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 21, 2021
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 21, 2021, Isabella Bank Corporation issued a press release announcing its results of operations for the three and nine-month periods ended September 30, 2021.
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 issuedOctober21, 2021 |
| 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 21, 2021 | By: | /s/ Jae A. Evans |
| Jae A. Evans, President & CEO |
INDEX TO EXHIBITS
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issuedOctober21, 2021 |
| 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:
Amber Zaske, Community Relations Specialist
Phone: 989-779-6309 Fax: 989-775-5501
Isabella Bank Corporation Announces Strong Third Quarter 2021 Earnings
Net income climbs 27% for the year compared to the same period in 2020
Mt. Pleasant, Michigan, October 21, 2021 — Isabella Bank Corporation (the “Corporation”) (OTCQX: ISBA) has released positive earnings results for the third quarter of 2021. The Corporation reported net income of $4.7 million for the quarter and $14.7 million for the first nine months of 2021. Both figures reflect increases over the same periods a year ago.
Earnings per common share were $0.59 in the third quarter and $1.85 for the first nine months of the year, increases from the same periods of 2020 at $0.55 and $1.46, respectively.
Highlights include growth in several key areas:
•Net income increased 27% when comparing the first three quarters of 2021 to the same period in 2020.
•Deposits rose to $1.7 billion, an increase of $126 million since the start of the year, largely the result of U.S. Small Business Administration Paycheck Protection Program (PPP) loans, government stimulus funds and new customer accounts.
•Total assets were $2.1 billion and assets under management were $2.9 billion as of September 30, 2021, both records for the Corporation.
Tender Offer Results:
The Corporation conducted a modified Dutch auction from September 1 to October 13, 2021 which designated a portion of funds from its recent $30 million subordinated debt issuance to purchase up to $20 million in ISBA common stock. The tender offer resulted in the Corporation purchasing 396,577 shares at a final price of $27.00 per share, for a total of $10.7 million. The tendered shares represented 5% of the outstanding shares.
“Our successful Dutch auction resulted in a reduction of ISBA shares in the open market, which should improve several key metrics for shareholders,” said Jae A. Evans, President and Chief Executive Officer. “Our ongoing stock repurchase plan and this tender offer both align with our strategic plan to improve shareholder value.
“Overall, Isabella Bank Corporation continues to grow its customer base through trusted, quality service as an independent, community bank,” Evans said. “We’re focused on meeting our customer needs while pursuing smart, strategic initiatives that benefit our shareholders, customers and communities over the long-term.”
Operating Results
Net income: Net income for the third quarter 2021 was $4.7 million, compared to $4.4 million in 2020. For the first nine months of 2021, net income was $14.7 million, compared to $11.6 million in the same period of 2020.
Net interest income: Net interest income for the first nine months of 2021 increased $2.4 million, or 6.6%, compared to the same period in 2020. Loan fees generated from participation in the SBA's Payroll Protection Program helped offset a reduction in gross interest income resulting from the decline in interest rates. Conversely, lower interest rates and a reduction in higher-cost borrowings benefited the Corporation with a $5.1 million decrease in interest expense during the nine-month period. The provision for loan losses also decreased $2 million when comparing the first nine months of 2021 to the same period in 2020, as a result of continued strong credit quality.
Noninterest income and expenses: Noninterest income decreased $90,000 during the first nine months of 2021 compared to 2020, when the Corporation recorded significant gains from redemption of bank-owned life insurance policies. During the same period in 2021, service charges and fees increased $800,000 and wealth management fees rose by $397,000. Noninterest expenses declined $98,000 as a result of a continued focus on reducing operating expenses.
Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 2.85% and 2.87% for the third quarter and first nine months of 2021, respectively, compared to 2.89% and 2.93% for the same periods in 2020. The Corporation’s strategic plan includes programs to improve net yield on interest earning assets, including enhanced pricing related to loans and less reliance on higher cost borrowed funds and brokered deposits as funding sources.
Balance Sheet
Assets: Total assets stood at $2.1 billion and assets under management were at $2.9 billion as of September 30, 2021, both records for the Corporation. Assets under management include loans sold and serviced of $285 million and investment and trust assets managed by Isabella Wealth of $492 million, in addition to assets on the consolidated balance sheet. Assets under management increased $195 million compared to September 30, 2020.
