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): July 20, 2023
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 July 20, 2023, Isabella Bank Corporation issued a press release announcing its results of operations for the three and six months ended June 30, 2023.
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 issuedJuly20, 2023 |
| 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: | July 20, 2023 | By: | /s/ Jae A. Evans |
| Jae A. Evans, President & CEO |
INDEX TO EXHIBITS
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issuedJuly20, 2023 |
| 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 Second Quarter 2023 Earnings
Growth in loans, Isabella Wealth during Q2; results remain strong despite interest rate headwinds
Mt. Pleasant, Michigan, July 20, 2023 — Isabella Bank Corporation (the “Corporation”) (OTCQX: ISBA) has reported net income of $4.6 million for the second quarter of 2023 and $10 million for the six-month period ended June 30, 2023. Earnings per common share were $0.62 for the second quarter of 2023 and $1.32 for the first half of the year.
Second Quarter 2023 Highlights:
•Loans grew $64 million, or 5%, during the quarter.
•Interest income improved 21%, compared to second quarter of 2022.
•Assets managed by Isabella Wealth grew more than $22 million, or 4%, during the quarter.
•Shareholders earned a cash dividend of $0.28 per share, with an annualized dividend yield of 5.46%, as of June 30, 2023.
“Our financial performance remains strong despite the challenges our industry faces with current interest rate dynamics,” said Jae A. Evans, President and Chief Executive Officer. “Competition for deposits was strong during the quarter, leading to continued pressure on our net interest margin and a decline in deposits. Despite this decline, our liquidity position remains strong.
“We are safeguarding the long-term success of the bank with strategic decisions and initiatives that will enhance shareholder value and the customer experience. One such action, for which planning began last year, is our first move into Bay County. The upcoming opening of our Bay City loan production office (LPO) is a great opportunity for us to assist individuals and businesses throughout the area with their loan needs," Evans said. "The continued growth of our footprint demonstrates our ongoing commitment to customers and communities as a leading, independent community bank.”
Operating Results
Net income: Net income for second quarter 2023 was $4.6 million, compared to $5.3 million in the second quarter of 2022. Net income for the first six months of the year was $10 million, remaining stable year over year. Interest income continued to improve in the second quarter and nearly offset the increase in interest expense due to rising rates on deposits.
Net interest income: Net interest income for second quarter 2023 decreased $248,000 compared to the second quarter of 2022. For the first six months of the year, net interest income increased $1.6 million compared to the same period in 2022. Rising interest rates and continued loan growth led to an increase in gross interest income of $3.4 million and $7.2 million for the second quarter and first six months of 2023, compared to the same periods in 2022. While the Bank continues to benefit from a strategic reduction in higher-cost borrowings, implemented in prior periods, rising interest rates on deposits led to a $3.6 million and $5.6 million increase in interest expense for the second quarter and first six months of 2023, compared the same periods in 2022.
Noninterest income and expenses: Noninterest income was $3.6 million for the second quarter of both 2023 and 2022. For the first six months of 2023, noninterest income decreased $245,000 compared to the same period in 2022, driven by a $554,000 reduction in mortgage servicing rights income, as rising interest rates led to a decline in both the volume and balance of loans serviced. Noninterest expenses increased $878,000 during the second quarter of 2023 and $1.8 million for the six-month period ended June 30, 2023 in comparison to the same periods in 2022. The increase was primarily the result of increased expense related to compensation, equipment, and FDIC insurance.
Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 3.11% and 3.17% for the three and six months ended June 30, 2023, compared to 3.16% and 3.01% for the same periods in 2022. While the second quarter of 2023 fell in comparison to the same period in 2022, net yield for the first half of 2023 improved significantly through strategic initiatives - such as the reduced reliance on higher-cost borrowed funds and brokered deposits - that were implemented in prior periods in anticipation of rising interest rates.
Balance Sheet
Assets: Total assets were $2 billion and assets under management were $2.9 billion as of June 30, 2023. Managed assets include loans sold and serviced of $255 million as well as $594 million in investment and trust assets managed by Isabella Wealth. Investment and trust assets increased $80 million, or 15.5%, since December 31, 2022.
