Isabella Bank Corporation · NASDAQ:ISBA
Isabella Bank — Q2 2023 Earnings Presentation
27 slides from Isabella Bank's earnings presentation, Aug 15, 2023
Slide 1: The Best Marketplace
‘The Best-Marketplace
Slide 2: Agenda
Agenda • About Us • Financial Data • Objectives & Strategy • Q&A 2
Slide 3: About Us
About Us • Isabella Bank was founded in 1903 • 30 Banking offices throughout seven Mid-Michigan counties • Full service banking, including Wealth Management • Five-star rating from Bauer Financial, Inc. • Cash dividends for 74 consecutive years 3
Slide 4: Our Market Area
Our Market Area SS << — Mt. @ Pleasan\ e Grand Rapids CLARE ‘County ABELLA MIDLAND County ‘county r] a Midland GRATIOT ® County on Ithaca & = 79iaw SAGINAW ‘County YT Vin ISBA The Best Marketplace
Slide 5: Market Deposit Demographics
Market Deposit Demographics Number Of Market Share / Total Banks In The County Population Branches Rank Market CLARE 3 41% / 2 31,129 3 GRATIOT 2 19% / 3 40,392 4 ISABELLA 10 58% / 1 69,920 6 MECOSTA 5 31% / 1 44,624 7 MIDLAND 2 9% / 4 84,343 7 MONTCALM 3 24% / 2 64,195 7 SAGINAW 4 6% / 7 190,738 12
Slide 6: Acquisitions & Expansions
Acquisitions & Expansions 2008 Greenville Community Bank ($114 Million in Assets) 2008 Lake Isabella office was opened 2008 Corporate Office moved to new location 2010 Midland West office was opened 2012 Freeland office was opened 2013 Big Rapids East office was opened 2015 Saginaw office was acquir
Slide 7: Board of Directors
Board of Directors Sarah R. Opperman - Chair Thomas L. Kleinhardt Vice President (retired) President The Dow Chemical Company McGuire Chevrolet Jae A. Evans Richard L. McGuirk Chief Executive Officer President & Operations Manager Isabella Bank United Apartments Jerome E. Schwind Chad R. Payton, CPA
Slide 8: Bank Executive Leadership
Bank Executive Leadership 190+ Years of Combined Experience Jae Evans, Chief Executive Officer Mr. Evans has served as President and Chief Executive Officer of Isabella Bank Corporation since 2014 and Chief Executive Officer of the Bank since 2018. He has been employed by the corporation since 2008
Slide 9: Neil McDonnell, Chief Financial Officer; Peggy Wheeler; Dave Reetz
Neil McDonnell, Chief Financial Officer Mr. McDonnell has over 30 years of banking experience and has been employed by the Bank since 2018. He has served as chief financial officer, controller, treasurer, compliance & risk officer, and director of finance at large international banks, local communit
Slide 10: About Us
About Us • 387 employees • 335 (87%) are full time employees • 142 (37%) have been with us more than 10 years • 85 (22%) have been with us more than 20 years • 18% employee turnover in 2022 (Industry Average for 2022 was 28%) Information as of June 30, 2023 10
Slide 11: Shareholder Statistics
Shareholder Statistics • 2,729 Shareholders and 7,496,826 Outstanding Shares • 33% of Employees are Shareholders • Current and retired director ownership 16% • Largest Shareholder owns <6% • Paid Cash Dividends Every Year Since 1948 Information as of June 30, 2023 11
Slide 12: Loan Portfolio
Loan Portfolio Gross Loans As of June 30, 2023 7.2% Commercial Commercial Loans 26.1% Agricultural Residential Mortgages 59.5% 12.7% Consumer Real Estate 7.2% 1.6% 4.9% Accommodation Services Health Care 4.1% Retail Trade 5.0% 41.0% Wholesale Trade 2.7% Construction 6.3% Manufacturing Education 7.4%
Slide 13: 2022 At a Glance…
2022 At a Glance… • Strong annual results • Core loan growth continues; strong credit quality • Interest expense declined 28% • Investments in Technology -New Online Banking Solution -Enhancing Mobile Banking Solution -New Deposit Account Platform -Phase 2 of Small Business Loan Automation • Expansi
