EX-99.1 2 earningsrelease_20220331xe.htm EX-99.1 Document

Exhibit 99.1
For Immediate Release
Isabella Bank Corporation
401 North Main Street
Mt. Pleasant, MI 48858-1649
FOR MORE INFORMATION CONTACT:
Amber Zaske, Community Relations
Phone: 989-779-6309    Fax: 989-775-5501
Isabella Bank Corporation Announces First Quarter 2022 Earnings
Solid start to 2022 with net income of $4.7 million
Mt. Pleasant, Michigan, April 21, 2022 — Isabella Bank Corporation (the “Corporation”) (OTCQX: ISBA) has released solid earnings results for the first quarter of 2022. The Corporation reported net income of $4.7 million and earnings per common share of $0.63.
First quarter 2022 highlights include:
•Net interest income improved, compared to first quarter 2021, as interest expense declined 39%.
•Credit quality remained strong, with nonperforming loans representing only 0.06% of gross loans.
•Deposits grew $53.8 million, or 3.1% compared to December 31, 2021, largely driven by new customer accounts.
•Shareholders earned a cash dividend of $0.27 per share, with an annualized dividend yield of 4.18%, as of March 31, 2022.
“We have started the year with solid financial results for the first quarter," said Jae A. Evans, President & CEO. “As we look ahead, there are concerns about the impact inflation and events in other parts of the world may have on the financial services industry. However, as the Federal Reserve considers additional interest rate hikes throughout 2022 and beyond, we expect the yield on loans and investments to rise, enhancing the Bank's net interest margin.
"Amidst this uncertainty, our longstanding focus remains the same - invest in our communities, and in advanced technology that enhances the customer experience while actively pursuing strategies that reward our shareholders with an attractive dividend," Evans added.
Operating Results
Net income: Net income for the first quarter 2022 was $4.7 million, compared to $5.4 million in the first quarter of 2021, largely as the result of changes in loan provision and mortgage originations, as described below.
Net interest income: Net interest income for first quarter 2022 increased $278,000 compared to the same period in 2021. While interest income declined $528,000 due to low interest rates and a decrease in the Paycheck


Protection Program fee income, interest expense also decreased $806,000, or 38.6%, largely due to a reduction in higher-cost borrowings over the last year. During the first quarter, a $37,000 provision for loan losses expense was recorded, compared to a $523,000 provision reversal in the first quarter 2021 as our initial concerns over potential credit quality issues related to the onset of the pandemic did not materialize.
Noninterest income and expenses: Noninterest income increased $15,000 during the first quarter of 2022, compared to the same period in 2021. A $514,000 increase in service charges and fees nearly offset a $521,000 reduction in gain on sale of loans as residential mortgage originations declined by over 60%. Noninterest expenses for the first quarter increased $503,000, as a result of increased compensation and professional services as well as donations and community relations expenses as charitable organizations resumed activities and events.
Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 2.86% for the first quarter of 2022, flat with the fourth quarter of 2021 and down from 2.98% compared to the same period in 2021. As rates began to decline in 2020, the implementation of strategic programs focused on improving the net yield, which included enhanced loan pricing and a reduced reliance on higher-cost borrowed funds and brokered deposits as funding sources, helped to minimize further declines in our net interest margin. If rates rise as expected, margin improvement is likely.
Balance Sheet
Assets: The Corporation had $2.1 billion in total assets and $2.8 billion of assets under management as of March 31, 2022. Managed assets included loans sold and serviced of $275.6 million and $501.8 million in investment and trust assets managed by Isabella Wealth.
Loans: Loans outstanding as of March 31, 2022 total $1.2 billion. During the first quarter, gross loans declined $82.7 million, largely driven by a $72 million reduction in advances to mortgage brokers, which is included within the commercial loan portfolio.
Deposits: Total deposits climbed to $1.8 billion as of March 31, 2022, an increase of $53.8 million, or 3.1%, since December 31, 2021. Growth in the first quarter is largely the result of new customer accounts.
Capital: The Bank is considered a “well-capitalized” institution, as its capital ratios exceeded the minimum designated requirements. As of March 31, 2022, the Bank’s Tier 1 Leverage Ratio was 8.74%, Tier 1 Capital Ratio was 13.83% and Total Capital Ratio was 14.56%. The minimum requirements to be considered well capitalized are a Tier 1 Leverage Ratio of 5.0%, Tier 1 Capital Ratio of 8.0% and Total Capital Ratio of 10.0%.
Dividend: During the first quarter of 2022, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation’s closing stock price of $25.85 as of March 31, 2022, the annualized cash dividend yield was 4.18%.



