Isabella Bank Corporation Reports Second Quarter 2024 Results
MT. PLEASANT, Mich., July 25, 2024 /PRNewswire/ -- Isabella Bank Corporation (OTCQX: ISBA) (the "Company") reported second quarter 2024 net income of $3.5 million, or $0.46 per diluted share, compared to $4.6 million or $0.61 per diluted share in the same quarter of 2023.
SECOND QUARTER 2024 HIGHLIGHTS (compared to second quarter 2023, unless otherwise stated)
- Total loans grew by an annualized rate of 5%
- 4.58% earning asset yield, compared to 4.11%
- 7% increase in wealth management income
- 0.07% ratio in nonperforming loans to total loans
"We are pleased the negative trend in net interest margin over the past several quarters has reversed, and we gained five basis points over the first quarter of 2024," said Isabella Bank Corporation's Chief Executive Officer Jerome Schwind. "The repricing of earning assets and continued loan growth have expanded yields beyond the growth of our cost of funds.
"While total commercial loans grew 1% during the quarter," he added, "we have a strong loan pipeline going into the third quarter. Given commercial loan growth prospects and the continued repricing of our book of business, we see a stronger second half of 2024, regardless of how interest rates change."
FINANCIAL CONDITION (June 30, 2024 compared to March 31, 2024)
Total assets remained steady at $2.06 billion. Loan growth during the second quarter was offset by lower cash and security balances and was primarily funded by security amortization and Federal Home Loan Bank borrowings.
Securities available-for-sale decreased $11.9 million to $505.6 million at the end of second quarter 2024 due to municipal maturities and principal paydowns on mortgage-related securities. This was offset in part by a smaller unrealized loss on the total portfolio during the period. Net losses on securities totaled $34 million and $34.8 million at the end of the second and first quarter, respectively. Unrealized losses represent 6% of total available-for-sale securities in both periods and will continue to decrease as bonds approach their maturity dates over the next three years.
Total loans grew $16.1 million to $1.38 billion at the end of second quarter 2024, led by residential loans, adding $8.5 million in balances due to a slowing of prepayments on steady new volume. Total commercial loans grew $8.8 million due to higher advances to mortgage brokers. The commercial pipeline remains strong.
The allowance for credit losses decreased $295,000 to $13.1 million at the end of second quarter 2024. A majority of the decrease was due to a few nonaccrual commercial loans that were settled at book value with specific allowances totaling $212,000. Nonaccrual loan balances decreased $289,000 for the same reason. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.11% compared to 0.58% at the end of first quarter 2024. The decrease is mostly the result of higher past due balances at the end of March due to a group of residential loans that typically make payments about 30 days in arrears, which become overdue when the 31st day lands on a business day. Overall, credit quality remains strong, with no negative trends.
Total deposits were $1.72 billion at the end of the second quarter, a decline of 2.6% or $46.0 million from the last quarter. However, demand for retail certificates of deposit accounts (CDs) continues due to the rate environment, resulting in a $2.3 million increase during the second quarter.
The level of total deposits resulted in a funding gap that was filled with short-duration Federal Home Loan bank advances. The Bank continues to have robust liquidity levels and capital. As of June 30, 2024, the Bank had $754 million of unencumbered sources of liquidity and strong capital ratios; the Tier 1 Leverage Ratio was 8.83%, Tier 1 risk-based capital was 12.37%, and Total risk-based capital was 15.29%.
Tangible book value per share was $20.60 as of June 30, 2024, compared to $20.35 on March 31, 2024. Net unrealized losses on available-for-sale securities reduced tangible book value per share by $3.60 and $3.67 for the respective periods.
