MOUNT PLEASANT, MI / ACCESS Newswire / July 24, 2025 / Isabella Bank Corporation (Nasdaq:ISBA) (“Isabella” or the “Company”) reported second quarter 2025 net income of $5.0 million, or $0.68 per diluted share, compared to $3.5 million, or $0.46 per diluted share, in the same quarter of 2024. Core net income (non-GAAP) in the second quarter of 2025 totaled $4.1 million, or $0.55 per diluted share, compared to $3.5 million, or $0.46 per diluted share, for the same quarter of 2024.
SECOND QUARTER 2025 HIGHLIGHTS (as of or for the three months ended June 30, 2025, compared to the second quarter of 2024, unless otherwise noted)
Return on average assets (ROA) of 0.96%, up from 0.68%; core ROA (non-GAAP) of 0.79%, up from 0.68%
Total loan growth from the first quarter of 2025 of 9%, annualized
Total deposit growth from the first quarter of 2025 of 11%, annualized
Net interest margin, fully taxable equivalent (“NIM”) (non-GAAP) of 3.14%, up from 2.82%
Noninterest income up 4% from the first quarter of 2025
Nonperforming loans to total loans of 0.09%
“It was a very good second quarter with improvements across most of our performance metrics,” said Isabella’s Chief Executive Officer, Jerome Schwind. “Our financial performance centered on growth in NIM, loans, and deposits.
“NIM increased as expected, expanding 8 basis points over the prior quarter with earning assets continuing to reprice on stable cost of funds. Loan growth was driven by the commercial loan portfolio, based on our pipeline in the first quarter and the continued concentrated efforts in this business line. The increase in total deposits was highlighted by an $89 million increase in non-maturity deposits, which mostly was due to a large deposit from a not-for-profit entity that is expected to be used by the customer by the end of the year. While short-term, this deposit is another example of our strong relationships with the communities we serve. As previously announced, the Bank also recovered the entire overdraft charge-off that occurred during the third quarter of 2024. This recovery positively affected the provision for credit losses for the quarter.
“Our teams continue to focus on the profitability of our operations and initiatives to enhance and grow non-interest income, and I am proud of their dedication throughout this process,” Schwind said. “Our teams embrace our culture and are focused on serving our customers and building and executing our strategy.
“Since uplisting to the Nasdaq in May, our stock volume has increased significantly,” Schwind added. “We view our higher stock price as an expanded source of potential currency and opportunity for further growth. As always, building shareholder value remains our focus, with strong earnings, share repurchases and continued dividends.”
FINANCIAL CONDITION (as of or for the three months ended June 30, 2025, compared to March 31, 2025, unless otherwise noted)
Total assets were $2.2 billion, up $53.6 million, primarily due to an increase of $33.9 million in interest bearing cash balances and an increase of $29.8 million in core loans, which excludes advances to mortgage brokers (non-GAAP), partially offset by a $16.4 million decline in gross securities.
Available-for-sale (“AFS”) securities at fair value were $501 million, decreasing $12.5 million at the end of second quarter 2025. The decline was driven by amortization and maturities of $26.8 million, partially offset by purchases totaling $10.6 million. Net unrealized losses on securities totaled $17.6 million, compared to $21.5 million at the end of the first quarter of 2025. Net unrealized losses as a percentage of total AFS securities decreased to 3% from 4% at the end of the first quarter of 2025, primarily due to the treasury portfolio rapidly approaching maturity. The par value and corresponding book yields that are estimated to mature or pay off by year include: $28.2 million in principal with a weighted-average book yield of 2.36% over the remainder of 2025; $217.4 million at 1.17% in 2026; and $63.0 million at 1.87% in 2027. Some of these securities amortize and actual principal paydown may differ from the estimates in this press release.
