,575 | ||||||||
| Net interest income (FTE) | $ | 44,997 | $ | 40,180 | ||||||||
| Net yield on interest earning assets (FTE) | 3.10 | % | 2.87 | % |
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30<br>2022 | June 30<br>2022 | March 31<br>2022 | December 31<br>2021 | September 30<br>2021 | |||||||||||
| PER SHARE | |||||||||||||||
| Basic earnings | $ | 0.78 | $ | 0.70 | $ | 0.63 | $ | 0.63 | $ | 0.59 | |||||
| Diluted earnings | $ | 0.77 | $ | 0.69 | $ | 0.62 | $ | 0.63 | $ | 0.58 | |||||
| Dividends | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.27 | |||||
| Tangible book value | $ | 16.96 | $ | 18.85 | $ | 19.56 | $ | 21.61 | $ | 21.87 | |||||
| Quoted market value | |||||||||||||||
| High | $ | 24.95 | $ | 26.25 | $ | 26.00 | $ | 29.00 | $ | 26.74 | |||||
| Low | $ | 21.39 | $ | 23.00 | $ | 24.50 | $ | 24.75 | $ | 22.55 | |||||
| Close (1) | $ | 21.40 | $ | 24.80 | $ | 25.85 | $ | 25.50 | $ | 26.03 | |||||
| Common shares outstanding (1) | 7,564,348 | 7,553,113 | 7,542,758 | 7,532,641 | 7,926,610 | ||||||||||
| Average number of common shares outstanding | 7,555,333 | 7,545,001 | 7,533,711 | 7,570,961 | 7,932,227 | ||||||||||
| Average number of diluted common shares outstanding | 7,650,950 | 7,650,145 | 7,639,688 | 7,679,019 | 8,044,572 | ||||||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average total assets | 1.13 | % | 1.04 | % | 0.92 | % | 0.96 | % | 0.91 | % | |||||
| Return on average shareholders' equity | 12.13 | % | 10.83 | % | 9.02 | % | 8.83 | % | 8.35 | % | |||||
| Return on average tangible shareholders' equity | 16.15 | % | 14.38 | % | 11.72 | % | 11.31 | % | 10.65 | % | |||||
| Net interest margin yield (FTE) | 3.28 | % | 3.16 | % | 2.86 | % | 2.86 | % | 2.85 | % | |||||
| ASSETS UNDER MANAGEMENT (1) | |||||||||||||||
| Loans sold with servicing retained | $ | 268,879 | $ | 273,294 | $ | 275,556 | $ | 278,844 | $ | 285,392 | |||||
| Assets managed by Isabella Wealth | $ | 464,136 | $ | 454,535 | $ | 501,829 | $ | 516,243 | $ | 491,784 | |||||
| Total assets under management | $ | 2,796,992 | $ | 2,776,202 | $ | 2,838,318 | $ | 2,827,245 | $ | 2,859,877 | |||||
| ASSET QUALITY (1) | |||||||||||||||
| Nonaccrual status loans | $ | 580 | $ | 540 | $ | 747 | $ | 1,245 | $ | 3,077 | |||||
| Performing troubled debt restructurings | $ | 18,702 | $ | 21,905 | $ | 22,335 | $ | 25,276 | $ | 26,189 | |||||
| Foreclosed assets | $ | 240 | $ | 241 | $ | 187 | $ | 211 | $ | 348 | |||||
| Net loan charge-offs (recoveries) | $ | 41 | $ | (11) | $ | (64) | $ | 71 | $ | 160 | |||||
| Nonperforming loans to gross loans | 0.05 | % | 0.05 | % | 0.06 | % | 0.10 | % | 0.25 | % | |||||
| Nonperforming assets to total assets | 0.04 | % | 0.05 | % | 0.05 | % | 0.08 | % | 0.18 | % | |||||
| Allowance for loan and lease losses to gross loans | 0.78 | % | 0.76 | % | 0.76 | % | 0.70 | % | 0.73 | % | |||||
| CAPITAL RATIOS (1) | |||||||||||||||
| Shareholders' equity to assets | 8.56 | % | 9.31 | % | 9.50 | % | 10.39 | % | 10.64 | % | |||||
| Tier 1 leverage | 8.44 | % | 8.38 | % | 8.12 | % | 7.97 | % | 8.37 | % | |||||
| Common equity tier 1 capital | 12.92 | % | 12.44 | % | 12.83 | % | 12.07 | % | 13.07 | % | |||||
| Tier 1 risk-based capital | 12.92 | % | 12.44 | % | 12.83 | % | 12.07 | % | 13.07 | % | |||||
| Total risk-based capital | 15.85 | % | 15.33 | % | 15.84 | % | 14.94 | % | 16.03 | % |
(1) At end of period
| Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30<br>2022 | September 30<br>2021 | September 30<br>2020 | |||||||
| PER SHARE | |||||||||
| Basic earnings | $ | 2.11 | $ | 1.85 | $ | 1.46 | |||
| Diluted earnings | $ | 2.08 | $ | 1.82 | $ | 1.43 | |||
