8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 25, 2024

ISABELLA BANK CORPORATION

(Exact name of registrant as specified in its charter)

Michigan	000-18415	38-2830092
(State or other jurisdiction<br>of incorporation)	(Commission<br>File Number)	(IRS Employer<br>Identification No.)		401 North Main Street	Mt. Pleasant	Michigan	48858-1649
---	---	---	---
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (989) 772-9471

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-l2) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240.l4d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.l3e-4(c)) | | --- | --- |

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br>Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On July 25, 2024, Isabella Bank Corporation issued a press release announcing its financial results for the quarter ended June 30, 2024.

A copy of the press release is filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing made by the registrant under the Securities Act of 1933, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit<br>No.	Description
99.1	Press release issuedJuly25, 2024
104	Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ISABELLA BANK CORPORATION
Dated:	July 25, 2024	By:	/s/ Jerome E. Schwind
			Jerome E. Schwind, President and CEO

INDEX TO EXHIBITS

Exhibit<br>No.	Description
99.1	Press release issuedJuly 25, 2024
104	Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document

Document

Exhibit 99.1

Isabella Bank Corporation Reports Second Quarter 2024 Results

MT. PLEASANT, MICHIGAN — July 25, 2024 — Isabella Bank Corporation (OTCQX: ISBA) (the “Company”) reported second quarter 2024 net income of $3.5 million, or $0.46 per diluted share, compared to $4.6 million or $0.61 per diluted share in the same quarter of 2023.

SECOND QUARTER 2024 HIGHLIGHTS (compared to second quarter 2023, unless otherwise stated)

•Total loans grew by an annualized rate of 5%

•4.58% earning asset yield, compared to 4.11%

•7% increase in wealth management income

•0.07% ratio in nonperforming loans to total loans

"We are pleased the negative trend in net interest margin over the past several quarters has reversed, and we gained five basis points over the first quarter of 2024," said Isabella Bank Corporation's Chief Executive Officer Jerome Schwind. "The repricing of earning assets and continued loan growth have expanded yields beyond the growth of our cost of funds.

"While total commercial loans grew 1% during the quarter," he added, "we have a strong loan pipeline going into the third quarter. Given commercial loan growth prospects and the continued repricing of our book of business, we see a stronger second half of 2024, regardless of how interest rates change."

FINANCIAL CONDITION (June 30, 2024 compared to March 31, 2024)

Total assets remained steady at $2.06 billion. Loan growth during the second quarter was offset by lower cash and security balances and was primarily funded by security amortization and Federal Home Loan Bank borrowings.

Securities available-for-sale decreased $11.9 million to $505.6 million at the end of second quarter 2024 due to municipal maturities and principal paydowns on mortgage-related securities. This was offset in part by a smaller unrealized loss on the total portfolio during the period. Net losses on securities totaled $34 million and $34.8 million at the end of the second and first quarter, respectively. Unrealized losses represent 6% of total available-for-sale securities in both periods and will continue to decrease as bonds approach their maturity dates over the next three years.

Total loans grew $16.1 million to $1.38 billion at the end of second quarter 2024, led by residential loans, adding $8.5 million in balances due to a slowing of prepayments on steady new volume. Total commercial loans grew $8.8 million due to higher advances to mortgage brokers. The commercial pipeline remains strong.

The allowance for credit losses decreased $295,000 to $13.1 million at the end of second quarter 2024. A majority of the decrease was due to a few nonaccrual commercial loans that were settled at book value with specific allowances totaling $212,000. Nonaccrual loan balances decreased $289,000 for the same reason. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.11% compared to 0.58% at the end of first quarter 2024. The decrease is mostly the result of higher past due balances at the end of March due to a group of residential loans that typically make payments about 30 days in arrears, which become overdue when the 31st day lands on a business day. Overall, credit quality remains strong, with no negative trends.