Loans: Residential mortgage loans increased $14.1 million in the first nine months of the year and loans outstanding at the end of the third quarter totaled $1.2 billion. PPP loans, included within the commercial segment of the loan portfolio, declined by $20.4 million since the end of 2020 due to continued PPP loan forgiveness. This reduction in PPP loans was offset with growth in new commercial lending by $21.7 million.
Deposits: Total deposits were $1.7 billion as of September 30, 2021, an increase of $126 million since December 31, 2020.
Liquidity: The Corporation's liquidity position remains strong as evidenced by its $807.3 million of cash and available funds as of September 30, 2021. This total was comprised of $206.5 million in cash and cash equivalents, $260.8 million in available lines of credit and approximately $340 million in unencumbered investment securities.
Capital: The Bank is designated as a “well-capitalized” institution, as its capital ratios exceeded the minimum requirements. As of September 30, 2021, the Bank’s Tier 1 Leverage Ratio was 8.32%, Tier 1 Capital Ratio was 12.94% and Total Capital Ratio was 13.64%. 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 2021, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation’s closing stock price of $26.03 as of September 30, 2021, the annualized cash dividend yield was 4.15%.
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 118 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>2021 | December 31<br>2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | ||||
| Cash and demand deposits due from banks | $ | 29,876 | $ | 31,296 |
| Interest bearing balances due from banks | 176,606 | 215,344 | ||
| Total cash and cash equivalents | 206,482 | 246,640 | ||
| Available-for-sale securities, at fair value | 494,384 | 339,228 | ||
| Mortgage loans available-for-sale | 818 | 2,741 | ||
| Loans | ||||
| Commercial | 757,993 | 756,686 | ||
| Agricultural | 93,782 | 100,461 | ||
| Residential real estate | 321,620 | 307,543 | ||
| Consumer | 75,163 | 73,621 | ||
| Gross loans | 1,248,558 | 1,238,311 | ||
| Less allowance for loan and lease losses | 9,093 | 9,744 | ||
| Net loans | 1,239,465 | 1,228,567 | ||
| Premises and equipment | 24,569 | 25,140 | ||
| Corporate owned life insurance policies | 32,690 | 28,292 | ||
| Equity securities without readily determinable fair values | 17,383 | 17,383 | ||
| Goodwill and other intangible assets | 48,309 | 48,331 | ||
| Accrued interest receivable and other assets | 18,601 | 21,056 | ||
| TOTAL ASSETS | $ | 2,082,701 | $ | 1,957,378 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Deposits | ||||
| Noninterest bearing | $ | 430,950 | $ | 375,395 |
| Interest bearing demand deposits | 374,137 | 302,444 | ||
| Certificates of deposit under $250 and other savings | 806,185 | 781,286 | ||
| Certificates of deposit over $250 | 81,044 | 107,192 | ||
| Total deposits | 1,692,316 | 1,566,317 | ||
| Borrowed funds | ||||
| Federal funds purchased and repurchase agreements | 67,519 | 68,747 | ||
| Federal Home Loan Bank advances | 60,000 | 90,000 | ||
| Subordinated debt, net of unamortized issuance costs | 29,136 | — | ||
| Total borrowed funds | 156,655 | 158,747 | ||
| Accrued interest payable and other liabilities | 12,088 | 13,726 | ||
| Total liabilities | 1,861,059 | 1,738,790 | ||
| Shareholders’ equity | ||||
| Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,926,610 shares (including 93,759 shares held in the Rabbi Trust) in 2021 and 7,997,247 shares (including 59,162 shares held in the Rabbi Trust) in 2020 | 140,004 | 142,247 | ||