RESULTS OF OPERATIONS (June 30, 2024 to June 30, 2023 quarterly comparison)
Net interest margin was 2.83%, up from 2.78% last quarter and was 3.11% a year ago. The decrease from a year ago primarily was driven by a higher cost of funds. The book yield from securities was 2.23% and 2.26% during second quarter 2024 and 2023, respectively. The yield includes the effect of the investment of excess cash in shorter term U.S. Treasury securities following the COVID pandemic in 2021 and 2022. These securities will mature over the next 6 to 30 months, and the proceeds are expected to be reinvested in market rate loans and securities, or to pay off borrowed funds. The yield on loans expanded to 5.49% in second quarter 2024, up from 4.90% in the same quarter of 2023. The expansion in loan yields is a result of higher rates on new loans and fixed rate commercial loans that have and will continue repricing to variable rates. Cost of interest-bearing liabilities increased to 2.37% from 1.41% in second quarter 2024 due to several interest rate hikes throughout 2023.
The provision for credit losses was $170,000 in the second quarter 2024 and $196,000 for the same period in 2023. The provision for the current year quarter reflects growth in residential loans and a $72,000 increase due to higher unfunded commitments.
Noninterest income was $3.6 million in both the second quarter of 2024 and 2023. Customer service fees grew $81,000 based on a higher number of transactional accounts. Wealth management income increased $67,000, or 7%, due to higher assets under management (AUM). AUM increased $54.3 million over the last year driven by growth in new accounts and higher security valuations.
Noninterest expenses were $12.9 million in second quarter 2024 compared to $12.5 million in second quarter 2023. Compensation and benefit expenses increased $409,000 and reflect annual merit increases and medical claim adjustments totaling $190,000. Higher card usage drove a $78,000 increase in ATM and debit card fees.
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.
Non-GAAP Financial Measures
This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided in this release.
Table Index | Consolidated Financial Schedules (Unaudited) |
A | Selected Financial Data |
B | Consolidated Balance Sheets |
C | Consolidated Statements of Income |
D | Consolidated Statements of Income |
E | Average Yields and Costs |
F | Average Balances |
G | Asset Quality Analysis |
H | Consolidated Loan and Deposit Analysis |
I | Reconciliation of Non-GAAP Financial Measures |
SELECTED FINANCIAL DATA (UNAUDITED) | |||||||||
(Dollars in thousands except per share amounts) | |||||||||
Three Months Ended | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
PER SHARE | |||||||||
Basic earnings | $ 0.47 | $ 0.42 | $ 0.51 | $ 0.59 | $ 0.62 | ||||
Diluted earnings | 0.46 | 0.42 | 0.51 | 0.58 | 0.61 | ||||
Dividends | 0.28 | 0.28 | 0.28 | 0.28 | 0.28 | ||||
Book value (1) | 27.06 | 26.80 | 27.04 | 24.71 | 25.13 | ||||
Tangible book value (1) | 20.60 | 20.35 | 20.59 | 18.27 | 18.69 | ||||
Market price (1) | 18.20 | 19.40 | 21.50 | 21.05 | 20.50 | ||||
Common shares outstanding (1) | 7,474,016 | 7,488,101 | 7,485,889 | 7,490,557 | 7,496,826 | ||||
