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): February 16, 2024
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 February 16, 2024, Isabella Bank Corporation issued a press release announcing its results of operations for the quarter and year ended December 31, 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 issued February 16, 2024 |
| 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: | February 16, 2024 | By: | /s/ Jerome E. Schwind |
| Jerome E. Schwind, President and CEO |
INDEX TO EXHIBITS
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issued February 16, 2024 |
| 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:
Lori Peterson, Director of Marketing
Phone: 989-779-6333 Fax: 989-775-5501
Isabella Bank Corporation Announces Fourth Quarter and 2023 Earnings
Continued growth in loans, Isabella Wealth; outpaced by continued interest rate pressure
Mt. Pleasant, Michigan, February 16, 2024 — Isabella Bank Corporation (the “Corporation”) (OTCQX: ISBA) reported fourth quarter and year-end 2023 earnings, demonstrating resilience during a year buffeted by rising interest rates on deposit accounts. Net income for the fourth quarter was $3.8 million and $18.2 million for the year ended December 31, 2023. Earnings per common share were $0.51 in the fourth quarter and $2.42 for the year.
Among the 2023 highlights:
•Gross loans increased more than $85 million, or 7%.
•Isabella Wealth assets grew 25% to $641 million, leading to an increase in wealth management fees of $552,000, or 18%, over 2022.
•Interest income increased $13.8 million, or 21%, over 2022, offset by an increase in interest expense of $16.4 million.
•Shareholders earned a cash dividend of $1.12 per share in 2023, with an annualized dividend yield of 5.21%.
“Our 2023 financial results demonstrate Isabella Bank’s ability to come out of a tough year still delivering strong results for shareholders,” said Jerome E. Schwind, President and Chief Executive Officer. "Our liquidity and capital ratios remain strong and we delivered results against our strategic plan based on our strength in the marketplace.
"We continued to grow our footprint — including adding our eighth mid-Michigan county — and customers continued to turn to Isabella Bank, driving our growth in loans and our wealth management business,” he added.
Operating Results
Net income: Net income for the fourth quarter of 2023 was $3.8 million, a decrease of $2.5 million compared to the same period in 2022. For the year ended December 31, 2023, net income was $18.2 million, compared to $22.2 million in 2022. The declines were driven by a rise in interest expense resulting largely from increased interest rates on deposit accounts.
Net interest income, fourth quarter 2023: Net interest income for the fourth quarter 2023 declined $2.7 million, or 16%, compared to the fourth quarter of 2022. Interest income increased $3.1 million, or 17.5%, driven by core loan growth, while continued interest rate pressure was the primary cause of a $5.8 million increase in interest expense over the same period in 2022.
Net interest income, year-end 2023: Net interest income for the year ended December 31, 2023 decreased $2.5 million, or 4.2%, compared to 2022. Rising interest rates and growth in core loans led to a $13.8 million, or 21%, increase in gross interest income during 2023, compared to 2022. At the same time, rising interest rates on deposits and an increase in borrowings led to a $16.4 million increase in interest expense for 2023, compared to 2022.
Noninterest income and expenses, fourth quarter 2023: Noninterest income increased $244,000 compared to the fourth quarter of 2022, primarily driven by wealth management fees and ATM and debit card income. Noninterest expenses for the quarter were essentially unchanged in comparison to the fourth quarter of 2022.
Noninterest income and expenses, year-end 2023: Noninterest income for the year ended December 31, 2023 increased $161,000 compared to 2022. The increase was driven by wealth management fees and ATM and debit card fee income, offset by a decrease in mortgage servicing rights and gain on sale of loans, as residential mortgages sold to the secondary market declined. Noninterest expense increased $2.5 million compared to 2022, primarily the result of increased compensation, equipment expense, other losses, and FDIC insurance premiums.
Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 2.85% and 3.05% for the fourth quarter and year ended December 31, 2023, respectively, compared to 3.43% and 3.18% for the same periods in 2022. To maintain a competitive edge in the rising interest rate environment, rates on several deposit products began to increase in the fourth quarter of 2022 and continued throughout 2023. Over the last year, the level of borrowings increased to fund loan growth. These factors have negatively impacted the net yield on interest earning assets slowing its rate of growth.
Balance Sheet
Assets: Total assets were $2.06 billion and assets under management were $2.95 billion as of December 31, 2023. Managed assets included loans sold and serviced of $249 million as well as $641 million in investment and trust assets managed by our wealth business.
