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Isabella Bank Corporation Announces Strong Second Quarter 2021 Earnings
Successful $30 million subordinated debt offering complete

Isabella Bank Corporation (the "Corporation") (OTCQX: ISBA) released its earnings results for the second quarter of 2021. The Corporation reported net income of $4.6 million for the second quarter and $10 million for the first six months of 2021, both increased compared to the same periods a year ago.  Earnings per common share were $0.58 in the second quarter and $1.26 for the first half of the year, up from the same periods of 2020 at $0.53 and $0.91, respectively.

Highlights include:

  1. Completed a $30 million private placement of subordinated notes with an initial interest rate of 3.25%.
  2. Net interest income — $12.7 million in the second quarter of 2021. Interest expense initiatives reduced costs by 45.9%, or $1.6 million, compared to the same period in 2020.
  3. Noninterest expense controls continue to benefit the Corporation.
  4. Loan payment deferrals, to provide short-term relief to customers, continued to decline as customers resumed contractual payments. As of June 30, 2021, loan deferrals totaled just 0.3% of gross loans.

“We delivered another strong financial quarter following our record performance from the previous quarter,” said Jae A. Evans, President and Chief Executive Officer of the Corporation. “Here at Isabella Bank, we continue to be a resource to our customers in a recovering economy. We facilitated over 950 PPP loans for a total of $99.5 million in 2020, and funded another 845 PPP loans for a total of $54.6 million this year. We also assisted customers by removing selected deposit account related charges and fees in day-to-day banking and temporarily waiving others."

On June 2, 2021, the Corporation completed a private placement of $30 million in fixed-to-floating rate notes due in 2031. The subordinated notes will initially bear a fixed interest rate of 3.25% until June 15, 2026, after which time until maturity, the notes convert to a floating rate instrument. The notes, issued to institutional investors, are structured to qualify as Tier 2 capital under regulatory guidelines. The Corporation expects to use proceeds from issuance of the notes for general corporate purposes, including potential repurchases of common stock and merger and acquisition activity.

“We are strengthening our ability to increase our presence while we continue to manage operating costs,” Evans said. “We also remain committed to increasing earnings and shareholder value through growth in our loan portfolio and Isabella Wealth.”

Operating Results

Net income: Net income for the second quarter 2021 was $4.6 million, compared to $4.2 million in the second quarter of 2020. For the first six months of 2021, net income was $10 million, compared to $7.3 million in the same period of 2020.

Net interest income: Net interest income for the first six months of 2021 increased by $1.6 million compared to the same period in 2020. Fees related to the U.S. Small Business Administration's Paycheck Protection Program ("PPP") have contributed significantly to interest income in 2021; however, fewer total loans and an interest rate decline led to a $2.1 million decrease in interest income when comparing the first two quarters of 2021 to 2020. Conversely, the reduction in interest rates, as well as reduced reliance on higher-cost borrowings, led to a $3.7 million decrease in interest expense on deposits and borrowings.

Noninterest income and expenses: Net gains on sold mortgage loans along with service charges and fees accounted for much of a $603,000 increase in noninterest income for the first six months of 2021 when compared to the same period in 2020. Noninterest expenses declined $333,000 for the first six months of 2021 compared to 2020, reflecting management's continued focus on reducing operating expenses.

Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 2.88% for the first six months of 2021 compared to 2.95% in the first six months of 2020. The Corporation’s banking subsidiary, Isabella Bank (the “Bank”), implemented strategic programs focused on improving the net yield on interest-earning assets, such as  enhanced pricing related to loans and reduced reliance on higher-cost borrowed funds and brokered deposits. These efforts have helped, although the current interest rate environment has had a negative impact on the yield of interest-earning assets. Future improvement is expected at a gradual pace.