Total deposits were $1.72 billion at the end of the second quarter, a decline of 2.6% or $46.0 million from the last quarter. However, demand for retail certificates of deposit accounts (CDs) continues due to the rate environment, resulting in a $2.3 million increase during the second quarter.

The level of total deposits resulted in a funding gap that was filled with short-duration Federal Home Loan bank advances. The Bank continues to have robust liquidity levels and capital. As of June 30, 2024, the Bank had $754 million of unencumbered sources of liquidity and strong capital ratios; the Tier 1 Leverage Ratio was 8.83%, Tier 1 risk-based capital was 12.37%, and Total risk-based capital was 15.29%.

Tangible book value per share was $20.60 as of June 30, 2024, compared to $20.35 on March 31, 2024. Net unrealized losses on available-for-sale securities reduced tangible book value per share by $3.60 and $3.67 for the respective periods.

RESULTS OF OPERATIONS (June 30, 2024 to June 30, 2023 quarterly comparison)

Net interest margin was 2.83%, up from 2.78% last quarter and was 3.11% a year ago. The decrease from a year ago primarily was driven by a higher cost of funds. The book yield from securities was 2.23% and 2.26% during second quarter 2024 and 2023, respectively. The yield includes the effect of the investment of excess cash in shorter term U.S. Treasury securities following the COVID pandemic in 2021 and 2022. These securities will mature over the next 6 to 30 months, and the proceeds are expected to be reinvested in market rate loans and securities, or to pay off borrowed funds. The yield on loans expanded to 5.49% in second quarter 2024, up from 4.90% in the same quarter of 2023. The expansion in loan yields is a result of higher rates on new loans and fixed rate commercial loans that have and will continue repricing to variable rates. Cost of interest-bearing liabilities increased to 2.37% from 1.41% in second quarter 2024 due to several interest rate hikes throughout 2023.

The provision for credit losses was $170,000 in the second quarter 2024 and $196,000 for the same period in 2023. The provision for the current year quarter reflects growth in residential loans and a $72,000 increase due to higher unfunded commitments.

Noninterest income was $3.6 million in both the second quarter of 2024 and 2023. Customer service fees grew $81,000 based on a higher number of transactional accounts. Wealth management income increased $67,000, or 7%, due to higher assets under management (AUM). AUM increased $54.3 million over the last year driven by growth in new accounts and higher security valuations.

Noninterest expenses were $12.9 million in second quarter 2024 compared to $12.5 million in second quarter 2023. Compensation and benefit expenses increased $409,000 and reflect annual merit increases and medical claim adjustments totaling $190,000. Higher card usage drove a $78,000 increase in ATM and debit card fees.

About the Corporation

Isabella Bank Corporation (OTCQX: 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 www.isabellabank.com. Isabella Bank Corporation common stock is quoted on the OTCQX tier of the OTC Markets Group, Inc.’s electronic quotation system (www.otcmarkets.com) under the symbol “ISBA.” The Corporation’s investor relations firm is Stonegate Capital Partners, Inc. (www.stonegateinc.com).

Contact

Lori Peterson, Director of Marketing Phone: 989-779-6333 Fax: 989-775-5501

Forward-Looking Statements

This press release includes forward-looking statements. To the extent that the foregoing information refers to matters that may occur in the future, please be aware that such forward-looking statements may differ materially from the actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections titled “Risk Factors” and “Forward Looking Statements” set forth in Isabella Bank Corporation’s filings with the Securities and Exchange Commission, which are available from the Securities and Exchange Commission’s Public Reference facilities and from its website at www.sec.gov.

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided in this release.