Average number of diluted common shares outstanding | 7,494,828 | 7,507,739 | 7,526,514 | 7,570,374 | 7,567,527 | ||||
PERFORMANCE RATIOS | |||||||||
Return on average total assets | 0.67 % | 0.61 % | 0.74 % | 0.86 % | 0.91 % | ||||
Return on average shareholders' equity | 6.94 % | 6.16 % | 8.05 % | 9.24 % | 9.47 % | ||||
Return on average tangible shareholders' equity | 9.14 % | 8.07 % | 10.82 % | 12.37 % | 12.58 % | ||||
Net interest margin yield (fully taxable equivalent) (2) | 2.83 % | 2.78 % | 2.85 % | 3.02 % | 3.11 % | ||||
Efficiency ratio (2) | 73.93 % | 74.84 % | 68.41 % | 70.56 % | 67.90 % | ||||
Net loan to deposit ratio (1) | 79.46 % | 74.46 % | 77.53 % | 74.71 % | 77.06 % | ||||
Shareholders' equity to total assets (1) | 9.82 % | 9.75 % | 9.83 % | 8.74 % | 9.23 % | ||||
Tangible shareholders' equity to tangible assets (1) | 7.65 % | 7.58 % | 7.66 % | 6.61 % | 7.03 % | ||||
ASSETS UNDER MANAGEMENT | |||||||||
Assets managed by Isabella Wealth (1) | $ 647,850 | $ 660,645 | $ 641,027 | $ 590,666 | $ 593,530 | ||||
ASSET QUALITY | |||||||||
Nonaccrual loans (1) | $ 994 | $ 1,283 | $ 982 | $ 520 | $ 414 | ||||
Foreclosed assets (1) | 629 | 579 | 406 | 509 | 405 | ||||
Net loan charge-offs (recoveries) | 393 | 46 | 381 | (254) | (3) | ||||
Net loan charge-offs (recoveries) to average loans outstanding | 0.03 % | 0.00 % | 0.03 % | (0.02) % | 0.00 % | ||||
Nonperforming loans to gross loans (1) | 0.07 % | 0.09 % | 0.08 % | 0.04 % | 0.04 % | ||||
Nonperforming assets to total assets (1) | 0.08 % | 0.09 % | 0.07 % | 0.05 % | 0.05 % | ||||
Allowance for credit losses to gross loans (1) | 0.95 % | 0.98 % | 0.97 % | 0.96 % | 0.96 % | ||||
CAPITAL RATIOS (1) | |||||||||
Tier 1 leverage | 8.83 % | 8.80 % | 8.76 % | 8.77 % | 8.70 % | ||||
Common equity tier 1 capital | 12.37 % | 12.36 % | 12.54 % | 12.43 % | 12.39 % | ||||
Tier 1 risk-based capital | 12.37 % | 12.36 % | 12.54 % | 12.43 % | 12.39 % | ||||
Total risk-based capital | 15.29 % | 15.31 % | 15.52 % | 15.39 % | 15.37 % | ||||
(1) At end of period |
(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I |
A
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||
(Dollars in thousands) | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
ASSETS | |||||||||
Cash and demand deposits due from banks | $ 22,690 | $ 22,987 | $ 25,628 | $ 48,862 | $ 25,584 | ||||
Fed Funds sold and interest bearing balances | 869 | 2,231 | 8,044 | 67,017 | 4,296 | ||||
Total cash and cash equivalents | 23,559 | 25,218 | 33,672 | 115,879 | 29,880 | ||||
Available-for-sale securities, at fair value | 505,646 | 517,585 | 528,148 | 516,897 | 530,497 | ||||
Federal Home Loan Bank stock | 12,762 | 12,762 | 12,762 | 12,762 | 12,762 | ||||
Mortgage loans held-for-sale | 637 | 366 | — | 105 | 362 | ||||
Loans | 1,381,636 | 1,365,508 | 1,349,463 | 1,334,674 | 1,334,402 | ||||
Less allowance for credit losses | 13,095 | 13,390 | 13,108 | 12,767 | 12,833 | ||||
Net loans | 1,368,541 | 1,352,118 | 1,336,355 | 1,321,907 | 1,321,569 | ||||
Premises and equipment | 27,843 | 27,951 | 27,639 | 26,960 | 26,383 | ||||
Bank-owned life insurance policies | 34,382 | 34,131 | 33,892 | 33,654 | 33,433 | ||||
