InsCorp, Inc. Faces Loan Fraud Dilemma Before Quarter Close

On December 11, 2025, InsCorp, Inc. (traded as OTCQX: IBTN) disclosed a troubling case of loan fraud against its banking subsidiary, INSBANK. This incident is projected to have a negative impact on the company's financial results for the fourth quarter of 2025, with anticipations of a quarterly loss even as they expect to maintain overall profitability for the entire year ending December 31, 2025.

The Fraud Incident

The fraudulent activity pertains to a single significant credit relationship, culminating in a total exposure of about $5 million. In light of the circumstances, InsCorp's leadership is actively pursuing remedies as laid out in their loan documents. They are also collaborating with law enforcement and exploring options through both civil and criminal judicial systems to recover the disbursed loan amounts. Despite the proactive measures, it remains too soon to evaluate the potential for successful recovery. Consequently, management has decided to charge off the total balance while pursuing the offender.

According to Jim Rieniets, CEO of INSBANK, this fraud incident appears to be an isolated case rather than indicative of systemic issues within the bank's lending strategies. He stated, "In our 25 years of making loans, we have periodically fended off or caught several purveyors of loan fraud, but this particular bad actor gained our team's confidence over a couple of years and then set about an elaborate scheme to exploit the bank."

This perpetrator had developed a relationship over two years while working with a vendor that performs a non-critical function for INSBANK, with their role contributing to the false sense of trust that ultimately led to this exploitation.

Financial Resilience

Despite the unfortunate circumstances, InsCorp asserts that it is well-equipped to handle the financial repercussions of this incident. The bank boasts strong capital ratios and loan loss reserves that surpass those of most industry peers. As of the end of September 2025, InsCorp reported total assets amounting to $962.3 million and maintained a risk-based capital of $118.1 million, equating to 13.30% of their risk-weighted assets. Their allowance for credit losses was observed at 1.34% across a total loans portfolio of $808.6 million.

Historically, loan losses at INSBANK have exceeded 0.20% of average loans only twice in 25 years, with a commendable record of 0.00% loss ratio for the year concluding on September 30, 2025.

Rieniets expressed optimism despite the setback, saying, "While this incident is indeed unfortunate, the impact on our shareholders should be limited to an interruption of one quarter's earnings, and a modest impact on tangible book value growth."

Strategic Future Steps

Looking ahead, InsCorp has engaged a third-party auditor to conduct a thorough review of their lending administration and diligence practices to mitigate future risks. This decision follows an absence of material weaknesses highlighted by prior internal, external, and regulatory audits on lending administration. The management emphasizes that the current practices are robust, however refining those processes is part of the commitment towards building a stronger operational framework.

Setting a clear path forward, InsCorp expects that loan growth momentum will permit a return to their earnings trajectory as early as the first quarter of 2026. Additionally, INSBANK’s innovation strategies will be further emphasized to enhance customer experience, even amidst the challenges presented.

About InsCorp, Inc. and INSBANK

InsCorp, Inc. has been a prominent financial entity since the year 2000, providing customized banking solutions primarily through INSBANK. Specializing in personalized service, INSBANK leverages technology to deliver innovative and efficient services. With divisions such as Medquity, which offers healthcare banking solutions, and Finworth, which provides virtual client services for deposits, INSBANK continues to position itself at the forefront of banking service innovation. InsCorp, Inc. itself is listed under the ticker IBTN and operates from its headquarters located in Nashville, with additional offices in Brentwood and a forthcoming expansion in Murfreesboro. For further details, you can visit their official website at www.insbank.com.