MT. PLEASANT, MI / ACCESS Newswire / November 20, 2025 / Isabella Bank Corporation (Nasdaq:ISBA) today announced its Board of Directors declared a fourth-quarter cash dividend of $0.28 per common share at its regular meeting on November 19, 2025. The dividend will be payable December 19, 2025 to shareholders of record as of December 17, 2025. ...

Securities and Fair Value - As of September 30, 2025, the total amortized cost of AFS securities is $524,534, with a fair value of $511,970, reflecting unrealized losses of $13,671[31]. - The U.S. Treasury securities have an amortized cost of $210,462 and a fair value of $206,041, resulting in unrealized losses of $4,421[31]. - The total unrealized losses for AFS securities categorized by investment type include $4,421 for U.S. Treasury, $2,966 for states and political subdivisions, and $1,299 for mortgage-backed securities[34]. - The number of securities in an unrealized loss position as of September 30, 2025, is 183, compared to 353 as of December 31, 2024[34]. - Management does not believe any of the AFS securities are impaired due to credit quality, as issuers continue to make timely principal and interest payments[34]. - The company expects unrealized losses to recover as securities approach their maturity date or if market yields decline[34]. - The total available-for-sale (AFS) securities reached $511,970 million on September 30, 2025, compared to $489,029 million at the end of 2024, reflecting a growth of approximately 4.0%[103]. - The fair value of collateral-dependent loans was $3,426 million with a discount rate of 25% applied to real estate collateral[97]. - The fair value of OMSR (Other Mortgage Servicing Rights) as of September 30, 2025, was $2,164 million, with a constant prepayment rate of 7% and a discount rate of 11%[99]. - The estimated fair value of gross loans as of September 30, 2025, was $1,395,921 million, while the net loans were valued at $1,382,772 million after accounting for an allowance for credit losses of $13,149 million[102]. - The carrying value of deposits without stated maturities was $1,520,804 million, matching the estimated fair value[102]. - The estimated fair value of subordinated debt as of September 30, 2025, was $28,417 million, with a carrying value of $29,492 million[102]. - The company conducts quarterly reviews of net realizable values for collateral-dependent loans to determine if additional reserves or charge-offs are necessary[96]. - The company utilizes independent appraisals and internal evaluations to assess the collateral value for loans, ensuring accurate fair value measurements[96]. - The percentage of assets and liabilities measured at fair value was 98.73% for Level 2 and 1.27% for Level 3 as of September 30, 2025, indicating a stable valuation structure[103]. - The company had no unrealized gains and losses included in other comprehensive income (OCI) for recurring Level 3 fair value measurements at the end of the reporting period[103]. Loan Portfolio and Credit Quality - Total loan portfolio balance as of September 30, 2025, is $1,431,905 million, a slight increase from $1,423,571 million on December 31, 2024[35]. - Commercial and industrial loans account for 15.23% of the total loan portfolio, increasing from 14.09% in the previous period[35]. - Total commercial real estate loans represent 43.77% of the loan portfolio, up from 41.57%[35]. - Residential real estate loans increased to 28.78% of the total portfolio, compared to 26.75% previously[35]. - Nonaccrual loans totaled $3,443 million as of September 30, 2025, with $282 million having no allowance for credit losses (ACL)[45]. - Past due loans include $100 million in the 30-59 days category and $3,000 million in the 90 days or more category for commercial and industrial loans[45]. - The company has a maximum loan-to-value ratio of 100% for residential real estate loans, with private mortgage insurance required for ratios exceeding 80%[40]. - The company reported net unamortized deferred loan costs of $3,129 million as of September 30, 2025[36]. - The company limits direct credit exposure to any one borrower to $18,000, utilizing loan participations for larger amounts[37]. - Consumer loans, which include secured and unsecured personal loans, total $72,225 million, down from $87,584 million[35]. - Total commercial and industrial loans amount to $200,623 million, with $328 million past due in the 30-59 days category[46]. - Total commercial real estate loans stand at $591,718 million, with $817 million past due in the 30-59 days category[46]. - Total agricultural loans are $99,694 million, with no loans past due in the 30-59 days category[46]. - Total residential real estate loans amount to $380,872 million, with $3,875 million past due in the 30-59 days category[46]. - Total consumer loans are $87,584 million, with $251 million past due in the 30-59 days category[46]. - The total amount of loans past due across all categories is $5,271 million, with a total loan portfolio of $1,423,571 million[46]. - The company reported gross charge-offs of $22 million year-to-date for commercial and industrial loans[48]. - For unsecured commercial and industrial loans, total loans amount to $31,826 million, with $10,692 million rated 1-3 risk[48]. - The total for commercial real estate loans (owner-occupied) is $220,233 million, with $21,777 million rated 1-3 risk[48]. - The total for commercial real estate loans (non-owner occupied) is $224,653 million, with $28,501 million rated 1-3 risk[48]. - Total commercial real estate loans reached $97.971 billion, with risk ratings 1-3 contributing $11.202 billion[49]. - Multifamily commercial real estate loans totaled $83.785 billion, with risk rating 4 accounting for $16.633 billion[49]. - Agricultural mortgage loans amounted to $67.726 billion, with risk ratings 1-3 contributing $5.798 billion[49]. - The total for commercial and industrial secured loans was $177.239 billion, with risk rating 4 at $27.530 billion[50]. - Gross charge-offs for commercial and industrial secured loans year-to-date were $327 million[50]. - Owner-occupied commercial real estate loans totaled $213.086 billion, with risk rating 4 at $34.980 billion[50]. - Non-owner occupied commercial real estate loans reached $217.679 billion, with risk rating 1-3 contributing $18.783 billion[50]. - The company reported $5.056 billion in advances to mortgage brokers for 2025 year-to-date[49]. - Risk rating 4 loans in commercial real estate increased significantly, reflecting a total of $160.134 billion[50]. - The company has not reported any gross charge-offs for agricultural mortgages year-to-date[49]. - Total loans for commercial real estate (1-4 family investor) reached $10,564 million in 2024, a decrease of 20% from $13,216 million in 2023[51]. - The total for commercial real estate multifamily loans was $68,456 million year-to-date in 2024, compared to $5,340 million in 2023, indicating a significant increase in risk ratings 1-3[51]. - Agricultural mortgage loans totaled $67,550 million in 2024, with risk ratings showing a mix of performance across different categories[51]. - The company reported a total of $92,497 million in loans across various risk ratings, with risk rating 4 loans amounting to $81,831 million[51]. - The company has implemented lending policies to maximize loan income while managing risk, with regular reviews by the Board of Directors[52]. - Internally assigned credit risk ratings are reviewed at least during loan renewals, ensuring ongoing assessment of credit quality[53]. - The classification of loans includes categories from "Excellent" to "Loss," with specific criteria for each rating to manage credit risk effectively[54][55][56]. - The company aims to diversify its loan portfolio to mitigate risks associated with economic fluctuations[52]. - The total gross charge-offs for agricultural other loans in 2024 were $32,144 million, reflecting the challenges in this segment[51]. - The company emphasizes the importance of cash flow and management capabilities in assessing loan quality and risk ratings[54][56]. Financial Performance - Consolidated net income is used to benchmark results against competitors, with significant revenue streams from loan and investment interest, deposit-related fees, and wealth fees[28]. - The company’s operations are entirely domestic, with all banking-related operations aggregated into one reportable operating segment[26]. - The financial performance is evaluated on a corporate-wide basis, with significant expenses including interest expense, provision for credit losses, and compensation costs[28]. - Basic earnings per common share for the three months ended September 30, 2025, was $0.71, an increase from $0.44 in the same period of 2024, representing a 61.4% growth[88]. - Diluted earnings per common share for the nine months ended September 30, 2025, was $1.92, compared to $1.32 for the same period in 2024, reflecting a 45.5% increase[88]. - The net income for the three months ended September 30, 2025, was $5,240 million, compared to $3,281 million for the same period in 2024, indicating a 59.7% increase[88]. - The average number of common shares outstanding for basic calculation decreased from 7,454,097 in 2024 to 7,357,977 in 2025[88]. - The balance of accumulated other comprehensive income (AOCI) as of September 30, 2025, was $(10,409) million, an improvement from $(14,387) million at the beginning of the quarter[90]. - Unrealized gains on available-for-sale (AFS) securities for the three months ended September 30, 2025, totaled $5,030 million, compared to $13,081 million in the same period of 2024[91]. - The company maintained its "well capitalized" status under the FDIC's regulatory framework as of September 30, 2025, with no changes in conditions or events affecting this status[89]. - Common equity Tier 1 capital to risk-weighted assets ratio for Isabella Bank was 12.26% as of September 30, 2025, exceeding the minimum requirement of 7.00%[89]. - Total capital to risk-weighted assets ratio for consolidated entities was 15.20% as of September 30, 2025, well above the minimum requirement of 10.50%[89]. Allowance for Credit Losses - The allowance for credit losses (ACL) is continuously monitored and adjusted based on expected losses inherent in the loan portfolio[68]. - The ACL is evaluated regularly, considering historical experience and current economic conditions, which may lead to significant changes in future periods[69]. - The methodology for estimating expected credit losses includes both individual loan analysis and pooled components for loans sharing similar risk characteristics[71]. - As of September 30, 2025, the total allowance for credit losses (ACL) was $13,149 million, an increase from $12,977 million as of June 30, 2025, reflecting a 1.32% rise[80]. - The provision for credit losses for the three months ended September 30, 2025, was $246 million, compared to a provision of $899 million for the same period in 2024, indicating a significant decrease[79]. - Charge-offs for the three months ended September 30, 2025, totaled $175 million, while recoveries amounted to $101 million, resulting in a net charge-off of $74 million[77]. - The ACL to gross loans ratio as of September 30, 2025, was 0.92%, slightly down from 0.93% as of June 30, 2025[80]. Loan Modifications and Financial Difficulty - Loan modifications are granted to borrowers experiencing financial difficulty, including interest rate reductions and extended maturity dates[63]. - The company considers various factors to determine financial difficulty, including current defaults and insufficient cash flow to service debt[63]. - The total amortized cost basis for loans modified due to financial difficulty was $9,056 for the three months ended September 30, 2025, with secured commercial and industrial loans at $4,114[67]. - The weighted average payment delay for secured commercial and industrial loans was 6 months, with a term extension of 1.08 years for the three months ended September 30, 2025[66]. - The company committed to advance $79 million in additional funds for modified loans as of September 30, 2025[65]. - No loans modified within 12 months prior to default were reported for the three and nine-month periods ended September 30, 2025, and 2024[67]. - The total amortized cost basis for agricultural mortgage modifications was $914, representing 1.35% of the total class of financial receivables[64]. - The total amortized cost basis for agricultural other loans was $925, representing 3.08% of the total class of financial receivables for the three months ended September 30, 2025[64]. - The company does not modify loans by forgiving principal or accrued interest, ensuring that all modifications are structured to maintain loan integrity[65].

