8-K
ISABELLA BANK CORP (ISBA)
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): January 30, 2025
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 January 30, 2025, Isabella Bank Corporation issued a press release announcing its financial results for the quarter and year ended December 31, 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 issuedJanuary 30, 2025 |
| 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: | January 30, 2025 | By: | /s/ Jerome E. Schwind |
| Jerome E. Schwind, President and CEO |
INDEX TO EXHIBITS
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press release issuedJanuary 30, 2025 |
| 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 Fourth Quarter 2024 Results
MT. PLEASANT, MICHIGAN — January 30, 2025 — Isabella Bank Corporation (OTCQX: ISBA) (the “Company” or "we") reported fourth quarter 2024 net income of $4.0 million, or $0.54 per diluted share, an increase compared to $3.8 million, or $0.51 per diluted share in the same quarter of 2023. The non-GAAP measure of core earnings in the fourth quarter 2024 totaled $3.9 million, or $0.52 per diluted share, an increase compared to $3.8 million, or $0.50 per diluted share for the same quarter of 2023.
For the full year, net income was $13.9 million, or $1.86 per diluted share, compared to $18.2 million, or $2.40 per diluted share for 2023. The non-GAAP measure of 2024 core earnings was $15.0 million, or $2.01 per diluted share, compared to $18.0 million, or $2.37 per diluted share, in 2023.
FOURTH QUARTER 2024 HIGHLIGHTS (compared to fourth quarter 2023, unless otherwise stated)
•Return on assets of 0.76%, compared to 0.73%
•Core loan growth of 4% annualized, compared to 6%
•Net interest margin of 2.99%, compared to 2.83%
•Noninterest income growth of 13%, compared to 3%
•Net loan charge-offs to average loans of 0.01%, compared to 0.03%
“Over the past several quarters we've emphasized that our financial performance is based on the strength of our core operations and maintaining our earnings momentum, and this quarter reflected the same focus,” said the Chief Executive Officer Jerome Schwind. He noted that net interest margin expanded again in the fourth quarter, when non-recurring loan recoveries are excluded, and continue to grow core loans while adhering to our disciplined credit culture.
"We enter 2025 looking forward to continued repricing of low fixed rate loans to variable rates, and the redeployment of more than $70 million of securities that will amortize and mature during the year," Schwind added. "Our teams also have been working on initiatives that will drive higher noninterest income, mostly in the second half of 2025. We are well-positioned to deliver long-term value to our shareholders in 2025 and beyond.
"What sets Isabella Bank apart is the talent, dedication, and teamwork of our employees, who continue to deliver exceptional service and financial strength, as noted by reader's choice awards across our market," Schwind added. In September 2024, the Company was honored as the Best Bank in Isabella County by The Morning Sun People’s Choice Awards. In December 2024, Midland Daily News recognized Isabella Bank as the Best Bank in Midland County through its Reader’s Choice Awards. Most recently, in January 2025, The Pioneer named Isabella Bank the Best Bank in Mecosta County serving the Big Rapids region in its Pioneer All Area Reader’s Choice Awards.
FINANCIAL CONDITION (December 31, 2024 compared to September 30, 2024, unless otherwise noted)
Total assets were $2.1 billion, down $20.7 million, primarily due to relatively flat total loans and a decline in available-for-sale (AFS) securities from amortization, maturities and a lower valuation of the portfolio in the fourth quarter.
AFS securities were $489.0 million, down $17.8 million, at the end of fourth quarter 2024. The decrease was due to a $5.5 million increase in the net unrealized loss and $17.7 million of amortization and maturities related to agency and municipal securities, offset by $5,400 of municipal bond purchases. Net unrealized losses on securities
totaled $26 million and $21 million at the end of the fourth and third quarters, respectively. Net unrealized losses as a percentage of total AFS securities increased to 5% from 4% at the end of the third quarter of 2024 due to an increase in bond yields. While bond rates may vary from quarter to quarter, unrealized losses are expected to decrease as bonds approach their maturity dates over the next two years.