Loans: Loans outstanding as of June 30, 2023 totaled $1.3 billion. Gross loans increased $63.8 million during the second quarter and rose $70.2 million compared to December 31, 2022. This reflects growth in the consumer portfolio and a resumption of the Bank's engagement with a mortgage participation program. Adherence to
strong underwriting standards continued to be reflected in the low levels of total past due and nonaccrual loans, which were $3.7 million, or 0.28% of total loans, at the end of the period.
Deposits: Total deposits were $1.7 billion as of June 30, 2023, a decrease of $29.3 million, or 1.7%, since December 31, 2022. The decline occurred during the second quarter, and was driven by strong pricing competition within the industry.
Capital: The Bank is considered a “well-capitalized” institution, as its capital ratios exceeded the minimum designated requirements. As of June 30, 2023, the Bank’s Tier 1 Leverage Ratio was 9.17%, Tier 1 Capital Ratio was 13.08%, and Total Capital Ratio was 14.00%. 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 second quarter of 2023, the Corporation paid a $0.28 per common share cash dividend. Based on the Corporation’s closing stock price of $20.50 as of June 30, 2023, the annualized cash dividend yield was 5.46%.
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 120 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 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 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)
| June 30<br>2023 | December 31<br>2022 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | ||||
| Cash and demand deposits due from banks | $ | 25,584 | $ | 27,420 |
| Fed Funds sold and interest bearing balances due from banks | 4,296 | 11,504 | ||
| Total cash and cash equivalents | 29,880 | 38,924 | ||
| Available-for-sale securities, at fair value | 530,497 | 580,481 | ||
| Mortgage loans available-for-sale | 362 | 379 | ||
| Loans | 1,334,402 | 1,264,173 | ||
| Less allowance for credit losses | 12,833 | 9,850 | ||
| Net loans | 1,321,569 | 1,254,323 | ||
| Premises and equipment | 26,383 | 25,553 | ||
| Corporate owned life insurance policies | 33,433 | 32,988 | ||
| Equity securities without readily determinable fair values | 15,746 | 15,746 | ||
| Goodwill and other intangible assets | 48,285 | 48,287 | ||
| Accrued interest receivable and other assets | 36,293 | 33,586 | ||
| TOTAL ASSETS | $ | 2,042,448 | $ | 2,030,267 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Deposits | ||||
| Noninterest bearing | $ | 458,845 | $ | 494,346 |
| Interest bearing demand deposits | 335,922 | 372,155 | ||
| Certificates of deposit under $250 and other savings | 824,272 | 810,642 | ||
| Certificates of deposit over $250 | 95,909 | 67,132 | ||
| Total deposits | 1,714,948 | 1,744,275 | ||
| Borrowed funds | ||||
| Federal funds purchased and repurchase agreements | 37,102 | 57,771 | ||
| Federal Home Loan Bank advances | 55,000 | — | ||
| Subordinated debt, net of unamortized issuance costs | 29,290 | 29,245 | ||
| Total borrowed funds | 121,392 | 87,016 | ||
| Accrued interest payable and other liabilities | 17,677 | 12,766 | ||
| Total liabilities | 1,854,017 | 1,844,057 | ||
| Shareholders’ equity | ||||
| Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,496,826 shares (including 195,217 shares held in the Rabbi Trust) in 2023 and 7,559,421 shares (including 154,879 shares held in the Rabbi Trust) in 2022 | 126,278 | 128,651 | ||