Table Index	Consolidated Financial Schedules (Unaudited)
A	Selected Financial Data
B	Consolidated Balance Sheets
C	Consolidated Statements of Income
D	Consolidated Statements of Income
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

SELECTED FINANCIAL DATA (UNAUDITED)

(Dollars in thousands except per share amounts)

	Three Months Ended
	June 30<br>2024			March 31<br>2024			December 31<br>2023			September 30<br>2023			June 30<br>2023
PER SHARE
Basic earnings	$	0.47		$	0.42		$	0.51		$	0.59		$	0.62
Diluted earnings	0.46			0.42			0.51			0.58			0.61
Dividends	0.28			0.28			0.28			0.28			0.28
Book value (1)	27.06			26.80			27.04			24.71			25.13
Tangible book value (1)	20.60			20.35			20.59			18.27			18.69
Market price (1)	18.20			19.40			21.50			21.05			20.50
Common shares outstanding (1)	7,474,016			7,488,101			7,485,889			7,490,557			7,496,826
Average number of diluted common shares outstanding	7,494,828			7,507,739			7,526,514			7,570,374			7,567,527
PERFORMANCE RATIOS
Return on average total assets	0.67		%	0.61		%	0.74		%	0.86		%	0.91		%
Return on average shareholders' equity	6.94		%	6.16		%	8.05		%	9.24		%	9.47		%
Return on average tangible shareholders' equity	9.14		%	8.07		%	10.82		%	12.37		%	12.58		%
Net interest margin yield (fully taxable equivalent) (2)	2.83		%	2.78		%	2.85		%	3.02		%	3.11		%
Efficiency ratio (2)	73.93		%	74.84		%	68.41		%	70.56		%	67.90		%
Net loan to deposit ratio (1)	79.46		%	74.46		%	77.53		%	74.71		%	77.06		%
Shareholders' equity to total assets (1)	9.82		%	9.75		%	9.83		%	8.74		%	9.23		%
Tangible shareholders' equity to tangible assets (1)	7.65		%	7.58		%	7.66		%	6.61		%	7.03		%
ASSETS UNDER MANAGEMENT
Assets managed by Isabella Wealth (1)	$	647,850		$	660,645		$	641,027		$	590,666		$	593,530
ASSET QUALITY
Nonaccrual loans (1)	$	994		$	1,283		$	982		$	520		$	414
Foreclosed assets (1)	629			579			406			509			405
Net loan charge-offs (recoveries)	393			46			381			(254)			(3)
Net loan charge-offs (recoveries) to average loans outstanding	0.03		%	0.00		%	0.03		%	(0.02)		%	0.00		%
Nonperforming loans to gross loans (1)	0.07		%	0.09		%	0.08		%	0.04		%	0.04		%
Nonperforming assets to total assets (1)	0.08		%	0.09		%	0.07		%	0.05		%	0.05		%
Allowance for credit losses to gross loans (1)	0.95		%	0.98		%	0.97		%	0.96		%	0.96		%
CAPITAL RATIOS (1)
Tier 1 leverage	8.83		%	8.80		%	8.76		%	8.77		%	8.70		%
Common equity tier 1 capital	12.37		%	12.36		%	12.54		%	12.43		%	12.39		%
Tier 1 risk-based capital	12.37		%	12.36		%	12.54		%	12.43		%	12.39		%
Total risk-based capital	15.29		%	15.31		%	15.52		%	15.39		%	15.37		%