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 the local banking needs of its customers and communities for 119 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services through Isabella Wealth. The Bank has locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.
For more information about Isabella Bank Corporation, visit the investors 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 market maker is Boenning & Scattergood, Inc. (www.boenninginc.com) and its investor relations firm is Renmark Financial Communications, Inc. (www.renmarkfinancial.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.


CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
March 31
2022		December 31
2021
ASSETS
Cash and cash equivalents
Cash and demand deposits due from banks$18,611 $25,563 
Interest bearing balances due from banks142,575 79,767 
Total cash and cash equivalents161,186 105,330 
Available-for-sale securities, at fair value544,919 490,601 
Mortgage loans available-for-sale969 1,735 
Loans
Commercial727,614 807,439 
Agricultural88,169 93,955 
Residential real estate328,559 326,361 
Consumer74,029 73,282 
Gross loans1,218,371 1,301,037 
Less allowance for loan and lease losses9,204 9,103 
Net loans1,209,167 1,291,934 
Premises and equipment24,339 24,419 
Corporate owned life insurance policies32,341 32,472 
Equity securities without readily determinable fair values15,095 17,383 
Goodwill and other intangible assets48,298 48,302 
Accrued interest receivable and other assets24,619 19,982 
TOTAL ASSETS$2,060,933 $2,032,158 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest bearing$461,473 $448,352 
Interest bearing demand deposits387,187 364,563 
Certificates of deposit under $250 and other savings843,341 818,841 
Certificates of deposit over $25072,160 78,583 
Total deposits1,764,161 1,710,339 
Borrowed funds
Federal funds purchased and repurchase agreements51,353 50,162 
FHLB advances10,000 20,000 
Subordinated debt, net of unamortized issuance costs29,181 29,158 
Total borrowed funds90,534 99,320 
Accrued interest payable and other liabilities10,396 11,451 
Total liabilities1,865,091 1,821,110 
Shareholders’ equity
Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,542,758 shares (including 111,482 shares held in the Rabbi Trust) in 2022 and 7,532,641 shares (including 105,654 shares held in the Rabbi Trust) in 2021
129,189 129,052 
Shares to be issued for deferred compensation obligations4,691 4,545 
Retained earnings78,295 75,592 
Accumulated other comprehensive income (loss)(16,333)1,859 
Total shareholders’ equity195,842 211,048 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$2,060,933 $2,032,158 


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended 
 March 31
 20222021
Interest income
Loans, including fees$12,378 $13,097 
Available-for-sale securities
Taxable1,615 1,165 
Nontaxable660 865 
Federal funds sold and other109 163 
Total interest income14,762 15,290 
Interest expense
Deposits936 1,668 
Borrowings
Federal funds purchased and repurchase agreements9 16 
FHLB advances72 405 
Subordinated debt, net of unamortized issuance costs266 — 
Total interest expense1,283 2,089 
Net interest income13,479 13,201 
Provision for loan losses37 (523)
Net interest income after provision for loan losses13,442 13,724 
Noninterest income
Service charges and fees2,209 1,695 
Wealth management fees754 696 
Net gain on sale of mortgage loans224 745 
Earnings on corporate owned life insurance policies210 186 
Gains from redemption of corporate owned life insurance policies52 146 
Other98 64 
Total noninterest income3,547 3,532 
Noninterest expenses
Compensation and benefits6,074 5,877 
Furniture and equipment1,450 1,373 
Occupancy966 945 
Other2,830 2,622 
Total noninterest expenses11,320 10,817 
Income before federal income tax expense5,669 6,439 
Federal income tax expense935 1,041 
NET INCOME$4,734 $5,398 
Earnings per common share
Basic$0.63 $0.68 
Diluted$0.62 $0.67 
Cash dividends per common share$0.27 $0.27 


AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED)
(Dollars in thousands)
The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB) restricted equity holdings are included in other interest earning assets.
Three Months Ended
March 31, 2022March 31, 2021
Average
Balance		Tax
Equivalent
Interest		Average
Yield /
Rate		Average
Balance		Tax
Equivalent
Interest		Average
Yield /
Rate
INTEREST EARNING ASSETS
Loans$1,235,788 $12,378 4.01 %$1,201,693 $13,097 4.36 %
Taxable investment securities421,503 1,615 1.53 %190,450 1,165 2.45 %
Nontaxable investment securities101,604 920 3.62 %131,850 1,194 3.62 %
Fed funds sold3 — 0.06 %2 — 0.01 %
Other163,353 109 0.27 %295,104 163 0.22 %
Total earning assets1,922,251 15,022 3.13 %1,819,099 15,619 3.43 %
NONEARNING ASSETS
Allowance for loan losses(9,128)(9,833)
Cash and demand deposits due from banks26,839 28,944 
Premises and equipment24,461 25,151 
Accrued income and other assets102,805 113,101 
Total assets$2,067,228 $1,976,462 
INTEREST BEARING LIABILITIES
Interest bearing demand deposits$383,474 $50 0.05 %$315,189 $77 0.10 %
Savings deposits615,335 159 0.10 %531,302 149 0.11 %
Time deposits290,146 727 1.00 %367,892 1,442 1.57 %
Federal funds purchased and repurchase agreements49,058 9 0.07 %54,145 16 0.12 %
FHLB advances14,889 72 1.93 %90,000 405 1.80 %
Subordinated debt, net of unamortized issuance costs
29,166 266 3.65 %— — — %
Total interest bearing liabilities1,382,068 1,283 0.37 %1,358,528 2,089 0.62 %
NONINTEREST BEARING LIABILITIES
Demand deposits458,343 383,189 
Other16,898 13,910 
Shareholders’ equity209,919 220,835 
Total liabilities and shareholders’ equity$2,067,228 $1,976,462 
Net interest income (FTE)$13,739 $13,530 
Net yield on interest earning assets (FTE)2.86 %2.98 %




SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended
March 31
2022		March 31
2021		March 31
2020
PER SHARE
Basic earnings$0.63 $0.68 $0.39 
Diluted earnings$0.62 $0.67 $0.38 
Dividends$0.27 $0.27 $0.27 
Tangible book value$19.56 $21.35 $21.10 
Quoted market value
High$26.00 $22.50 $24.50 
Low$24.50 $19.45 $16.00 
Close (1)
$25.85 $21.75 $18.00 
Common shares outstanding (1)
7,542,758 7,958,883 7,921,291 
Average number of common shares outstanding7,533,711 7,969,462 7,892,421 
Average number of diluted common shares outstanding7,639,688 8,088,524 8,055,607 
PERFORMANCE RATIOS
Return on average total assets0.92 %1.09 %0.68 %
Return on average shareholders' equity9.02 %9.78 %5.68 %
Return on average tangible shareholders' equity11.72 %12.53 %7.35 %
Net interest margin yield (FTE)2.86 %2.98 %2.98 %
ASSETS UNDER MANAGEMENT (1)
Loans sold with servicing retained$275,556 $298,514 $257,285 
Assets managed by Isabella Wealth$501,829 $454,459 $359,968 
Total assets under management$2,838,318 $2,768,405 $2,433,157 
ASSET QUALITY (1)
Nonaccrual status loans$747 $4,532 $6,913 
Performing troubled debt restructurings$22,335 $28,947 $20,228 
Foreclosed assets$187 $384 $564 
Net loan charge-offs (recoveries)$(64)$(50)$30 
Nonperforming loans to gross loans0.06 %0.38 %0.59 %
Nonperforming assets to total assets0.05 %0.26 %0.43 %
Allowance for loan and lease losses to gross loans0.76 %0.78 %0.74 %
CAPITAL RATIOS (1)
Shareholders' equity to assets9.50 %10.83 %11.87 %
Tier 1 leverage8.12 %8.56 %9.09 %
Common equity tier 1 capital12.83 %13.77 %12.72 %
Tier 1 risk-based capital12.83 %13.77 %12.72 %
Total risk-based capital15.84 %14.54 %13.41 %
(1) At end of period