Loans: Loans outstanding as of December 31, 2023 totaled $1.35 billion, growing $85.3 million since December 31, 2022. Credit quality remained strong, as evidenced by total past due and nonaccrual loans which were 0.37% of gross loans as of December 31, 2023.
Deposits: Deposits were $1.72 billion as of December 31, 2023, declining $20.6 million, or 1.2%, since December 31, 2022. A decline in demand deposits was driven by contraction in money supply as the Federal Reserve Bank pulled money out of the banking system.
Capital: The Bank continues to be considered a “well-capitalized” institution, as its capital ratios exceeded the minimum designated requirements. As of December 31, 2023, the Bank’s Tier 1 Leverage Ratio was 8.71%, Tier 1 Capital Ratio was 12.48% and Total Capital Ratio was 13.42%, compared to minimum requirements to be considered well capitalized of 5.0%, 8.0% and 10.0%, respectively.
Dividend: The Corporation paid a $0.28 per common share cash dividend for the fourth quarter of 2023. Total cash dividends paid for the year ended December 31, 2023 totaled $1.12, a 2.75% increase over dividends paid in 2022. Based on the Corporation’s closing stock price of $21.50 as of December 29, 2023, the annualized cash dividend yield was 5.21%.
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 its customers' and communities' local banking needs for over 120 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services. The Bank has locations throughout eight Mid-Michigan counties: Bay, 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 Stonegate Capital Partners, Inc. (www.stonegateinc.com).
Forward-Looking Statements
This press release includes forward-looking statements. To the extent that the foregoing information refers to matters that may occur in the future, please be aware that such forward-looking statements may differ materially from the actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections titled “Risk Factors” and “Forward Looking Statements” set forth in Isabella Bank Corporation’s filings with the Securities and Exchange Commission, which are available from the Securities and Exchange Commission’s Public Reference facilities and from its website at www.sec.gov.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
| December 31<br>2023 | December 31<br>2022 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | ||||
| Cash and demand deposits due from banks | $ | 25,628 | $ | 27,420 |
| Fed Funds sold and interest bearing balances due from banks | 8,044 | 11,504 | ||
| Total cash and cash equivalents | 33,672 | 38,924 | ||
| Available-for-sale securities, at fair value | 528,148 | 580,481 | ||
| Mortgage loans available-for-sale | — | 379 | ||
| Loans | 1,349,463 | 1,264,173 | ||
| Less allowance for credit losses | 13,108 | 9,850 | ||
| Net loans | 1,336,355 | 1,254,323 | ||
| Premises and equipment | 27,639 | 25,553 | ||
| Corporate owned life insurance policies | 33,892 | 32,988 | ||
| Equity securities without readily determinable fair values | 15,848 | 15,746 | ||
| Goodwill and other intangible assets | 48,284 | 48,287 | ||
| Accrued interest receivable and other assets | 35,130 | 33,586 | ||
| TOTAL ASSETS | $ | 2,058,968 | $ | 2,030,267 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Deposits | ||||
| Noninterest bearing | $ | 428,505 | $ | 494,346 |
| Interest bearing demand deposits | 320,737 | 372,155 | ||
| Certificates of deposit under $250 and other savings | 857,768 | 810,642 | ||
| Certificates of deposit over $250 | 116,685 | 67,132 | ||
| Total deposits | 1,723,695 | 1,744,275 | ||
| Borrowed funds | ||||
| Federal funds purchased and repurchase agreements | 46,801 | 57,771 | ||
| Federal Home Loan Bank advances | 40,000 | — | ||