Total loans remained steady at $1.42 billion at the end of the fourth quarter, due to an increase of $11.0 million in residential loans and $4.3 million in commercial and industrial loans, offset by a $13.1 million decrease in advances to mortgage brokers. The increase in residential loans was related to steady new volume and continued slowing of prepayments. The growth in commercial and industrial loans primarily was in the hotel and construction industries. While commercial real estate loans remained relatively flat with the third quarter of 2024, the fourth quarter included a payoff of a $6.4 million relationship that had an elevated credit risk. Core loans, which excluded advances to mortgage brokers, grew $12.4 million or 4% on an annualized basis.
The allowance for credit losses increased $260 thousand to $12.9 million at the end of the fourth quarter of 2024. The increase mostly reflects $118 thousand from core loan growth, and the impact from a few commercial loans migrating to a special mention risk rating during the quarter. The downgraded loans are well collateralized and are not an indication of a negative trend in the broader portfolio. Nonaccrual loan balances decreased $265 thousand to $282 thousand at the end of the fourth quarter of 2024. Past due and accruing accounts between 30 to 89 days, as a percentage of total loans, was 0.40% compared to 0.16% at the end of third quarter 2024. The increase primarily was due to customers who typically make payments about 30 days in arrears, which becomes overdue in months with 31 days. Accordingly, the increase is not believed to be an indication of deteriorating credit quality.
Total deposits were $1.75 billion, down $34.8 million, at the end of the fourth quarter. The slight decrease primarily was due to an outflow from businesses and municipalities consistent with normal seasonal patterns, in addition to some expected outflows to fund large, regional projects. Certificates of Deposit accounts (CDs) were up $4.0 million, driven by the rate environment that attracted customers and investors as a safe place with a competitive rate.
Tangible book value per share was $21.82 as of December 31, 2024, compared to $22.14 on September 30, 2024. Net unrealized losses on AFS securities reduced tangible book value per share by $2.82 and $2.23 for the respective periods. Share repurchases totaled 27,608 during the fourth quarter for a value of $657 thousand at an average price of $23.80.
RESULTS OF OPERATIONS (December 31, 2024 to December 31, 2023 quarterly comparison, unless otherwise noted)
Net interest margin (NIM) was 2.99%, an increase from 2.98% last quarter and 2.83% in the fourth quarter of 2023. During the third quarter, we recovered the full contractual interest from two commercial loans that previously were charged off, which contributed 6 basis points to NIM. The book yield from securities was 2.18% and 2.23% during fourth quarters of 2024 and 2023, respectively. The weighted average maturity of our U.S. Treasury portfolio is less than 1.4 years, 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 5.67% in fourth quarter, up from 5.20% in the same quarter of 2023. The expansion in loan yields was a result of higher rates on new loans and fixed rate commercial loans that have and continue to reprice to variable rates. At the end of the fourth quarter, approximately 40% of commercial loans were fixed at rates lower than current market rates, but the majority will contractually reprice to variable rates over the next four years. Cost of interest-bearing liabilities increased to 2.38% from 2.11% in the fourth quarter of 2023, but have stabilized compared to the cost in the previous quarter of 2.43%.
The provision for credit losses in the fourth quarter 2024 was $376 thousand, which reflects the $260 thousand change in the allowance for credit losses on loans and net charge-offs totaling $102 thousand. The provision for loan losses in the same period of 2023 was $684 thousand reflecting $200 thousand from growth in core loans and $381 thousand in net charge-offs. Charge-offs in the fourth quarter of 2023 included a $247 thousand write down of a commercial and industrial loan that was recovered in the third quarter of 2024.