SUPPLEMENTAL BALANCE SHEET DATA (UNAUDITED)
(Dollars in thousands)
March 31
2022		December 31
2021		September 30
2021		June 30
2021		March 31
2021
Commercial$727,614 $807,439 $757,993 $723,888 $725,540 
Agricultural88,169 93,955 93,782 95,197 91,629 
Residential real estate328,559 326,361 321,620 312,567 305,909 
Consumer74,029 73,282 75,163 75,011 72,840 
Gross loans$1,218,371 $1,301,037 $1,248,558 $1,206,663 $1,195,918 
March 31
2022		December 31
2021		September 30
2021		June 30
2021		March 31
2021
Noninterest bearing demand deposits$461,473 $448,352 $430,950 $428,410 $404,710 
Interest bearing demand deposits387,187 364,563 374,137 326,971 328,440 
Savings deposits635,195 596,662 572,136 549,134 555,688 
Certificates of deposit279,708 297,696 312,027 326,214 331,413 
Brokered certificates of deposit— — — — 14,029 
Internet certificates of deposit598 3,066 3,066 5,777 9,301 
Total deposits$1,764,161 $1,710,339 $1,692,316 $1,636,506 $1,643,581 
March 31
2022		December 31
2021		September 30
2021		June 30
2021		March 31
2021
U.S. Treasury$218,268 $209,703 $192,069 $132,593 $29,371 
States and political subdivisions114,015 121,205 128,689 130,960 140,329 
Auction rate money market preferred2,867 3,242 3,246 3,260 3,224 
Mortgage-backed securities49,578 56,148 62,030 68,155 75,835 
Collateralized mortgage obligations152,441 92,301 100,767 109,294 116,865 
Corporate7,750 8,002 7,583 4,192 1,700 
Available-for-sale securities, at fair value$544,919 $490,601 $494,384 $448,454 $367,324 
March 31
2022		December 31
2021		September 30
2021		June 30
2021		March 31
2021
Securities sold under agreements to repurchase without stated maturity dates$51,353 $50,162 $67,519 $62,274 $51,967 
FHLB advances10,000 20,000 60,000 70,000 90,000 
Subordinated debt, net of unamortized issuance costs29,181 29,158 29,136 29,121 — 
Total borrowed funds$90,534 $99,320 $156,655 $161,395 $141,967 


SUPPLEMENTAL STATEMENTS OF INCOME DATA (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31
20222021
Service charges and fees
ATM and debit card fees$1,093 $999 
Service charges and fees on deposit accounts609 436 
Net OMSR income (loss)264 (32)
Freddie Mac servicing fee171 214 
Other fees for customer services72 78 
Total service charges and fees2,209 1,695 
Wealth management fees754 696 
Net gain on sale of mortgage loans224 745 
Earnings on corporate owned life insurance policies210 186 
Gains from redemption of corporate owned life insurance policies52 146 
Other98 64 
Total noninterest income$3,547 $3,532 
Three Months Ended March 31
20222021
Compensation and benefits$6,074 $5,877 
Furniture and equipment1,450 1,373 
Occupancy966 945 
Other
Audit, consulting, and legal fees549 436 
ATM and debit card fees434 417 
Donations and community relations287 146 
Marketing costs239 209 
Memberships and subscriptions217 211 
Director fees201 159 
Loan underwriting fees182 190 
FDIC insurance premiums125 231 
All other596 623 
Total other noninterest expenses2,830 2,622 
Total noninterest expenses$11,320 $10,817