| Subordinated debt, net of unamortized issuance costs | 29,335 | 29,245 | ||
| Total borrowed funds | 116,136 | 87,016 | ||
| Accrued interest payable and other liabilities | 16,735 | 12,766 | ||
| Total liabilities | 1,856,566 | 1,844,057 | ||
| Shareholders’ equity | ||||
| Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,485,889 shares (including 150,581 shares held in the Rabbi Trust) in 2023 and 7,559,421 shares (including 154,879 shares held in the Rabbi Trust) in 2022 | 127,323 | 128,651 | ||
| Shares to be issued for deferred compensation obligations | 3,693 | 5,005 | ||
| Retained earnings | 97,282 | 89,748 | ||
| Accumulated other comprehensive income (loss) | (25,896) | (37,194) | ||
| Total shareholders’ equity | 202,402 | 186,210 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,058,968 | $ | 2,030,267 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended <br> December 31 | Year Ended <br>December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Interest income | ||||||||
| Loans, including fees | $ | 17,580 | $ | 14,163 | $ | 65,670 | $ | 53,283 |
| Available-for-sale securities | ||||||||
| Taxable | 2,303 | 2,512 | 9,514 | 8,363 | ||||
| Nontaxable | 623 | 718 | 2,642 | 2,808 | ||||
| Federal funds sold and other | 550 | 522 | 1,805 | 1,344 | ||||
| Total interest income | 21,056 | 17,915 | 79,631 | 65,798 | ||||
| Interest expense | ||||||||
| Deposits | 6,399 | 1,323 | 18,352 | 4,021 | ||||
| Borrowings | ||||||||
| Federal funds purchased and repurchase agreements | 357 | 53 | 961 | 79 | ||||
| Federal Home Loan Bank advances | 422 | — | 1,309 | 152 | ||||
| Subordinated debt, net of unamortized issuance costs | 266 | 267 | 1,065 | 1,065 | ||||
| Total interest expense | 7,444 | 1,643 | 21,687 | 5,317 | ||||
| Net interest income | 13,612 | 16,272 | 57,944 | 60,481 | ||||
| Provision for credit losses | 684 | (57) | 629 | 483 | ||||
| Net interest income after provision for credit losses | 12,928 | 16,329 | 57,315 | 59,998 | ||||
| Noninterest income | ||||||||
| Service charges and fees | 2,212 | 2,115 | 8,297 | 8,730 | ||||
| Wealth management fees | 932 | 788 | 3,557 | 3,005 | ||||
| Earnings on corporate owned life insurance policies | 239 | 229 | 920 | 884 | ||||
| Net gain on sale of mortgage loans | 85 | 63 | 317 | 631 | ||||
| Other | 48 | 77 | 736 | 416 | ||||
| Total noninterest income | 3,516 | 3,272 | 13,827 | 13,666 | ||||
| Noninterest expenses | ||||||||
| Compensation and benefits | 6,116 | 6,407 | 25,905 | 24,887 | ||||
| Furniture and equipment | 1,697 | 1,624 | 6,519 | 6,006 | ||||
| Occupancy | 857 | 878 | 3,778 | 3,691 | ||||
| Other | 3,245 | 3,013 | 13,108 | 12,236 | ||||
| Total noninterest expenses | 11,915 | 11,922 | 49,310 | 46,820 | ||||
| Income before federal income tax expense | 4,529 | 7,679 | 21,832 | 26,844 | ||||
| Federal income tax expense | 726 | 1,357 | 3,665 | 4,606 | ||||
| NET INCOME | $ | 3,803 | $ | 6,322 | $ | 18,167 | $ | 22,238 |
| Earnings per common share | ||||||||
| Basic | $ | 0.51 | $ | 0.84 | $ | 2.42 | $ | 2.95 |
| Diluted | $ | 0.51 | $ | 0.83 | $ | 2.40 | $ | 2.91 |
| Cash dividends per common share | $ | 0.28 | $ | 0.28 | $ | 1.12 | $ | 1.09 |
AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED)
(Dollars in thousands)
The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 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) | $ | 1,340,271 | $ | 17,580 | 5.25 | % | $ | 1,244,972 | $ | 14,163 | 4.55 | % |
| Taxable investment securities | 473,660 | 2,274 | 1.92 | % | 520,139 | 2,499 | 1.92 | % | ||||
| Nontaxable investment securities | 90,408 | 899 | 3.98 | % | 107,508 | 999 | 3.72 | % | ||||
| Fed funds sold | 13 | — | 5.76 | % | 14 | — | 4.00 | % | ||||
| Other | 39,585 | 549 | 5.55 | % | 56,142 | 522 | 3.72 | % | ||||