Balance Sheet

Assets: Total assets and assets under management were $2 billion and $2.8 billion as of June 30, 2021, respectively. Assets under management include loans sold and serviced of $290 million and investment and trust assets managed by Isabella Wealth of $493 million, in addition to assets on our consolidated balance sheet. Assets under management are up $243 million, or 9.4%, compared to June 30, 2020. Market improvement and growth in new client assets managed by Isabella Wealth, as well as growth in deposits, account for this increase.

Loans: Loans outstanding as of June 30, 2021, totaled $1.2 billion. Approximately $62 million of PPP loans are included in the commercial loan balance. During the first six months of 2021, gross loans declined $31.6 million, largely driven by a decrease in advances to mortgage brokers, which also is included in the commercial loan portfolio.  Credit quality indicators remained strong and economic factors continued to improve in the second quarter.

Deposits: Total deposits were $1.64 billion as of June 30, 2021, an increase of $70.2 million since December 31, 2020. Since June 2020, total deposits have increased 13.6%. The increase of deposits is the result of funds from PPP loans, customers receiving stimulus checks, and attracting new customers.

Liquidity

The Corporation's liquidity position remains strong as evidenced by its $797 million of cash and available funds as of June 30, 2021. This total is comprised of $248.2 million in cash and cash equivalents, $248.8 million in available lines of credit and approximately $300 million in unencumbered investment securities.

Capital

The Bank is designated as a “well capitalized” institution, as its capital ratios exceeded the minimum requirements for this designation. As of June 30, 2021, the Bank’s Tier 1 Leverage Ratio was 8.3%, Tier 1 Capital Ratio was 13.5% and Total Capital Ratio was 14.2%. From a consolidated perspective, the Corporation's Tier 1 Leverage Ratio was 8.5%, Tier 1 Capital Ratio was 13.8% and Total Capital Ratio was 17.0% as of June 30, 2021. 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 second quarter of 2021, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation's closing stock price of $23.00 as of June 30, 2021, the annualized cash dividend yield was 4.70%.

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 118 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 actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections entitled "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.

Henderson Joins Isabella Bank South Board, Miller Retires after 19 Years
Mr. William Henderson III joins the Isabella Bank South Region Board following Mr. Timothy Miller’s retirement from the board after 19 years of loyal service.

07-21-2021

Brian Goward, South Region President of Isabella Bank announced the retirement of Mr. Timothy Miller and the appointment of Mr. William Henderson III to the Board, June 2021.  Mr. Henderson graduated from Michigan State University with a degree in Engineering Arts.  He currently serves as president of Aircraft Precision Products, a leading component supplier to the commercial and military aircraft engine industry. 

“Bill is a pillar in the community.  He is committed to serving others and helping them succeed in their endeavors.  We are thrilled to have him join our board,” stated Goward.

Mr. Henderson earned the 2018 Association for Career Technical Education Region 1 Outstanding Board Member of the Year Award, 2016 Michigan Association of School Administrators Region 4 Champion of Children Award, as well as the 2003 and 2007 Finalist for MMA Michigan Manufacturer of the Year – Small Business Division.

He currently serves as chair of the Michigan Manufacturers Association, Greater Gratiot Development, and Coe Township Planning Commission.  He serves as co-chair on the Central Michigan Manufacturers Association Special Interest Group, and vice-chair of the MidMichigan Health Foundation Board of Directors.  He is currently the president of the Central Michigan Manufacturers Association, and is a member of the Gratiot-Isabella Regional Education Service District.  He is treasurer and past president of Central Michigan Area Concert Band, and past chair of MidMichigan Health Board of Directors.  William and his wife, Candace, reside in Shepherd. 

“Mr. Miller was an asset to our Bank and Board for many years.  We wish him all the best in retirement,” added Goward. 

Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 118 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.  The Corporation has been recognized on the Detroit Free Press list of “Top Workplaces.”