| Shares to be issued for deferred compensation obligations | 5,395 | 5,005 | ||
| Retained earnings | 93,175 | 89,748 | ||
| Accumulated other comprehensive income (loss) | (36,417) | (37,194) | ||
| Total shareholders’ equity | 188,431 | 186,210 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,042,448 | $ | 2,030,267 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended <br> June 30 | Six Months Ended <br> June 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Interest income | ||||||||
| Loans, including fees | $ | 15,931 | $ | 13,179 | $ | 30,820 | $ | 25,557 |
| Available-for-sale securities | ||||||||
| Taxable | 2,382 | 2,027 | 4,884 | 3,642 | ||||
| Nontaxable | 665 | 704 | 1,383 | 1,364 | ||||
| Federal funds sold and other | 517 | 192 | 1,003 | 301 | ||||
| Total interest income | 19,495 | 16,102 | 38,090 | 30,864 | ||||
| Interest expense | ||||||||
| Deposits | 4,109 | 854 | 6,938 | 1,790 | ||||
| Borrowings | ||||||||
| Federal funds purchased and repurchase agreements | 171 | 8 | 320 | 17 | ||||
| Federal Home Loan Bank advances | 270 | 47 | 270 | 119 | ||||
| Subordinated debt, net of unamortized issuance costs | 266 | 266 | 532 | 532 | ||||
| Total interest expense | 4,816 | 1,175 | 8,060 | 2,458 | ||||
| Net interest income | 14,679 | 14,927 | 30,030 | 28,406 | ||||
| Provision for credit losses | 196 | 485 | 237 | 522 | ||||
| Net interest income after provision for credit losses | 14,483 | 14,442 | 29,793 | 27,884 | ||||
| Noninterest income | ||||||||
| Service charges and fees | 2,047 | 2,284 | 4,025 | 4,493 | ||||
| Wealth management fees | 981 | 784 | 1,767 | 1,538 | ||||
| Earnings on corporate owned life insurance policies | 226 | 222 | 452 | 432 | ||||
| Net gain on sale of mortgage loans | 56 | 170 | 123 | 394 | ||||
| Other | 294 | 135 | 530 | 285 | ||||
| Total noninterest income | 3,604 | 3,595 | 6,897 | 7,142 | ||||
| Noninterest expenses | ||||||||
| Compensation and benefits | 6,561 | 6,037 | 13,150 | 12,111 | ||||
| Furniture and equipment | 1,613 | 1,442 | 3,210 | 2,892 | ||||
| Occupancy | 993 | 929 | 1,998 | 1,895 | ||||
| Other | 3,372 | 3,253 | 6,379 | 6,083 | ||||
| Total noninterest expenses | 12,539 | 11,661 | 24,737 | 22,981 | ||||
| Income before federal income tax expense | 5,548 | 6,376 | 11,953 | 12,045 | ||||
| Federal income tax expense | 918 | 1,081 | 2,002 | 2,016 | ||||
| NET INCOME | $ | 4,630 | $ | 5,295 | $ | 9,951 | $ | 10,029 |
| Earnings per common share | ||||||||
| Basic | $ | 0.62 | $ | 0.70 | $ | 1.32 | $ | 1.33 |
| Diluted | $ | 0.61 | $ | 0.69 | $ | 1.31 | $ | 1.31 |
| Cash dividends per common share | $ | 0.28 | $ | 0.27 | $ | 0.56 | $ | 0.54 |
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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | June 30, 2022 | |||||||||||
| 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) | $ | 1,300,593 | $ | 15,931 | 4.90 | % | $ | 1,259,573 | $ | 13,179 | 4.19 | % |
| Taxable investment securities | 485,897 | 2,356 | 1.94 | % | 475,010 | 2,027 | 1.71 | % | ||||
| Nontaxable investment securities | 97,755 | 946 | 3.87 | % | 109,367 | 975 | 3.57 | % | ||||
| Fed funds sold | 4 | — | 4.70 | % | 6 | — | 1.47 | % | ||||
| Other | 37,664 | 517 | 5.49 | % | 77,176 | 192 | 1.00 | % | ||||
| Total earning assets | 1,921,913 | 19,750 | 4.11 | % | 1,921,132 | 16,373 | 3.41 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for credit losses | (12,759) | (9,288) | ||||||||||
| Cash and demand deposits due from banks | 24,807 | 22,838 | ||||||||||
