INSBANK Parent InsCorp Reports First Quarter Profits

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Apr 20, 2023, 20:16 ET

Nashville Bank Balances Growth & Risk Management Practices to Navigate Current Economy

NASHVILLE, Tenn., April 20, 2023 /PRNewswire/ -- Today InsCorp (OTCQX: IBTN) reported a first quarter net profit of $2,050,000 or, $0.71 per share. Relative to the same quarter of the prior year, net interest income grew $1,047,000, while operating expenses increased $143,000. Operating income before taxes and non-recurring items was $2,614,000, versus $1,740,000 the prior year. While net interest margin of 3.44% was greater than that of the prior year same period of 3.06%, margin declined 30 basis points on a sequential quarter basis. For the quarter, loans grew $12.8 million, or 7.8%, on an annualized basis, while all forms of funding increased $32 million. "Against the backdrop of unprecedented Fed rate increases over the past 12 months, our results were in line with our expectations for the early part of the year," said Jim Rieniets, President and CEO of INSBANK. "Despite the headwind of higher funding costs, loan growth and efficient operations helped enable a 13.5% return on equity for the quarter, which is consistent with our long-term strategic objectives," Rieniets continued.

Measures of asset quality remain very strong for the company and compare very favorably to recent peer group data. Past due loans as of March 31 were 0.05%, while non-performing assets totaled just 0.32%. There were no charge-offs during the quarter, and loan risk ratings migrated positively during the period. On-balance sheet liquidity as of March 31 was $86 million, increasing $22 million during the quarter. "Recent bank failures highlighted the importance of prudent enterprise risk management, more specifically in the areas of interest rate risk and liquidity risk," said Rieniets. "Our team has historically applied the concept of diversification to funding the balance sheet, alongside risk mitigation strategies such as interest rate caps, floors, and hedges to minimize exposure to interest rate volatility. While some of our peers have seen large discounts to mark-to-market capital, our negative AOCI adjustment is a mere $208,000, or less than 0.25% of the $88 million in bank-level capital," Rieniets continued.

As of March 31, InsCorp shares had a tangible book value of $22.35 per share, and a book value of $22.73 per share. Tangible book value per share increased $0.65 during the quarter. Shares outstanding decreased slightly by virtue of a repurchase of 10,000 shares during the quarter, and the holding company's debt-to-equity ratio remained stable at 0.395. "With uncertainty around the near-term economic outlook, our team will seek to optimize growth opportunities where the bank can generate value for the customer while navigating risk for the bank. For example, Medquity, our nationwide healthcare division, continues to have a steady pipeline of prospects which have less correlation of risk to a general economic downturn than do general CRE and C&I portfolios," said Jim Rieniets. "We continue to believe that leveraging technology-focused platforms to serve niche business lines is the best path for enhancing shareholder value today, and in the future," Rieniets continued.

Highlights of the quarter and year-over-year include:

Loans grew $108.7 million or 19.7% as of March 31, 2023, compared to March 31, 2022.
Total assets grew $61.8 million or 8.5% as of March 31, 2023, compared to March 31, 2022.
Non-interest-bearing deposits grew $1.1 million or 1.3% during the 12 months ended March 31, 2023.
Non-Interest Expense to Total Average Assets was 1.56% for the quarter ended March 31, 2023, slightly lower than 1.79% for the same period in 2022 and compared favorably to the bank's FDIC peer group average of 2.40%.
Assets per employee remained strong at $14.0 million, compared to the FDIC peer group of $6.90 million.
Cost of all interest-bearing funding was 2.97% for the three months ended March 31, 2023, increasing from 0.69% for the same period in 2022.
Net income before taxes, at the bank level, was $3.08 million after excluding one-time gains at March 31, 2023, compared to $2.06 million at March 31, 2022.
Quarterly earnings per share were $0.71 for the quarter ended March 31, 2023, compared to $1.21 for the quarter ended March 31, 2022.
Annualized return on tangible common equity was 13.49% for the three months ended March 31, 2023.
The percentage of loans past due and non-accrual to gross loans was 0.36% comparing to peer of 0.34%.
The allowance for loan and lease losses was 1.42%, inclusive of a $493,000 CECL adoption adjustment in the first quarter.
Estimated uninsured deposits at March 31 were 24.8% of total deposits.
Deposits placed in reciprocal programs totaled $31 million as of March 31. The bank maintains an additional capacity of $108 million for placing depositors' funds in reciprocal arrangements.
Accumulated Other Comprehensive Income (AOCI) reflected a loss on the securities portfolio substantially offset by gains on interest rate swaps held by the bank for interest rate risk purposes, resulting in a $205,000 decrease in AOCI for the three months ended March 31, 2023.
Tangible book value increased to $22.35 on March 31, 2023, from $19.89 at March 31, 2022.