| Shares to be issued for deferred compensation obligations | 4,455 | 4,183 | ||
| Retained earnings | 72,796 | 64,460 | ||
| Accumulated other comprehensive income | 4,387 | 7,698 | ||
| Total shareholders’ equity | 221,642 | 218,588 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,082,701 | $ | 1,957,378 |
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 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Interest income | ||||||||
| Loans, including fees | $ | 13,033 | $ | 13,554 | $ | 38,634 | $ | 40,105 |
| Available-for-sale securities | ||||||||
| Taxable | 1,224 | 1,071 | 3,529 | 3,912 | ||||
| Nontaxable | 725 | 911 | 2,393 | 2,950 | ||||
| Federal funds sold and other | 160 | 164 | 516 | 803 | ||||
| Total interest income | 15,142 | 15,700 | 45,072 | 47,770 | ||||
| Interest expense | ||||||||
| Deposits | 1,251 | 1,996 | 4,363 | 7,034 | ||||
| Borrowings | ||||||||
| Federal funds purchased and repurchase agreements | 13 | 7 | 40 | 22 | ||||
| Federal Home Loan Bank advances | 299 | 1,200 | 1,093 | 3,911 | ||||
| Subordinated debt, net of unamortized issuance costs | 266 | — | 349 | — | ||||
| Total interest expense | 1,829 | 3,203 | 5,845 | 10,967 | ||||
| Net interest income | 13,313 | 12,497 | 39,227 | 36,803 | ||||
| Provision for loan losses | (107) | 516 | (599) | 1,409 | ||||
| Net interest income after provision for loan losses | 13,420 | 11,981 | 39,826 | 35,394 | ||||
| Noninterest income | ||||||||
| Service charges and fees | 1,964 | 1,950 | 5,489 | 4,689 | ||||
| Wealth management fees | 772 | 649 | 2,274 | 1,877 | ||||
| Net gain on sale of mortgage loans | 339 | 1,036 | 1,459 | 1,653 | ||||
| Earnings on corporate owned life insurance policies | 201 | 187 | 577 | 558 | ||||
| Gains from redemption of corporate owned life insurance policies | — | — | 150 | 873 | ||||
| Other | 91 | 238 | 265 | 654 | ||||
| Total noninterest income | 3,367 | 4,060 | 10,214 | 10,304 | ||||
| Noninterest expenses | ||||||||
| Compensation and benefits | 6,116 | 6,101 | 17,693 | 17,763 | ||||
| Furniture and equipment | 1,349 | 1,426 | 4,049 | 4,318 | ||||
| Occupancy | 866 | 889 | 2,726 | 2,668 | ||||
| Other | 2,854 | 2,534 | 8,029 | 7,846 | ||||
| Total noninterest expenses | 11,185 | 10,950 | 32,497 | 32,595 | ||||
| Income before federal income tax expense | 5,602 | 5,091 | 17,543 | 13,103 | ||||
| Federal income tax expense | 916 | 734 | 2,838 | 1,495 | ||||
| NET INCOME | $ | 4,686 | $ | 4,357 | $ | 14,705 | $ | 11,608 |
| Earnings per common share | ||||||||
| Basic | $ | 0.59 | $ | 0.55 | $ | 1.85 | $ | 1.46 |
| Diluted | $ | 0.58 | $ | 0.54 | $ | 1.82 | $ | 1.43 |
| 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, 2021 | September 30, 2020 | |||||||||||
| 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 | $ | 1,203,468 | $ | 13,033 | 4.33 | % | $ | 1,275,297 | $ | 13,554 | 4.25 | % |
| Taxable investment securities | 332,056 | 1,224 | 1.47 | % | 223,119 | 1,071 | 1.92 | % | ||||
| Nontaxable investment securities | 113,857 | 1,035 | 3.64 | % | 135,168 | 1,238 | 3.66 | % | ||||
| Fed funds sold | 4 | — | 0.02 | % | — | — | — | % | ||||
| Other | 262,023 | 160 | 0.24 | % | 140,042 | 164 | 0.47 | % | ||||
| Total earning assets | 1,911,408 | 15,452 | 3.23 | % | 1,773,626 | 16,027 | 3.61 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for loan losses | (9,361) | (8,996) | ||||||||||
| Cash and demand deposits due from banks | 30,120 | 29,311 | ||||||||||
| Premises and equipment | 24,540 | 25,627 | ||||||||||