Core Insights - Isabella Bank Corporation (ISBA) reported quarterly earnings of $0.71 per share, exceeding the Zacks Consensus Estimate of $0.60 per share, and showing an increase from $0.61 per share a year ago, resulting in an earnings surprise of +18.33% [1] - The company achieved revenues of $20.47 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 4.44% and increasing from $18.02 million year-over-year [2] - Isabella Bank shares have appreciated approximately 38.1% year-to-date, significantly outperforming the S&P 500's gain of 15.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.64, with expected revenues of $19.9 million, and for the current fiscal year, the consensus EPS is $2.31 on revenues of $76.4 million [7] - The estimate revisions trend for Isabella Bank was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Banks - Northeast industry, to which Isabella Bank belongs, is currently ranked in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another bank in the same industry, Peapack-Gladstone (PGC), is expected to report quarterly earnings of $0.59 per share, reflecting a year-over-year increase of +37.2%, with revenues projected at $72.21 million, up 27.5% from the previous year [9]

Financial Performance - Net income for Q3 2025 was $5.2 million, or $0.71 per diluted share, compared to $3.3 million, or $0.44 per diluted share in Q3 2024[15]. - Basic earnings per share for Q3 2025 increased to $0.71, up 4.41% from $0.68 in Q2 2025 and 61.36% from $0.44 in Q3 2024[32]. - Diluted earnings per share for Q3 2025 also rose to $0.71, reflecting the same growth trends as basic earnings[32]. - Net income for the quarter was $5,240 million, compared to $5,031 million in the previous quarter, reflecting an increase of 4.2%[36]. - Earnings per common share increased to $0.71, up from $0.68 in the previous quarter, representing a growth of 4.4%[36]. Assets and Liabilities - Total assets increased to $2.3 billion, up $173.4 million from December 31, 2024, driven by a $127.5 million rise in interest-bearing cash balances[6]. - Total liabilities increased to $2,032,234 million, up from $1,935,668 million in the previous quarter, a rise of 5.0%[34]. - Total assets increased to $2,259,654 million as of September 30, 2025, up from $2,156,168 million in the previous quarter, representing a growth of 4.8%[34]. - Total assets increased to $2,206,722 thousand as of September 30, 2025, from $2,095,200 thousand a year earlier[38]. Loans and Deposits - Total loans reached $1.4 billion, increasing by $34.4 million during Q3 2025, with core loans growing by $32 million, or 2%[9]. - Total deposits grew to $1.93 billion, up $76.2 million in Q3 2025 and $178.5 million since December 31, 2024[13]. - Total deposits rose to $1,925,602 million, an increase from $1,849,376 million in the previous quarter, reflecting a growth of 4.1%[34]. - Core loans reached $1,426,849 thousand as of September 30, 2025, up from $1,348,096 thousand a year earlier[41]. Income and Margins - Net interest income for Q3 2025 was $16.2 million, representing an 11.6% increase compared to Q3 2024[9]. - Noninterest income for Q3 2025 was $4.3 million, an increase from $3.5 million in Q3 2024, driven by profitability initiatives[20]. - Total interest income for the quarter was $24,882 million, compared to $23,242 million in the previous quarter, marking an increase of 7.1%[36]. - Net interest income after provision for credit losses was $15,953 million, slightly down from $16,228 million in the previous quarter, a decrease of 1.7%[36]. - The net yield on interest earning assets (FTE) improved to 3.15% for the three months ended September 30, 2025, from 2.96% a year ago[40]. Equity and Capital - Total equity increased to $227.4 million, or $30.94 per share, compared to $210.3 million, or $28.32 per share at year-end 2024[14]. - Shareholders' equity rose to $223,970 thousand as of September 30, 2025, compared to $208,444 thousand in the same period last year[38]. - The tangible book value per share increased to $24.37 in Q3 2025, up from $23.39 in Q2 2025, indicating growth in shareholder equity[32]. - Tangible book value per share increased to $24.37 as of September 30, 2025, compared to $22.14 a year ago[41]. Credit Quality - The allowance for credit losses (ACL) reached $13.1 million, reflecting a $172 thousand increase during Q3 2025[11]. - Nonaccrual loans increased to $3,443 thousand in Q3 2025 from $1,164 thousand in Q2 2025, highlighting a significant rise in asset quality concerns[32]. - The provision for credit losses was $209 million, compared to a reversal of $1,099 million in the previous quarter, indicating a shift in credit quality assessment[36]. Operational Efficiency - The efficiency ratio improved to 67.51% in Q3 2025, compared to 70.53% in Q2 2025, indicating better operational efficiency[32]. - The return on average total assets for Q3 2025 was 0.94%, slightly down from 0.96% in Q2 2025 but up from 0.62% in Q3 2024[32]. Non-GAAP Measures - Non-GAAP financial measures are utilized to provide a more comprehensive understanding of the company's financial performance, supplementing GAAP measures[28]. - The company acknowledges that not all companies use the same calculations for non-GAAP measures, which may affect comparability[29]. - A reconciliation of non-GAAP financial measures to GAAP measures is provided, ensuring transparency in financial reporting[30].

Financial Performance - The company reported net income of $5.2 million for the third quarter of 2025 [1] - For the nine months ended September 30, 2025, the net income was $14.2 million [1] - Earnings per diluted share were $0.71 for the third quarter of 2025 and $1.92 for the first nine months of 2025 [1]

Group 1 - Isabella Bank Corporation has appointed Brian Tessin to its Board of Directors, effective October 6, 2025 [1] - Brian Tessin serves as the Chief Tax Officer for Dow Inc., where he oversees tax strategy, planning, compliance, and financial reporting [1]

Securities and Fair Value - As of June 30, 2025, the total amortized cost of AFS securities is $518,154, with a fair value of $500,560, reflecting unrealized losses of $18,594[32] - The U.S. Treasury securities have an amortized cost of $210,588 and a fair value of $204,306, resulting in unrealized losses of $6,282[32] - The total unrealized losses for AFS securities categorized by investment type include $22,176 for securities with losses less than twelve months and $18,014 for those with losses of twelve months or more[35] - The fair value of U.S. Treasury securities decreased from $220,571 on December 31, 2024, to $204,306 on June 30, 2025[32] - The company expects unrealized losses to recover as securities approach their respective maturity dates or if market yields decline[35] - The total number of securities in an unrealized loss position as of June 30, 2025, is 268, compared to 353 on December 31, 2024[35] - The balance of unrealized gains on AFS securities decreased from $(20,958,000) at December 31, 2024, to $(13,990,000) by June 30, 2025[92] - The total fair value of financial instruments recorded at fair value was $504,575 million as of June 30, 2025, with 99.20% classified as Level 2[105] - The total AFS securities fair value increased to $500,560 million as of June 30, 2025, from $489,029 million as of December 31, 2024[105] Loan Portfolio and Credit Quality - Total loan portfolio balance as of June 30, 2025, is $1,397,513 million, a decrease from $1,423,571 million as of December 31, 2024[37] - Commercial real estate loans account for 43.96% of the total loan portfolio, increasing from 41.57% in the previous period[37] - Residential real estate loans represent 28.53% of the total loan portfolio, up from 26.75%[37] - Nonaccrual loans total $1,164 million as of June 30, 2025, with 282 million having no allowance for credit losses (ACL)[47] - Past due loans of 90 days or more amount to $953 million, with a total current loan balance of $1,395,379 million[47] - The company limits direct credit exposure to any one borrower to $18,000, mitigating risk through loan participations with other banks[39] - The company requires personal guarantees and/or life insurance beneficiary assignments from owners of closely held corporations[40] - Interest income is accrued based on the principal amount outstanding unless a loan is in nonaccrual status[38] - The company’s lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value or purchase price[42] - Consumer loans are amortized for a period of up to 15 years, focusing on the borrower's intent and ability to pay rather than collateral value[43] - The total amount of loans past due across all categories is $5,271 million, with a total loan portfolio of $1,423,571 million[48] - The primary credit quality indicator for residential real estate and consumer loans is the individual loan's past due status[61] - The company has seen a total of $41,743 million in indirect secured consumer loans, with a minor past due amount of $8 million[62] - The overall performance indicates a stable loan portfolio with manageable past due and nonaccrual amounts[62] Charge-offs and Allowance for Credit Losses - The year-to-date gross charge-offs for commercial and industrial loans is $22 million[50] - The year-to-date gross charge-offs for unsecured commercial and industrial loans is $50 