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.
Consolidated Balance Sheets
(000's)
(unaudited)

		*March 31,*	*December 31,*	*March 31,*
		2023	2022	2022
Assets
Cash and Cash Equivalents		$ 4,765	$ 5,412	$ 17,258
Interest Bearing Deposits		31,359	18,226	90,288
Securities		50,101	40,785	27,545

Loans		661,226	648,382	552,473
Allowance for Loan Losses		(9,396)	(8,778)	(8,193)
Net Loans		651,830	639,604	544,280

Premises and Equipment, net		12,918	13,028	13,275
Bank Owned Life Insurance		13,803	13,721	13,477
Restricted Equity Securities		8,577	8,496	9,225
Goodwill and Related Intangibles, net		1,091	1,091	1,091
Other Assets		12,303	11,657	8,490

Total Assets		$ 786,747	$ 752,020	$ 724,929

Liabilities and Shareholders' Equity
Liabilities
Deposits
	Non-interest-bearing	$ 85,274	$ 87,843	$ 84,190
	Interest-bearing	542,163	488,684	529,316
	Total Deposits	627,437	576,527	613,506

Federal Home Loan Bank Advances		62,000	67,000	30,000
Paycheck Protection Program Liquidity Fund				322
Subordinated Debentures		17,500	17,500	17,500
Federal Funds Purchased		-	15,000	-
Notes Payable		8,000	7,500	2,500
Other Liabilities		6,306	4,653	2,885
Total Liabilities		721,243	688,180	666,713

Shareholders' Equity
	Common Stock	32,775	32,643	32,241
	Treasury Stock	(3,417)	(3,200)	(3,150)
	Accumulated Retained Earnings	36,354	34,810	28,543
	Accumulated Other Comprehensive Income	(208)	(413)	582
	Total Stockholders' Equity	65,504	63,840	58,216
Total Liabilities & Shareholders' Equity		$ 786,747	$ 752,020	$ 724,929

Tangible Book Value		$ 22.35	$ 21.71	$ 19.89

InsCorp, Inc.
Consolidated Statements of Income
(000's)
(Unaudited)

		*Three Months Ended*	*Twelve Months Ended*	*Three Months Ended*
		*March 31, 2023*	*December 31, 2022*	*March 31, 2022*

Interest Income		$ 10,386	$ 30,415	$ 6,013
Interest Expense		4,261	6,202	935
Net Interest Income		6,125	24,213	5,078
Provision for Loan Losses		125	670	145
Non-Interest Income
	Service Charges on Deposit Accounts	47	209	57
	Bank Owned Life Insurance	82	322	79
	Gain on Sale of Securities	-	-	-
	Other	298	1,156	221
Non-Interest Expense
	Salaries and Benefits	2,251	8,402	2,035
	Occupancy and equipment	373	1,563	433
	Data Processing	99	858	154
	Marketing and Advertising	116	524	128
	Other	621	2,266	567
Net income from Operations		2,967	11,617	1,973

Gain in Interest Rate Hedges		66	2,789	2,516
Interest Expense-Subordinated Debt		353	1,095	233
Income Before Income Taxes		2,680	13,311	4,256
Income Tax Expense		(630)	(2,975)	(1,052)
Net Income		$ 2,050	$ 10,336	$ 3,204

Return on Weighted Average Common Shares		$ 0.71	$ 3.59	$ 1.12