Goodwill and other intangible assets | 48,283 | 48,284 | 48,284 | 48,285 | 48,285 | ||||
Other assets | 38,486 | 39,161 | 38,216 | 42,041 | 39,277 | ||||
Total assets | $ 2,060,139 | $ 2,057,576 | $ 2,058,968 | $ 2,118,490 | $ 2,042,448 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Liabilities | |||||||||
Demand deposits | $ 412,193 | $ 413,272 | $ 428,505 | $ 445,043 | $ 458,845 | ||||
Interest bearing demand deposits | 338,329 | 349,401 | 320,737 | 363,558 | 335,922 | ||||
Savings | 603,328 | 639,491 | 628,079 | 628,795 | 606,644 | ||||
Certificates of deposit | 368,449 | 366,143 | 346,374 | 332,078 | 313,537 | ||||
Total deposits | 1,722,299 | 1,768,307 | 1,723,695 | 1,769,474 | 1,714,948 | ||||
Federal funds purchased and repurchase agreements | 44,194 | 42,998 | 46,801 | 52,330 | 37,102 | ||||
Federal Home Loan Bank advances | 45,000 | — | 40,000 | 65,000 | 55,000 | ||||
Subordinated debt, net of unamortized issuance costs | 29,380 | 29,357 | 29,335 | 29,312 | 29,290 | ||||
Total borrowed funds | 118,574 | 72,355 | 116,136 | 146,642 | 121,392 | ||||
Other liabilities | 17,017 | 16,240 | 16,735 | 17,251 | 17,677 | ||||
Total liabilities | 1,857,890 | 1,856,902 | 1,856,566 | 1,933,367 | 1,854,017 | ||||
Shareholders' equity | |||||||||
Common stock | 126,126 | 126,656 | 127,323 | 127,680 | 126,278 | ||||
Shares to be issued for deferred compensation obligations | 3,951 | 3,890 | 3,693 | 3,641 | 5,395 | ||||
Retained earnings | 99,808 | 98,318 | 97,282 | 95,533 | 93,175 | ||||
Accumulated other comprehensive income (loss) | (27,636) | (28,190) | (25,896) | (41,731) | (36,417) | ||||
Total shareholders' equity | 202,249 | 200,674 | 202,402 | 185,123 | 188,431 | ||||
Total liabilities and shareholders' equity | $ 2,060,139 | $ 2,057,576 | $ 2,058,968 | $ 2,118,490 | $ 2,042,448 | ||||
B
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||
(Dollars in thousands except per share amounts) | |||
Six Months Ended June 30 | |||
2024 | 2023 | ||
Interest income | |||
Loans | $ 36,920 | $ 30,820 | |
Available-for-sale securities | 5,688 | 6,267 | |
Federal Home Loan Bank stock | 304 | 135 | |
Federal funds sold and other | 556 | 868 | |
Total interest income | 43,468 | 38,090 | |
Interest expense | |||
Deposits | 14,476 | 6,938 | |
Federal funds purchased and repurchase agreements | 642 | 320 | |
Federal Home Loan Bank advances | 1,026 | 270 | |
Subordinated debt, net of unamortized issuance costs | 532 | 532 | |
Total interest expense | 16,676 | 8,060 | |
Net interest income | 26,792 | 30,030 | |
Provision for credit losses | 562 | 237 | |
Net interest income after provision for credit losses | 26,230 | 29,793 | |
Noninterest income | |||
Service charges and fees | 4,174 | 4,025 | |
Wealth management fees | 1,987 | 1,767 | |
Earnings on bank-owned life insurance policies | 496 | 452 | |
Net gain on sale of mortgage loans | 101 | 123 | |
Other | 318 | 530 | |
Total noninterest income | 7,076 | 6,897 | |
Noninterest expenses | |||
Compensation and benefits | 13,985 | 13,150 | |
Occupancy and equipment | 5,325 | 5,208 | |
Other professional services | 1,040 | 1,092 | |
ATM and debit card fees | 956 | 809 | |
FDIC insurance premiums | 532 | 461 | |
Other | 3,733 | 4,017 | |