Noninterest income was $4.0 million, an increase from $3.5 million in the fourth quarter of 2023. Customer service fees grew $81 thousand based on a higher number of transactional accounts. Wealth management income increased $119 thousand, or 13%, due to higher assets under management (AUM). Average AUM in the fourth quarter 2024 increased $53.6 million, or 9% over the prior year quarter, driven by growth in new accounts and higher security valuations. Other noninterest income in the fourth quarter 2024 included a $103 thousand recovery from a security that was written down in a previous year and $74 thousand from net gains on foreclosed assets.
Noninterest expenses were $13.3 million in the fourth quarter 2024 compared to $11.9 million in same quarter of 2023. The change mostly was due to higher compensation and benefit expenses totaling $1.2 million, which reflect annual merit increases in 2024 and more medical insurance claims compared to the fourth quarter of 2023.
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
Information in this 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”, “plan”, “believe”, “estimate”, “anticipate”, “strategy”, “trend”, “forecast”, “outlook”, “project”, “intend”, “assume”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “comfortable”, “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. 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. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, or included in any subsequent filing by the Company with the Securities and Exchange Commission. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Company cautions you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations, and projections about future events may, and often do, differ materially from actual results. 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.
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 - 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 |
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | |||||||||||
| PER SHARE | |||||||||||||||
| Basic earnings | $ | 0.54 | $ | 0.44 | $ | 0.47 | $ | 0.42 | $ | 0.51 | |||||
| Diluted earnings | 0.54 | 0.44 | 0.46 | 0.42 | 0.51 | ||||||||||
| Core diluted earnings (2) | 0.52 | 0.61 | 0.46 | 0.41 | 0.50 | ||||||||||
| Dividends | 0.28 | 0.28 | 0.28 | 0.28 | 0.28 | ||||||||||
| Book value (1) | 28.32 | 28.63 | 27.06 | 26.80 | 27.04 | ||||||||||
| Tangible book value (1) | 21.82 | 22.14 | 20.60 | 20.35 | 20.59 | ||||||||||
| Market price (1) | 25.99 | 21.21 | 18.20 | 19.40 | 21.50 | ||||||||||
| Common shares outstanding (1) (3) | 7,424,893 | 7,438,720 | 7,474,016 | 7,488,101 | 7,485,889 | ||||||||||
| Average number of diluted common shares outstanding (3) | 7,453,033 | 7,473,184 | 7,494,828 | 7,507,739 | 7,526,515 | ||||||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average total assets | 0.76 | % | 0.62 | % | 0.68 | % | 0.61 | % | 0.73 | % | |||||
| Core return on average total assets (2) | 0.74 | % | 0.87 | % | 0.68 | % | 0.60 | % | 0.73 | % | |||||
| Return on average shareholders' equity | 7.47 | % | 6.26 | % | 6.97 | % | 6.19 | % | 7.98 | % | |||||
| Core return on average shareholders' equity (2) | 7.29 | % | 8.70 | % | 6.96 | % | 6.08 | % | 7.97 | % | |||||
| Return on average tangible shareholders' equity | 9.66 | % | 8.15 | % | 9.19 | % | 8.12 | % | 10.73 | % | |||||