Total loans were $1.4 billion at the end of the second quarter, increasing $29.8 million from growth in core loans (non-GAAP) led by commercial and residential loans. Commercial loans, excluding advances to mortgage brokers, increased $23.1 million, or 10.3% on an annualized basis. The outsized growth is primarily the result of closing several loans that were originally expected to close in the first quarter, along with executing on our pipeline that was robust going into the second quarter 2025. While our commercial pipeline is strong at the beginning of the third quarter, future loan growth could be lower due to changes in timing and funding, customer demand, and overall economic conditions. Residential mortgages increased $11.3 million mostly due to drawdowns on construction loans and an increase in originations that are both associated with seasonal patterns. Loan growth during the quarter was partially offset by a decline in the agricultural and consumer loan portfolios that continue to roll off amid decreasing demand.
The allowance for credit losses increased $242 thousand to $13.0 million as of June 30, 2025. The increase reflects core loan growth during the period and changes in historical loss rates. Nonaccrual loan balances increased $991 thousand to $1.2 million, primarily due to the downgrade of one unique commercial real estate loan to nonaccrual status during the quarter. Past due and accruing accounts between 30 to 89 days, as a percentage of total loans, was 0.08% compared to 0.41% at the end of first quarter 2025.
Total deposits were $1.85 billion, increasing $51.5 million, at the end of the second quarter. The growth was driven by demand deposits, which increased $89.3 million, primarily due to one customer with large deposits during the second quarter that is expected to be withdrawn by the customer by the end of they year. Consumer demand for retail certificates of deposit accounts continues based on the current elevated market interest rate environment, resulting in a $5.7 million increase during the period. Money market and interest-bearing demand deposits led to a $26.3 million and $20.6 million decline in deposits, respectively, as a result of seasonal trends.
Tangible book value per share (non-GAAP) was $23.39 as of June 30, 2025, compared to $22.58. Net unrealized losses on AFS securities reduced tangible book value per share by $1.90 and $2.30 for the respective periods. Share repurchases totaled 57,824 during the second quarter for an aggregate purchase price of approximately $1.5 million at an average per share purchase price of approximately $26.03.
RESULTS OF OPERATIONS (June 30, 2025 to June 30, 2024 quarterly comparison, unless otherwise noted)
NIM was 3.14%, an increase from 3.06% in the first quarter 2025 and from 2.82% in the second quarter of 2024. The book yield from securities was 2.38% and 2.17% during the second quarters of 2025 and 2024, respectively. The yield on loans expanded to 5.71% in the second quarter, up from 5.50% in the same quarter of 2024. The expansion in loan yields was a result of higher interest rates on new loans and variable rate commercial loans that continue to reprice. At the end of the second quarter, approximately 38% of commercial loans were fixed at rates lower than current market rates, and the majority will contractually reprice to variable rates over the next four years. Cost of interest-bearing liabilities was 2.24%, decreasing from 2.26% in the previous quarter and from 2.38% in the second quarter of 2024, primarily due to reductions to rates in the money market and certificate of deposit products. NIM is expected to continue to expand as loans reprice and the cost of interest-bearing liabilities stabilizes.
The provision for credit losses in the second quarter 2025 was a credit of $1.1 million, which reflects net recoveries totaling $1.4 million, offset by the $242 thousand change in the allowance for credit losses on loans and an increase in the reserve for unfunded commitments. Recoveries of $1.6 million during the quarter were related to overdrawn deposit accounts from a single customer that were charged off during the third quarter of 2024. The provision for loan losses in the same period of 2024 was $170 thousand, reflecting growth in core loans and unfunded commitments.
The Company continues to closely monitor credit quality in light of the continued economic uncertainty caused by, among other factors, the prolonged elevated interest rate environment, stronger than expected employment data in recent periods, continued uncertainty regarding U.S. trade and tariff policy and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.