million[50] - The total gross charge-offs for commercial real estate loans is not specified, but the total for all categories is $72 million[50] - Year-to-date gross charge-offs for agricultural other loans were $29.695 million[51] - Year-to-date gross charge-offs for residential real estate are $1 million, indicating a stable performance[62] - Year-to-date gross charge-offs for secured consumer loans amount to $135 million, reflecting a slight increase[62] - The allowance for credit losses (ACL) for loans increased to $12,977 million as of June 30, 2025, up from $12,895 million at December 31, 2024[80] - The total charge-offs for the three months ended June 30, 2025, amounted to $390 million, while recoveries were $1,822 million[80] Financial Performance - Basic earnings per common share for the three months ended June 30, 2025, were $0.68, an increase from $0.47 for the same period in 2024, reflecting a growth of approximately 44.7%[90] - Net income for the six months ended June 30, 2025, was $8,980 million, compared to $6,612 million for the same period in 2024, representing an increase of about 36.0%[90] - The average number of common shares outstanding for basic calculation during the three months ended June 30, 2025, was 7,383,338, a slight decrease from 7,477,310 in the same period of 2024[90] Capital Ratios and Regulatory Compliance - As of June 30, 2025, Isabella Bank's Common Equity Tier 1 capital to risk-weighted assets ratio is 12.18%, exceeding the minimum requirement of 7.00%[91] - The consolidated Total Capital to risk-weighted assets ratio is 15.34%, significantly above the minimum requirement of 10.50%[91] - The Tier 1 capital to average assets ratio for the consolidated entity is 9.04%, exceeding the minimum requirement of 4.00%[91] - The bank's capital ratios indicate that it is categorized as "well capitalized" under the FDIC's regulatory framework[91] - The company has no significant regulatory constraints on its capital as of June 30, 2025[91] Loan Modifications and Financial Assistance - Loan modifications granted to borrowers experiencing financial difficulty included $2.6 billion in term extensions, representing 1.12% of the total class of financial receivables[65] - The company committed to advance $41 million and $43 million in additional funds for modified loans as of June 30, 2025, and December 31, 2024, respectively[67] - The total amortized cost basis of loans modified due to financial difficulty totaled $6,996 million, with $6,897 million classified as current[70] - The company had no loans that defaulted in the three and six-month periods ended June 30, 2025, which were modified within 12 months prior to the default date[70] Miscellaneous Financial Information - Securities sold under agreements to repurchase without stated maturity dates amounted to $43,208 million as of June 30, 2025, down from $53,567 million as of December 31, 2024[84] - The weighted average interest rate for short-term borrowings during the three months ended June 30, 2025, was 3.14%[83] - The company had the ability to borrow up to an additional $376,974 million without pledging additional collateral as of June 30, 2025[85] - The total subordinated debt, net, as of June 30, 2025, was $29,469 million, slightly up from $29,424 million as of December 31, 2024[88]

Group 1: Earnings Performance - Isabella Bank Corporation reported quarterly earnings of $0.55 per share, matching the Zacks Consensus Estimate, and an increase from $0.46 per share a year ago [1] - The company had a surprise of +9.62% in the previous quarter, posting earnings of $0.57 per share against an expected $0.52 [1] - Over the last four quarters, Isabella Bank has surpassed consensus EPS estimates three times [1] Group 2: Revenue Performance - For the quarter ended June 2025, Isabella Bank posted revenues of $18.82 million, exceeding the Zacks Consensus Estimate by 2.26%, compared to $17.16 million in the same quarter last year [2] - The company has topped consensus revenue estimates two times over the last four quarters [2] Group 3: Stock Performance and Outlook - Isabella Bank shares have increased by approximately 26.9% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for future stock performance [4] - The current consensus EPS estimate for the next quarter is $0.59 on revenues of $19.2 million, and for the current fiscal year, it is $2.31 on revenues of $75.35 million [7] Group 4: Industry Context - The Banks - Northeast industry, to which Isabella Bank belongs, is currently in the top 23% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Second Quarter 2025 Financial Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance%20Overview) Isabella Bank Corporation reported a significant increase in net income and diluted EPS for Q2 2025 compared to Q2 2024, with core net income also showing growth **Q2 2025 vs. Q2 2024 Financial Performance:** | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------- | :---------- | :---------- | :------- | | Net Income | $5.0 million | $3.5 million | +$1.5 million | | Diluted EPS | $0.68 | $0.46 | +$0.22 | | Core Net Income (non-GAAP) | $4.1 million | $3.5 million | +$0.6 million | | Core Diluted EPS (non-GAAP) | $0.55 | $0.46 | +$0.09 | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Jerome Schwind highlighted strong Q2 2025 performance driven by growth in Net Interest Margin (NIM), loans, and deposits, alongside a focus on profitability and non-interest income. The Nasdaq uplisting has also increased stock volume and potential for growth - **NIM expanded by 8 basis points** over the prior quarter due to repricing earning assets and stable cost of funds[4](index=4&type=chunk) - Loan growth was primarily driven by the commercial loan portfolio, supported by a strong pipeline and concentrated efforts[4](index=4&type=chunk) - Total deposits increased, notably an **$89 million rise in non-maturity deposits** from a not-for-profit entity, demonstrating strong community relationships[4](index=4&type=chunk) - The Company recovered the entire overdraft charge-off from Q3 2024, positively impacting the provision for credit losses[4](index=4&type=chunk) - Management continues to focus on operational profitability and initiatives to enhance non-interest income[5](index=5&type=chunk) - Since uplisting to Nasdaq in May, stock volume has significantly increased, viewed as an expanded source of currency and opportunity for growth, with a continued focus on building shareholder value through earnings, repurchases, and dividends[6](index=6&type=chunk) [Financial Condition](index=1&type=section&id=Financial%20Condition) [Balance Sheet Overview](index=1&type=section&id=Balance%20Sheet%20Overview) Total assets increased to $2.2 billion, primarily driven by higher interest-bearing cash balances and core loan growth, partially offset by a decline in gross securities **Key Balance Sheet Changes (QoQ):** | Metric | Q2 2025 | Change from Q1 2025 | | :-------------------------- | :---------- | :------------------ | | Total Assets | $2.2 billion | +$53.6 million | | Interest Bearing Cash Balances | N/A | +$33.9 million | | Core Loans (non-GAAP) | N/A | +$29.8 million | | Gross Securities | N/A | -$16.4 million | **Performance Ratios (QoQ):** | Metric | Q2 2025 | Q1 2025 | Change | | :-------------------------- | :------ | :------ | :----- | | Return on Average Assets (ROA) | 0.96% | 0.68% | +0.28% | | Core ROA (non-GAAP) | 0.79% | 0.68% | +0.11% | | Total Loan Growth (annualized) | 9% | N/A | N/A | | Total Deposit Growth (annualized) | 11% | N/A | N/A | | Net Interest Margin (NIM) (non-GAAP) | 3.14% | 2.82% | +0.32% | | Noninterest Income Growth (QoQ) | 4% | N/A | N/A | | Nonperforming Loans to Total Loans | 0.09% | N/A | N/A | [Available-for-Sale Securities](index=2&type=section&id=Available-for-Sale%20Securities) Available-for-sale (AFS) securities decreased to $501 million, primarily due to amortization and maturities, partially offset by new purchases. Net unrealized losses improved, decreasing to 3% of total AFS securities **Available-for-Sale Securities (QoQ):** | Metric | June 30, 2025 | March 31, 2025 | Change | | :------------------------------------ | :------------ | :------------- | :----- | | AFS Securities at Fair Value | $501 million | $513.5 million | -$12.5 million | | Decline Drivers: | | | | | - Amortization and Maturities | N/A | N/A | -$26.8 million | | - Purchases | N/A | N/A | +$10.6 million | | Net Unrealized Losses | $17.6 million | $21.5 million | -$3.9 million | | Net Unrealized Losses as % of AFS Securities | 3% | 4% | -1% | - The decrease in net unrealized losses was primarily due to the treasury portfolio rapidly approaching maturity[8](index=8&type=chunk) [Loans Portfolio](index=2&type=section&id=Loans%20Portfolio) Total loans reached $1.4 billion, driven by strong growth in commercial and residential loans. This growth was partially offset by declines in agricultural and consumer loan portfolios **Loan Portfolio Growth (QoQ):** | Loan Category | June 30, 2025 | Change from Q1 2025 | | :-------------------------------- | :------------ | :------------------ | | Total Loans | $1.4 billion | +$29.8 million | | Commercial Loans (excl. mortgage brokers) | N/A | +$23.1 million (10.3% annualized) | | Residential Mortgages | N/A | +$11.3 million | - Outsized commercial loan growth resulted from closing several