Slide 14: Looking at 2023…
Looking at 2023… • Saginaw State Street branch opened • Opening of an LPO in Bay City • Focus on operational efficiencies • Asset sensitive balance sheet benefits us in a rising rate environment • Continued effort on stock buyback program 14 14
Slide 15: Strength at the Bank
Strength at the Bank • Excess cash and liquidity - $697 million – Total cash and cash equivalents – $30 million – Available lines of credit – $307 million – Unencumbered lendable value of collateral – $360 million • Strong capital ratios – Tier 1 leverage – 9.17% – Tier 1 risk-based capital – 13.08%
Slide 16: ISBA Highlights
ISBA Highlights ($000) % of change since June 30, 2023 December 31, 2022 Assets Under Management $2,890,912 2.94% Total Assets $2,042,448 0.60% Gross Loans $1,334,402 5.56% Investment Securities $530,497 -8.61% Deposits $1,714,948 -1.68% Borrowings $121,392 39.51% Capital $188,431 1.19% Information
Slide 17: Key Metrics
Key Metrics Information as of June 30, 2023 Loan Growth ($000) Credit Quality Deposit Growth ($000) Borrowed Funds ($000) 17
Slide 18: Revenue
Isabella Wealth ($000) $600,000 $4,000 $3,500 $500,000 $3,000 $400,000 $2,500 Revenue Assets $300,000 $2,000 $1,500 $200,000 $1,000 $100,000 $500 $0 $0 12/31/19 12/31/20 12/31/21 12/31/22 06/30/23 Investment Management Trust Services Revenue* * 2023 annualized based on actual June 30, 2023 results I
Slide 19: ISBA Earnings Highlights
ISBA Earnings Highlights ($000) except per share data Six Months Ended Six Months Ended % Change June 30, 2023 June 30, 2022 Net Interest Income $30,030 $28,406 5.72% Provision for Credit Losses $237 $522 -54.60% Noninterest Income $6,897 $7,142 -3.43% Noninterest Expenses $24,737 $22,981 7.64% Net
Slide 20: 10+ Year Earnings Trends
10+ Year Earnings Trends Earnings Per Common Share Dividends Per Common Share $3.20 4.21% $2.80 $2.40 $2.00 CAGR $1.60 $1.20 $0.80 2.84% $0.40 $0.00 (1) 2020 includes a $6.0 million after-tax debt extinguishment charge *Annualized based on actual June 30, 2023 results Information as of June 30, 2023
Slide 21: ROAA
ROAA Isabella Bank Corporation Peer Average 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 -0.20 -0.40 Source: S&P Global Market Intelligence Data as of Q2-2023 21
Slide 22: ROAE
ROAE Isabella Bank Corporation Peer Average 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 -2.00 -4.00 Source: S&P Global Market Intelligence Data as of Q2-2023 22
Slide 23: Efficiency Ratio
Efficiency Ratio Isabella Bank Corporation Peer Average 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Source: S&P Global Market Intelligence Data as of Q2-2023 23
Slide 24: Net Interest Margin
Net Interest Margin Isabella Bank Corporation Peer Average 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Source: S&P Global Market Intelligence Data as of Q2-2023 24
Slide 25: Dividend Yield
Dividend Yield Isabella Bank Corporation Peer Average 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Source: S&P Global Market Intelligence Data as of Q2-2023 25
Slide 26: Opportunity to Invest in ISBA
Opportunity to Invest in ISBA • Long History of Growth and Performance • Strategic Initiatives Improving Key Financial Metrics • Strong Credit Performance • Dividend History and Current Yield • Strong Capital & Liquidity Positions • Focused on Building Long Term Shareholder Value 26
Slide 27: Thank You
Thank You Jae Evans Chief Executive Officer 989.779.6215 | jevans@isabellabank.com Neil McDonnell Chief Financial Officer 989.779.6236 | nmcdonnell@isabellabank.com This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These