(1) At end of period

(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I

A

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

	June 30<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023
ASSETS
Cash and demand deposits due from banks	$	22,690	$	22,987	$	25,628	$	48,862	$	25,584
Fed Funds sold and interest bearing balances due from banks	869		2,231		8,044		67,017		4,296
Total cash and cash equivalents	23,559		25,218		33,672		115,879		29,880
Available-for-sale securities, at fair value	505,646		517,585		528,148		516,897		530,497
Federal Home Loan Bank stock	12,762		12,762		12,762		12,762		12,762
Mortgage loans held-for-sale	637		366		—		105		362
Loans	1,381,636		1,365,508		1,349,463		1,334,674		1,334,402
Less allowance for credit losses	13,095		13,390		13,108		12,767		12,833
Net loans	1,368,541		1,352,118		1,336,355		1,321,907		1,321,569
Premises and equipment	27,843		27,951		27,639		26,960		26,383
Bank-owned life insurance policies	34,382		34,131		33,892		33,654		33,433
Goodwill and other intangible assets	48,283		48,284		48,284		48,285		48,285
Other assets	38,486		39,161		38,216		42,041		39,277
Total assets	$	2,060,139	$	2,057,576	$	2,058,968	$	2,118,490	$	2,042,448
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Demand deposits	$	412,193	$	413,272	$	428,505	$	445,043	$	458,845
Interest bearing demand deposits	338,329		349,401		320,737		363,558		335,922
Savings	603,328		639,491		628,079		628,795		606,644
Certificates of deposit	368,449		366,143		346,374		332,078		313,537
Total deposits	1,722,299		1,768,307		1,723,695		1,769,474		1,714,948
Federal funds purchased and repurchase agreements	44,194		42,998		46,801		52,330		37,102
Federal Home Loan Bank advances	45,000		—		40,000		65,000		55,000
Subordinated debt, net of unamortized issuance costs	29,380		29,357		29,335		29,312		29,290
Total borrowed funds	118,574		72,355		116,136		146,642		121,392
Other liabilities	17,017		16,240		16,735		17,251		17,677
Total liabilities	1,857,890		1,856,902		1,856,566		1,933,367		1,854,017
Shareholders’ equity
Common stock	126,126		126,656		127,323		127,680		126,278
Shares to be issued for deferred compensation obligations	3,951		3,890		3,693		3,641		5,395
Retained earnings	99,808		98,318		97,282		95,533		93,175
Accumulated other comprehensive income (loss)	(27,636)		(28,190)		(25,896)		(41,731)		(36,417)
Total shareholders’ equity	202,249		200,674		202,402		185,123		188,431
Total liabilities and shareholders' equity	$	2,060,139	$	2,057,576	$	2,058,968	$	2,118,490	$	2,042,448

B

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

	Six Months Ended <br> June 30
		2024		2023
Interest income
Loans		$	36,920	$	30,820
Available-for-sale securities		5,688		6,267
Federal Home Loan Bank stock		304		135
Federal funds sold and other		556		868
Total interest income		43,468		38,090
Interest expense
Deposits		14,476		6,938
Federal funds purchased and repurchase agreements		642		320
Federal Home Loan Bank advances		1,026		270
Subordinated debt, net of unamortized issuance costs		532		532
Total interest expense		16,676		8,060
Net interest income		26,792		30,030
Provision for credit losses		562		237
Net interest income after provision for credit losses		26,230		29,793
Noninterest income
Service charges and fees		4,174		4,025
Wealth management fees		1,987		1,767
Earnings on bank-owned life insurance policies		496		452
Net gain on sale of mortgage loans		101		123
Other		318		530
Total noninterest income		7,076		6,897
Noninterest expenses
Compensation and benefits		13,985		13,150
Occupancy and equipment		5,325		5,208
Other professional services		1,040		1,092
ATM and debit card fees		956		809
FDIC insurance premiums		532		461
Other		3,733		4,017
Total noninterest expenses		25,571		24,737
Income before income tax expense		7,735		11,953
Income tax expense		1,123		2,002
Net income		$	6,612	$	9,951
Earnings per common share
Basic		$	0.88	$	1.32
Diluted		0.88		1.31
Cash dividends per common share		0.56		0.56