Mid-Michigan Native Sarah Opperman Named Chair of Isabella Bank Corporation and its Subsidiary Isabella Bank
David Maness completes 11 years as chair, will continue as member of the board

06-08-2021

Sarah R. Opperman, retired executive of The Dow Chemical Company and lifelong mid-Michigan resident, has been named chair of the Isabella Bank Corporation (OTCQX:ISBA) and Isabella Bank Board of Directors. Former Chair David J. Maness will remain a member of the board.

“Mr. Maness and Ms. Opperman are visionary leaders,” said Jae A. Evans, President and Chief Executive Officer. “Both are resolute in upholding Isabella Bank’s 118-year history and culture as an independent, locally owned and operated community bank. They are strategic in their approach to growth while keeping a steadfast focus on knowing and serving our customers and communities extraordinarily well.”

Maness has been a director of Isabella Bank since 2003 and joined the corporate board of directors in 2004. He was named board chair in 2010.

During his tenure as chair, Isabella Bank Corporation and Isabella Bank:

  • Added six local branches in Midland, Freeland, Saginaw and Big Rapids.
  • Established its services in the East Region, which includes Midland and Saginaw counties.
  • Transitioned to the leadership of Evans, who had been the chief operations officer, from Richard Barz, who retired in 2013 after 46 years with the bank.
  • Launched its mobile banking services and option to open accounts online, which addressed increasingly crucial needs during the COVID-19 pandemic.
  • Grew its assets to nearly $2 billion, up almost $800,000 million.

“Dave is a champion for the bank as well as the residents and businesses we serve,” Evans said. “He has led the board in overseeing significant financial growth and increasing value for shareholders while further cementing our commitment to community. I’m delighted he will continue to serve on our board.”

Maness is president of Maness Petroleum, a geological and geophysical consulting services company founded in 1985 to explore the Michigan Basin for oil and gas. David and his brother, Tim, are equal owners of the Mt. Pleasant-based company. Maness also has served on the boards of the Michigan Oil and Gas Association and Mount Pleasant Public Schools.

Opperman joined the boards of Isabella Bank Corporation and the bank in 2012.  She worked for Dow nearly 30 years, retiring in 2009 as vice president of Global Government Affairs and Public Policy. In 2018, she served as interim president and CEO of the Midland Business Alliance, an integrated business hub that includes economic development, the Chamber of Commerce and four other organizations. She received the Chairman’s Award from the Alliance in 2019 for her contributions in strategically realigning and relaunching the organization.

She also spent eight years on the Central Michigan University Board of Trustees, twice serving as chair.

Sarah has received Dow’s highest recognition for being an effective, committed leader and champion of people, and the ATHENA Award, for her community service and support of other women. She chairs the MidMichigan Health Foundation Board and is a member of the Midland 100 Club, a women’s organization that supported 47 local nonprofits in its first 10 years with contributions and grants approaching $1 million.

“Sarah’s vast experience in corporate business strategy and organizational leadership is invaluable as Isabella Bank continues its drive for growth and shareholder value,” Evans said. 

“At the same time, she exudes commitment to our employees, communities and customers. Originally from Frankenmuth, having lived in Mount Pleasant and in Midland, she is very familiar with the communities throughout our seven-county footprint,” he said. “As so many other banks are sold and merged and sold again, Sarah knows the value of independent community banking.”

Opperman began as board chair May 26.

Bank Corporation Announces First Quarter 2021 Earnings
Strong results reflect strategic moves; loan portfolio metrics remain strong

04-22-2021

Isabella Bank Corporation (the "Corporation") (OTCQX: ISBA) released its earnings results for the first quarter of 2021. The Corporation reported net income of $5.4 million and earnings per common share of $0.68.