| Accrued income and other assets | 109,750 | 122,279 | ||||||||||
| Total assets | $ | 2,066,457 | $ | 1,941,847 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 366,345 | $ | 46 | 0.05 | % | $ | 277,695 | $ | 94 | 0.14 | % |
| Savings deposits | 565,814 | 161 | 0.11 | % | 462,867 | 173 | 0.15 | % | ||||
| Time deposits | 323,322 | 1,044 | 1.29 | % | 375,916 | 1,729 | 1.84 | % | ||||
| Federal funds purchased and repurchase agreements | 62,790 | 13 | 0.08 | % | 30,583 | 7 | 0.09 | % | ||||
| Federal Home Loan Bank advances | 62,718 | 299 | 1.91 | % | 205,000 | 1,200 | 2.34 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,124 | 266 | 3.65 | % | — | — | — | % | ||||
| Total interest bearing liabilities | 1,410,113 | 1,829 | 0.52 | % | 1,352,061 | 3,203 | 0.95 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 419,017 | 349,212 | ||||||||||
| Other | 12,826 | 16,441 | ||||||||||
| Shareholders’ equity | 224,501 | 224,133 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,066,457 | $ | 1,941,847 | ||||||||
| Net interest income (FTE) | $ | 13,623 | $ | 12,824 | ||||||||
| Net yield on interest earning assets (FTE) | 2.85 | % | 2.89 | % | ||||||||
| Nine Months Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| September 30, 2021 | September 30, 2020 | |||||||||||
| 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 | $ | 1,202,060 | $ | 38,634 | 4.29 | % | $ | 1,228,579 | $ | 40,105 | 4.35 | % |
| Taxable investment securities | 268,435 | 3,529 | 1.75 | % | 237,509 | 3,912 | 2.20 | % | ||||
| Nontaxable investment securities | 122,675 | 3,346 | 3.64 | % | 142,893 | 3,989 | 3.72 | % | ||||
| Fed funds sold | 3 | — | 0.01 | % | 4 | — | 0.07 | % | ||||
| Other | 273,997 | 516 | 0.25 | % | 114,108 | 803 | 0.94 | % | ||||
| Total earning assets | 1,867,170 | 46,025 | 3.29 | % | 1,723,093 | 48,809 | 3.78 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for loan losses | (9,502) | (8,580) | ||||||||||
| Cash and demand deposits due from banks | 29,236 | 23,772 | ||||||||||
| Premises and equipment | 24,836 | 25,911 | ||||||||||
| Accrued income and other assets | 109,835 | 117,852 | ||||||||||
| Total assets | $ | 2,021,575 | $ | 1,882,048 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 337,561 | $ | 168 | 0.07 | % | $ | 254,283 | $ | 263 | 0.14 | % |
| Savings deposits | 549,213 | 459 | 0.11 | % | 445,702 | 1,064 | 0.32 | % | ||||
| Time deposits | 345,960 | 3,736 | 1.44 | % | 389,375 | 5,707 | 1.95 | % | ||||
| Federal funds purchased and repurchase agreements | 56,424 | 40 | 0.09 | % | 30,847 | 22 | 0.10 | % | ||||
| Federal Home Loan Bank advances | 79,048 | 1,093 | 1.84 | % | 222,445 | 3,911 | 2.34 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 12,907 | 349 | 3.61 | % | — | — | — | % | ||||
| Total interest bearing liabilities | 1,381,113 | 5,845 | 0.56 | % | 1,342,652 | 10,967 | 1.09 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 405,046 | 304,322 | ||||||||||
| Other | 13,144 | 15,314 | ||||||||||
| Shareholders’ equity | 222,272 | 219,760 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,021,575 | $ | 1,882,048 | ||||||||
| Net interest income (FTE) | $ | 40,180 | $ | 37,842 | ||||||||
| Net yield on interest earning assets (FTE) | 2.87 | % | 2.93 | % |
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30<br>2021 | June 30<br>2021 | March 31<br>2021 | December 31<br>2020 | September 30<br>2020 | |||||||||||
| PER SHARE | |||||||||||||||
| Basic earnings (loss) | $ | 0.59 | $ | 0.58 | $ | 0.68 | $ | (0.10) | $ | 0.55 | |||||
| Diluted earnings (loss) | $ | 0.58 | $ | 0.57 | $ | 0.67 | $ | (0.10) | $ | 0.54 | |||||
