Steady Growth Defines the 4th Quarter for the Nashville Lender
NASHVILLE, Tenn., Jan. 29, 2024 /PRNewswire/ -- Today InsCorp (OTCQX: IBTN) reported a net profit of $2,267,000, or $0.79 per share, in the fourth quarter of 2023 compared to respective levels of $2,319,000 and $0.80 for the fourth quarter of 2022. For the year, net profit of $8,404,000, or $2.92 per share, in 2023 compared to $10,336,000, which benefited from a one-time $2,900,000 gain, or $3.59 per share, in 2022. InsCorp generated a ROA of 1.06% and ROE of 12.8% in 2023.
INSBANK has demonstrated relative stability in a volatile environment over the past couple of years. "While we were pleased to report a meaningful increase in loan originations in the fourth quarter and loan growth of 5%, this progress was somewhat offset by the rational behavior of our customers to deploy portions of their liquidity into interest-bearing accounts," said Jim Rieniets, President and CEO of INSBANK. "Despite the optics of a decline in aggregate non-interest-bearing deposits, for the year active operating accounts grew 6% while treasury services fee income grew 20%. This is reflective of both smart customers and capable bankers, the latter of which are garnering new relationship deposits with virtually all new loans." President and CEO Rieniets further added, "Our credit discipline, proactive management, and a focus on high quality commercial borrowers resulted in de minimis charge offs in 2023, 30-day past dues of 0.03% of loans, nonperforming loans of 0.16% of loans, and the return in the aggregate level of our watch list loans to pre-pandemic levels, as of December 31, 2023."
Net interest income decreased 1% to $6,481,000 in the fourth quarter and increased 5% for the year to $25,430,000. Although the Company benefited from an increase in loan yields of 105 basis points on a year-over-year basis and of 23 basis points on a linked-quarter to 6.59% in the quarter, the average cost of interest bearing funds increased 178 basis points during the quarter on a year-over-year basis and 33 basis points on a linked-quarter basis to 3.87% in the fourth quarter. Meanwhile, an increase in the mix of interest bearing cash and securities limited the expansion in the earning asset yield to 100 basis points on a year-over-year and 16 basis points on a linked-quarter basis to 6.47% in the quarter. The Bank's net interest margin performance on a cycle to date basis has reflected prudent interest rate risk management, as the Bank's net interest margin of 3.34% in 2023 compared to 3.53% in 2022 and 3.21% in 2021. Going forward, net interest margin comparisons with prior periods will likely reflect more pressure for another couple of quarters given the change in deposit mix favoring certificates of deposit, higher renewal rates on certificates of deposit, and a smaller relative benefit from improved loan yields.
Although the bank continued to experience elevated pay-off activity in the quarter—including two large payoffs related to sales of a business and real estate—outstanding balances increased 5% year-over-year and 5% on a linked-quarter annualized basis, as the bank's commercial bankers originated $48 million of loan commitments in the quarter compared to $26 million in the previous quarter.
Asset quality remained very strong for the Bank, as 30-day past due loans and nonperforming loans represented 0.03% and 0.16% of loans, respectively, as of December 31. Net chargeoffs were de minimis during the quarter and in 2023. The Allowance for Credit Losses ("ACL") increased to $9,565,000, or 1.40% of total loans outstanding, compared to $8,778,000, or 1.35%, a year ago. The increase in the ACL reflected an adjustment of $493,000 related to the adoption of the Current Expected Credit Loss methodology earlier in the year, with provision expense of $315,000, and $21,000 of net chargeoffs in 2023.
Measures of liquidity risk remain healthy, as on-balance sheet liquidity ended the year at approximately $118 million compared to $92 million a quarter ago and $57 million a year ago. Estimated uninsured deposits were approximately 22% of total deposits at quarter-end compared to 32% a year ago. Balance sheet liquidity and $121 million in reciprocal deposit capacity provide ample risk mitigation strategies.
The mark to market adjustment on the carrying values of derivatives used in the management of the Bank's interest rate risk benefitted EPS by $0.01 in 4Q23 and decreased EPS by $0.01 in 4Q22. For the year, the mark to market adjustment adversely affected EPS by $0.12 in 2023 in contrast to an EPS benefit of $0.77 in 2022. The gain recognized in 2022 was related to the value of interest rate caps that were purchased in 2021 to insulate the Bank against a significant increase in interest rates, while the negative mark to market in 2023 represented the decline in value of interest rate floors purchased in the first nine months of 2023 to protect against a potential significant drop in short-term interest rates.
Tangible book value increased 10.7%, or $2.32 per share, on a year-over-year basis, and 9.5% annualized, or $0.56 per share, on a linked-quarter basis to $24.02, as of December 31, 2023. Accumulated Other Comprehensive Income was ($838,000), or less than 1% of bank-level capital of $94,075,000. Tier-1 risk-based capital was 12.4% and total risk-based capital was 13.6%. On a consolidated basis, tangible common equity was 8.3%.
The Company's board of directors also recently approved the payment of a quarterly dividend compared to its previous policy of declaring and paying dividends on a semi-annual basis. Shareholders of record on February 16, 2024, will receive a dividend of $0.10 per common share payable on March 8, 2024, which represents an increase in the annualized rate of 17.6%. "As our company continues to grow, increasing the frequency of dividend distribution is a logical step for our shareholders," said Mike Qualls, Chairman of InsCorp. "We're pleased to increase the dividend while retaining sufficient capital to fuel near-term growth as well as previously authorized stock repurchases," Qualls continued.