| Premises and equipment | 26,401 | 24,269 | ||||||||||
| Accrued income and other assets | 80,374 | 84,590 | ||||||||||
| Total assets | $ | 2,040,736 | $ | 2,043,541 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 348,341 | 194 | 0.22 | % | $ | 375,123 | 56 | 0.06 | % | ||
| Savings deposits | 628,673 | 1,849 | 1.18 | % | 627,916 | 171 | 0.11 | % | ||||
| Time deposits | 303,117 | 2,066 | 2.73 | % | 274,284 | 627 | 0.91 | % | ||||
| Federal funds purchased and repurchase agreements | 35,495 | 171 | 1.93 | % | 46,029 | 8 | 0.07 | % | ||||
| Federal Home Loan Bank advances | 20,404 | 270 | 5.29 | % | 10,000 | 47 | 1.88 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,275 | 266 | 3.63 | % | 29,188 | 266 | 3.65 | % | ||||
| Total interest bearing liabilities | 1,365,305 | 4,816 | 1.41 | % | 1,362,540 | 1,175 | 0.34 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 462,953 | 470,139 | ||||||||||
| Other | 16,906 | 15,237 | ||||||||||
| Shareholders’ equity | 195,572 | 195,625 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,040,736 | $ | 2,043,541 | ||||||||
| Net interest income (FTE) | $ | 14,934 | $ | 15,198 | ||||||||
| Net yield on interest earning assets (FTE) | 3.11 | % | 3.16 | % |
(1) Includes loans and mortgage loans AFS
| Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | June 30, 2022 | |||||||||||
| 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) | $ | 1,284,520 | $ | 30,820 | 4.80 | % | $ | 1,247,746 | $ | 25,557 | 4.10 | % |
| Taxable investment securities | 495,340 | 4,827 | 1.95 | % | 448,405 | 3,642 | 1.62 | % | ||||
| Nontaxable investment securities | 101,973 | 1,967 | 3.86 | % | 105,507 | 1,895 | 3.59 | % | ||||
| Fed funds sold | 10 | — | 4.77 | % | 4 | — | 1.12 | % | ||||
| Other | 49,059 | 1,003 | 4.09 | % | 120,027 | 301 | 0.50 | % | ||||
| Total earning assets | 1,930,902 | 38,617 | 4.00 | % | 1,921,689 | 31,395 | 3.27 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for credit losses | (12,709) | (9,209) | ||||||||||
| Cash and demand deposits due from banks | 24,918 | 24,827 | ||||||||||
| Premises and equipment | 26,132 | 24,364 | ||||||||||
| Accrued income and other assets | 75,746 | 93,648 | ||||||||||
| Total assets | $ | 2,044,989 | $ | 2,055,319 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 363,942 | 340 | 0.19 | % | $ | 379,275 | 106 | 0.06 | % | ||
| Savings deposits | 637,281 | 3,315 | 1.04 | % | 621,661 | 330 | 0.11 | % | ||||
| Time deposits | 285,389 | 3,283 | 2.30 | % | 282,172 | 1,354 | 0.96 | % | ||||
| Federal funds purchased and repurchase agreements | 37,656 | 320 | 1.70 | % | 47,535 | 17 | 0.07 | % | ||||
| Federal Home Loan Bank advances | 10,193 | 270 | 5.30 | % | 12,431 | 119 | 1.91 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,264 | 532 | 3.64 | % | 29,177 | 532 | 3.65 | % | ||||
| Total interest bearing liabilities | 1,363,725 | 8,060 | 1.18 | % | 1,372,251 | 2,458 | 0.36 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 474,656 | 464,271 | ||||||||||
| Other | 15,005 | 16,061 | ||||||||||
| Shareholders’ equity | 191,603 | 202,736 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,044,989 | $ | 2,055,319 | ||||||||
| Net interest income (FTE) | $ | 30,557 | $ | 28,937 | ||||||||
| Net yield on interest earning assets (FTE) | 3.17 | % | 3.01 | % |
(1) Includes loans and mortgage loans AFS
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | September 30<br>2022 | June 30<br>2022 | |||||||||||
| PER SHARE | |||||||||||||||