| Core return on average tangible shareholders' equity (2) | 9.43 | % | 11.32 | % | 9.17 | % | 7.97 | % | 10.71 | % | |||||
| Net interest margin yield (fully taxable equivalent) (2) | 2.99 | % | 2.98 | % | 2.85 | % | 2.79 | % | 2.83 | % | |||||
| Efficiency ratio (2) | 71.20 | % | 72.30 | % | 73.93 | % | 74.84 | % | 68.41 | % | |||||
| Gross loan to deposit ratio (1) | 81.48 | % | 79.93 | % | 80.22 | % | 77.22 | % | 78.29 | % | |||||
| Shareholders' equity to total assets (1) | 10.08 | % | 10.11 | % | 9.82 | % | 9.75 | % | 9.83 | % | |||||
| Tangible shareholders' equity to tangible assets (1) | 7.95 | % | 8.00 | % | 7.65 | % | 7.58 | % | 7.66 | % | |||||
| ASSETS UNDER MANAGEMENT | |||||||||||||||
| Wealth assets under management (1) | 658,042 | 679,858 | 647,850 | 660,645 | 641,027 | ||||||||||
| ASSET QUALITY | |||||||||||||||
| Nonaccrual loans (1) | 282 | 547 | 994 | 1,283 | 982 | ||||||||||
| Foreclosed assets (1) | 544 | 546 | 629 | 579 | 406 | ||||||||||
| Net loan charge-offs (recoveries) | 102 | 1,359 | 393 | 46 | 381 | ||||||||||
| Net loan charge-offs (recoveries) to average loans outstanding | 0.01 | % | 0.10 | % | 0.03 | % | 0.00 | % | 0.03 | % | |||||
| Nonperforming loans to gross loans (1) | 0.02 | % | 0.04 | % | 0.07 | % | 0.09 | % | 0.08 | % | |||||
| Nonperforming assets to total assets (1) | 0.04 | % | 0.06 | % | 0.08 | % | 0.09 | % | 0.07 | % | |||||
| Allowance for credit losses to gross loans (1) | 0.91 | % | 0.89 | % | 0.95 | % | 0.98 | % | 0.97 | % | |||||
| CAPITAL RATIOS (1) | |||||||||||||||
| Tier 1 leverage | 8.86 | % | 8.77 | % | 8.83 | % | 8.80 | % | 8.76 | % | |||||
| Common equity tier 1 capital | 12.21 | % | 12.08 | % | 12.37 | % | 12.36 | % | 12.54 | % | |||||
| Tier 1 risk-based capital | 12.21 | % | 12.08 | % | 12.37 | % | 12.36 | % | 12.54 | % | |||||
| Total risk-based capital | 15.06 | % | 14.90 | % | 15.29 | % | 15.31 | % | 15.52 | % |
(1) At end of period
(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I
(3) Whole shares
A
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||
| Cash and demand deposits due from banks | $ | 22,830 | $ | 27,019 | $ | 22,690 | $ | 22,987 | $ | 25,628 |
| Fed Funds sold and interest bearing balances due from banks | 1,712 | 359 | 869 | 2,231 | 8,044 | |||||
| Total cash and cash equivalents | 24,542 | 27,378 | 23,559 | 25,218 | 33,672 | |||||
| Available-for-sale securities, at fair value | 489,029 | 506,806 | 505,646 | 517,585 | 528,148 | |||||
| Federal Home Loan Bank stock | 12,762 | 12,762 | 12,762 | 12,762 | 12,762 | |||||
| Mortgage loans held-for-sale | 242 | 504 | 637 | 366 | — | |||||
| Loans | 1,423,571 | 1,424,283 | 1,381,636 | 1,365,508 | 1,349,463 | |||||
| Less allowance for credit losses | 12,895 | 12,635 | 13,095 | 13,390 | 13,108 | |||||
| Net loans | 1,410,676 | 1,411,648 | 1,368,541 | 1,352,118 | 1,336,355 | |||||
| Premises and equipment | 27,659 | 27,674 | 27,843 | 27,951 | 27,639 | |||||
| Bank-owned life insurance policies | 34,882 | 34,625 | 34,382 | 34,131 | 33,892 | |||||
| Goodwill and other intangible assets | 48,283 | 48,283 | 48,283 | 48,284 | 48,284 | |||||
| Other assets | 38,166 | 37,221 | 38,486 | 39,161 | 38,216 | |||||
| Total assets | $ | 2,086,241 | $ | 2,106,901 | $ | 2,060,139 | $ | 2,057,576 | $ | 2,058,968 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Liabilities | ||||||||||