Total noninterest expenses | 25,571 | 24,737 | |
Income before income tax expense | 7,735 | 11,953 | |
Income tax expense | 1,123 | 2,002 | |
Net income | $ 6,612 | $ 9,951 | |
Earnings per common share | |||
Basic | $ 0.88 | $ 1.32 | |
Diluted | 0.88 | 1.31 | |
Cash dividends per common share | 0.56 | 0.56 | |
C
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||
(Dollars in thousands except per share amounts) | |||||||||
Three Months Ended | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
Interest income | |||||||||
Loans | $ 18,863 | $ 18,057 | $ 17,580 | $ 17,270 | 15,931 | ||||
Available-for-sale securities | 2,804 | 2,884 | 2,926 | 2,963 | 3,047 | ||||
Federal Home Loan Bank stock | 158 | 146 | 129 | 91 | 71 | ||||
Federal funds sold and other | 263 | 293 | 421 | 161 | 446 | ||||
Total interest income | 22,088 | 21,380 | 21,056 | 20,485 | 19,495 | ||||
Interest expense | |||||||||
Deposits | 7,313 | 7,163 | 6,399 | 5,015 | 4,109 | ||||
Federal funds purchased and repurchase agreements | 321 | 321 | 357 | 284 | 171 | ||||
Federal Home Loan Bank advances | 638 | 388 | 422 | 617 | 270 | ||||
Subordinated debt, net of unamortized issuance costs | 266 | 266 | 266 | 267 | 266 | ||||
Total interest expense | 8,538 | 8,138 | 7,444 | 6,183 | 4,816 | ||||
Net interest income | 13,550 | 13,242 | 13,612 | 14,302 | 14,679 | ||||
Provision for credit losses | 170 | 392 | 684 | (292) | 196 | ||||
Net interest income after provision for credit losses | 13,380 | 12,850 | 12,928 | 14,594 | 14,483 | ||||
Noninterest income | |||||||||
Service charges and fees | 2,128 | 2,046 | 2,212 | 2,060 | 2,047 | ||||
Wealth management fees | 1,048 | 939 | 932 | 858 | 981 | ||||
Earnings on bank-owned life insurance policies | 253 | 243 | 239 | 229 | 226 | ||||
Net gain on sale of mortgage loans | 67 | 34 | 85 | 109 | 56 | ||||
Other | 112 | 206 | 48 | 158 | 294 | ||||
Total noninterest income | 3,608 | 3,468 | 3,516 | 3,414 | 3,604 | ||||
Noninterest expenses | |||||||||
Compensation and benefits | 6,970 | 7,015 | 6,116 | 6,639 | 6,561 | ||||
Occupancy and equipment | 2,619 | 2,706 | 2,554 | 2,535 | 2,606 | ||||
Other professional services | 527 | 513 | 576 | 672 | 557 | ||||
ATM and debit card fees | 487 | 469 | 487 | 471 | 409 | ||||
FDIC insurance premiums | 280 | 252 | 233 | 228 | 233 | ||||
Other | 2,012 | 1,721 | 1,949 | 2,113 | 2,173 | ||||
Total noninterest expenses | 12,895 | 12,676 | 11,915 | 12,658 | 12,539 | ||||
Income before income tax expense | 4,093 | 3,642 | 4,529 | 5,350 | 5,548 | ||||
Income tax expense | 612 | 511 | 726 | 937 | 918 | ||||
Net income | $ 3,481 | $ 3,131 | $ 3,803 | $ 4,413 | $ 4,630 | ||||
Earnings per common share | |||||||||
Basic | $ 0.47 | $ 0.42 | $ 0.51 | $ 0.59 | $ 0.62 | ||||
Diluted | 0.46 | 0.42 | 0.51 | 0.58 | 0.61 | ||||
Cash dividends per common share | 0.28 | 0.28 | 0.28 | 0.28 | 0.28 | ||||
D
AVERAGE YIELDS AND COSTS (UNAUDITED)
The following schedules present yield and daily average amounts outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. For analytical purposes, interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%. Federal Reserve Bank restricted equity holdings are included in other interest earning assets.