| Basic earnings | $ | 0.62 | $ | 0.70 | $ | 0.84 | $ | 0.78 | $ | 0.70 | |||||
| Diluted earnings | $ | 0.61 | $ | 0.70 | $ | 0.83 | $ | 0.77 | $ | 0.69 | |||||
| Dividends | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.27 | $ | 0.27 | |||||
| Tangible book value | $ | 18.69 | $ | 19.24 | $ | 18.25 | $ | 16.96 | $ | 18.85 | |||||
| Quoted market value | |||||||||||||||
| High | $ | 26.00 | $ | 25.10 | $ | 24.02 | $ | 24.95 | $ | 26.25 | |||||
| Low | $ | 19.13 | $ | 22.08 | $ | 21.00 | $ | 21.39 | $ | 23.00 | |||||
| Close (1) | $ | 20.50 | $ | 24.80 | $ | 23.50 | $ | 21.40 | $ | 24.80 | |||||
| Common shares outstanding (1) | 7,496,826 | 7,540,015 | 7,559,421 | 7,564,348 | 7,553,113 | ||||||||||
| Average number of common shares outstanding | 7,498,584 | 7,556,585 | 7,564,405 | 7,555,333 | 7,545,001 | ||||||||||
| Average number of diluted common shares outstanding | 7,567,527 | 7,634,417 | 7,648,152 | 7,650,950 | 7,650,145 | ||||||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average total assets | 0.91 | % | 1.04 | % | 1.24 | % | 1.13 | % | 1.04 | % | |||||
| Return on average shareholders' equity | 9.47 | % | 11.35 | % | 14.01 | % | 12.13 | % | 10.83 | % | |||||
| Return on average tangible shareholders' equity | 12.58 | % | 15.28 | % | 19.14 | % | 16.15 | % | 14.38 | % | |||||
| Net interest margin yield (FTE) | 3.11 | % | 3.22 | % | 3.43 | % | 3.28 | % | 3.16 | % | |||||
| ASSETS UNDER MANAGEMENT (1) | |||||||||||||||
| Loans sold with servicing retained | $ | 254,934 | $ | 259,512 | $ | 264,206 | $ | 268,879 | $ | 273,294 | |||||
| Assets managed by Isabella Wealth | $ | 593,530 | $ | 571,453 | $ | 513,918 | $ | 464,136 | $ | 454,535 | |||||
| Total assets under management | $ | 2,890,912 | $ | 2,915,589 | $ | 2,808,391 | $ | 2,796,992 | $ | 2,776,202 | |||||
| ASSET QUALITY (1) | |||||||||||||||
| Nonaccrual loans | $ | 414 | $ | 488 | $ | 457 | $ | 580 | $ | 540 | |||||
| Foreclosed assets | $ | 405 | $ | 414 | $ | 439 | $ | 240 | $ | 241 | |||||
| Net loan charge-offs (recoveries) | $ | (3) | $ | (9) | $ | (230) | $ | 41 | $ | (11) | |||||
| Nonperforming loans to gross loans | 0.04 | % | 0.04 | % | 0.04 | % | 0.05 | % | 0.05 | % | |||||
| Nonperforming assets to total assets | 0.05 | % | 0.05 | % | 0.05 | % | 0.04 | % | 0.05 | % | |||||
| Allowance for credit losses to gross loans | 0.96 | % | 0.99 | % | 0.78 | % | 0.78 | % | 0.76 | % | |||||
| CAPITAL RATIOS (1) | |||||||||||||||
| Shareholders' equity to assets | 9.23 | % | 9.27 | % | 9.17 | % | 8.56 | % | 9.31 | % | |||||
| Tier 1 leverage | 8.70 | % | 8.58 | % | 8.61 | % | 8.44 | % | 8.38 | % | |||||
| Common equity tier 1 capital | 12.39 | % | 12.71 | % | 12.91 | % | 12.92 | % | 12.44 | % | |||||
| Tier 1 risk-based capital | 12.39 | % | 12.71 | % | 12.91 | % | 12.92 | % | 12.44 | % | |||||
| Total risk-based capital | 15.37 | % | 15.77 | % | 15.79 | % | 15.85 | % | 15.33 | % |
(1) At end of period
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
| Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30<br>2023 | June 30<br>2022 | June 30<br>2021 | |||||||
| PER SHARE | |||||||||
| Basic earnings | $ | 1.32 | $ | 1.33 | $ | 1.26 | |||
| Diluted earnings | $ | 1.31 | $ | 1.31 | $ | 1.24 | |||
| Dividends | $ | 0.56 | $ | 0.54 | $ | 0.54 | |||
| Tangible book value | $ | 18.69 | $ | 18.85 | $ | 21.73 | |||
| Quoted market value | |||||||||
| High | $ | 26.00 | $ | 26.25 | $ | 23.90 | |||
| Low | $ | 19.13 | $ | 23.00 | $ | 19.45 | |||