loans expected in Q1 and executing a robust Q2 pipeline[9](index=9&type=chunk) - Residential mortgage increases were due to construction loan drawdowns and seasonal origination patterns[9](index=9&type=chunk) - Agricultural and consumer loan portfolios continued to decline due to decreasing demand[9](index=9&type=chunk) - Future loan growth could be lower due to changes in timing, funding, customer demand, and overall economic conditions, despite a strong commercial pipeline[9](index=9&type=chunk) [Allowance for Credit Losses](index=2&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses increased to $13.0 million, reflecting core loan growth and changes in historical loss rates. Nonaccrual loans also rose due to a specific commercial real estate loan downgrade **Credit Loss Metrics (QoQ):** | Metric | June 30, 2025 | March 31, 2025 | Change | | :------------------------------------ | :------------ | :------------- | :----- | | Allowance for Credit Losses | $13.0 million | $12.735 million | +$242 thousand | | Nonaccrual Loan Balances | $1.2 million | $0.173 million | +$991 thousand | | Past Due & Accruing (30-89 days) to Total Loans | 0.08% | 0.41% | -0.33% | - The increase in nonaccrual loans was primarily due to the downgrade of one unique commercial real estate loan[10](index=10&type=chunk) [Deposits](index=2&type=section&id=Deposits) Total deposits grew to $1.85 billion, primarily driven by a significant increase in demand deposits from a single large customer. This growth was partially offset by declines in money market and interest-bearing demand deposits due to seasonal trends **Deposit Growth (QoQ):** | Deposit Type | June 30, 2025 | Change from Q1 2025 | | :-------------------------- | :------------ | :------------------ | | Total Deposits | $1.85 billion | +$51.5 million | | Demand Deposits | N/A | +$89.3 million | | Retail Certificates of Deposit | N/A | +$5.7 million | | Money Market Deposits | N/A | -$26.3 million | | Interest-Bearing Demand Deposits | N/A | -$20.6 million | - The increase in demand deposits was largely due to one customer with large deposits expected to be withdrawn by year-end[11](index=11&type=chunk) - Consumer demand for retail certificates of deposit accounts continued due to the elevated market interest rate environment[11](index=11&type=chunk) [Shareholder Equity & Repurchases](index=2&type=section&id=Shareholder%20Equity%20%26%20Repurchases) Tangible book value per share increased to $23.39, despite the negative impact of net unrealized losses on AFS securities. The company also repurchased shares totaling approximately $1.5 million during the quarter **Shareholder Metrics (QoQ):** | Metric | June 30, 2025 | March 31, 2025 | Change | | :------------------------------------ | :------------ | :------------- | :----- | | Tangible Book Value Per Share (non-GAAP) | $23.39 | $22.58 | +$0.81 | | Reduction to TBV per Share from Unrealized Losses | $1.90 | $2.30 | -$0.40 | | Shares Repurchased (Q2 2025) | 57,824 | N/A | N/A | | Aggregate Purchase Price (Q2 2025) | ~$1.5 million | N/A | N/A | | Average Per Share Purchase Price (Q2 2025) | ~$26.03 | N/A | N/A | [Results of Operations](index=2&type=section&id=Results%20of%20Operations) [Net Interest Margin (NIM)](index=2&type=section&id=Net%20Interest%20Margin%20(NIM)) Net Interest Margin (NIM) expanded to 3.14% in Q2 2025, showing improvement both quarter-over-quarter and year-over-year. This was driven by higher yields on loans and securities, coupled with a decrease in the cost of interest-bearing liabilities **Net Interest Margin & Yields:** | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | NIM (fully taxable equivalent) | 3.14% | 3.06% | 2.82% | | Book Yield from Securities | 2.38% | N/A | 2.17% | | Yield on Loans | 5.71% | N/A | 5.50% | | Cost of Interest-Bearing Liabilities | 2.24% | 2.26% | 2.38% | - The expansion in loan yields resulted from higher interest rates on new loans and repricing variable-rate commercial loans[13](index=13&type=chunk) - Approximately **38% of commercial loans were fixed at rates lower than current market rates**, with the majority contractually repricing to variable rates over the next four years[13](index=13&type=chunk) - Cost of interest-bearing liabilities decreased due to reductions in money market and certificate of deposit product rates[13](index=13&type=chunk) - NIM is expected to continue expanding as loans reprice and the cost of interest-bearing liabilities stabilizes[13](index=13&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The Company recorded a credit of $1.1 million for the provision for credit losses in Q2 2025, primarily due to significant net recoveries, particularly from previously charged-off overdraft accounts. Credit quality continues to be closely monitored amidst economic uncertainties **Provision for Credit Losses:** | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :------------ | :---------- | | Provision for Credit Losses | -$1.1 million (credit) | $170 thousand | | Net Recoveries (Q2 2025) | $1.4 million | N/A | | Specific Recoveries (Q2 2025) | $1.6 million | N/A | - The net recoveries in Q2 2025 included **$1.6 million related to overdrawn deposit accounts** from a single customer that were charged off in Q3 2024[14](index=14&type=chunk)[15](index=15&type=chunk) - The Company continues to closely monitor credit quality due to ongoing economic uncertainties, including elevated interest rates, employment data, trade policy, and inflationary pressures[16](index=16&type=chunk) - Additional provisions for credit losses may be necessary in future periods[16](index=16&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) Noninterest income increased to $3.7 million in Q2 2025, driven by higher service charges and fees, increased earnings on bank-owned life insurance (BOLI) policies, and growth in wealth management fees **Noninterest Income (QoQ):** | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------ | :------------ | :---------- | :----- | | Total Noninterest Income | $3.7 million | $3.6 million | +$0.1 million | | Service Charges and Fees | N/A | N/A | +$48 thousand | | Earnings on BOLI Policies | N/A | N/A | +$47 thousand | | Wealth Management Fees | N/A | N/A | +$36 thousand | | Assets Under Management (AUM) | $679 million | $648 million | +$31 million | - Service charges and fees increased due to profitability initiatives[17](index=17&type=chunk) - BOLI earnings increased from new investments in a separate account BOLI, partially offset by a one-time **$120 thousand restructuring expense**[17](index=17&type=chunk) - Wealth management fees grew due to an increase in assets under management (AUM)[17](index=17&type=chunk) [Noninterest Expenses](index=4&type=section&id=Noninterest%20Expenses) Noninterest expenses increased to $13.7 million in Q2 2025, primarily due to higher compensation and benefits, reflecting annual merit increases, incentives, and increased medical insurance claims. Professional services also rose due to profitability initiatives and Nasdaq uplisting legal fees **Noninterest Expenses (QoQ):** | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------ | :------------ | :---------- | :----- | | Total Noninterest Expenses | $13.7 million | $12.9 million | +$0.8 million | | Compensation and Benefit Expenses | N/A | N/A | +$526 thousand | | Professional Services | N/A | N/A | N/A | - Higher compensation and benefit expenses were driven by annual merit increases, incentives, and increased medical insurance claims[18](index=18&type=chunk) - Professional services included **$173 thousand for profitability initiative costs** and **$47 thousand in legal fees** related to the Nasdaq uplisting[18](index=18&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [About Isabella Bank Corporation](index=4&type=section&id=About%20Isabella%20Bank%20Corporation) Isabella Bank Corporation is the parent holding company of Isabella Bank, a community bank established in 1903. It provides a range of personal and commercial banking services across eight Mid-Michigan counties - Isabella Bank Corporation (Nasdaq: ISBA) is the parent holding company of Isabella Bank, a state-chartered community bank[19](index=19&type=chunk) - Isabella Bank was established in 1903 and has served its communities for over 120 years[19](index=19&type=chunk) - The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services[19](index=19&type=chunk) - It operates across eight Mid-Michigan counties: Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw[19](index=19&type=chunk) [Investor Relations & Available Information](index=4&type=section&id=Investor%20Relations%20%26%20Available%20Information) The Company provides investor information, including annual and quarterly reports, and press releases, on its dedicated Investor Relations website. This website is also used for disclosing material non-public information in compliance with Regulation FD - The Company's Investor Relations website (ir.isabellabank.com/overview) provides annual reports, quarterly earnings reports, and other press releases[21](index=21&type=chunk) - The Company uses its website (www.isabellabank.com and ir.isabellabank.com/news) as a means of disclosing material non-public information and complying with Regulation FD[22](index=22&type=chunk) - Investors should monitor the Company's website in addition to other