| Total earning assets | 1,943,937 | 21,302 | 4.38 | % | 1,928,775 | 18,183 | 3.77 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for credit losses | (12,780) | (9,792) | ||||||||||
| Cash and demand deposits due from banks | 23,244 | 24,312 | ||||||||||
| Premises and equipment | 27,444 | 25,382 | ||||||||||
| Accrued income and other assets | 71,592 | 63,553 | ||||||||||
| Total assets | $ | 2,053,437 | $ | 2,032,230 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 317,996 | $ | 504 | 0.63 | % | $ | 358,809 | $ | 104 | 0.12 | % |
| Savings deposits | 634,539 | 2,819 | 1.78 | % | 635,771 | 535 | 0.34 | % | ||||
| Time deposits | 338,852 | 3,076 | 3.63 | % | 254,604 | 684 | 1.07 | % | ||||
| Federal funds purchased and repurchase agreements | 50,049 | 357 | 2.85 | % | 55,478 | 53 | 0.38 | % | ||||
| Federal Home Loan Bank advances | 29,674 | 422 | 5.69 | % | — | — | — | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,320 | 266 | 3.63 | % | 29,233 | 267 | 3.65 | % | ||||
| Total interest bearing liabilities | 1,400,430 | 7,444 | 2.13 | % | 1,333,895 | 1,643 | 0.49 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 446,747 | 504,791 | ||||||||||
| Other | 17,302 | 13,103 | ||||||||||
| Shareholders’ equity | 188,958 | 180,441 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,053,437 | $ | 2,032,230 | ||||||||
| Net interest income (FTE) | $ | 13,858 | $ | 16,540 | ||||||||
| Net yield on interest earning assets (FTE) | 2.85 | % | 3.43 | % |
(1) Includes loans and mortgage loans available-for-sale
| Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | |||||||||||
| Average<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) | $ | 1,308,891 | $ | 65,670 | 5.02 | % | $ | 1,249,634 | $ | 53,283 | 4.26 | % |
| Taxable investment securities | 485,718 | 9,399 | 1.94 | % | 477,159 | 8,294 | 1.74 | % | ||||
| Nontaxable investment securities | 96,845 | 3,780 | 3.90 | % | 107,158 | 3,933 | 3.67 | % | ||||
| Fed funds sold | 12 | 1 | 5.04 | % | 10 | — | 2.42 | % | ||||
| Other | 41,965 | 1,804 | 4.30 | % | 99,301 | 1,344 | 1.35 | % | ||||
| Total earning assets | 1,933,431 | 80,654 | 4.17 | % | 1,933,262 | 66,854 | 3.46 | % | ||||
| NONEARNING ASSETS | ||||||||||||
| Allowance for credit losses | (12,784) | (9,477) | ||||||||||
| Cash and demand deposits due from banks | 24,592 | 24,708 | ||||||||||
| Premises and equipment | 26,589 | 24,648 | ||||||||||
| Accrued income and other assets | 74,319 | 81,823 | ||||||||||
| Total assets | $ | 2,046,147 | $ | 2,054,964 | ||||||||
| INTEREST BEARING LIABILITIES | ||||||||||||
| Interest bearing demand deposits | $ | 346,875 | $ | 1,086 | 0.31 | % | $ | 374,623 | $ | 274 | 0.07 | % |
| Savings deposits | 626,027 | 8,290 | 1.32 | % | 630,574 | 1,135 | 0.18 | % | ||||
| Time deposits | 308,699 | 8,976 | 2.91 | % | 270,296 | 2,612 | 0.97 | % | ||||
| Federal funds purchased and repurchase agreements | 43,061 | 961 | 2.23 | % | 49,974 | 79 | 0.16 | % | ||||
| Federal Home Loan Bank advances | 23,699 | 1,309 | 5.52 | % | 7,863 | 152 | 1.93 | % | ||||
| Subordinated debt, net of unamortized issuance costs | 29,287 | 1,065 | 3.64 | % | 29,200 | 1,065 | 3.65 | % | ||||
| Total interest bearing liabilities | 1,377,648 | 21,687 | 1.57 | % | 1,362,530 | 5,317 | 0.39 | % | ||||
| NONINTEREST BEARING LIABILITIES | ||||||||||||
| Demand deposits | 461,689 | 482,781 | ||||||||||
| Other | 16,043 | 14,695 | ||||||||||
| Shareholders’ equity | 190,767 | 194,958 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 2,046,147 | $ | 2,054,964 | ||||||||
| Net interest income (FTE) | $ | 58,967 | $ | 61,537 | ||||||||
| Net yield on interest earning assets (FTE) | 3.05 | % | 3.18 | % |
(1) Includes loans and mortgage loans available-for-sale
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