C

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

	Three Months Ended
	June 30<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023
Interest income
Loans	$	18,863	$	18,057	$	17,580	$	17,270	15,931
Available-for-sale securities	2,804		2,884		2,926		2,963		3,047
Federal Home Loan Bank stock	158		146		129		91		71
Federal funds sold and other	263		293		421		161		446
Total interest income	22,088		21,380		21,056		20,485		19,495
Interest expense
Deposits	7,313		7,163		6,399		5,015		4,109
Federal funds purchased and repurchase agreements	321		321		357		284		171
Federal Home Loan Bank advances	638		388		422		617		270
Subordinated debt, net of unamortized issuance costs	266		266		266		267		266
Total interest expense	8,538		8,138		7,444		6,183		4,816
Net interest income	13,550		13,242		13,612		14,302		14,679
Provision for credit losses	170		392		684		(292)		196
Net interest income after provision for credit losses	13,380		12,850		12,928		14,594		14,483
Noninterest income
Service charges and fees	2,128		2,046		2,212		2,060		2,047
Wealth management fees	1,048		939		932		858		981
Earnings on bank-owned life insurance policies	253		243		239		229		226
Net gain on sale of mortgage loans	67		34		85		109		56
Other	112		206		48		158		294
Total noninterest income	3,608		3,468		3,516		3,414		3,604
Noninterest expenses
Compensation and benefits	6,970		7,015		6,116		6,639		6,561
Occupancy and equipment	2,619		2,706		2,554		2,535		2,606
Other professional services	527		513		576		672		557
ATM and debit card fees	487		469		487		471		409
FDIC insurance premiums	280		252		233		228		233
Other	2,012		1,721		1,949		2,113		2,173
Total noninterest expenses	12,895		12,676		11,915		12,658		12,539
Income before income tax expense	4,093		3,642		4,529		5,350		5,548
Income tax expense	612		511		726		937		918
Net income	$	3,481	$	3,131	$	3,803	$	4,413	$	4,630
Earnings per common share
Basic	$	0.47	$	0.42	$	0.51	$	0.59	$	0.62
Diluted	0.46		0.42		0.51		0.58		0.61
Cash dividends per common share	0.28		0.28		0.28		0.28		0.28

D

AVERAGE YIELDS AND COSTS (UNAUDITED)

The following schedules present yield and daily average amounts outstanding for each major category of interest earning assets, non-earning 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<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023
INTEREST EARNING ASSETS
Loans (1)	5.49	%	5.36	%	5.25	%	5.21	%	4.90	%
Available-for-sale securities	2.23	%	2.25	%	2.25	%	2.25	%	2.26	%
Federal Home Loan Bank stock	4.95	%	4.58	%	4.07	%	2.85	%	2.23	%
Fed funds sold	5.48	%	5.69	%	5.76	%	5.51	%	4.70	%
Other	7.49	%	4.65	%	6.25	%	3.65	%	7.16	%
Total interest earning assets	4.58	%	4.45	%	4.38	%	4.30	%	4.11	%
INTEREST BEARING LIABILITIES
Interest bearing demand deposits	0.39	%	0.48	%	0.63	%	0.28	%	0.22	%
Savings	2.16	%	2.10	%	1.78	%	1.45	%	1.18	%
Certificates of deposit	3.99	%	3.82	%	3.63	%	3.23	%	2.73	%
Federal funds purchased and repurchase agreements	3.16	%	3.16	%	2.85	%	2.44	%	1.93	%
Federal Home Loan Bank advances	5.61	%	5.60	%	5.69	%	5.55	%	5.29	%
Subordinated debt, net of unamortized issuance costs	3.62	%	3.63	%	3.63	%	3.65	%	3.63	%
Total interest bearing liabilities	2.37	%	2.27	%	2.13	%	1.79	%	1.41	%
Net yield on interest earning assets (FTE) (2)	2.83	%	2.78	%	2.85	%	3.02	%	3.11	%
Net interest spread	2.21	%	2.18	%	2.25	%	2.51	%	2.70	%

(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

E

AVERAGE BALANCES (UNAUDITED)

(Dollars in thousands)