| Dividends | $ | 0.81 | $ | 0.81 | $ | 0.81 | |||
| Tangible book value | $ | 16.96 | $ | 21.87 | $ | 21.75 | |||
| Quoted market value | |||||||||
| High | $ | 26.25 | $ | 26.74 | $ | 24.50 | |||
| Low | $ | 21.39 | $ | 19.45 | $ | 15.60 | |||
| Close (1) | $ | 21.40 | $ | 26.03 | $ | 16.74 | |||
| Common shares outstanding (1) | 7,564,348 | 7,926,610 | 8,007,901 | ||||||
| Average number of common shares outstanding | 7,544,909 | 7,948,578 | 7,945,762 | ||||||
| Average number of diluted common shares outstanding | 7,647,117 | 8,065,252 | 8,096,802 | ||||||
| PERFORMANCE RATIOS | |||||||||
| Return on average total assets | 1.03 | % | 0.97 | % | 0.82 | % | |||
| Return on average shareholders' equity | 10.62 | % | 8.82 | % | 7.04 | % | |||
| Return on average tangible shareholders' equity | 14.01 | % | 11.28 | % | 9.05 | % | |||
| Net interest margin yield (FTE) | 3.10 | % | 2.87 | % | 2.93 | % | |||
| ASSETS UNDER MANAGEMENT (1) | |||||||||
| Loans sold with servicing retained | $ | 268,879 | $ | 285,392 | $ | 289,524 | |||
| Assets managed by Isabella Wealth | $ | 464,136 | $ | 491,784 | $ | 403,730 | |||
| Total assets under management | $ | 2,796,992 | $ | 2,859,877 | $ | 2,664,951 | |||
| ASSET QUALITY (1) | |||||||||
| Nonaccrual status loans | $ | 580 | $ | 3,077 | $ | 4,946 | |||
| Performing troubled debt restructurings | $ | 18,702 | $ | 26,189 | $ | 23,257 | |||
| Foreclosed assets | $ | 240 | $ | 348 | $ | 651 | |||
| Net loan charge-offs (recoveries) | $ | (34) | $ | 52 | $ | (158) | |||
| Nonperforming loans to gross loans | 0.05 | % | 0.25 | % | 0.38 | % | |||
| Nonperforming assets to total assets | 0.04 | % | 0.18 | % | 0.30 | % | |||
| Allowance for loan and lease losses to gross loans | 0.78 | % | 0.73 | % | 0.73 | % | |||
| CAPITAL RATIOS (1) | |||||||||
| Shareholders' equity to assets | 8.56 | % | 10.64 | % | 11.29 | % | |||
| Tier 1 leverage | 8.44 | % | 8.37 | % | 8.76 | % | |||
| Common equity tier 1 capital | 12.92 | % | 13.07 | % | 12.90 | % | |||
| Tier 1 risk-based capital | 12.92 | % | 13.07 | % | 12.90 | % | |||
| Total risk-based capital | 15.85 | % | 16.03 | % | 13.64 | % |
(1) At end of period
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)
(Dollars in thousands)
| September 30<br>2022 | June 30<br>2022 | March 31<br>2022 | December 31<br>2021 | September 30<br>2021 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial | $ | 730,504 | $ | 772,567 | $ | 727,614 | $ | 807,439 | $ | 757,993 | ||||||||||||
| Agricultural | 96,850 | 94,726 | 88,169 | 93,955 | 93,782 | |||||||||||||||||
| Residential real estate | 334,412 | 329,795 | 328,559 | 326,361 | 321,620 | |||||||||||||||||
| Consumer | 74,385 | 74,822 | 74,029 | 73,282 | 75,163 | |||||||||||||||||
| Gross loans | $ | 1,236,151 | $ | 1,271,910 | $ | 1,218,371 | $ | 1,301,037 | $ | 1,248,558 | September 30<br>2022 | June 30<br>2022 | March 31<br>2022 | December 31<br>2021 | September 30<br>2021 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Noninterest bearing demand deposits | $ | 510,127 | $ | 488,110 | $ | 461,473 | $ | 448,352 | $ | 430,950 | ||||||||||||
| Interest bearing demand deposits | 368,537 | 370,284 | 387,187 | 364,563 | 374,137 | |||||||||||||||||
| Savings deposits | 651,129 | 635,397 | 635,195 | 596,662 | 572,136 | |||||||||||||||||
| Certificates of deposit | 260,741 | 265,477 | 279,708 | 297,696 | 312,027 | |||||||||||||||||
| Internet certificates of deposit | 499 | 598 | 598 | 3,066 | 3,066 | |||||||||||||||||