First quarter 2021 highlights include:

  1. Net interest income was $13.2 million in the first quarter of 2021 and increased $1.2 million when compared to the same period in 2020.
  2. Elimination of debt and higher-cost funding throughout 2020 and a decline in interest rates led to a $2.1 million decline in interest expenses in the first quarter of 2021 compared to the same period in 2020.
  3. Provision for loan losses decreased $1.3 million compared to the first quarter of 2020 due largely to improving credit quality indicators and economic factors.
  4. Total deposits increased $77.3 million in the first quarter of 2021.
  5. Outstanding shares of ISBA stock have declined nearly 40,000 since December 31, 2020, as part of a buyback program and changes in the dividend reinvestment plan. The goal is to improve key metrics that positively affect shareholder value and price.

“Isabella Bank Corporation started 2021 with a strong first quarter that reflects the rebounding strength of our communities and the positive returns from the intentional actions we’ve taken in alignment with our five-year strategic plan,” said Jae A. Evans, President and Chief Executive Officer of the Corporation.

“New initiatives designed to support the changing needs of our customers, leverage the interest rate environment and improve key metrics were leading contributors to our excellent results in the first quarter.”

Net income

Net income for the first quarter 2021 was $5.4 million compared to $3.1 million in the first quarter of 2020.

Net interest income: Net interest income for the first quarter increased by $1.2 million compared to the same period in 2020. Net interest income has been up from March 2020 in each of the last four quarters due largely to PPP loans. Income from PPP interest totaled $2.3 million in 2020 and $1.2 million in the first quarter of 2021.

Noninterest income and expenses: Net gain on sold mortgage loans is a key reason noninterest income increased $534,000 in the first quarter compared to the same period in 2020. Ongoing operating expense controls led to noninterest expenses declining $128,000 compared to the first quarter of 2020.

Net yield on interest earning assets: The Corporation’s fully taxable equivalent net yield on interest earning assets was 2.98% for the first quarter of 2021, the same percentage recorded in the first quarter of 2020. The Corporation’s banking subsidiary, Isabella Bank (the “Bank”), implemented strategic programs focused on improving the net yield on interest-earning assets, which included enhanced pricing related to loans and a reduced reliance on higher-cost borrowed funds and brokered deposits. These efforts have helped offset the year-long, low-interest-rate environment. As the economy recovers and interest rates rise, improvement in the yield on interest-earning assets is expected.

Assets

Total assets were $2 billion as of March 31, 2021, and assets under management were $2.8 billion. Assets under management are up $335.2 million, or 13.8%, in comparison to March 31, 2020.

Assets under management include loans sold and serviced of $298.5 million, investment and trust assets managed by Isabella Wealth of $454.5 million and assets on the consolidated balance sheet.

The securities portfolio increased $28.1 million in the first quarter of 2021 due primarily to purchases of U.S. Treasury securities.

Loans

Loans outstanding as of March 31, 2021, totaled $1.2 billion. During the first quarter 2021, gross loans declined $42.4 million, largely driven by reduced volume in advances to mortgage brokers.  A second round of participation in the Small Business Administration's Paycheck Protection Program resulted in advances of more than 650 PPP loans totaling $49.9 million in the first quarter of 2021.

Deposits

Total deposits were $1.6 billion at the end of the first quarter 2021, an increase of $321.5 million compared to the same period in 2020. The increase of deposits is largely the result of PPP loan proceeds and from customers receiving government stimulus checks.

Liquidity

The Corporation's liquidity position remains strong as evidenced by its $740 million of cash and available funds as of March 31, 2021. This total is comprised of $322 million in cash and cash equivalents, $219 million in available lines of credit and approximately $200 million in unencumbered investment securities.

Capital

The Bank is designated as a “well capitalized” institution, as its capital ratios exceeded the minimum requirements for this designation. As of March 31, 2021, the Bank’s Tier 1 Leverage Ratio was 8.3%, Tier 1 Capital Ratio was 13.2% and Total Capital Ratio was 14.0%. From a consolidated perspective, the Corporation's Tier 1 Leverage Ratio was 8.6%, Tier 1 Capital Ratio was 13.8% and Total Capital Ratio was 14.5% as of March 31, 2021. 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 2021, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation's closing stock price of $21.75 as of March 31, 2021, the annualized cash dividend yield was 4.97%.