| Close (1) | $ | 20.50 | $ | 24.80 | $ | 23.00 | |||
| Common shares outstanding (1) | 7,496,826 | 7,553,113 | 7,946,658 | ||||||
| Average number of common shares outstanding | 7,528,251 | 7,539,799 | 7,956,889 | ||||||
| Average number of diluted common shares outstanding | 7,601,613 | 7,645,357 | 8,075,763 | ||||||
| PERFORMANCE RATIOS | |||||||||
| Return on average total assets | 0.97 | % | 0.98 | % | 1.00 | % | |||
| Return on average shareholders' equity | 10.39 | % | 9.89 | % | 9.06 | % | |||
| Return on average tangible shareholders' equity | 13.89 | % | 13.00 | % | 11.61 | % | |||
| Net interest margin yield (FTE) | 3.17 | % | 3.01 | % | 2.88 | % | |||
| ASSETS UNDER MANAGEMENT (1) | |||||||||
| Loans sold with servicing retained | $ | 254,934 | $ | 273,294 | $ | 290,033 | |||
| Assets managed by Isabella Wealth | $ | 593,530 | $ | 454,535 | $ | 493,287 | |||
| Total assets under management | $ | 2,890,912 | $ | 2,776,202 | $ | 2,814,727 | |||
| ASSET QUALITY (1) | |||||||||
| Nonaccrual loans | $ | 414 | $ | 540 | $ | 3,329 | |||
| Foreclosed assets | $ | 405 | $ | 241 | $ | 365 | |||
| Net loan charge-offs (recoveries) | $ | (12) | $ | (75) | $ | (108) | |||
| Nonperforming loans to gross loans | 0.04 | % | 0.05 | % | 0.28 | % | |||
| Nonperforming assets to total assets | 0.05 | % | 0.05 | % | 0.19 | % | |||
| Allowance for credit losses to gross loans | 0.96 | % | 0.76 | % | 0.78 | % | |||
| CAPITAL RATIOS (1) | |||||||||
| Shareholders' equity to assets | 9.23 | % | 9.31 | % | 10.88 | % | |||
| Tier 1 leverage | 8.70 | % | 8.38 | % | 8.46 | % | |||
| Common equity tier 1 capital | 12.39 | % | 12.44 | % | 13.81 | % | |||
| Tier 1 risk-based capital | 12.39 | % | 12.44 | % | 13.81 | % | |||
| Total risk-based capital | 15.37 | % | 15.33 | % | 17.00 | % |
(1) At end of period
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)
(Dollars in thousands)
| June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | September 30<br>2022 | June 30<br>2022 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial and industrial | $ | 194,914 | $ | 189,185 | $ | 178,428 | $ | 180,124 | $ | 175,674 | ||||||||||||
| Commercial real estate | 564,254 | 566,410 | 566,012 | 552,399 | 559,602 | |||||||||||||||||
| Advances to mortgage brokers | 39,099 | — | — | 1,484 | 37,291 | |||||||||||||||||
| Agricultural | 96,689 | 94,760 | 104,985 | 97,527 | 94,726 | |||||||||||||||||
| Residential real estate | 343,474 | 336,186 | 336,694 | 330,232 | 329,795 | |||||||||||||||||
| Consumer | 95,972 | 84,110 | 78,054 | 74,385 | 74,822 | |||||||||||||||||
| Gross loans | $ | 1,334,402 | $ | 1,270,651 | $ | 1,264,173 | $ | 1,236,151 | $ | 1,271,910 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | September 30<br>2022 | June 30<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Noninterest bearing demand deposits | $ | 458,845 | $ | 478,829 | $ | 494,346 | $ | 510,127 | $ | 488,110 | ||||||||||||
| Interest bearing demand deposits | 335,922 | 383,602 | 372,155 | 368,537 | 370,284 | |||||||||||||||||
| Savings deposits | 606,644 | 662,495 | 625,734 | 651,129 | 635,397 | |||||||||||||||||
| Certificates of deposit | 313,288 | 288,103 | 251,541 | 260,741 | 265,477 | |||||||||||||||||
| Internet certificates of deposit | 249 | 499 | 499 | 499 | 598 | |||||||||||||||||
| Total deposits | $ | 1,714,948 | $ | 1,813,528 | $ | 1,744,275 | $ | 1,791,033 | $ | 1,759,866 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | September 30<br>2022 | June 30<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| U.S. Treasury | $ | 209,353 | $ | 212,086 | $ | 208,701 | $ | 206,791 | $ | 214,474 | ||||||||||||
