2024 Journal of Community Bank Case Studies

SECOND PLACE: University of Illinois Springfield

be more diversified compared to its peers than is immediately apparent. Finally, Newton says that they recognized that they were reaching their concentration limits in CRE, and that the expansion to the Florida market was partially to expand their portfolio of C&I lending (Interview, 19 April). This strategy is paying off, as INB has grown their C&I portfolio at a five-year CAGR of 22.5%, while all real-estate loans increased 19.7% (CAGR) over the same period (UPBR). Asset Growth In 2023, INB listed $2.17 billion in total assets, a 19.1% increase over the previous year outpacing their peers’ 5.9% growth rate. Overall, INB grew assets at a CAGR of 17.0% over the past five years (CPG: 9.6%). While typically growth is good, rapid growth was listed as a cause of failure in the Federal Reserve’s and FDIC’s reports on all three of the banks that failed in 2023, and the OCC’s handbook on earnings lists asset growth that significantly outpaces capital growth as a red flag, so INB’s growth deserves further examination (OCC, Earnings 36).

largest reduction in holdings was in Securities, as they allowed $4.8 million to roll off, reinvesting that in loans. Overall, earning assets make up 97.29% of INB’s average assets, slightly higher than the peer group’s 95.82% (UBPR). Figure 4 shows the levels of total assets by category over the past five years YoY growth rates. The shift from cash to loans and leases between 2021 and 2022 was due to INB’s entry into the Florida market and the production of new loans there. Also, while INB’s growth was higher than its peers’, comparing it to SVB’s growth shows that the level of growth that set SVB up for failure was significantly higher than that experienced by INB (See Fig 5). Furthermore, INB’s assets have not out grown it’s capital levels. Tier 1 capital has remained between approximately 8% and 10% of total assets during the past five years. As of 2023, it was at 9.62%, virtually identical to its peers’ average of 9.65%. Capital Levels INB increased its total bank equity capital level by $25.5 million in 2023, ending the year with

INB grew their deposits, the main source of funds to grow assets, by $362.2 million in 2023, a 22.7% increase from 2022. The asset category with the largest increase was Net Loans and Leases, which increased $256.3 million, with real estate loans increasing $230.9 million and commercial and industrial loans $25.1 million. Their

Figure 6: Bank Equity Capital (in Millions)

$250

15.0%

$200

29.9%

$150

10.1%

14.7%

10.7%

$100

$50

$0

2019

2020

2021

2022

2023

Total Bank Equity Capital

% YoY

Source: UBPR

31