Three Months Ended | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
INTEREST EARNING ASSETS | |||||||||
Loans (1) | 5.49 % | 5.36 % | 5.25 % | 5.21 % | 4.90 % | ||||
Available-for-sale securities | 2.23 % | 2.25 % | 2.25 % | 2.25 % | 2.26 % | ||||
Federal Home Loan Bank stock | 4.95 % | 4.58 % | 4.07 % | 2.85 % | 2.23 % | ||||
Fed funds sold | 5.48 % | 5.69 % | 5.76 % | 5.51 % | 4.70 % | ||||
Other | 7.49 % | 4.65 % | 6.25 % | 3.65 % | 7.16 % | ||||
Total interest earning assets | 4.58 % | 4.45 % | 4.38 % | 4.30 % | 4.11 % | ||||
INTEREST BEARING LIABILITIES | |||||||||
Interest bearing demand deposits | 0.39 % | 0.48 % | 0.63 % | 0.28 % | 0.22 % | ||||
Savings | 2.16 % | 2.10 % | 1.78 % | 1.45 % | 1.18 % | ||||
Certificates of deposit | 3.99 % | 3.82 % | 3.63 % | 3.23 % | 2.73 % | ||||
Federal funds purchased and repurchase agreements | 3.16 % | 3.16 % | 2.85 % | 2.44 % | 1.93 % | ||||
Federal Home Loan Bank advances | 5.61 % | 5.60 % | 5.69 % | 5.55 % | 5.29 % | ||||
Subordinated debt, net of unamortized issuance costs | 3.62 % | 3.63 % | 3.63 % | 3.65 % | 3.63 % | ||||
Total interest bearing liabilities | 2.37 % | 2.27 % | 2.13 % | 1.79 % | 1.41 % | ||||
Net yield on interest earning assets (FTE) (2) | 2.83 % | 2.78 % | 2.85 % | 3.02 % | 3.11 % | ||||
Net interest spread | 2.21 % | 2.18 % | 2.25 % | 2.51 % | 2.70 % | ||||
(1) Includes loans held-for-sale and nonaccrual loans |
(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I |
E
AVERAGE BALANCES (UNAUDITED) | |||||||||
(Dollars in thousands) | |||||||||
Three Months Ended | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
INTEREST EARNING ASSETS | |||||||||
Loans (1) | $ 1,375,523 | $ 1,348,749 | $ 1,340,271 | $ 1,325,455 | $ 1,300,593 | ||||
Available-for-sale securities (2) | 545,827 | 557,030 | 564,068 | 572,038 | 583,652 | ||||
Federal Home Loan Bank stock | 12,762 | 12,762 | 12,762 | 12,762 | 12,762 | ||||
Fed funds sold | 7 | 7 | 13 | 13 | 4 | ||||
Other (3) | 14,054 | 25,210 | 26,823 | 17,638 | 24,902 | ||||
Total interest earning assets | 1,948,173 | 1,943,758 | 1,943,937 | 1,927,906 | 1,921,913 | ||||
NONEARNING ASSETS | |||||||||
Allowance for credit losses | (13,431) | (13,100) | (12,780) | (12,937) | (12,759) | ||||
Cash and demand deposits due from banks | 23,931 | 24,018 | 23,244 | 25,287 | 24,807 | ||||
Premises and equipment | 27,999 | 28,022 | 27,444 | 26,629 | 26,401 | ||||
Other assets | 80,539 | 84,059 | 71,592 | 74,244 | 80,374 | ||||
Total assets | $ 2,067,211 | $ 2,066,757 | $ 2,053,437 | $ 2,041,129 | $ 2,040,736 | ||||
INTEREST BEARING LIABILITIES | |||||||||
Interest bearing demand deposits | $ 342,931 | $ 345,842 | $ 317,996 | $ 342,175 | $ 348,341 | ||||
Savings | 613,601 | 633,904 | 634,529 | 595,372 | 628,673 | ||||
Certificates of deposit | 366,440 | 357,541 | 338,852 | 324,399 | 303,117 | ||||
Federal funds purchased and repurchase agreements | 40,593 | 40,623 | 50,049 | 46,574 | 35,495 | ||||
Federal Home Loan Bank advances | 45,510 | 27,692 | 29,674 | 44,429 | 20,404 | ||||
Subordinated debt, net of unamortized issuance costs | 29,365 | 29,342 | 29,320 | 29,298 | 29,275 | ||||
Total interest bearing liabilities | 1,438,440 | 1,434,944 | 1,400,420 | 1,382,247 | 1,365,305 | ||||