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 118 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), its investor relations firm is Renmark Financial Communications, Inc. (www.renmarkfinancial.com), and analyst coverage is provided by Piper Sander Companies (www.pipersandler.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 actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections entitled "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.

McGuirk and Payton Appointed to Isabella Bank Corporation and Isabella Bank Boards

03-11-2021

Jae Evans, President and Chief Executive Officer and David Maness, Board Chairman of Isabella Bank Corporation announced the appointment of Mr. Richard McGuirk and Mr. Chad Payton to the Corporate and Bank Boards on February 24, 2021.

Mr. McGuirk is President and Operations Manager of United Apartments and a Management Consultant for McGuirk Sand and Gravel.  Mr. McGuirk brings a wealth of operational and executive management expertise to the Board.  He currently serves on the Mt. Pleasant Area Community Foundation and Advancement Board for Central Michigan University.  Mr. McGuirk earned his undergraduate degree from Central Michigan University, majoring in management and marketing.  He is a licensed real estate broker and builder in the State of Michigan.  Rick and his wife, Julie, reside in Mount Pleasant.  They have four children, Tom, Trevor, Tyler, and Taryn.

“Rick’s entrepreneurial experience and leadership, combined with his commitment to the community makes him a great addition to both of our boards. We are excited to have Mr. McGuirk join our leadership team,” stated Jae Evans.

Mr. Payton, CPA is an Officer and Managing Partner with Roslund, Prestage & Company, CPA’s, PC.  As a certified public accountant, Mr. Payton brings a vast knowledge of small business accounting and financial consulting to the Board.  He currently serves on the Isabella Bank South Region Board, American Institute of CPAs, and Michigan Association of CPAs.  Mr. Payton earned his undergraduate degree from Alma College.  Chad and his wife, Natalie, reside in Mount Pleasant.  They have two children, Mason and Tanner.

“Chad’s extensive knowledge and understanding in the areas of audit, tax, and financial planning has been a great asset to our South Region Advisory Board.  We look forward to having him serve on our Corporate and Bank Boards,” stated David Maness, Board Chairman.

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 118 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).

Isabella Bank Corporation Announces First Quarter 2021 Dividend

03-01-2021

Isabella Bank Corporation (OTCQX:ISBA) announced today that the Board of Directors of the Corporation declared a first quarter cash dividend of $0.27 per common share at its regular meeting held on February 24, 2021.  The dividend will be payable on March 31, 2021 to shareholders of record as of March 26, 2021.  Based on ISBA’s closing stock price of $20.50 per share as of February 24, 2021, the annualized cash dividend yield was 5.27%.

“The Corporation’s continued financial strength reinforces the strategic actions we have taken thus far to improve our performance metrics," said Jae A. Evans, President and Chief Executive Officer. “This dividend also reflects the stability we are maintaining as we address the ongoing challenges of a year old pandemic.”

About the Corporation
Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state chartered 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 118 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 Invest in Us 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 actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections entitled "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.

Isabella Bank Corporation Announces Fourth Quarter and 2020 Earnings
Strategic elimination of debt lowers quarterly earnings; core business results remain strong

02-17-2021

Isabella Bank Corporation (the "Corporation") (OTCQX: ISBA) released its earnings results for the fourth quarter and year ended December 31, 2020. Driven by the cost of eliminating $100 million of Federal Home Loan Bank debt, the Corporation reported a loss of $723,000 for the fourth quarter of 2020.  For the year, net income was $10.9 million and earnings per common share was $1.37.

The elimination of $100 million of Federal Home Loan Bank debt, resulting in a one-time noninterest expense of $7.6 million, will lower future annual interest expenses by $2.8 million. The move was one of two essential actions the Corporation took in the fourth quarter as part of a five-year strategic plan to improve financial performance metrics of its core businesses. The other — the sale of its membership interest in Corporate Settlement Solutions, LLC (“CSS”) in the fourth quarter — resulted in a $394,000 reduction in noninterest income.