Noninterest income was $3.7 million in the second quarter of 2025 compared to $3.6 million for the same quarter of 2024. Service charges and fees increased $48 thousand because of profitability initiatives designed to increase fee income. Earnings on bank-owned life insurance (“BOLI”) policies increased $47 thousand over the prior year quarter due to new investments in a separate account BOLI, which was offset in part by a one-time expense of $120 thousand due to restructuring charges. Wealth management fees grew $36 thousand due to growth in assets under management (“AUM”) as compared to the second quarter of 2024. AUM totaled $679 million, $657 million and $648 million as of June 30, 2025, March 31, 2025, and June 30, 2024, respectively.
Noninterest expenses were $13.7 million in the second quarter 2025 compared to $12.9 million in the same quarter of 2024. The change mostly was due to higher compensation and benefit expenses totaling $526 thousand, which reflect annual merit increases in 2025, incentives, and higher medical insurance claims compared to the second quarter of 2024. Professional services included $173 thousand in fees related to profitability initiative costs and $47 thousand in legal fees related to our Nasdaq uplisting.
About Isabella Bank Corporation
Isabella Bank Corporation (Nasdaq: ISBA) is the parent holding company of Isabella Bank, a state-chartered community bank headquartered in Mt. Pleasant, Michigan. Isabella Bank was established in 1903 and has been committed to serving its customers’ and communities’ local banking needs for over 120 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services. The Bank has locations throughout eight Mid-Michigan counties: Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.
For more information about Isabella Bank Corporation, visit the Investor Relations link at http://www.isabellabank.com.
Contact
Lori Peterson, Director of Marketing
Phone: 989-779-6333 Fax: 989-775-5501
Available Information
The Company maintains an Internet web site at ir.isabellabank.com/overview. The Company makes available, free of charge, on its web site the Company’s annual reports, quarterly earnings reports, and other press releases.
The Company routinely posts important information for investors on its website (www.isabellabank.com and, more specifically, under the News tab at ir.isabellabank.com/news). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD (Fair Disclosure) promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, investors should monitor the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.
The information contained on, or that may be accessed through, the Company’s website is not incorporated by reference into, and is not a part of, this document.
Forward-Looking Statements
Information in this press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended and Rule 3b-6 promulgated thereunder. We intend such forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995, and are included in this statement for purposes of these safe harbor provisions. Forward-looking statements generally relate to losses, impact of events, financial condition, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting the Company and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result”, “expect”, “could”, “may”, “plan”, “believe”, “estimate”, “anticipate”, “strategy”, “trend”, “forecast”, “outlook”, “project”, “intend”, “assume”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. These forward-looking statements are based on current information and/or management’s good faith belief as to future events. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. Additional information regarding risks and uncertainties to which the Company’s business and future financial performance are subject is contained in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of such documents, and other documents the Company files or furnishes with the SEC from time to time, which are available on the SEC’s website, http://www.sec.gov. Due to these and other possible uncertainties and risks, the Company cautions you not to unduly rely on forward-looking statements. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans or expectations contemplated by the Company will be achieved. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made, except as required by law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.
We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.
A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this press release.