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Demand deposits | 411,282 | 412,228 | 446,747 | 451,123 | 462,953 | ||||
Other liabilities | 16,755 | 16,151 | 17,302 | 16,802 | 16,906 | ||||
Shareholders' equity | 200,734 | 203,434 | 188,958 | 190,957 | 195,572 | ||||
Total liabilities and shareholders' equity | $ 2,067,211 | $ 2,066,757 | $ 2,053,427 | $ 2,041,129 | $ 2,040,736 | ||||
(1) Includes loans held-for-sale and nonaccrual loans |
(2) Average balances for available-for-sale securities are based on amortized cost |
(3) Includes average interest-bearing deposits with other banks, net of Federal Reserve daily cash letter |
F
ASSET QUALITY ANALYSIS (UNAUDITED) | |||||||||
(Dollars in thousands) | |||||||||
The following table outlines quarter-to-date asset quality analysis as of, and for the three-month periods ended: | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
NONPERFORMING ASSETS | |||||||||
Commercial and industrial | $ 271 | $ 567 | $ 491 | $ 17 | $ 17 | ||||
Commercial real estate | — | 234 | — | — | — | ||||
Agricultural | 167 | 189 | 205 | 208 | 218 | ||||
Residential real estate | 556 | 293 | 286 | 295 | 179 | ||||
Consumer | — | — | — | — | — | ||||
Total nonaccrual loans | 994 | 1,283 | 982 | 520 | 414 | ||||
Accruing loans past due 90 days or more | 15 | — | 87 | — | 133 | ||||
Total nonperforming loans | 1,009 | 1,283 | 1,069 | 520 | 547 | ||||
Foreclosed assets | 629 | 579 | 406 | 509 | 405 | ||||
Debt securities | 12 | 12 | 12 | 77 | 77 | ||||
Total nonperforming assets | $ 1,650 | $ 1,874 | $ 1,487 | $ 1,106 | $ 1,029 | ||||
Nonperforming loans to gross loans | 0.07 % | 0.09 % | 0.08 % | 0.04 % | 0.04 % | ||||
Nonperforming assets to total assets | 0.08 % | 0.09 % | 0.07 % | 0.05 % | 0.05 % | ||||
Allowance for credit losses as a % of nonaccrual loans | 1,317.40 % | 1,043.65 % | 1,334.83 % | 2,455.19 % | 3,099.76 % | ||||
ALLOWANCE FOR CREDIT LOSSES | |||||||||
Allowance at beginning of period | $ 13,390 | $ 13,108 | $ 12,767 | $ 12,833 | $ 12,640 | ||||
Charge-offs | 527 | 191 | 452 | 179 | 92 | ||||
Recoveries | 134 | 145 | 71 | 433 | 95 | ||||
Net loan charge-offs (recoveries) | 393 | 46 | 381 | (254) | (3) | ||||
Provision for credit losses - loans | 98 | 328 | 722 | (320) | 190 | ||||
Allowance at end of period | $ 13,095 | $ 13,390 | $ 13,108 | $ 12,767 | $ 12,833 | ||||
Allowance for credit losses to gross loans | 0.95 % | 0.98 % | 0.97 % | 0.96 % | 0.96 % | ||||
NET LOAN CHARGE-OFFS (RECOVERIES) | |||||||||
Commercial and industrial | $ 334 | $ (2) | $ 242 | $ (41) | $ (4) | ||||
Commercial real estate | (29) | (6) | (3) | (3) | (10) | ||||
Agricultural | — | (2) | (6) | — | 2 | ||||
Residential real estate | (19) | (63) | (14) | (266) | (25) | ||||
Consumer | 107 | 119 | 162 | 56 | 34 | ||||
Total | $ 393 | $ 46 | $ 381 | $ (254) | $ (3) | ||||
Net (recoveries) charge-offs (Quarter to Date | 0.03 % | 0.00 % | 0.03 % | (0.02) % | 0.00 % | ||||
Net (recoveries) charge-offs (Year to Date | 0.12 % | 0.00 % | 0.03 % | (0.02) % | 0.00 % | ||||
DELINQUENT AND NONACCRUAL LOANS | |||||||||
Accruing loans 30-89 days past due | $ 1,484 | $ 7,938 | $ 3,895 | $ 715 | $ 3,132 | ||||
Accruing loans past due 90 days or more | 15 | — | 87 | — | 133 | ||||
Total accruing past due loans | 1,499 | 7,938 | 3,982 | 715 | 3,265 | ||||
Nonaccrual loans | 994 | 1,283 | 982 | 520 | 414 | ||||