| Dividends | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.27 | |||||
| Tangible book value | $ | 21.87 | $ | 21.73 | $ | 21.35 | $ | 21.29 | $ | 21.75 | |||||
| Quoted market value | |||||||||||||||
| High | $ | 26.74 | $ | 23.90 | $ | 22.50 | $ | 21.95 | $ | 19.00 | |||||
| Low | $ | 22.55 | $ | 21.00 | $ | 19.45 | $ | 15.73 | $ | 15.75 | |||||
| Close (1) | $ | 26.03 | $ | 23.00 | $ | 21.75 | $ | 19.57 | $ | 16.74 | |||||
| Common shares outstanding (1) | 7,926,610 | 7,946,658 | 7,958,883 | 7,997,247 | 8,007,901 | ||||||||||
| Average number of common shares outstanding | 7,932,227 | 7,969,462 | 8,006,144 | 7,966,811 | 7,966,811 | ||||||||||
| Average number of diluted common shares outstanding | 8,044,572 | 8,088,524 | 8,133,157 | 8,111,283 | 8,111,283 | ||||||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average total assets | 0.91 | % | 0.91 | % | 1.09 | % | (0.15) | % | 0.90 | % | |||||
| Return on average shareholders' equity | 8.35 | % | 8.35 | % | 9.78 | % | (1.30) | % | 7.78 | % | |||||
| Return on average tangible shareholders' equity | 10.65 | % | 10.69 | % | 12.53 | % | (1.63) | % | 9.93 | % | |||||
| Net interest margin yield (FTE) | 2.85 | % | 2.79 | % | 2.98 | % | 3.04 | % | 2.89 | % | |||||
| ASSETS UNDER MANAGEMENT (1) | |||||||||||||||
| Loans sold with servicing retained | $ | 285,392 | $ | 290,033 | $ | 298,514 | $ | 301,377 | $ | 289,524 | |||||
| Assets managed by Isabella Wealth | $ | 491,784 | $ | 493,287 | $ | 454,459 | $ | 443,967 | $ | 403,730 | |||||
| Total assets under management | $ | 2,859,877 | $ | 2,814,727 | $ | 2,768,405 | $ | 2,702,722 | $ | 2,664,951 | |||||
| ASSET QUALITY (1) | |||||||||||||||
| Nonaccrual status loans | $ | 3,077 | $ | 3,329 | $ | 4,532 | $ | 5,313 | $ | 4,946 | |||||
| Performing troubled debt restructurings | $ | 26,189 | $ | 28,947 | $ | 22,200 | $ | 23,257 | $ | 20,536 | |||||
| Foreclosed assets | $ | 348 | $ | 365 | $ | 384 | $ | 527 | $ | 651 | |||||
| Net loan charge-offs (recoveries) | $ | 160 | $ | (58) | $ | (50) | $ | 18 | $ | (113) | |||||
| Nonperforming loans to gross loans | 0.25 | % | 0.28 | % | 0.38 | % | 0.43 | % | 0.38 | % | |||||
| Nonperforming assets to total assets | 0.18 | % | 0.19 | % | 0.26 | % | 0.31 | % | 0.30 | % | |||||
| Allowance for loan and lease losses to gross loans | 0.73 | % | 0.78 | % | 0.78 | % | 0.79 | % | 0.73 | % | |||||
| CAPITAL RATIOS (1) | |||||||||||||||
| Shareholders' equity to assets | 10.64 | % | 10.88 | % | 10.83 | % | 11.17 | % | 11.29 | % | |||||
| Tier 1 leverage | 8.37 | % | 8.46 | % | 8.56 | % | 8.37 | % | 8.76 | % | |||||
| Common equity tier 1 capital | 13.07 | % | 13.81 | % | 13.77 | % | 12.97 | % | 12.90 | % | |||||
| Tier 1 risk-based capital | 13.07 | % | 13.81 | % | 13.77 | % | 12.97 | % | 12.90 | % | |||||
| Total risk-based capital | 16.03 | % | 17.00 | % | 14.54 | % | 13.75 | % | 13.64 | % |
(1) At end of period
| Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30<br>2021 | September 30<br>2020 | September 30<br>2019 | |||||||
| PER SHARE | |||||||||
| Basic earnings | $ | 1.85 | $ | 1.46 | $ | 1.53 | |||
| Diluted earnings | $ | 1.82 | $ | 1.43 | $ | 1.50 | |||
| Dividends | $ | 0.81 | $ | 0.81 | $ | 0.78 | |||
| Tangible book value | $ | 21.87 | $ | 21.75 | $ | 20.66 | |||
| Quoted market value | |||||||||
| High | $ | 26.74 | $ | 24.50 | $ | 24.50 | |||
| Low | $ | 19.45 | $ | 15.60 | $ | 22.01 | |||
| Close (1) | $ | 26.03 | $ | 16.74 | $ | 22.30 | |||
| Common shares outstanding (1) | 7,926,610 | 8,007,901 | 7,938,234 | ||||||