	Three Months Ended
	June 30<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023
INTEREST EARNING ASSETS
Loans (1)	$	1,375,523	$	1,348,749	$	1,340,271	$	1,325,455	$	1,300,593
Available-for-sale securities (2)	545,827		557,030		564,068		572,038		583,652
Federal Home Loan Bank stock	12,762		12,762		12,762		12,762		12,762
Fed funds sold	7		7		13		13		4
Other (3)	14,054		25,210		26,823		17,638		24,902
Total interest earning assets	1,948,173		1,943,758		1,943,937		1,927,906		1,921,913
NONEARNING ASSETS
Allowance for credit losses	(13,431)		(13,100)		(12,780)		(12,937)		(12,759)
Cash and demand deposits due from banks	23,931		24,018		23,244		25,287		24,807
Premises and equipment	27,999		28,022		27,444		26,629		26,401
Other assets	80,539		84,059		71,592		74,244		80,374
Total assets	$	2,067,211	$	2,066,757	$	2,053,437	$	2,041,129	$	2,040,736
INTEREST BEARING LIABILITIES
Interest bearing demand deposits	$	342,931	$	345,842	$	317,996	$	342,175	$	348,341
Savings	613,601		633,904		634,529		595,372		628,673
Certificates of deposit	366,440		357,541		338,852		324,399		303,117
Federal funds purchased and repurchase agreements	40,593		40,623		50,049		46,574		35,495
Federal Home Loan Bank advances	45,510		27,692		29,674		44,429		20,404
Subordinated debt, net of unamortized issuance costs	29,365		29,342		29,320		29,298		29,275
Total interest bearing liabilities	1,438,440		1,434,944		1,400,420		1,382,247		1,365,305
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits	411,282		412,228		446,747		451,123		462,953
Other liabilities	16,755		16,151		17,302		16,802		16,906
Shareholders’ equity	200,734		203,434		188,958		190,957		195,572
Total liabilities and shareholders’ equity	$	2,067,211	$	2,066,757	$	2,053,427	$	2,041,129	$	2,040,736

(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

F

ASSET QUALITY ANALYSIS (UNAUDITED)

(Dollars in thousands)

The following table outlines quarter-to-date asset quality analysis as of, and for the three-month periods ended:

	June 30<br>2024			March 31<br>2024			December 31<br>2023			September 30<br>2023			June 30<br>2023
NONPERFORMING ASSETS
Commercial and industrial	$	271		$	567		$	491		$	17		$	17
Commercial real estate	—			234			—			—			—
Agricultural	167			189			205			208			218
Residential real estate	556			293			286			295			179
Consumer	—			—			—			—			—
Total nonaccrual loans	994			1,283			982			520			414
Accruing loans past due 90 days or more	15			—			87			—			133
Total nonperforming loans	1,009			1,283			1,069			520			547
Foreclosed assets	629			579			406			509			405
Debt securities	12			12			12			77			77
Total nonperforming assets	$	1,650		$	1,874		$	1,487		$	1,106		$	1,029
Nonperforming loans to gross loans	0.07		%	0.09		%	0.08		%	0.04		%	0.04		%
Nonperforming assets to total assets	0.08		%	0.09		%	0.07		%	0.05		%	0.05		%
Allowance for credit losses as a % of nonaccrual loans	1,317.40		%	1,043.65		%	1,334.83		%	2,455.19		%	3,099.76		%
ALLOWANCE FOR CREDIT LOSSES
Allowance at beginning of period	$	13,390		$	13,108		$	12,767		$	12,833		$	12,640
Charge-offs	527			191			452			179			92
Recoveries	134			145			71			433			95
Net loan charge-offs (recoveries)	393			46			381			(254)			(3)
Provision for credit losses - loans	98			328			722			(320)			190
Allowance at end of period	$	13,095		$	13,390		$	13,108		$	12,767		$	12,833
Allowance for credit losses to gross loans	0.95		%	0.98		%	0.97		%	0.96		%	0.96		%
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial	$	334		$	(2)		$	242		$	(41)		$	(4)
Commercial real estate	(29)			(6)			(3)			(3)			(10)
Agricultural	—			(2)			(6)			—			2
Residential real estate	(19)			(63)			(14)			(266)			(25)
Consumer	107			119			162			56			34
Total	$	393		$	46		$	381		$	(254)		$	(3)
Net (recoveries) charge-offs (Quarter to Date annualized to average loans)	0.03		%	0.00		%	0.03		%	(0.02)		%	0.00		%
Net (recoveries) charge-offs (Year to Date annualized to average loans)	0.12		%	0.00		%	0.03		%	(0.02)		%	0.00		%
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due	$	1,484		$	7,938		$	3,895		$	715		$	3,132
Accruing loans past due 90 days or more	15			—			87			—			133
Total accruing past due loans	1,499			7,938			3,982			715			3,265
Nonaccrual loans	994			1,283			982			520			414
Total past due and nonaccrual loans	$	2,493		$	9,221		$	4,964		$	1,235		$	3,679

