Investment in Joint Venture

In 2008, we merged the assets of our wholly owned subsidiary, IBT Title and Insurance Agency, Inc. (“IBT Title”) into a 50/50 joint venture with Corporate Title Agency, LLC, a third-party business based in Traverse City, Michigan, to form CSS. The purpose of the joint venture was to help IBT Title expand its service area and to take advantage of economies of scale. As a 50% owner of the membership units of this entity, we account for our investment under the equity method of accounting, and our share of income and loss from the joint venture is included in noninterest income.

The following tables provide financial information for CSS.

Condensed Balance Sheets



	December 31
	2019		2018
ASSETS
Cash and cash equivalents	$	2,054	$	1,844
Escrow funds	1,659		3,337
Accounts receivable	1,823		1,629
Premises and equipment	562		466
Goodwill	2,010		3,063
Title plants	132		6,212
Other assets	878		1,010
TOTAL ASSETS	$	9,118	$	17,561
LIABILITIES AND SHAREHOLDERS’ EQUITY
Escrow funds payable	$	1,659	$	3,337
Notes payable	416		465
Other liabilities	200		211
Members' equity	6,843		13,548
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,118	$	17,561

Condensed Statements of Income



	Year Ended December 31
	2019			2018		2017
Income
Title premiums and other fees	$	3,645		$	3,013	$	3,533
Property reports	2,046			1,822		1,425
Appraisals	9,370			9,526		9,121
Other income	2,898			2,871		2,318
Total income	17,959			17,232		16,397
Expenses
Cost of services
Property reports	$	1,101		$	1,029	$	821
Appraisals	7,372			7,466		7,152
Other	2,607			2,307		2,029
Compensation and benefits	4,203			4,138		4,391
Occupancy and equipment	836			804		739
Impairment of goodwill and title plants	7,133			—		—
Other	988			1,024		960
Total expenses	24,240			16,768		16,092
Net (loss) income	$	(6,281	)	$	464	$	305

CSS is a limited liability company. Therefore, federal taxable income and deductions are passed through to the members, and no provision for federal income taxes is reflected in the condensed statements of income. During the second half of 2019, a new line of business was proposed by the CSS General Manager which did not interest us as it was unrelated to the Bank's core business. Subsequently, the General Manager of CSS chose to have a company valuation performed during the fourth quarter of 2019 for purposes of investor planning, and the independent, third-party valuation identified that CSS’ intangible assets required an impairment of $7,133. As a 50% owner of the membership units of CSS, we recognized the reduced value of our investment which resulted in a reduction to income of $3,566 in the fourth quarter of 2019. While we continually analyze all investments, there are no current plans to change our ownership or investment in CSS.