Fourth quarter 2020 and the year also included several achievements:

  • Total deposits increased $252.5 million in 2020.
  • Gain on loans sold increased $2.1 million (318%) in 2020 as new mortgages sold grew $75.2 million.
  • Loan growth reached $51.7 million in 2020.
  • COVID-19 related loan payment deferrals decreased 94.2% in the fourth quarter.

“The strategic actions taken in the fourth quarter of 2020 are measures, which we identified when implemented, would improve our overall financial performance. The ongoing stability and strength of our core business, as evidenced by the growth in our mortgage, commercial, and consumer loan portfolios, combined with our focus on controlling non-interest expenses, will be beneficial for future periods,” said Jae A. Evans, President and Chief Executive Officer of the Corporation.

“This year showed our true strength and role as a full-service banking institution as customers adjusted to circumstances brought on by the pandemic. We served businesses in our communities by helping them through government loan processes, along with 90-day loan deferrals. By the fourth quarter, most of these customers were back on a regular payment plan. This is good news, not just for them and the Bank, but also for our communities.”

Net Income

The net loss for the fourth quarter was $723,000, while net income for the year ended December 31, 2020 was $10.9 million. Net income for the fourth quarter of 2019 and year ended December 31, 2019 was $898,000 and $13.0 million, respectively.

Net interest Income, fourth quarter 2020: Net interest income for fourth quarter 2020 increased $1.2 million  compared to the same period in 2019 largely due to loan fee income related to the Small Business Administration's Paycheck Protection Program ("PPP"). Provision for loan losses for the quarter increased by $274,000 compared to the same period last year as a result of increased economic and environmental risk factors, predominantly driven by COVID-19.

Net interest income, 2020: The decline in interest rates in the first quarter of 2020 was the primary driver of a $3.1 million decrease in interest income compared to 2019. Interest expense on deposits and borrowings decreased $4.0 million for the year largely due to reduced interest rates and reduced reliance on higher-cost borrowings. Net interest income increased $902,000 for 2020 compared to 2019. For the year, provision for loan losses increased by $1.6 million as a result of increased economic and environmental risk factors, predominantly driven by the pandemic.

Noninterest income and expense, fourth quarter 2020: The quarter's noninterest income increased $4.8 million from the same period of 2019 as a result of 2019's $3.6 million reduction in the Corporation's joint venture investment in CSS, plus an increase in the net gain on sale of mortgage loans. Fourth quarter 2020 noninterest expense increased $7.7 million from the same period last year as a result of the cost associated with the $100 million debt elimination.

Noninterest income and expense, 2020: Noninterest income increased $6.4 million over 2019, mainly as a result of net gain on sold mortgage loans, the redemption of corporate owned life insurance policies, and the investment reduction in CSS in 2019. Noninterest expense for the year increased $8.2 million, which can be attributed to a $7.6 million cost to eliminate $100 million of Federal Home Loan Bank debt.  As a result, future interest expense will decline $2.8 million annually, which will have a favorable impact on net yields.

Net yield on interest earning assets: The Corporation's fully taxable equivalent net yield on interest earning assets was 3.04% and 2.96% for the fourth quarter and year ended December 31, 2020, respectively. This compares to 3.06% and 3.07% for the fourth quarter and year ended December 31, 2019. The Corporation's banking subsidiary, Isabella Bank (the "Bank"), implemented strategic programs focused on improving the net yield on interest earning assets, including enhanced pricing related to loans and a reduced reliance on higher-cost borrowed funds and brokered deposits. While these efforts have helped, the current interest rate environment has had a negative impact on the yield of interest earning assets. Future improvement is expected to be gradual.