G

CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)

(Dollars in thousands)

Loan Analysis

	June 30<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023		Annualized Growth % Quarter to Date
Commercial and industrial	$	238,245	$	226,281	$	209,738	$	195,814	$	194,914	21.15	%
Commercial real estate	547,005		561,123		564,244		566,639		564,254		(10.06)	%
Advances to mortgage brokers	39,300		29,688		18,541		24,807		39,099		129.51	%
Agricultural	94,996		93,695		99,994		99,233		96,689		5.55	%
Total commercial loans	919,546		910,787		892,517		886,493		894,956		3.85	%
Residential real estate	365,188		356,658		356,418		348,196		343,474		9.57	%
Consumer	96,902		98,063		100,528		99,985		95,972		(4.74)	%
Gross loans	$	1,381,636	$	1,365,508	$	1,349,463	$	1,334,674	$	1,334,402	4.72	%

Deposit Analysis

	June 30<br>2024		March 31<br>2024		December 31<br>2023		September 30<br>2023		June 30<br>2023		Annualized Growth % Quarter to Date
Noninterest bearing demand deposits	$	412,193	$	413,272	$	428,505	$	445,043	$	458,845	(1.04)	%
Interest bearing demand deposits	338,329		349,401		320,737		363,558		335,922		(12.68)	%
Savings	603,328		639,491		628,079		628,795		606,644		(22.62)	%
Certificates of deposit	368,449		366,143		346,374		332,078		313,537		2.52	%
Total deposits	$	1,722,299	$	1,768,307	$	1,723,695	$	1,769,474	$	1,714,948	(10.41)	%

H

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(Dollars in thousands)

		Three Months Ended
		June 30<br>2024			March 31<br>2024			December 31<br>2023			September 30<br>2023			June 30<br>2023
Noninterest expenses		$	12,895		$	12,676		$	11,915		$	12,658		$	12,539
Amortization of acquisition intangibles		1			—			1			—			1
Core noninterest expense	(A)	$	12,894		$	12,676		$	11,914		$	12,658		$	12,538
Net interest income		$	13,550		$	13,242		$	13,612		$	14,302		$	14,679
Tax equivalent adjustment for net interest margin		237			246			246			250			255
Net interest income (FTE)	(B)	13,787			13,488			13,858			14,552			14,934
Noninterest income		3,608			3,468			3,516			3,414			3,604
Tax equivalent adjustment for efficiency ratio		53			51			50			48			47
Core revenue (FTE)		17,448			17,007			17,424			18,014			18,585
Nonrecurring items
Net gains on sale of available-for-sale securities		—			—			—			—			66
Net gains (losses) on foreclosed assets		6			69			8			75			53
Total nonrecurring items		6			69			8			75			119
Adjusted core revenue	(C)	$	17,442		$	16,938		$	17,416		$	17,939		$	18,466
Efficiency ratio	(A/C)	73.93		%	74.84		%	68.41		%	70.56		%	67.90		%
Average earning assets	(D)	1,948,173			1,943,758			1,943,937			1,927,906			1,921,913
Net yield on interest earning assets (FTE)	(B/D)	2.83		%	2.78		%	2.85		%	3.02		%	3.11		%

I