| Average number of common shares outstanding | 7,948,578 | 7,945,762 | 7,895,610 | ||||||
| Average number of diluted common shares outstanding | 8,065,252 | 8,096,802 | 8,084,965 | ||||||
| PERFORMANCE RATIOS | |||||||||
| Return on average total assets | 0.97 | % | 0.82 | % | 0.89 | % | |||
| Return on average shareholders' equity | 8.82 | % | 7.04 | % | 7.85 | % | |||
| Return on average tangible shareholders' equity | 11.28 | % | 9.05 | % | 10.29 | % | |||
| Net interest margin yield (FTE) | 2.87 | % | 2.93 | % | 3.07 | % | |||
| ASSETS UNDER MANAGEMENT (1) | |||||||||
| Loans sold with servicing retained | $ | 285,392 | $ | 289,524 | $ | 258,873 | |||
| Assets managed by Isabella Wealth | $ | 491,784 | $ | 403,730 | $ | 475,574 | |||
| Total assets under management | $ | 2,859,877 | $ | 2,664,951 | $ | 2,548,131 | |||
| ASSET QUALITY (1) | |||||||||
| Nonaccrual status loans | $ | 3,077 | $ | 4,946 | $ | 8,107 | |||
| Performing troubled debt restructurings | $ | 26,189 | $ | 20,536 | $ | 20,310 | |||
| Foreclosed assets | $ | 348 | $ | 651 | $ | 513 | |||
| Net loan charge-offs (recoveries) | $ | 52 | $ | (158) | $ | 193 | |||
| Nonperforming loans to gross loans | 0.25 | % | 0.38 | % | 0.59 | % | |||
| Nonperforming assets to total assets | 0.18 | % | 0.30 | % | 0.42 | % | |||
| Allowance for loan and lease losses to gross loans | 0.73 | % | 0.73 | % | 0.69 | % | |||
| CAPITAL RATIOS (1) | |||||||||
| Shareholders' equity to assets | 10.64 | % | 11.29 | % | 11.71 | % | |||
| Tier 1 leverage | 8.37 | % | 8.76 | % | 9.16 | % | |||
| Common equity tier 1 capital | 13.07 | % | 12.90 | % | 12.58 | % | |||
| Tier 1 risk-based capital | 13.07 | % | 12.90 | % | 12.58 | % | |||
| Total risk-based capital | 16.03 | % | 13.64 | % | 13.21 | % |
(1) At end of period
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)
(Dollars in thousands)
| September 30<br>2021 | June 30<br>2021 | March 31<br>2021 | December 31<br>2020 | September 30<br>2020 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial | $ | 757,993 | $ | 723,888 | $ | 725,540 | $ | 756,686 | $ | 821,102 | ||||||||||||
| Agricultural | 93,782 | 95,197 | 91,629 | 100,461 | 102,263 | |||||||||||||||||
| Residential real estate | 321,620 | 312,567 | 305,909 | 307,543 | 304,559 | |||||||||||||||||
| Consumer | 75,163 | 75,011 | 72,840 | 73,621 | 75,384 | |||||||||||||||||
| Gross loans | $ | 1,248,558 | $ | 1,206,663 | $ | 1,195,918 | $ | 1,238,311 | $ | 1,303,308 | September 30<br>2021 | June 30<br>2021 | March 31<br>2021 | December 31<br>2020 | September 30<br>2020 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Noninterest bearing demand deposits | $ | 430,950 | $ | 428,410 | $ | 404,710 | $ | 375,395 | $ | 353,082 | ||||||||||||
| Interest bearing demand deposits | 374,137 | 326,971 | 328,440 | 302,444 | 287,809 | |||||||||||||||||
| Savings deposits | 572,136 | 549,134 | 555,688 | 505,497 | 474,483 | |||||||||||||||||
| Certificates of deposit | 312,027 | 326,214 | 331,413 | 358,165 | 354,210 | |||||||||||||||||
| Brokered certificates of deposit | — | — | 14,029 | 14,029 | 14,029 | |||||||||||||||||
| Internet certificates of deposit | 3,066 | 5,777 | 9,301 | 10,787 | 11,482 | |||||||||||||||||
| Total deposits | $ | 1,692,316 | $ | 1,636,506 | $ | 1,643,581 | $ | 1,566,317 | $ | 1,495,095 | September 30<br>2021 | June 30<br>2021 | March 31<br>2021 | December 31<br>2020 | September 30<br>2020 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| U.S. Treasury | $ | 192,069 | $ | 132,593 | $ | 29,371 | $ | — | $ | — | ||||||||||||