public disclosures[22](index=22&type=chunk) [Legal & Financial Disclosures](index=4&type=section&id=Legal%20%26%20Financial%20Disclosures) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines the Company's forward-looking statements, emphasizing that they are subject to risks and uncertainties and are not guarantees of future results. Investors are cautioned not to unduly rely on them and are directed to SEC filings for more information on risks - The press release contains forward-looking statements intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[24](index=24&type=chunk) - These statements relate to future events, financial condition, plans, objectives, and other matters affecting the Company's future business and operations[24](index=24&type=chunk) - Forward-looking statements are based on current information and management's good faith beliefs, but assumptions could be inaccurate, and results may not be realized[25](index=25&type=chunk) - Investors are cautioned not to unduly rely on these statements, and additional risks are detailed in the Company's Form 10-K and 10-Q filings with the SEC[25](index=25&type=chunk) - The Company undertakes no obligation to update any forward-looking statement to reflect developments after the statement is made, except as required by law[25](index=25&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) The Company uses non-GAAP financial measures to provide a more complete understanding of its financial position and performance, noting that these are supplemental and not a substitute for GAAP measures. A reconciliation to GAAP is provided - Non-GAAP financial measures are used to provide management and investors with a more complete understanding of the Company's financial position and performance[26](index=26&type=chunk) - These measures are supplemental and not a substitute for GAAP financial measures[26](index=26&type=chunk) - The Company defines non-GAAP measures as those excluding or including amounts that are included or excluded in the most directly comparable GAAP measure[27](index=27&type=chunk) - A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of the press release[28](index=28&type=chunk) [Consolidated Financial Schedules (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Schedules%20(Unaudited)) [Selected Financial Data](index=7&type=section&id=Selected%20Financial%20Data) This table presents key selected financial data, including per share amounts, performance ratios, assets under management, asset quality, and capital ratios, for the three-month periods ended June 30, 2025, and prior quarters | | | | | | | Three Months Ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | | PER SHARE | | | | | | | | | | | | Basic earnings | $ | 0.68 | $ | 0.53 | $ | 0.54 | $ | 0.44 | $ | 0.47 | | Diluted earnings | | 0.68 | | 0.53 | | 0.54 | | 0.44 | | 0.46 | | (1) Core diluted earnings | | 0.55 | | 0.57 | | 0.52 | | 0.61 | | 0.46 | | Dividends | | 0.28 | | 0.28 | | 0.28 | | 0.28 | | 0.28 | | (2) Book value | | 29.95 | | 29.10 | | 28.32 | | 28.63 | | 27.06 | | (1) (2) Tangible book value | | 23.39 | | 22.58 | | 21.82 | | 22.14 | | 20.60 | | (2) Market price | | 30.15 | | 23.59 | | 25.99 | | 21.21 | | 18.20 | | (2) (3) Common shares outstanding | | 7,361,684 | | 7,408,010 | | 7,424,893 | | 7,438,720 | | 7,474,016 | | Average number of diluted common shares | | | | | | | | | | | | (3) outstanding | | 7,398,109 | | 7,432,162 | | 7,451,718 | | 7,473,184 | | 7,494,828 | | PERFORMANCE RATIOS | | | | | | | | | | | | Return on average total assets | | 0.96 % | | 0.77 % | | 0.76 % | | 0.62 % | | 0.68 % | | (1) Core return on average total assets | | 0.79 % | | 0.83 % | | 0.74 % | | 0.87 % | | 0.68 % | | Return on average shareholders' equity | | 9.19 % | | 7.48 % | | 7.47 % | | 6.26 % | | 6.97 % | | Core return on average shareholders' equity | (1) | 7.48 % | | 8.05 % | | 7.29 % | | 8.70 % | | 6.96 % | | Return on average tangible shareholders' equity (1) | | | | | | | | | | | | | | 11.78 % | | 9.65 % | | 9.66 % | | 8.15 % | | 9.19 % | | Core return on average tangible shareholders' | | | | | | | | | | | | (1) equity | | 9.59 % | | 10.40 % | | 9.43 % | | 11.32 % | | 9.17 % | | Net interest margin yield (fully taxable | | | | | | | | | | | | (1) equivalent) | | 3.14 % | | 3.06 % | | 2.98 % | | 2.96 % | | 2.82 % | | (1) Efficiency ratio | | 70.53 % | | 71.73 % | | 71.08 % | | 72.30 % | | 73.93 % | | (2) Gross loan to deposit ratio | | 75.57 % | | 76.07 % | | 81.48 % | | 79.93 % | | 80.22 % | | (2) Shareholders' equity to total assets | | 10.23 % | | 10.25 % | | 10.08 % | | 10.11 % | | 9.82 % | | Tangible shareholders' equity to tangible assets | | | | | | | | | | | | (1) (2) | | 8.17 % | | 8.14 % | | 7.95 % | | 8.00 % | | 7.65 % | | ASSETS UNDER MANAGEMENT | | | | | | | | | | | | (2) Wealth assets under management (thousands) | | 678,959 | | 656,617 | | 658,042 | | 679,858 | | 647,850 | | ASSET QUALITY | | | | | | | | | | | | (2) Nonaccrual loans (thousands) | | 1,164 | | 173 | | 282 | | 547 | | 994 | | (2) Foreclosed assets (thousands) | | 667 | | 649 | | 544 | | 546 | | 629 | | Net loan charge-offs (recoveries) (thousands) | | (1,432) | | (52) | | 102 | | 1,359 | | 393 | | Net loan charge-offs (recoveries) to average | | | | | | | | | | | | loans outstanding | | (0.10)% | | 0.00 % | | 0.01 % | | 0.10 % | | 0.03 % | | (2) Nonperforming loans to gross loans | | 0.09 % | | 0.01 % | | 0.02 % | | 0.04 % | | 0.07 % | | (2) Nonperforming assets to total assets | | 0.09 % | | 0.04 % | | 0.04 % | | 0.06 % | | 0.08 % | | (2) Allowance for credit losses to gross loans | | 0.93 % | | 0.93 % | | 0.91 % | | 0.89 % | | 0.95 % | | (2) CAPITAL RATIOS | | | | | | | | | | | | Tier 1 leverage | | 9.04 % | | 8.96 % | | 8.86 % | | 8.77 % | | 8.83 % | | Common equity tier 1 capital | | 12.46 % | | 12.58 % | | 12.21 % | | 12.08 % | | 12.37 % | | Tier 1 risk-based capital | | 12.46 % | | 12.58 % | | 12.21 % | | 12.08 % | | 12.37 % | | Total risk-based capital | | 15.34 % | | 15.50 % | | 15.06 % | | 14.90 % | | 15.29 % | [Consolidated Balance Sheets - Quarterly Trend](index=8&type=section&id=Consolidated%20Balance%20Sheets%20-%20Quarterly%20Trend) This table provides a quarterly trend of the Company's consolidated balance sheets, detailing assets, liabilities, and shareholders' equity from June 30, 2025, back to June 30, 2024 | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | | ASSETS (thousands) | | | | | | | | | | | | Cash and demand deposits due from banks | $ | 34,246 | $ | 28,786 | $ | 22,830 | $ | 27,019 | $ | 22,690 | | Fed Funds sold and interest bearing balances due | | | | | | | | | | | | from banks | | 74,308 | | 40,393 | | 1,712 | | 359 | | 869 | | Total cash and cash equivalents | | 108,554 | | 69,179 | | 24,542 | | 27,378 | | 23,559 | | Available-for-sale securities, at fair value | | 500,560 | | 513,040 | | 489,029 | | 506,806 | | 505,646 | | Federal Home Loan Bank stock | | 5,600 | | 5,600 | | 12,762 | | 12,762 | | 12,762 | | Mortgage loans held-for-sale | | 55 | | 127 | | 242 | | 504 | | 637 | | Loans | | 1,397,513 | | 1,367,724 | | 1,423,571 | | 1,424,283 | | 1,381,636 | | Less allowance for credit losses | | 12,977 | | 12,735 | | 12,895 | | 12,635 | | 13,095 | | Net loans | | 1,384,536 | | 1,354,989 | | 1,410,676 | | 1,411,648 | | 1,368,541 | | Premises and equipment | | 28,171 | | 28,108 | | 27,659 | | 27,674 | | 27,843 | | Cash surrender value of bank-owned life | | | | | | | | | | | | insurance policies | | 45,774 | | 45,833 | | 34,882 | | 34,625 | | 34,382 | | Goodwill and other intangible assets | | 48,282 | | 48,282 | | 48,283 | | 48,283 | | 48,283 | | Other assets | | 34,636 | | 37,429 | | 38,166 | | 37,221 | | 38,486 | | Total assets | $ | 2,156,168 | $ | 2,102,587 | $ | 2,086,241 | $ | 2,106,901 | $ | 2,060,139 | | LIABILITIES AND SHAREHOLDERS' EQUITY (thousands) | | | | | | | | | | | | Liabilities | | | | | | | | | | | | Demand deposits | $ | 493,477 | $ | 404,194 | $ | 416,373 | $ | 421,493 | $ | 412,193 | | Interest bearing demand deposits | | 223,376 | | 243,939 | | 237,548 | | 228,902 | | 232,660 | | Money market deposits | | 446,845 | | 473,138 | | 423,883 | | 471,745 | | 429,150 | | Savings | | 289,746 | | 286,399 | | 281,665 | | 276,095 | | 279,847 | | Certificates of deposit | | 395,932 | | 390,239 | | 387,591 | | 383,597 | | 368,449 | | Total deposits | | 1,849,376 | | 1,797,909 | | 1,747,060 | | 1,781,832 | | 1,722,299 | | Short-term borrowings | | 43,208 | | 47,310 | | 53,567 | | 52,434 | | 44,194 | | Federal Home Loan Bank advances | | — | | — | | 30,000 | | 15,000 | | 45,000 | | Subordinated debt, net of unamortized issuance | | | | | | | | | | | | costs | | 29,469 | | 29,447 | | 29,424 | | 29,402 | | 29,380 | | Total borrowed funds | | 72,677 | | 76,757 | | 112,991 | | 96,836 | | 118,574 | | Other liabilities | | 13,615 | | 12,365 | | 15,914 | | 15,248 | | 17,017 | | Total liabilities | | 1,935,668 | | 1,887,031 | | 1,875,965 | | 1,893,916 | | 1,857,890 | | Shareholders' equity | | | | | | | | | | | | Common stock | | 124,607 | | 125,547 | | 126,224 | | 125,218 | | 126,126 | | Shares to be issued for deferred compensation | | | | | | | | | | | | obligations | | 2,331 | | 2,508 | | 2,383 | | 3,981 | | 3,951 | | Retained earnings | | 107,949 | | 104,940 | | 103,024 | | 101,065 | | 99,808 | | Accumulated other comprehensive income (loss) | | (14,387) | | (17,439) | | (21,355) | | (17,279) | | (27,636) | | Total shareholders' equity | | 220,500 | | 215,556 | | 210,276 | | 212,985 | | 202,249 | | Total liabilities and shareholders' equity | $ | 2,156,168 | $ | 2,102,587 | $ | 2,086,241 | $ | 2,106,901 | $ | 2,060,139 | [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) This table presents the consolidated statements of income for the six months ended June 30, 2025, and June 30, 2024, showing interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expenses, and net income | | | Six Months Ended June 30 | | | | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | Interest income (thousands) | | | | | | Loans | $ | 39,180 | $ | 36,920 | | Available-for-sale securities | | 5,675 | | 5,688 | | Federal Home Loan Bank stock | | 285 | | 304 | | Federal funds sold and other | | 735 | | 556 | | Total interest income | | 45,875 | | 43,468 | | Interest expense (thousands) | | | | | | Deposits | | 14,854 | | 14,476 | | Short-term borrowings | | 665 | | 642 | | Federal Home Loan Bank advances | | 170 | | 1,026 | | Subordinated debt | | 532 | | 532 | | Total interest expense | | 16,221 | | 16,676 | | Net interest income (thousands) | | 29,654 | | 26,792 | | (Reversal of) provision for credit losses (thousands) | | (1,206) | | 562 | | Net interest income after provision for credit losses (thousands) | | 30,860 | | 26,230 | | Noninterest income (thousands) | | | | | | Service charges and fees | | 4,045 | | 3,956 | | Wealth management fees | | 2,063 | | 1,987 | | Earnings on bank-owned life insurance policies | | 672 | | 496 | | Net gain on sale of mortgage loans | | 77 | | 101 | | Other | | 357 | | 536 | | Total noninterest income | | 7,214 | | 7,076 | | Noninterest expenses (thousands) | | | | | | Compensation and benefits | | 14,879 | | 13,985 | | Occupancy and equipment | | 5,250 | | 5,325 | | Other professional services | | 1,574 | | 1,040 | | ATM and debit card fees | | 1,041 | | 956 | | Marketing | | 928 | | 851 | | FDIC insurance premiums | | 570 | | 532 | | Other losses | | 454 | | 561 | | Other | | 2,348 | | 2,321 | | Total noninterest expenses | | 27,044 | | 25,571 | | Income before income tax expense (thousands) | | 11,030 | | 7,735 | | Income tax expense (thousands) | | 2,050 | | 1,123 | | Net income (thousands) | $ | 8,980 | $ | 6,612 | | Earnings per common share | | | | | | Basic | $ | 1.21 | $ | 0.88 | | Diluted | | 1.21 | | 0.88 | | Cash dividends per common share | | 0.56 | | 0.56 | [Consolidated Statements of Income - Quarterly Trend](index=10&type=section&id=Consolidated%20Statements%20of%20Income%20-%20Quarterly%20Trend) This table provides a quarterly trend of the Company's consolidated statements of income, detailing interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expenses, and net income for the three-month periods ended June 30, 2025, and prior quarters | | | | | | | Three Months Ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | | Interest income (thousands) | | | | | | | | | | | | Loans | $ | 19,832 | $ | 19,348 | $ | 20,145 | $ | 20,230 | | 18,863 | | Available-for-sale securities | | 3,032 | | 2,643 | | 2,656 | | 2,749 | | 2,804 | | Federal Home Loan Bank stock | | 125 | | 160 | | 168 | | 168 | | 158 | | Federal funds sold and other | | 253 | | 482 | | 200 | | 194 | | 263 | | Total interest income | | 23,242 | | 22,633 | | 23,169 | | 23,341 | | 22,088 | | Interest expense (thousands) | | | | | | | | | | | | Deposits | | 7,391 | | 7,463 | | 7,583 | | 7,631 | | 7,313 | | Short-term borrowings | | 324 | | 341 | | 413 | | 384 | | 321 | | Federal Home Loan Bank advances | | 132 | | 38 | | 352 | | 571 | | 638 | | Subordinated debt | | 266 | | 266 | | 266 | | 267 | | 266 | | Total interest expense | | 8,113 | | 8,108 | | 8,614 | | 8,853 | | 8,538 | | Net interest income (thousands) | | 15,129 | | 14,525 | | 14,555 | | 14,488 | | 13,550 | | (Reversal of) provision for credit losses (thousands) | | (1,099) | | (107) | | 376 | | 946 | | 170 | | Net interest income after provision for credit | | | | | | | | | | | | losses (thousands) | | 16,228 | | 14,632 | | 14,179 | | 13,542 | | 13,380 | | Noninterest income (thousands) | | | | | | | | | | | | Service charges and fees | | 2,071 | | 1,974 | | 2,186 | | 2,133 | | 2,023 | | Wealth management fees | | 1,084 | | 979 | | 1,051 | | 1,003 | | 1,048 | | Earnings on bank-owned life insurance policies | | 300 | | 372 | | 259 | | 252 | | 253 | | Net gain on sale of mortgage loans | | 47 | | 30 | | 75 | | 37 | | 67 | | Other | | 184 | | 173 | | 401 | | 103 | | 217 | | Total noninterest income | | 3,686 | | 3,528 | | 3,972 | | 3,528 | | 3,608 | | Noninterest expenses (thousands) | | | | | | | | | | | | Compensation and benefits | | 7,496 | | 7,383 | | 7,340 | | 7,251 | | 6,970 | | Occupancy and equipment | | 2,650 | | 2,600 | | 2,554 | | 2,645 | | 2,619 | | Other professional services | | 863 | | 711 | | 584 | | 588 | | 527 | | ATM and debit card fees | | 555 | | 486 | | 516 | | 503 | | 487 | | Marketing | | 469 | | 459 | | 458 | | 403 | | 425 | | FDIC insurance premiums | | 267 | | 303 | | 309 | | 291 | | 280 | | Other losses | | 339 | | 115 | | 209 | | 347 | | 416 | | Other | | 1,106 | | 1,242 | | 1,360 | | 1,200 | | 1,171 | | Total noninterest expenses | | 13,745 | | 13,299 | | 13,330 | | 13,228 | | 12,895 | | Income before income tax expense (thousands) | | 6,169 | | 4,861 | | 4,821 | | 3,842 | | 4,093 | | Income tax expense (thousands) | | 1,138 | | 912 | | 825 | | 561 | | 612 | | Net income (thousands) | $ | 5,031 | $ | 3,949 | $ | 3,996 | $ | 3,281 | $ | 3,481 | | Earnings per common share | | | | | | | | | | | | Basic | $ | 0.68 | $ | 0.53 | $ | 0.54 | $ | 0.44 | $ | 0.47 | | Diluted | | 0.68 | | 0.53 | | 0.54 | | 0.44 | | 0.46 | | Cash dividends per common share | | 0.28 | | 0.28 | | 0.28 | | 0.28 | | 0.28 | [Average Yields and Costs](index=11&type=section&id=Average%20Yields%20and%20Costs) This table presents the average yields on interest-earning assets and costs of interest-bearing liabilities, reported on a fully taxable equivalent (FTE) basis, for the three-month periods ended June 30, 2025, and prior quarters | | | | Three Months Ended | | | | --- | --- | --- | --- | --- | --- | | | June 30 | March 31 | December 31 | September 30 | June 30 | | | 2025 | 2025 | 2024 | 2024 | 2024 | | INTEREST EARNING ASSETS (%) | | | | | | | (1) Loans | 5.71 % | 5.71 % | 5.66 % | 5.72 % | 5.50 % | | Available-for-sale securities | 2.38 % | 2.20 % | 2.15 % | 2.17 % | 2.17 % | | Federal Home Loan Bank stock | 8.94 % | 5.82 % | 5.25 % | 5.26 % | 4.97 % | | Fed funds sold | 3.83 % | 4.32 % | 4.54 % | 5.36 % | 5.30 % | | Other | 4.92 % | 4.06 % | 4.94 % | 5.18 % | 7.38 % | | Total interest earning assets | 4.81 % | 4.75 % | 4.72 % | 4.75 % | 4.59 % | | INTEREST BEARING LIABILITIES (%) | | | | | | | Interest bearing demand deposits | 0.37 % | 0.41 % | 0.36 % | 0.28 % | 0.30 % | | Money market deposits | 2.55 % | 2.58 % | 2.71 % | 2.77 % | 2.85 % | | Savings | 0.76 % | 0.76 % | 0.64 % | 0.61 % | 0.56 % | | Certificates of deposit | 3.82 % | 3.93 % | 4.07 % | 4.13 % | 4.01 % | | Short-term borrowings | 3.11 % | 3.18 % | 3.22 % | 3.17 % | 3.18 % | | Federal Home Loan Bank advances | 4.53 % | 4.53 % | 4.88 % | 5.52 % | 5.55 % | | Subordinated debt, net of unamortized | | | | | | | issuance costs | 3.61 % | 3.62 % | 3.62 % | 3.62 % | 3.63 % | | Total interest bearing liabilities | 2.24 % | 2.26 % | 2.38 % | 2.42 % | 2.38 % | | Net yield on interest earning assets (FTE) (2) | 3.14 % | 3.06 % | 2.98 % | 2.96 % | 2.82 % | | Net interest spread | 2.57 % | 2.49 % | 2.34 % | 2.33 % | 2.21 % | [Average Balances](index=12&type=section&id=Average%20Balances) This table provides the average daily amounts outstanding for interest-earning assets, non-earning assets, interest-bearing liabilities, and noninterest-bearing liabilities for the three-month periods ended June 30, 2025, and prior quarters | | | | | | | Three Months Ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | | INTEREST EARNING ASSETS (thousands) | | | | | | | | | | | | (1) Loans | $ | 1,388,684 | $ | 1,370,765 | $ | 1,412,578 | $ | 1,403,810 | $ | 1,375,523 | | (2) Available-for-sale securities | | 534,352 | | 514,479 | | 522,733 | | 536,379 | | 545,827 | | Federal Home Loan Bank stock | | 5,600 | | 11,011 | | 12,762 | | 12,762 | | 12,762 | | Fed funds sold | | | 6 | 4 | | 8 | | 4 | | 7 | | (3) Other | | 20,487 | | 47,374 | | 15,905 | | 14,597 | | 14,054 | | Total interest earning assets | | 1,949,129 | | 1,943,633 | | 1,963,986 | | 1,967,552 | | 1,948,173 | | NONEARNING ASSETS (thousands) | | | | | | | | | | | | Allowance for credit losses | | (13,369) | | (12,884) | | (12,598) | | (13,125) | | (13,431) | | Cash and demand deposits due from banks | | 22,026 | | 23,899 | | 22,800 | | 25,903 | | 23,931 | | Premises and equipment | | 28,306 | | 27,962 | | 27,773 | | 27,868 | | 27,999 | | Other assets | | 106,595 | | 102,927 | | 92,608 | | 87,002 | | 80,539 | | Total assets | $ | 2,092,687 | $ | 2,085,537 | $ | 2,094,569 | $ | 2,095,200 | $ | 2,067,211 | | INTEREST BEARING LIABILITIES (thousands) | | | | | | | | | | | | Interest bearing demand deposits | $ | 236,076 | $ | 240,860 | $ | 232,271 | $ | 232,018 | $ | 238,866 | | Money market deposits | | 449,110 | | 460,663 | | 436,235 | | 451,216 | | 434,061 | | Savings | | 286,434 | | 286,364 | | 276,856 | | 274,828 | | 283,605 | | Certificates of deposit | | 395,450 | | 387,820 | | 386,871 | | 375,936 | | 366,440 | | Short-term borrowings | | 41,661 | | 43,563 | | 50,862 | | 48,304 | | 40,609 | | Federal Home Loan Bank advances | | 11,539 | | 3,333 | | 28,261 | | 40,435 | | 45,494 | | Subordinated debt, net of unamortized issuance | | | | | | | | | | | | costs | | 29,455 | | 29,433 | | 29,410 | | 29,388 | | 29,365 | | Total interest bearing liabilities | | 1,449,725 | | 1,452,036 | | 1,440,766 | | 1,452,125 | | 1,438,440 | | NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY (thousands) | | | | | | | | | | | | Demand deposits | | 409,262 | | 403,024 | | 425,116 | | 418,973 | | 411,282 | | Other liabilities | | 14,158 | | 16,265 | | 15,775 | | 15,658 | | 16,755 | | Shareholders' equity | | 219,542 | | 214,212 | | 212,912 | | 208,444 | | 200,734 | | Total liabilities and shareholders' equity | $ | 2,092,687 | $ | 2,085,537 | $ | 2,094,569 | $ | 2,095,200 | $ | 2,067,211 | [Asset Quality Analysis](index=13&type=section&id=Asset%20Quality%20Analysis) This table provides a detailed analysis of the Company's asset quality, including nonperforming assets, allowance for credit losses, and net loan charge-offs (recoveries) for the three-month periods ended June 30, 2025, and prior quarters | | | June 30 2025 | | March 31 2025 | | December 31 2024 | | September 30 2024 | | June 30 2024 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | NONPERFORMING ASSETS (thousands) | | | | | | | | | | | | Commercial and industrial | $ | 17 | $ | — | $ | — | $ | 120 | $ | 271 | | Commercial real estate | | 533 | | — | | — | | — | | — | | Agricultural | | — | | — | | — | | — | | 167 | | Residential real estate | | 614 | | 173 | | 282 | | 427 | | 556 | | Consumer | | — | | — | | — | | — | | — | | Total nonaccrual loans | | 1,164 | | 173 | | 282 | | 547 | | 994 | | Accruing loans past due 90 days or more | | 31 | | 26 | | 19 | | 64 | | 15 | | Total nonperforming loans | | 1,195 | | 199 | | 301 | | 611 | | 1,009 | | Foreclosed assets | | 667 | | 649 | | 544 | | 546 | | 629 | | Debt securities | | — | | — | | — | | 12 | | 12 | | Total nonperforming assets | $ | 1,862 | $ | 848 | $ | 845 | $ | 1,169 | $ | 1,650 | | Nonperforming loans to gross loans | | 0.09 % | | 0.01 % | | 0.02 % | | 0.04 % | | 0.07 % | | Nonperforming assets to total assets | | 0.09 % | | 0.04 % | | 0.04 % | | 0.06 % | | 0.08 % | | Allowance for credit losses as a % of nonaccrual | | | | | | | | | | | | (1) loans | | N/M | | N/M | | N/M | | N/M | | N/M | | ALLOWANCE FOR CREDIT LOSSES (thousands) | | | | | | | | | | | | Allowance at beginning of period | $ | 12,735 | $ | 12,895 | $ | 12,635 | $ | 13,095 | $ | 13,390 | | Charge-offs | | 390 | | 172 | | 299 | | 1,767 | | 527 | | Recoveries | | 1,822 | | 224 | | 197 | | 408 | | 134 | | Net loan charge-offs (recoveries) | | (1,432) | | (52) | | 102 | | 1,359 | | 393 | | (Reversal of) provision for credit losses - loans | | (1,190) | | (212) | | 362 | | 899 | | 98 | | Allowance at end of period | $ | 12,977 | $ | 12,735 | $ | 12,895 | $ | 12,635 | $ | 13,095 | | Allowance for credit losses to gross loans | | 0.93 % | | 0.93 % | | 0.91 % | | 0.89 % | | 0.95 % | | Reserve for unfunded commitments (thousands) | | 708 | | 617 | | 512 | | 498 | | 450 | | Provision for credit losses - unfunded | | | | | | | | | | | | commitments (thousands) | | 91 | | 105 | | 14 | | 47 | | 72 | | Reserve to unfunded commitments | | 0.16 % | | 0.14 % | | 0.15 % | | 0.15 % | | 0.14 % | | NET LOAN CHARGE-OFFS (RECOVERIES) (thousands) | | | | | | | | | | | | Commercial and industrial | $ | 68 | $ | (80) | $ | 13 | $ | (6) | $ | 334 | | Commercial real estate | | (50) | | (2) | | (2) | | (318) | | (29) | | Agricultural | | — | | — | | (4) | | — | | — | | Residential real estate | | (16) | | (13) | | (16) | | (20) | | (19) | | Consumer | | (1,434) | | 43 | | 111 | | 1,703 | | 107 | | Total | $ | (1,432) | $ | (52) | $ | 102 | $ | 1,359 | $ | 393 | | Net (recoveries) charge-offs (Quarter to Date | | | | | | | | | | | | annualized to average loans) | | (0.41)% | | (0.02)% | | 0.03 % | | 0.39 % | | 0.11 % | | Net (recoveries) charge-offs (Year to Date | | | | | | | | | | | | annualized to average loans) | | (0.22)% | | (0.02)% | | 0.14 % | | 0.17 % | | 0.06 % | | DELINQUENT AND NONACCRUAL LOANS (thousands) | | | | | | | | | | | | Accruing loans 30-89 days past due | $ | 1,076 | $ | 5,555 | $ | 5,682 | $ | 2,226 | $ | 1,484 | | Accruing loans past due 90 days or more | | 31 | | 26 | | 19 | | 64 | | 15 | | Total accruing past due loans | | 1,107 | | 5,581 | | 5,701 | | 2,290 | | 1,499 | | Nonaccrual loans | | 1,164 | | 173 | | 282 | | 547 | | 994 | | Total past due and nonaccrual loans | $ | 2,271 | $ | 5,754 | $ | 5,983 | $ | 2,837 | $ | 2,493 | [Consolidated Loan and Deposit Analysis](index=14&type=section&id=Consolidated%20Loan%20and%20Deposit%20Analysis) This table provides a detailed breakdown of the Company's loan and deposit portfolios, including annualized growth rates, for the three-month periods ended June 30, 2025, and prior quarters **Loan Analysis:** | | | | | | | | | | | | | Annualized Growth | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | % | | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | Quarter to Date | | Commercial and industrial (thousands) | (1) | $ | 207,719 | $ | 205,172 | $ | 200,623 | $ | 197,372 | $ | 198,769 | 4.97 % | | (1) Commercial real estate (thousands) | | | 614,383 | | 596,282 | | 591,718 | | 590,255 | | 586,481 | 12.14 % | | Advances to mortgage | | | | | | | | | | | | | | brokers (thousands) | | | 3,005 | | 3,015 | | 63,080 | | 76,187 | | 39,300 | (1.33)% | | Agricultural (thousands) | | | 96,842 | | 94,359 | | 99,694 | | 96,794 | | 94,996 | 10.53 % | | Total commercial loans (thousands) | | | 921,949 | | 898,828 | | 955,115 | | 960,608 | | 919,546 | 10.29 % | | Residential real estate (thousands) | | | 398,668 | | 387,348 | | 380,872 | | 369,846 | | 365,188 | 11.69 % | | Consumer (thousands) | | | 76,896 | | 81,548 | | 87,584 | | 93,829 | | 96,902 | (22.82)% | | Gross loans (thousands) | | $ | 1,397,513 | $ | 1,367,724 | $ | 1,423,571 | $ | 1,424,283 | $ | 1,381,636 | 8.71 % | **Deposit Analysis:** | | | | | | | | | | | | Annualized Growth | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | June 30 | | March 31 | December 31 | | | September 30 | | June 30 | % | | | | 2025 | | 2025 | 2024 | | | 2024 | | 2024 | Quarter to Date | | Noninterest bearing demand | | | | | | | | | | | | | deposits (thousands) | $ | 493,477 | $ | 404,194 | $ | 416,373 | $ | 421,493 | $ | 412,193 | 88.36 % | | Interest bearing demand | | | | | | | | | | | | | deposits (thousands) | | 223,376 | | 243,939 | | 237,548 | | 228,902 | | 232,660 | (33.72)% | | Money market deposits (thousands) | | 446,845 | | 473,138 | | 423,883 | | 471,745 | | 429,150 | (22.23)% | | Savings (thousands) | | 289,746 | | 286,399 | | 281,665 | | 276,095 | | 279,847 | 4.67 % | | Certificates of deposit (thousands) | | 395,932 | | 390,239 | | 387,591 | | 383,597 | | 368,449 | 5.84 % | | Total deposits (thousands) | $ | 1,849,376 | $ | 1,797,909 | $ | 1,747,060 | $ | 1,781,832 | $ | 1,722,299 | 11.45 % | [Reconciliation of Non-GAAP Financial Measures](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This table provides a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, including core net income, core noninterest expense, net interest income (FTE), and various core performance ratios, for the three-month periods ended June 30, 2025, and prior quarters | | | | | | | | Three Months Ended | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | June 30 | | March 31 | | December 31 | | September 30 | | June 30 | | | | | 2025 | | 2025 | | 2024 | | 2024 | | 2024 | | Net income (thousands) | | $ | 5,031 | $ | 3,949 | $ | 3,996 | $ | 3,281 | $ | 3,481 | | Net gains (losses) on foreclosed assets (thousands) | | | — | | (55) | | 74 | | 4 | | 6 | | (1) Overdraft (charge-off) recoveries (thousands) | | | 1,556 | | — | | 66 | | (1,622) | | — | | (2) Profitability initiative cost (thousands) | | | (173) | | — | | (23) | | — | | — | | (2) Legal fees related to Nasdaq (thousands) | | | (47) | | (121) | | — | | — | | — | | Income tax impact on items above (thousands) | | | (281) | | 37 | | (25) | | 340 | | (1) | | Exchange fees on bank-owned life | | | | | | | | | | | | | (3) insurance transfers (thousands) | | | (120) | | — | | — | | — | | — | | Income tax expense on bank-owned | | | | | | | | | | | | | (4) life insurance surrender (thousands) | | | — | | (166) | | — | | — | | — | | Core net income (thousands) | (A) | $ | 4,096 | $ | 4,254 | $ | 3,904 | $ | 4,559 | $ | 3,476 | | Noninterest expenses (thousands) | | $ | 13,745 | $ | 13,299 | $ | 13,330 | $ | 13,228 | $ | 12,895 | | Amortization of acquisition | | | | | | | | | | | | | intangibles (thousands) | | | — | | 1 | | 1 | | — | | 1 | | Non-core expenses (thousands) | | | 220 | | 121 | | 23 | | — | | — | | Core noninterest expense (thousands) | (B) | $ | 13,525 | $ | 13,177 | $ | 13,306 | $ | 13,228 | $ | 12,894 | | Net interest income (thousands) | | $ | 15,129 | $ | 14,525 | $ | 14,555 | $ | 14,488 | $ | 13,550 | | Tax equivalent adjustment for net | | | | | | | | | | | | | interest margin (thousands) | | | 178 | | 184 | | 213 | | 232 | | 237 | | Net interest income (FTE) (thousands) | (C) | | 15,307 | | 14,709 | | 