| Year Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2023 | December 31<br>2022 | December 31<br>2021 | |||||||
| PER SHARE | |||||||||
| Basic earnings | $ | 2.42 | $ | 2.95 | $ | 2.48 | |||
| Diluted earnings | $ | 2.40 | $ | 2.91 | $ | 2.45 | |||
| Dividends | $ | 1.12 | $ | 1.09 | $ | 1.08 | |||
| Tangible book value | $ | 20.59 | $ | 18.25 | $ | 21.61 | |||
| Quoted market value | |||||||||
| High | $ | 26.00 | $ | 26.25 | $ | 29.00 | |||
| Low | $ | 19.13 | $ | 21.00 | $ | 19.45 | |||
| Close (1) | $ | 21.50 | $ | 23.50 | $ | 25.50 | |||
| Common shares outstanding (1) | 7,485,889 | 7,559,421 | 7,532,641 | ||||||
| Average number of common shares outstanding | 7,511,591 | 7,549,878 | 7,853,398 | ||||||
| Average number of diluted common shares outstanding | 7,575,492 | 7,647,612 | 7,965,961 | ||||||
| PERFORMANCE RATIOS | |||||||||
| Return on average total assets | 0.89 | % | 1.08 | % | 0.96 | % | |||
| Return on average shareholders' equity | 9.52 | % | 11.41 | % | 8.83 | % | |||
| Return on average tangible shareholders' equity | 12.75 | % | 15.17 | % | 11.31 | % | |||
| Net interest margin yield (FTE) | 3.05 | % | 3.18 | % | 2.87 | % | |||
| ASSETS UNDER MANAGEMENT (1) | |||||||||
| Loans sold with servicing retained | $ | 248,756 | $ | 264,206 | $ | 278,844 | |||
| Assets managed by Isabella Wealth | $ | 641,027 | $ | 513,918 | $ | 516,243 | |||
| Total assets under management | $ | 2,948,751 | $ | 2,808,391 | $ | 2,827,245 | |||
| ASSET QUALITY (1) | |||||||||
| Nonaccrual loans | $ | 982 | $ | 457 | $ | 1,245 | |||
| Foreclosed assets | $ | 406 | $ | 439 | $ | 211 | |||
| Net loan charge-offs (recoveries) | $ | 115 | $ | (264) | $ | 123 | |||
| Nonperforming loans to gross loans | 0.08 | % | 0.04 | % | 0.10 | % | |||
| Nonperforming assets to total assets | 0.07 | % | 0.05 | % | 0.08 | % | |||
| Allowance for credit losses to gross loans | 0.97 | % | 0.78 | % | 0.70 | % | |||
| CAPITAL RATIOS (1) | |||||||||
| Shareholders' equity to assets | 9.83 | % | 9.17 | % | 10.39 | % | |||
| Tier 1 leverage | 8.76 | % | 8.61 | % | 7.97 | % | |||
| Common equity tier 1 capital | 12.54 | % | 12.91 | % | 12.07 | % | |||
| Tier 1 risk-based capital | 12.54 | % | 12.91 | % | 12.07 | % | |||
| Total risk-based capital | 15.52 | % | 15.79 | % | 14.94 | % |
(1) At end of period
SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)
(Dollars in thousands)
| December 31<br>2023 | September 30<br>2023 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial and industrial | $ | 209,738 | $ | 195,814 | $ | 194,914 | $ | 189,185 | $ | 178,428 | ||||||||||||
| Commercial real estate | 564,244 | 566,639 | 564,254 | 566,410 | 566,012 | |||||||||||||||||
| Advances to mortgage brokers | 18,541 | 24,807 | 39,099 | — | — | |||||||||||||||||
| Agricultural | 99,994 | 99,233 | 96,689 | 94,760 | 104,985 | |||||||||||||||||
| Residential real estate | 356,418 | 348,196 | 343,474 | 336,186 | 336,694 | |||||||||||||||||
| Consumer | 100,528 | 99,985 | 95,972 | 84,110 | 78,054 | |||||||||||||||||
| Gross loans | $ | 1,349,463 | $ | 1,334,674 | $ | 1,334,402 | $ | 1,270,651 | $ | 1,264,173 | December 31<br>2023 | September 30<br>2023 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Noninterest bearing demand deposits | $ | 428,505 | $ | 445,043 | $ | 458,845 | $ | 478,829 | $ | 494,346 | ||||||||||||
| Interest bearing demand deposits | 320,737 | 363,558 | 335,922 | 383,602 | 372,155 | |||||||||||||||||
| Savings deposits | 628,079 | 628,795 | 606,644 | 662,495 | 625,734 | |||||||||||||||||
| Certificates of deposit | 346,125 | 331,829 | 313,288 | 288,103 | 251,541 | |||||||||||||||||
| Internet certificates of deposit | 249 | 249 | 249 | 499 | 499 | |||||||||||||||||