Assets

As of December 31, 2020, total assets were $1.96 billion and assets under management were $2.7 billion. Assets under management included loans sold and serviced of $301.4 million and investment and trust assets managed by Isabella Wealth of $444.0 million, in addition to assets on the consolidated balance sheet.

The Bank's securities portfolio has declined by $90.6 million since December 31, 2019, primarily as a result of increased monthly prepayments and payoffs of available-for-sale securities. The Bank utilized this available cash flow to reduce higher-cost funding sources and other borrowings as they matured, which strengthened its liquidity position. Borrowed funds have declined $117.3 million since December 31, 2019.

Loans

Loans outstanding as of December 31, 2020, totaled $1.2 billion. During 2020, gross loans increased $51.7 million, driven by growth in the commercial loan portfolio of $55.7 million. During this same period, the agricultural loan portfolio declined $16.5 million while residential real estate and consumer loan portfolios experienced growth totaling $12.5 million.

The Bank experienced a 94.2% decline in the amount of COVID-19 related loan payment deferrals during the fourth quarter.  Loan payment deferrals decreased to $6.0 million, or 0.5% of gross loans, as of December 31, 2020 compared to $103.9 million, or 8.0%, as of September 30, 2020.  The majority of borrowers granted loan payment deferrals had reverted back to contractual payments as of December 31, 2020.

Deposits

Total deposits increased $252.5 million during 2020 to $1.6 billion. This increase was primarily attributed to deposits from borrowers participating in the PPP loan program and customers receiving government stimulus funds. Over the past year, excess funds were used to reduce higher-cost deposits such as brokered certificates of deposit balances. Since December 31, 2019, the Bank reduced brokered certificates of deposits $13.4 million, or 49%, which was favorable to the Bank's net interest margin.

Liquidity

The Corporation's liquidity position remains strong as evidenced by its $621 million of cash and available funds as of December 31, 2020. This total is comprised of $247 million in cash and cash equivalents, $215 million in available lines of credit and approximately $160 million in unencumbered investment securities.

Capital

The Bank is designated as a “well capitalized” institution, as its capital ratios exceeded the minimum requirements for this designation. As of December 31, 2020, the Bank’s Tier 1 Leverage Ratio was 8.0%, Tier 1 Capital Ratio was 12.3% and Total Capital Ratio was 13.1%. From a consolidated perspective, the Corporation's Tier 1 Leverage Ratio was 8.4%, Tier 1 Capital Ratio was 13.0% and Total Capital Ratio was 13.8% as of December 31, 2020. 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 fourth quarter of 2020, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation's closing stock price of $19.57 as of December 31, 2020, the annualized cash dividend yield was 5.5%.

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 118 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 actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections entitled "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.

Williams Promoted to Midland Market President

01-22-2021

Jerome Schwind, President of Isabella Bank announced the promotion of Mike Williams to Midland Market President.  In his new role, Mike is responsible for leading the sales and customer service initiatives in Midland and the surrounding areas.  A vital part of his role will be serving his commercial lending customers, while remaining engaged in the community. 

“Mike positively impacts his team and community with his knowledge and commitment to Isabella Bank.  We look forward to the future as Mike continues to build and deepen relationships in the area,” stated Schwind.

Williams is a graduate of Albion College, Leadership Midland, and Great Lakes Bay Region Alliance Leadership.  Mike has 22 years of banking experience, spending the majority of his career in commercial lending and credit underwriting.  He is actively involved in his community, volunteering with the Midland Noon Rotary, The Legacy Center for Community Success, United Way of Midland County, Midland Business Alliance, Greater Midland Community Center Operating Board, Midland Center for the Arts NextGen Council, Junior Achievement of Central Michigan, Midland Center City Project Committee, and Midland Habitat for Humanity.  He is an avid outdoorsman, enjoys watching girls fast pitch softball, and college football.  Mike and his wife, Amy, reside in Midland with their two daughters, Morgan and Caroline.   

Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 118 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.  The Corporation has been recognized on the Detroit Free Press list of “Top Workplaces.”

Watson Graduates from Cannon Trust as an Honor Graduate

01-14-2021

Tricia Watson, Trust Advisor at Isabella Wealth was among 74 professionals who attended the Cannon Trust School offered by Cannon Financial Institute.  CFI’s School is a three-year school, consisting of 38 hours of classroom instruction each year.  Diplomas are awarded upon completion of the entire sequence.  Additionally, Tricia successfully completed the Cannon Trust School with the Honor Graduate Designation, Cannon’s highest academic distinction.  This award is given to those students who complete each level of the course with a 90 or above on each of the comprehensive exams given at the conclusion of each class.

“I appreciate Tricia’s dedication to continuous improvement for herself and our clients.  We are grateful to have her extensive trust knowledge on our wealth team,” stated Jerome Schwind, Isabella Bank President.

Tricia earned her associates degree from Mott Community College and her bachelors of business administration from Northwood University.  She is an Accredited Fiduciary Investment Manager from Cannon Financial Institute and a Certified Fund Specialist from the Institute of Business and Finance.  Tricia has 29 years of banking experience, spending the last 27 years in the trust area. 

Cannon is a 50 year old financial training institution which offers a three year General Trust School at the following four locations around the country: Hilton Head, S.C., Boston University in Boston, MA; The University of Notre Dame, South Bend, IN, and Pepperdine University, Malibu, CA.

Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 117 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 30 banking locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw. The Corporation has been recognized on the Detroit Free Press list of “Top Workplaces.”

Isabella Bank Corporation Announces Fourth Quarter 2020 Dividend

11-30-2020

Isabella Bank Corporation (OTCQX:ISBA) announced today that the Board of Directors of the Corporation declared a fourth quarter cash dividend of $0.27 per common share at its regular meeting held on November 24, 2020.  The dividend will be payable on December 18, 2020 to shareholders of record as of December 16, 2020.  Based on ISBA’s closing stock price of $19.05 per share as of November 27, 2020, the annualized cash dividend yield was 5.67%.

“I am pleased to announce our Board approved a dividend of $0.27 per share for the fourth quarter.  Our continued financial strength, as evidenced by our results through the third quarter, provides us the ability to reward shareholders with an attractive return on their investment as evidenced by the 5.67% annualized yield," commented Jae A. Evans, President and Chief Executive Officer of Isabella Bank Corporation. “We are looking ahead and strategically preparing for the continued strength and stability of our organization, while we continue to assist our customers during these unusual times.”

About the Corporation

Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state chartered 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 117 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 30 banking locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.

For more information about Isabella Bank Corporation, visit the Invest in Us 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 actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections entitled "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.

Isabella Bank Announces Making Spirits Bright Campaign
Nominate someone in need to receive one of seven $500 gift cards

11-23-2020

Jerome Schwind, President of Isabella Bank is pleased to announce their “Making Spirits Bright” holiday campaign.  From November 23 through December 14, visit www.isabellabank.com/MakingSpiritsBright to nominate a friend or family member that needs a little light this holiday season.  Isabella Bank is giving a $500 gift card to seven nominated families across their footprint.

“This year has been challenging for so many and we want to help add a little light to our community, especially this time of year,” stated Schwind. “The holiday season is a time for us to reflect and help make spirits brighter.”

Nominations will be accepted through December 14, 2020.  Drawing will be held on December 15, 2020.  Winners will be notified by phone/email.  No purchase necessary. Employees are ineligible.  Eligible nominations must be a resident of Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, or Saginaw counties.

Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 117 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 30 banking locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw. The Corporation has been recognized on the Detroit Free Press list of “Top Workplaces.”

Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state chartered bank headquartered in Mt. Pleasant, Michigan.  Isabella Bank Corporation common stock is quoted on the OTCQX tier of the OTC Markets Group, Inc.’s

 

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