Loan Growth Drives Q4 Profits for INSBANK Parent InsCorp

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Jan 27, 2023, 20:32 ET

Nashville Lender Completes Conversion to Open API Core System

NASHVILLE, Tenn., Jan. 27, 2023 /PRNewswire/ -- Today InsCorp (OTCQX: IBTN) reported a fourth quarter net profit of $2,319,000 or, 0.80 per share, representing a 33% increase over the fourth quarter of 2021. Year-to-date earnings are $10,336,000, or $3.59 per share. At the bank-level, net interest income for the quarter was $6,546,000, which was a 17.3% increase over the prior year same quarter. Operating income for the quarter was driven by a stable net interest margin as well as loan growth. During the quarter loans grew $31 million, or at an annualized rate of 20%. Operating income before tax at the bank-level was $3,208,000, as compared to $2,719,000 during the fourth quarter of the prior year. "The momentum of the quarter capped off a strong year of loan growth for INSBANK, which included more than $60 million of net growth in our MedQuity division," said Jim Rieniets, President & CEO of INSBANK. "While credit markets are tightening amid concerns of recession, we are thoughtfully allocating credit to industry silos that have had minimal credit cycle correlation to recessionary environments," Rieniets continued.

For the year non-interest bearing deposit balances increased 9.9% on a consolidated basis, while interest-bearing accounts decreased slightly by 3.2%. The cost of interest-bearing deposits was 2.05% during the fourth quarter, increasing from 1.18% the prior quarter. Bank-level quarterly operating expenses of $3,618,000 equated to 1.99% of assets, and contributed to an efficiency ratio of 53.3%, which compares favorably to the bank's historical peer group average. Asset quality measures remained strong with non-performing assets and past due loans totaling 0.36%. "While we're very pleased with strong loan growth, the fourth quarter also witnessed the culmination of a multi-year project to convert and upgrade to an open API core software platform," said Jim Rieniets, President & CEO of INSBANK. "With this conversion successfully completed, the bank can better leverage data and integrate industry-specific software solutions for our customers, both of which are critical for achieving core deposit objectives in 2023 and beyond," Rieniets continued.

Also during the fourth quarter, on December 9th the company paid a semi-annual dividend of $0.15 to shareholders of record as of November 18, 2022.

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

Loans grew $96.9 million or 17.6% as of December 31, 2022, compared to December 31, 2021.
Total assets grew $51.6 million or 7.4% as of December 31, 2022, compared to December 31, 2021.
Non-interest bearing deposits grew $7.9 million or 9.9% during the 12 months ended December 31, 2022.
Non-Interest Expense to Total Average Assets was 1.86% for the year ended December 31, 2022, slightly higher than 1.77% for the same period in 2021 and compared favorably to the bank's most recently reported FDIC peer group average of 2.36%.
Assets per employee remained strong at $13.4 million, compared to the most recent FDIC peer group average of $6.9 million.
Cost of all interest-bearing funding was 2.17% for the three months ended December 31, 2022, increasing from 0.72% for the same period in 2021.
Net income before taxes, at the bank level, were $12.0 million after excluding one-time gains on derivative products of $2.8 million at December 31, 2022, compared to $9.2 million at December 31, 2021.
Quarterly earnings per share were $0.80 for the quarter ended December 31, 2022, compared to $0.60 for the quarter ended December 31, 2021.
Annualized return on assets was 1.26% for the quarter-ended December 31, 2022.
Annualized return on tangible common equity was 15.03% for the quarter-ended December 31, 2022.
The percentage of loans past due and non-accrual to gross loans was 0.36%.
Net recoveries for the twelve months ended December 31, 2022, were $83,000.
The allowance for loan and lease losses was 1.35%.
Accumulated Other Comprehensive Income (AOCI) reflected a loss on the securities portfolio partially offset by gains on interest rate swaps held by the bank for interest rate risk purposes, resulting in a $57,000 increase in AOCI for the three months ended December 31, 2022.
Tangible book value increased to $21.70 on December 31, 2022, from $18.90 at December 31, 2021.

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 INSBANK Online. 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. INSBANK Online 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)

		*December 31,*	*December 31,*
		2022	2021
Assets
Cash and Cash Equivalents		$ 5,412	$ 16,680
Interest Bearing Deposits		18,226	73,746
Securities		38,285	21,606

Loans		648,382	551,463
Allowance for Loan Losses		(8,778)	(8,025)
Net Loans		639,604	543,438

Premises and Equipment, net		13,028	13,345
Bank Owned Life Insurance		13,721	13,398
Restricted Equity Securities		10,996	9,054
Goodwill and Related Intangibles, net		1,091	1,091
Other Assets		11,827	8,247

Total Assets		$ 752,190	$ 700,605

Liabilities and Shareholders' Equity
Liabilities
Deposits
	Non-interest-bearing	$ 87,842	$ 79,929
	Interest-bearing	488,685	504,781
	Total Deposits	576,527	584,710

Federal Home Loan Bank Advances		67,000	32,000
Paycheck Protection Program Liquidity Fund		-	1,404
Subordinated Debentures		17,500	17,500
Line of Credit		7,500	2,500
Federal Funds Purchased		15,000	4,000
Other Liabilities		4,823	3,278
Total Liabilities		688,350	645,392

Shareholders' Equity
	Common Stock	32,656	32,087
	Treasury Stock	(3,200)	(3,150)
	Accumulated Retained Earnings	34,797	25,689
	Accumulated Other Comprehensive Income	(413)	587
	Total Stockholders' Equity	63,840	55,213
Total Liabilities & Shareholders' Equity		$ 752,190	$ 700,605

Tangible Book Value		$ 21.70	$ 18.90

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

		*Three Months Ended*		*Twelve Months Ended*
		*December 31, 2022*	*December 31, 2021*	*December 31, 2022*	*December 31, 2021*

Interest Income		$ 9,426	$ 6,521	$ 30,730	$ 24,901
Interest Expense		2,879	938	6,517	4,690
Net Interest Income		6,547	5,583	24,213	20,211
Provision for Loan Losses		75	450	670	1,850
Non-Interest Income
	Service Charges on Deposit Accounts	41	60	209	240
	Bank Owned Life Insurance	82	81	322	283
	Gain on Security Sales	-	-	-	62
	Other	330	222	1,131	1,114
Non-Interest Expense
	Salaries and Benefits	2,336	2,234	8,402	7,332
	Occupancy and equipment	350	363	1,563	1,347
	Data Processing	302	151	858	597
	Marketing and Advertising	150	170	524	574
	Other	598	843	2,266	2,373
Net income from Operations		3,189	1,735	11,592	7,837

Gain on Interest Rate Hedges/Securities		(25)	604	2,814	748
Interest Expense-Holding Co. Debt		343	275	1,095	992
Income Before Income Taxes		2,821	2,064	13,311	7,593
Income Tax Expense		(502)	(321)	(2,975)	(1,564)
Net Income		$ 2,319	$ 1,743	$ 10,336	$ 6,029

Return on Weighted Average Common Shares		$ 0.80	$ 0.60	$ 3.59	$ 2.06