Total past due and nonaccrual loans | $ 2,493 | $ 9,221 | $ 4,964 | $ 1,235 | $ 3,679 | ||||
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CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED) | |||||||||||
(Dollars in thousands) | |||||||||||
Loan Analysis | |||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | Annualized | ||||||
Commercial and industrial | $ 238,245 | $ 226,281 | $ 209,738 | $ 195,814 | $ 194,914 | 21.15 % | |||||
Commercial real estate | 547,005 | 561,123 | 564,244 | 566,639 | 564,254 | (10.06) % | |||||
Advances to mortgage brokers | 39,300 | 29,688 | 18,541 | 24,807 | 39,099 | 129.51 % | |||||
Agricultural | 94,996 | 93,695 | 99,994 | 99,233 | 96,689 | 5.55 % | |||||
Total commercial loans | 919,546 | 910,787 | 892,517 | 886,493 | 894,956 | 3.85 % | |||||
Residential real estate | 365,188 | 356,658 | 356,418 | 348,196 | 343,474 | 9.57 % | |||||
Consumer | 96,902 | 98,063 | 100,528 | 99,985 | 95,972 | (4.74) % | |||||
Gross loans | $ 1,381,636 | $ 1,365,508 | $ 1,349,463 | $ 1,334,674 | $ 1,334,402 | 4.72 % | |||||
Deposit Analysis | |||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | Annualized | ||||||
Noninterest bearing demand deposits | $ 412,193 | $ 413,272 | $ 428,505 | $ 445,043 | $ 458,845 | (1.04) % | |||||
Interest bearing demand deposits | 338,329 | 349,401 | 320,737 | 363,558 | 335,922 | (12.68) % | |||||
Savings | 603,328 | 639,491 | 628,079 | 628,795 | 606,644 | (22.62) % | |||||
Certificates of deposit | 368,449 | 366,143 | 346,374 | 332,078 | 313,537 | 2.52 % | |||||
Total deposits | $ 1,722,299 | $ 1,768,307 | $ 1,723,695 | $ 1,769,474 | $ 1,714,948 | (10.41) % | |||||
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(Dollars in thousands) | ||||||||||
Three Months Ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
Noninterest expenses | $ 12,895 | $ 12,676 | $ 11,915 | $ 12,658 | $ 12,539 | |||||
Amortization of acquisition intangibles | 1 | — | 1 | — | 1 | |||||
Core noninterest expense | (A) | $ 12,894 | $ 12,676 | $ 11,914 | $ 12,658 | $ 12,538 | ||||
Net interest income | $ 13,550 | $ 13,242 | $ 13,612 | $ 14,302 | $ 14,679 | |||||
Tax equivalent adjustment for net interest margin | 237 | 246 | 246 | 250 | 255 | |||||
Net interest income (FTE) | (B) | 13,787 | 13,488 | 13,858 | 14,552 | 14,934 | ||||
Noninterest income | 3,608 | 3,468 | 3,516 | 3,414 | 3,604 | |||||
Tax equivalent adjustment for efficiency ratio | 53 | 51 | 50 | 48 | 47 | |||||
Core revenue (FTE) | 17,448 | 17,007 | 17,424 | 18,014 | 18,585 | |||||
Nonrecurring items | ||||||||||
Net gains on sale of available-for-sale securities | — | — | — | — | 66 | |||||
Net gains (losses) on foreclosed assets | 6 | 69 | 8 | 75 | 53 | |||||
Total nonrecurring items | 6 | 69 | 8 | 75 | 119 | |||||
Adjusted core revenue | (C) | $ 17,442 | $ 16,938 | $ 17,416 | $ 17,939 | $ 18,466 | ||||
Efficiency ratio | (A/C) | 73.93 % | 74.84 % | 68.41 % | 70.56 % | 67.90 % | ||||
Average earning assets | (D) | 1,948,173 | 1,943,758 | 1,943,937 | 1,927,906 | 1,921,913 | ||||
Net yield on interest earning assets (FTE) | (B/D) | 2.83 % | 2.78 % | 2.85 % | 3.02 % | 3.11 % | ||||
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SOURCE Isabella Bank Corporation
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