| Total deposits | $ | 1,723,695 | $ | 1,769,474 | $ | 1,714,948 | $ | 1,813,528 | $ | 1,744,275 | December 31<br>2023 | September 30<br>2023 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| U.S. Treasury | $ | 214,801 | $ | 209,182 | $ | 209,353 | $ | 212,086 | $ | 208,701 | ||||||||||||
| States and political subdivisions | 92,876 | 89,773 | 95,242 | 108,719 | 117,512 | |||||||||||||||||
| Auction rate money market preferred | 2,931 | 2,570 | 2,637 | 2,716 | 2,342 | |||||||||||||||||
| Mortgage-backed securities | 32,815 | 32,923 | 35,532 | 37,797 | 39,070 | |||||||||||||||||
| Collateralized mortgage obligations | 177,775 | 175,630 | 180,996 | 200,252 | 205,728 | |||||||||||||||||
| Corporate | 6,950 | 6,819 | 6,737 | 7,080 | 7,128 | |||||||||||||||||
| Available-for-sale securities, at fair value | $ | 528,148 | $ | 516,897 | $ | 530,497 | $ | 568,650 | $ | 580,481 | December 31<br>2023 | September 30<br>2023 | June 30<br>2023 | March 31<br>2023 | December 31<br>2022 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Securities sold under agreements to repurchase without stated maturity dates | $ | 46,801 | $ | 52,330 | $ | 37,102 | $ | 31,995 | $ | 57,771 | ||||||||||||
| Federal Home Loan Bank advances | 40,000 | 65,000 | 55,000 | — | — | |||||||||||||||||
| Subordinated debt, net of unamortized issuance costs | 29,335 | 29,312 | 29,290 | 29,267 | 29,245 | |||||||||||||||||
| Total borrowed funds | $ | 116,136 | $ | 146,642 | $ | 121,392 | $ | 61,262 | $ | 87,016 |
SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)
(Dollars in thousands)
| Three Months Ended <br> December 31 | Year Ended <br>December 31 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Service charges and fees | ||||||||||||||||||
| ATM and debit card fees | $ | 1,397 | $ | 1,267 | $ | 5,051 | $ | 4,774 | ||||||||||
| Service charges and fees on deposit accounts | 616 | 653 | 2,413 | 2,566 | ||||||||||||||
| Freddie Mac servicing fee | 155 | 163 | 630 | 669 | ||||||||||||||
| Net mortgage servicing rights income (loss) | (40) | (42) | (137) | 435 | ||||||||||||||
| Other fees for customer services | 84 | 74 | 340 | 286 | ||||||||||||||
| Total service charges and fees | 2,212 | 2,115 | 8,297 | 8,730 | ||||||||||||||
| Wealth management fees | 932 | 788 | 3,557 | 3,005 | ||||||||||||||
| Earnings on corporate owned life insurance policies | 239 | 229 | 920 | 884 | ||||||||||||||
| Net gain on sale of mortgage loans | 85 | 63 | 317 | 631 | ||||||||||||||
| Other | 48 | 77 | 736 | 416 | ||||||||||||||
| Total noninterest income | $ | 3,516 | $ | 3,272 | $ | 13,827 | $ | 13,666 | Three Months Ended <br> December 31 | Year Ended <br>December 31 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Compensation and benefits | $ | 6,116 | $ | 6,407 | $ | 25,905 | $ | 24,887 | ||||||||||
| Furniture and equipment | 1,697 | 1,624 | 6,519 | 6,006 | ||||||||||||||
| Occupancy | 857 | 878 | 3,778 | 3,691 | ||||||||||||||
| Other | ||||||||||||||||||
| Audit, consulting, and legal fees | 576 | 609 | 2,340 | 2,358 | ||||||||||||||
| ATM and debit card fees | 487 | 424 | 1,767 | 1,909 | ||||||||||||||
| Marketing costs | 276 | 244 | 1,159 | 1,056 | ||||||||||||||
| Memberships and subscriptions | 313 | 222 | 1,042 | 876 | ||||||||||||||
| Loan underwriting fees | 290 | 364 | 927 | 1,004 | ||||||||||||||
| FDIC insurance premiums | 233 | 143 | 922 | 537 | ||||||||||||||
| Donations and community relations | 223 | 258 | 915 | 923 | ||||||||||||||
| Other losses | 101 | 137 | 871 | 546 | ||||||||||||||
| Director fees | 183 | 192 | 764 | 790 | ||||||||||||||
| All other | 563 | 420 | 2,401 | 2,237 | ||||||||||||||
| Total other noninterest expenses | 3,245 | 3,013 | 13,108 | 12,236 | ||||||||||||||
| Total noninterest expenses | $ | 11,915 | $ | 11,922 | $ | 49,310 | $ | 46,820 |