INSBANK Parent InsCorp Reports Annual Profits

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:

Earnings per share were $0.79 for the quarter ended December 31, 2023, compared to $0.80 for the quarter ended September 30, 2023, and $0.80 for the quarter ended December 31, 2022.
Annualized return on tangible common equity was 12.8% in 2023 compared to 17.7% in 2022.
Tangible book value increased 10.7% to $24.02 at year-end compared to $21.70 a year ago.
Loans grew $33.2 million, or 5.1%, on a year-over-year basis, and 4.9% on a linked-quarter annualized basis, as of December 30, 2023.
Total assets grew $84.9 million or 11.3% on a year-over-year basis, and 11.6% on a linked-quarter annualized basis, as of December 31, 2023.
Total deposits grew $109.7 million, or 19.0%, compared to December 31, 2022, and by $23.6 million, or 18.1% on a linked-quarter annualized basis in the quarter.
Noninterest expense to total average assets increased to 1.91% in the quarter compared to 1.77% in 3Q23 and 2.08% in 4Q23. The linked-quarter increase reflected compensation accrual expense and an increase in the FDIC assessment. All compared favorably to the bank’s FDIC peer group average of 2.33%.
Assets per employee increased 11.3% year-over-year to $14.9 million, which doubled the FDIC peer group level of $7.4 million.
Cost of all interest bearing funds was 3.87% in the fourth quarter of 2023 compared to 2.09% for the same period in 2022.
The percentage of loans past due >90 days, nonaccrual, and other real estate to gross loans was 0.16% compared to 0.35% for peers.
The allowance for credit losses increased to 1.40% of loans compared to 1.35% a year ago.
Accumulated Other Comprehensive Income (AOCI) of ($838,000) compared to ($413,000) a year ago. The change was primarily due to an increase in the securities portfolio.

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)

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.

Consolidated Statements of Income

(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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