| States and political subdivisions | 128,689 | 130,960 | 140,329 | 143,656 | 148,401 | |||||||||||||||||
| Auction rate money market preferred | 3,246 | 3,260 | 3,224 | 3,237 | 3,194 | |||||||||||||||||
| Mortgage-backed securities | 62,030 | 68,155 | 75,835 | 88,652 | 104,165 | |||||||||||||||||
| Collateralized mortgage obligations | 100,767 | 109,294 | 116,865 | 101,983 | 107,294 | |||||||||||||||||
| Corporate | 7,583 | 4,192 | 1,700 | 1,700 | — | |||||||||||||||||
| Available-for-sale securities, at fair value | $ | 494,384 | $ | 448,454 | $ | 367,324 | $ | 339,228 | $ | 363,054 | September 30<br>2021 | June 30<br>2021 | March 31<br>2021 | December 31<br>2020 | September 30<br>2020 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Federal Home Loan Bank advances | $ | 60,000 | $ | 70,000 | $ | 90,000 | $ | 90,000 | $ | 205,000 | ||||||||||||
| Securities sold under agreements to repurchase without stated maturity dates | 67,519 | 62,274 | 51,967 | 68,747 | 33,349 | |||||||||||||||||
| Subordinated debt, net of unamortized issuance costs | 29,136 | 29,121 | — | — | — | |||||||||||||||||
| Total borrowed funds | $ | 156,655 | $ | 161,395 | $ | 141,967 | $ | 158,747 | $ | 238,349 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)
(Dollars in thousands)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Service charges and fees | ||||||||||||||||||
| ATM and debit card fees | $ | 1,156 | $ | 1,003 | $ | 3,282 | $ | 2,680 | ||||||||||
| Service charges and fees on deposit accounts | 601 | 436 | 1,518 | 1,373 | ||||||||||||||
| Freddie Mac servicing fee | 177 | 162 | 572 | 476 | ||||||||||||||
| Net OMSR income (loss) | (28) | 271 | (128) | (79) | ||||||||||||||
| Other fees for customer services | 58 | 78 | 245 | 239 | ||||||||||||||
| Total service charges and fees | 1,964 | 1,950 | 5,489 | 4,689 | ||||||||||||||
| Wealth management fees | 772 | 649 | 2,274 | 1,877 | ||||||||||||||
| Net gain on sale of mortgage loans | 339 | 1,036 | 1,459 | 1,653 | ||||||||||||||
| Earnings on corporate owned life insurance policies | 201 | 187 | 577 | 558 | ||||||||||||||
| Gains from redemption of corporate owned life insurance policies | — | — | 150 | 873 | ||||||||||||||
| Other | ||||||||||||||||||
| Net income (loss) on joint venture investment | — | 181 | — | 308 | ||||||||||||||
| All other | 91 | 57 | 265 | 346 | ||||||||||||||
| Total other | 91 | 238 | 265 | 654 | ||||||||||||||
| Total noninterest income | $ | 3,367 | $ | 4,060 | $ | 10,214 | $ | 10,304 | Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Compensation and benefits | $ | 6,116 | $ | 6,101 | $ | 17,693 | $ | 17,763 | ||||||||||
| Furniture and equipment | 1,349 | 1,426 | 4,049 | 4,318 | ||||||||||||||
| Occupancy | 866 | 889 | 2,726 | 2,668 | ||||||||||||||
| Other | ||||||||||||||||||
| Audit, consulting, and legal fees | 665 | 417 | 1,553 | 1,348 | ||||||||||||||
| ATM and debit card fees | 473 | 373 | 1,352 | 1,024 | ||||||||||||||
| Marketing costs | 236 | 209 | 683 | 677 | ||||||||||||||
| Memberships and subscriptions | 234 | 188 | 662 | 546 | ||||||||||||||
| Loan underwriting fees | 238 | 199 | 628 | 577 | ||||||||||||||
| FDIC insurance premiums | 169 | 159 | 529 | 459 | ||||||||||||||
| Director fees | 166 | 168 | 505 | 527 | ||||||||||||||
| Donations and community relations | 198 | 131 | 452 | 566 | ||||||||||||||
| All other | 475 | 690 | 1,665 | 2,122 | ||||||||||||||
| Total other noninterest expenses | 2,854 | 2,534 | 8,029 | 7,846 | ||||||||||||||
| Total noninterest expenses | $ | 11,185 | $ | 10,950 | $ | 32,497 | $ | 32,595 |