Table Index
Consolidated Financial Schedules (Unaudited)
A
Selected Financial Data
B
Consolidated Balance Sheets – Quarterly Trend
C
Consolidated Statements of Income
D
Consolidated Statements of Income – Quarterly Trend
E
Average Yields and Costs
F
Average Balances
G
Asset Quality Analysis
H
Consolidated Loan and Deposit Analysis
I
Reconciliation of Non-GAAP Financial Measures
[A] SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
The following table outlines selected financial data as of, and for the three-month periods ended:
Three Months Ended
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
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
Core diluted earnings (1)
0.55
0.57
0.52
0.61
0.46
Dividends
0.28
0.28
0.28
0.28
0.28
Book value (2)
29.95
29.10
28.32
28.63
27.06
Tangible book value (1) (2)
23.39
22.58
21.82
22.14
20.60
Market price (2)
30.15
23.59
25.99
21.21
18.20
Common shares outstanding (2) (3)
7,361,684
7,408,010
7,424,893
7,438,720
7,474,016
Average number of diluted common shares outstanding (3)
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
%
Core return on average total assets (1)
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’ equity (1)
9.59
%
10.40
%
9.43
%
11.32
%
9.17
%
Net interest margin yield (fully taxable equivalent) (1)
3.14
%
3.06
%
2.98
%
2.96
%
2.82
%
Efficiency ratio (1)
70.53
%
71.73
%
71.08
%
72.30
%
73.93
%
Gross loan to deposit ratio (2)
75.57
%
76.07
%
81.48
%
79.93
%
80.22
%
Shareholders’ equity to total assets (2)
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
Wealth assets under management (2)
678,959
656,617
658,042
679,858
647,850
ASSET QUALITY
Nonaccrual loans (2)
1,164
173
282
547
994
Foreclosed assets (2)
667
649
544
546
629
Net loan charge-offs (recoveries)
(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
%
Nonperforming loans to gross loans (2)
0.09
%
0.01
%
0.02
%
0.04
%
0.07
%
Nonperforming assets to total assets (2)
0.09
%
0.04
%
0.04
%
0.06
%
0.08
%
Allowance for credit losses to gross loans (2)
0.93
%
0.93
%
0.91
%
0.89
%
0.95
%
CAPITAL RATIOS (2)
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
%
(1) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I
(2) At end of period
(3) Whole shares
[B] CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
ASSETS
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
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
[C] CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Six Months EndedJune 30
2025
2024
Interest income
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
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
29,654
26,792
(Reversal of) provision for credit losses
(1,206
)
562
Net interest income after provision for credit losses
30,860
26,230
Noninterest income
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
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
11,030
7,735
Income tax expense
2,050
1,123
Net income
$
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
[D] CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
Interest income
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
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
15,129
14,525
14,555
14,488
13,550
(Reversal of) provision for credit losses
(1,099
)
(107
)
376
946
170
Net interest income after provision for credit losses
16,228
14,632
14,179
13,542
13,380
Noninterest income
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
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
6,169
4,861
4,821
3,842
4,093
Income tax expense
1,138
912
825
561
612
Net income
$
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
[E] AVERAGE YIELDS AND COSTS (UNAUDITED)
The following schedules present yield and daily average amounts outstanding for each major category of interest earning assets, nonearning assets, interest bearing liabilities, and noninterest bearing liabilities. For analytical purposes, interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%. Federal Reserve Bank restricted equity holdings are included in other interest earning assets.
Three Months Ended
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
INTEREST EARNING ASSETS
Loans (1)
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
%
(1) Includes loans held-for-sale and nonaccrual loans
(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I
[F] AVERAGE BALANCES (UNAUDITED)
(Dollars in thousands)
Three Months Ended
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
INTEREST EARNING ASSETS
Loans (1)
$
1,388,684
$
1,370,765
$
1,412,578
$
1,403,810
$
1,375,523
Available-for-sale securities (2)
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
Other (3)
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
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
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