Highlights of the quarter and the year include:
About INSBANK
Since 2000, INSBANK has offered its clients highly personalized service provided by experienced relationship managers, while positioning itself as an innovator, utilizing technologies to deliver those services efficiently and conveniently. In addition to its commercial focused operation, INSBANK operates three divisions, Medquity, TMA Medical Banking and Finworth. Medquity offers healthcare banking solutions to physicians, partnerships, and practices nationwide, while TMA Medical Banking provides banking services specifically to members of the Tennessee Medical Association. Finworth offers nationally available virtual private client services for interest bearing deposits. INSBANK is owned by InsCorp, Inc., a Tennessee bank holding company. The bank is headquartered in Nashville at 2106 Crestmoor Road and has an office in Brentwood at 5614 Franklin Pike Circle. For more information, please visit www.insbank.com.
InsCorp, Inc. |
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Consolidated Balance Sheets |
|||||
(000's) |
|||||
(unaudited) |
|||||
December 31, |
December 31, |
||||
2023 |
2022 |
||||
Assets |
|||||
Cash and Cash Equivalents |
$ 7,689 |
$ 5,412 |
|||
Interest Bearing Deposits |
49,757 |
18,226 |
|||
Securities |
58,162 |
38,285 |
|||
Loans |
681,558 |
648,382 |
|||
Allowance for Loan Losses |
(9,565) |
(8,778) |
|||
Net Loans |
671,993 |
639,604 |
|||
Premises and Equipment, net |
12,715 |
13,028 |
|||
Bank Owned Life Insurance |
14,065 |
13,721 |
|||
Restricted Equity Securities |
8,890 |
10,996 |
|||
Goodwill and Related Intangibles, net |
1,091 |
1,091 |
|||
Other Assets |
12,703 |
11,827 |
|||
Total Assets |
$ 837,065 |
$ 752,190 |
|||
Liabilities and Shareholders' Equity |
|||||
Liabilities |
|||||
Deposits |
|||||
Non-interest-bearing |
$ 70,417 |
$ 87,842 |
|||
Interest-bearing |
615,779 |
488,685 |
|||
Total Deposits |
686,196 |
576,527 |
|||
Federal Home Loan Bank Advances |
45,000 |
67,000 |
|||
Paycheck Protection Program Liquidity Fund |
- |
||||
Subordinated Debentures |
17,500 |
17,500 |
|||
Line of Credit |
8,750 |
7,500 |
|||
Federal Funds Purchased |
- |
15,000 |
|||
Other Liabilities |
9,500 |
4,823 |
|||
Total Liabilities |
766,946 |
688,350 |
|||
Shareholders' Equity |
|||||
Common Stock |
33,112 |
32,656 |
|||
Treasury Stock |
(3,869) |
(3,200) |
|||
Accumulated Retained Earnings |
41,714 |
34,797 |
|||
Accumulated Other Comprehensive Income |
(838) |
(413) |
|||
Total Stockholders' Equity |
70,119 |
63,840 |
|||
Total Liabilities & Shareholders' Equity |
$ 837,065 |
$ 752,190 |
|||
Tangible Book Value |
$ 24.02 |
$ 21.70 |
InsCorp, Inc. |
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Consolidated Statements of Income |
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(000's) |
|||||||||
(Unaudited) |
|||||||||
Three Months Ended |
Twelve Months Ended |
||||||||
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
||||||
Interest Income |
$ 12,145 |
$ 9,426 |
$ 46,208 |
$ 30,730 |
|||||
Interest Expense |
5,664 |
2,879 |
20,778 |
6,517 |
|||||
Net Interest Income |
6,481 |
6,547 |
25,430 |
24,213 |
|||||
Provision for Loan Losses |
150 |
75 |
315 |
670 |
|||||
Non-Interest Income |
|||||||||
Service Charges on Deposit Accounts |
60 |
41 |
252 |
209 |
|||||
Bank Owned Life Insurance |
91 |
82 |
345 |
322 |
|||||
Other |
414 |
330 |
1,379 |
1,131 |
|||||
Non-Interest Expense |
|||||||||
Salaries and Benefits |
2,627 |
2,336 |
9,434 |
8,402 |
|||||
Occupancy and equipment |
424 |
350 |
1,562 |
1,563 |
|||||
Data Processing |
87 |
302 |
382 |
858 |
|||||
Marketing and Advertising |
165 |
150 |
519 |
524 |
|||||
Other |
642 |
598 |
2,576 |
2,266 |
|||||
Net income from Operations |
2,951 |
3,189 |
12,618 |
11,592 |
|||||
Gain (Loss) on Interest Rate Hedges |
53 |
(25) |
(432) |
2,814 |
|||||
Interest Expense-Holding Co. Debt |
391 |
343 |
1,509 |
1,095 |
|||||
Income Before Income Taxes |
2,613 |
2,821 |
10,677 |
13,311 |
|||||
Income Tax Expense |
(346) |
(502) |
(2,273) |
(2,975) |
|||||
Net Income |
$ 2,267 |
$ 2,319 |
$ 8,404 |
$ 10,336 |
|||||
Return on Weighted Average Common Shares |
$ 0.79 |
$ 0.80 |
$ 2.92 |
$ 3.59 |
SOURCE INSBANK
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