| Total deposits | $ | 1,791,033 | $ | 1,759,866 | $ | 1,764,161 | $ | 1,710,339 | $ | 1,692,316 | September 30<br>2022 | June 30<br>2022 | March 31<br>2022 | December 31<br>2021 | September 30<br>2021 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| U.S. Treasury | $ | 206,791 | $ | 214,474 | $ | 218,268 | $ | 209,703 | $ | 192,069 | ||||||||||||
| States and political subdivisions | 114,000 | 119,649 | 114,015 | 121,205 | 128,689 | |||||||||||||||||
| Auction rate money market preferred | 2,479 | 2,497 | 2,867 | 3,242 | 3,246 | |||||||||||||||||
| Mortgage-backed securities | 41,042 | 45,796 | 49,578 | 56,148 | 62,030 | |||||||||||||||||
| Collateralized mortgage obligations | 209,720 | 167,572 | 152,441 | 92,301 | 100,767 | |||||||||||||||||
| Corporate | 7,201 | 7,602 | 7,750 | 8,002 | 7,583 | |||||||||||||||||
| Available-for-sale securities, at fair value | $ | 581,233 | $ | 557,590 | $ | 544,919 | $ | 490,601 | $ | 494,384 | September 30<br>2022 | June 30<br>2022 | March 31<br>2022 | December 31<br>2021 | September 30<br>2021 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Securities sold under agreements to repurchase without stated maturity dates | $ | 52,479 | $ | 47,247 | $ | 51,353 | $ | 50,162 | $ | 67,519 | ||||||||||||
| Federal Home Loan Bank advances | — | 10,000 | 10,000 | 20,000 | 60,000 | |||||||||||||||||
| Subordinated debt, net of unamortized issuance costs | 29,225 | 29,203 | 29,181 | 29,158 | 29,136 | |||||||||||||||||
| Total borrowed funds | $ | 81,704 | $ | 86,450 | $ | 90,534 | $ | 99,320 | $ | 156,655 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)
(Dollars in thousands)
| Three Months Ended <br> September 30 | Nine Months Ended <br> September 30 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| Service charges and fees | ||||||||||||||||||
| ATM and debit card fees | $ | 1,212 | $ | 1,156 | $ | 3,507 | $ | 3,282 | ||||||||||
| Service charges and fees on deposit accounts | 673 | 601 | 1,913 | 1,518 | ||||||||||||||
| Freddie Mac servicing fee | 168 | 177 | 506 | 572 | ||||||||||||||
| Net mortgage servicing rights income (loss) | — | (28) | 477 | (128) | ||||||||||||||
| Other fees for customer services | 69 | 58 | 212 | 245 | ||||||||||||||
| Total service charges and fees | 2,122 | 1,964 | 6,615 | 5,489 | ||||||||||||||
| Wealth management fees | 679 | 772 | 2,217 | 2,274 | ||||||||||||||
| Earnings on corporate owned life insurance policies | 223 | 201 | 655 | 577 | ||||||||||||||
| Net gain on sale of mortgage loans | 174 | 339 | 568 | 1,459 | ||||||||||||||
| Other | 54 | 91 | 339 | 415 | ||||||||||||||
| Total noninterest income | $ | 3,252 | $ | 3,367 | $ | 10,394 | $ | 10,214 | Three Months Ended <br> September 30 | Nine Months Ended <br> September 30 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| Compensation and benefits | $ | 6,369 | $ | 6,116 | $ | 18,480 | $ | 17,693 | ||||||||||
| Furniture and equipment | 1,490 | 1,349 | 4,382 | 4,049 | ||||||||||||||
| Occupancy | 918 | 866 | 2,813 | 2,726 | ||||||||||||||
| Other | ||||||||||||||||||
| Audit, consulting, and legal fees | 595 | 665 | 1,749 | 1,553 | ||||||||||||||
| ATM and debit card fees | 543 | 473 | 1,485 | 1,352 | ||||||||||||||
| Marketing costs | 209 | 236 | 812 | 683 | ||||||||||||||
| Donations and community relations | 239 | 198 | 665 | 452 | ||||||||||||||
| Memberships and subscriptions | 230 | 234 | 654 | 662 | ||||||||||||||
| Loan underwriting fees | 243 | 238 | 640 | 628 | ||||||||||||||
| Director fees | 210 | 166 | 598 | 505 | ||||||||||||||
| All other | 871 | 644 | 2,620 | 2,194 | ||||||||||||||
| Total other noninterest expenses | 3,140 | 2,854 | 9,223 | 8,029 | ||||||||||||||
| Total noninterest expenses | $ | 11,917 | $ | 11,185 | $ | 34,898 | $ | 32,497 |