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
(1) Includes loans held-for-sale and nonaccrual loans
(2) Average balances for available-for-sale securities are based on amortized cost
(3) Includes average interest-bearing deposits with other banks, net of Federal Reserve daily cash letter
[G] ASSET QUALITY ANALYSIS (UNAUDITED)
(Dollars in thousands)
The following table outlines our asset quality analysis as of, and for the three-month periods ended:
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
NONPERFORMING ASSETS
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 loans (1)
N/M
N/M
N/M
N/M
N/M
ALLOWANCE FOR CREDIT LOSSES
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
708
617
512
498
450
Provision for credit losses – unfunded commitments
91
105
14
47
72
Reserve to unfunded commitments
0.16
%
0.14
%
0.15
%
0.15
%
0.14
%
NET LOAN CHARGE-OFFS (RECOVERIES)
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
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
(1) N/M: Not meaningful
[H] CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)
(Dollars in thousands)
Loan Analysis
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
Annualized
Growth %
Quarter to Date
Commercial and industrial (1)
$
207,719
$
205,172
$
200,623
$
197,372
$
198,769
4.97
%
Commercial real estate (1)
614,383
596,282
591,718
590,255
586,481
12.14
%
Advances to mortgage brokers
3,005
3,015
63,080
76,187
39,300
(1.33)
%
Agricultural
96,842
94,359
99,694
96,794
94,996
10.53
%
Total commercial loans
921,949
898,828
955,115
960,608
919,546
10.29
%
Residential real estate
398,668
387,348
380,872
369,846
365,188
11.69
%
Consumer
76,896
81,548
87,584
93,829
96,902
(22.82)
%
Gross loans
$
1,397,513
$
1,367,724
$
1,423,571
$
1,424,283
$
1,381,636
8.71
%
(1) Certain amounts reported as commercial and industrial loans have been reclassified as commercial real estate loans to conform to the June 30, 2025 presentation
Deposit Analysis
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
Annualized
Growth %
Quarter to Date
Noninterest bearing demand deposits
$
493,477
$
404,194
$
416,373
$
421,493
$
412,193
88.36
%
Interest bearing demand deposits
223,376
243,939
237,548
228,902
232,660
(33.72)
%
Money market deposits
446,845
473,138
423,883
471,745
429,150
(22.23)
%
Savings
289,746
286,399
281,665
276,095
279,847
4.67
%
Certificates of deposit
395,932
390,239
387,591
383,597
368,449
5.84
%
Total deposits
$
1,849,376
$
1,797,909
$
1,747,060
$
1,781,832
$
1,722,299
11.45
%
[I] RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
Three Months Ended
June 30
2025
March 31
2025
December 31
2024
September 30
2024
June 30
2024
Net income
$
5,031
$
3,949
$
3,996
$
3,281
$
3,481
Net gains (losses) on foreclosed assets
–
(55
)
74
4
6
Overdraft (charge-off) recoveries (1)
1,556
–
66
(1,622
)
–
Profitability initiative cost (2)
(173
)
–
(23
)
–
–
Legal fees related to Nasdaq (2)
(47
)
(121
)
–
–
–
Income tax impact on items above
(281
)
37
(25
)
340
(1
)
Exchange fees on bank-owned life insurance transfers (3)
(120
)
–
–
–
–
Income tax expense on bank-owned life insurance surrender (4)
–
(166
)
–
–
–
Core net income
(A)
$
4,096
$
4,254
$
3,904
$
4,559
$
3,476
Noninterest expenses
$
13,745
$
13,299
$
13,330
$
13,228
$
12,895
Amortization of acquisition intangibles
–
1
1
–
1
Non-core expenses
220
121
23
–
–
Core noninterest expense
(B)
$
13,525
$
13,177
$
13,306
$
13,228
$
12,894
Net interest income
$
15,129
$
14,525
$
14,555
$
14,488
$
13,550
Tax equivalent adjustment for net interest margin
178
184
213
232
237
Net interest income (FTE)
(C)
15,307
14,709
14,768
14,720
13,787
Noninterest income
3,686
3,528
3,972
3,528
3,608
Tax equivalent adjustment for efficiency ratio
63
78
54
53
53
Core revenue (FTE)
19,056
18,315
18,794
18,301
17,448
Non-core revenue (loss)
(120
)
(55
)
74
4
6
Core revenue
(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
(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
(F)
2,092,687
2,085,537
2,094,569
2,095,200
2,067,211
Average shareholders’ equity
(G)
219,542
214,212
212,912
208,444
200,734
Average tangible shareholders’ equity
(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
%
(1) Includes reversal of provision for credit losses in the first quarter of 2025 and provision for credit losses in the third quarter of 2024 related to overdrawn deposit accounts from a single customer.
(2) Included in Other professional services in the consolidated statements of income
(3) Income tax expense on life to date earnings on bank-owned life insurance policies surrendered
(4) Included as a reduction to Earnings on bank-owned life insurance policies in the consolidated statements of income
(5) Whole shares
SOURCE: Isabella Bank Corp.
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