14,768 | | 14,720 | | 13,787 | | Noninterest income (thousands) | | | 3,686 | | 3,528 | | 3,972 | | 3,528 | | 3,608 | | Tax equivalent adjustment for | | | | | | | | | | | | | efficiency ratio (thousands) | | | 63 | | 78 | | 54 | | 53 | | 53 | | Core revenue (FTE) (thousands) | | | 19,056 | | 18,315 | | 18,794 | | 18,301 | | 17,448 | | Non-core revenue (loss) (thousands) | | | (120) | | (55) | | 74 | | 4 | | 6 | | Core revenue (thousands) | (D) | $ | 19,176 | $ | 18,370 | $ | 18,720 | $ | 18,297 | $ | 17,442 | | Efficiency ratio | (B/D) | | 70.53 % | | 71.73 % | | 71.08 % | | 72.30 % | | 73.93 % | | Average earning assets (thousands) | (E) | | 1,949,129 | | 1,943,633 | | 1,963,986 | | 1,967,552 | | 1,948,173 | | Net yield on interest earning assets | | | | | | | | | | | | | (FTE) | (C/E) | | 3.14 % | | 3.06 % | | 2.98 % | | 2.96 % | | 2.82 % | | Average assets (thousands) | (F) | | 2,092,687 | | 2,085,537 | | 2,094,569 | | 2,095,200 | | 2,067,211 | | Average shareholders' equity (thousands) | (G) | | 219,542 | | 214,212 | | 212,912 | | 208,444 | | 200,734 | | Average tangible shareholders' | | | | | | | | | | | | | equity (thousands) | (H) | | 171,260 | | 165,929 | | 164,629 | | 160,161 | | 152.451 | | Average diluted shares outstanding (5) | (I) | | 7,398,109 | | 7,432,162 | | 7,451,718 | | 7,473,184 | | 7,494,828 | | Core diluted earnings per share | (A/I) $ | | 0.55 | $ | 0.57 | $ | 0.52 | $ | 0.61 | $ | 0.46 | | Core return on average assets | (A/F) | | 0.79 % | | 0.83 % | | 0.74 % | | 0.87 % | | 0.68 % | | Core return on average | | | | | | | | | | | | | shareholders' equity | (A/G) | | 7.48 % | | 8.05 % | | 7.29 % | | 8.70 % | | 6.96 % | | Core return on average tangible | | | | | | | | | | | | | shareholders' equity | (A/H) | | 9.59 % | | 10.40 % | | 9.43 % | | 11.32 % | | 9.17 % |

AFS Securities - As of March 31, 2025, the total amortized cost of AFS securities is $534,513,000, with a fair value of $513,040,000, reflecting unrealized losses of $21,639,000[31]. - The total unrealized losses for AFS securities categorized by investment type include $21,275,000 for securities held for less than twelve months and $21,639,000 for those held for twelve months or more[34]. - The company has not recognized any allowance for credit losses on AFS securities in an unrealized loss position, indicating no impairment due to credit quality concerns[34]. - The total fair value of U.S. Treasury securities decreased from $220,571,000 on December 31, 2024, to $212,783,000 on March 31, 2025[31]. - The company’s investment in mortgage-backed securities has an amortized cost of $27,545,000 and a fair value of $25,828,000, resulting in unrealized losses of $1,717,000[31]. - The total number of securities in an unrealized loss position increased to 306 as of March 31, 2025, compared to 353 on December 31, 2024[34]. - The unrealized gains on AFS securities improved by $5,014 million for the three months ended March 31, 2025, compared to a loss of $2,926 million in the same period of 2024[90]. - Unrealized gains (losses) for AFS securities in Q1 2025 totaled $(215) million, with total unrealized gains of $5,014 million, compared to $(2,926) million in Q1 2024[91]. - The tax effect on unrealized gains (losses) resulted in a net of $(215) million in Q1 2025, compared to $(2,294) million in Q1 2024[91]. - The total available-for-sale (AFS) securities increased to $513,040 from $489,029 as of December 31, 2024, representing a growth of approximately 4.9%[104]. Loan Portfolio - Total loan portfolio balance as of March 31, 2025, is $1,367,724, a decrease from $1,423,571 as of December 31, 2024, representing a decline of approximately 3.9%[36]. - Commercial and industrial loans account for 18.22% of the total loan portfolio, increasing from 17.20% in the previous quarter[36]. - Total commercial real estate loans increased to $552,234, representing 40.38% of the total loan portfolio, up from 38.46%[36]. - Residential real estate loans increased to $387,348, accounting for 28.32% of the total loan portfolio, up from 26.75%[36]. - Nonaccrual loans in the residential real estate category totaled $173 as of March 31, 2025, down from $282 as of December 31, 2024[46]. - Total past due loans amount to $5,202, with 30-59 days past due at $5,202, and 90 days or more past due at $82[46]. - The company limits direct credit exposure to any one borrower to $18,000, with larger needs serviced through loan participations[38]. - The company requires a loan-to-value ratio of 80% or less for commercial and agricultural real estate loans[38]. - Total commercial and industrial loans amount to $244,894 million, with past due loans of $328 million[47]. - Total commercial real estate loans stand at $547,447 million, including $817 million past due[47]. - Total agricultural loans are $99,694 million, with no past due loans reported[47]. - Total residential real estate loans reach $380,872 million, with past due loans of $3,875 million[47]. - Total consumer loans amount to $87,584 million, with past due loans of $251 million[47]. - Overall, total loans amount to $1,423,571 million, with total past due loans of $502 million[47]. - The company has seen a significant amount of loans converted to term loans, indicating a shift in loan structure[49]. - Overall, the company maintains a diversified loan portfolio with a focus on managing credit risk effectively[49]. Credit Quality and Risk Management - The allowance for credit losses (ACL) as of March 31, 2025, was $12,735 million, reflecting a decrease from $12,895 million as of December 31, 2024[79]. - The collectively evaluated ACL to gross loans ratio was 0.93% as of March 31, 2025, compared to 0.91% as of December 31, 2024[79]. - Charge-offs for the three months ended March 31, 2025, totaled $172 million, while recoveries amounted to $224 million[77]. - The provision for credit losses for the three months ended March 31, 2024, was $328 million, indicating a proactive approach to managing credit risk[77]. - The company has implemented lending policies to maximize loan income while managing risk, with regular reviews by the Board[53]. - Internally assigned credit risk ratings are reviewed at least during loan renewals or when credit quality changes are known[54]. - The classification of loans includes categories from "Excellent" to "Loss," indicating varying levels of credit risk[56][58]. - The primary credit quality indicator for residential real estate and consumer loans is the individual loan's past due status[60]. - The company continues to monitor borrower financial difficulties closely, considering factors such as cash flow and potential defaults[65]. - The company does not modify loans by forgiving principal or accrued interest, ensuring the integrity of the loan modification process[66]. Financial Performance - Basic earnings per common share for the three months ended March 31, 2025, was $0.53, an increase from $0.42 in the same period of 2024[88]. - The net income for the three months ended March 31, 2025, was $3,949 million, compared to $3,131 million for the same period in 2024[88]. - The total capital to risk-weighted assets ratio was 12.99% for Isabella Bank and 15.50% for consolidated figures as of March 31, 2025[89]. - The Common Equity Tier 1 capital to risk-weighted assets ratio was 12.08% for Isabella Bank and 12.58% for consolidated figures as of March 31, 2025, exceeding the minimum required ratios[89]. Borrowings and Collateral - As of March 31, 2025, short-term borrowings from securities sold under repurchase agreements amounted to $47,310 million with a weighted average interest rate of 3.21%[81]. - The total amount pledged to secure borrowed funds was $519,967 million as of March 31, 2025, compared to $548,987 million as of December 31, 2024[82]. - The company had the ability to borrow an additional $377,824 million without pledging additional collateral as of March 31, 2025[83]. Fair Value Measurements - Fair value measurement categorizes assets and liabilities into three levels, with Level 1 based on quoted prices in active markets and Level 3 based on unobservable inputs[92]. - As of March 31, 2025, the fair value of collateral-dependent loans was $145 million, with a 20% discount applied to collateral[98]. - The fair value of OMSR as of March 31, 2025, was $2,366 million, with a constant prepayment rate of 7% and a discount rate of 11%[100]. - The carrying amount of gross loans as of March 31, 2025, was $1,367,724 million, with an estimated fair value of $1,321,419 million[103]. - Cash and cash equivalents were recorded at $69,179 million, with an equal estimated fair value[103]. - Deposits without stated maturities totaled $1,407,670 million, matching their estimated fair value[103]. - The estimated fair value of subordinated debt as of March 31, 2025, was $27,916 million, compared to a carrying amount of $29,447 million[103]. - As of March 31, 2025, total assets and liabilities measured at fair value amounted to $513,834, with $513,040 classified as recurring items[104]. - The percentage of assets and liabilities measured at fair value remained stable, with 99.85% classified under Level 2 as of March 31, 2025[104]. - The company had no other assets or liabilities recorded at fair value with changes recognized through earnings on a recurring or nonrecurring basis as of March 31, 2025[104].