| States and political subdivisions | 95,242 | 108,719 | 117,512 | 114,000 | 119,649 | |||||||||||||||||
| Auction rate money market preferred | 2,637 | 2,716 | 2,342 | 2,479 | 2,497 | |||||||||||||||||
| Mortgage-backed securities | 35,532 | 37,797 | 39,070 | 41,042 | 45,796 | |||||||||||||||||
| Collateralized mortgage obligations | 180,996 | 200,252 | 205,728 | 209,720 | 167,572 | |||||||||||||||||
| Corporate | 6,737 | 7,080 | 7,128 | 7,201 | 7,602 | |||||||||||||||||
| Available-for-sale securities, at fair value | $ | 530,497 | $ | 568,650 | $ | 580,481 | $ | 581,233 | $ | 557,590 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | September 30<br>2022 | June 30<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Securities sold under agreements to repurchase without stated maturity dates | $ | 37,102 | $ | 31,995 | $ | 57,771 | $ | 52,479 | $ | 47,247 | ||||||||||||
| Federal Home Loan Bank advances | 55,000 | — | — | — | 10,000 | |||||||||||||||||
| Subordinated debt, net of unamortized issuance costs | 29,290 | 29,267 | 29,245 | 29,225 | 29,203 | |||||||||||||||||
| Total borrowed funds | $ | 121,392 | $ | 61,262 | $ | 87,016 | $ | 81,704 | $ | 86,450 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)
(Dollars in thousands)
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Service charges and fees | ||||||||||||||||||
| ATM and debit card fees | $ | 1,244 | $ | 1,202 | $ | 2,404 | $ | 2,295 | ||||||||||
| Service charges and fees on deposit accounts | 588 | 631 | 1,199 | 1,240 | ||||||||||||||
| Freddie Mac servicing fee | 162 | 167 | 321 | 338 | ||||||||||||||
| Net mortgage servicing rights income (loss) | (41) | 213 | (77) | 477 | ||||||||||||||
| Other fees for customer services | 94 | 71 | 178 | 143 | ||||||||||||||
| Total service charges and fees | 2,047 | 2,284 | 4,025 | 4,493 | ||||||||||||||
| Wealth management fees | 981 | 784 | 1,767 | 1,538 | ||||||||||||||
| Earnings on corporate owned life insurance policies | 226 | 222 | 452 | 432 | ||||||||||||||
| Net gain on sale of mortgage loans | 56 | 170 | 123 | 394 | ||||||||||||||
| Other | 294 | 135 | 530 | 285 | ||||||||||||||
| Total noninterest income | $ | 3,604 | $ | 3,595 | $ | 6,897 | $ | 7,142 | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Compensation and benefits | $ | 6,561 | $ | 6,037 | $ | 13,150 | $ | 12,111 | ||||||||||
| Furniture and equipment | 1,613 | 1,442 | 3,210 | 2,892 | ||||||||||||||
| Occupancy | 993 | 929 | 1,998 | 1,895 | ||||||||||||||
| Other | ||||||||||||||||||
| Audit, consulting, and legal fees | 557 | 605 | 1,092 | 1,154 | ||||||||||||||
| ATM and debit card fees | 409 | 508 | 809 | 942 | ||||||||||||||
| Other losses | 425 | 233 | 572 | 316 | ||||||||||||||
| Marketing costs | 240 | 364 | 485 | 603 | ||||||||||||||
| Memberships and subscriptions | 230 | 207 | 470 | 424 | ||||||||||||||
| FDIC insurance premiums | 233 | 131 | 461 | 256 | ||||||||||||||
| Donations and community relations | 256 | 139 | 440 | 426 | ||||||||||||||
| Loan underwriting fees | 216 | 215 | 431 | 397 | ||||||||||||||
| Director fees | 198 | 187 | 402 | 388 | ||||||||||||||
| All other | 608 | 664 | 1,217 | 1,177 | ||||||||||||||
| Total other noninterest expenses | 3,372 | 3,253 | 6,379 | 6,083 | ||||||||||||||
| Total noninterest expenses | $ | 12,539 | $ | 11,661 | $ | 24,737 | $ | 22,981 |