| Demand deposits | $ | 416,373 | $ | 421,493 | $ | 412,193 | $ | 413,272 | $ | 428,505 |
| Interest bearing demand deposits | 341,366 | 376,592 | 338,329 | 349,401 | 320,737 | |||||
| Savings | 601,730 | 600,150 | 603,328 | 639,491 | 628,079 | |||||
| Certificates of deposit | 387,591 | 383,597 | 368,449 | 366,143 | 346,374 | |||||
| Total deposits | 1,747,060 | 1,781,832 | 1,722,299 | 1,768,307 | 1,723,695 | |||||
| Short-term borrowings | 53,567 | 52,434 | 44,194 | 42,998 | 46,801 | |||||
| Federal Home Loan Bank advances | 30,000 | 15,000 | 45,000 | — | 40,000 | |||||
| Subordinated debt, net of unamortized issuance costs | 29,424 | 29,402 | 29,380 | 29,357 | 29,335 | |||||
| Total borrowed funds | 112,991 | 96,836 | 118,574 | 72,355 | 116,136 | |||||
| Other liabilities | 15,914 | 15,248 | 17,017 | 16,240 | 16,735 | |||||
| Total liabilities | 1,875,965 | 1,893,916 | 1,857,890 | 1,856,902 | 1,856,566 | |||||
| Shareholders’ equity | ||||||||||
| Common stock | 126,224 | 125,218 | 126,126 | 126,656 | 127,323 | |||||
| Shares to be issued for deferred compensation obligations | 2,383 | 3,981 | 3,951 | 3,890 | 3,693 | |||||
| Retained earnings | 103,024 | 101,065 | 99,808 | 98,318 | 97,282 | |||||
| Accumulated other comprehensive income (loss) | (21,355) | (17,279) | (27,636) | (28,190) | (25,896) | |||||
| Total shareholders’ equity | 210,276 | 212,985 | 202,249 | 200,674 | 202,402 | |||||
| Total liabilities and shareholders' equity | $ | 2,086,241 | $ | 2,106,901 | $ | 2,060,139 | $ | 2,057,576 | $ | 2,058,968 |
B
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
| Year Ended <br>December 31 | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Interest income | ||||
| Loans | $ | 77,295 | $ | 65,670 |
| Available-for-sale securities | 11,093 | 12,156 | ||
| Federal Home Loan Bank stock | 640 | 355 | ||
| Federal funds sold and other | 950 | 1,450 | ||
| Total interest income | 89,978 | 79,631 | ||
| Interest expense | ||||
| Deposits | 29,690 | 18,352 | ||
| Short-term borrowings | 1,439 | 961 | ||
| Federal Home Loan Bank advances | 1,949 | 1,309 | ||
| Subordinated debt, net of unamortized issuance costs | 1,065 | 1,065 | ||
| Total interest expense | 34,143 | 21,687 | ||
| Net interest income | 55,835 | 57,944 | ||
| Provision for credit losses | 1,884 | 629 | ||
| Net interest income after provision for credit losses | 53,951 | 57,315 | ||
| Noninterest income | ||||
| Service charges and fees | 8,626 | 8,297 | ||
| Wealth management fees | 4,041 | 3,557 | ||
| Earnings on bank-owned life insurance policies | 1,007 | 920 | ||
| Net gain on sale of mortgage loans | 213 | 317 | ||
| Other | 689 | 736 | ||
| Total noninterest income | 14,576 | 13,827 | ||
| Noninterest expenses | ||||
| Compensation and benefits | 28,576 | 25,905 | ||
| Occupancy and equipment | 10,524 | 10,297 | ||
| Other professional services | 2,212 | 2,340 | ||
| ATM and debit card fees | 1,975 | 1,767 | ||
| FDIC insurance premiums | 1,132 | 922 | ||
| Other | 7,710 | 8,079 | ||
| Total noninterest expenses | 52,129 | 49,310 | ||
| Income before income tax expense | 16,398 | 21,832 | ||
| Income tax expense | 2,509 | 3,665 | ||
| Net income | $ | 13,889 | $ | 18,167 |
| Earnings per common share | ||||
| Basic | $ | 1.86 | $ | 2.42 |
| Diluted | 1.86 | 2.40 | ||
| Cash dividends per common share | 1.12 | 1.12 |
C
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | ||||||
| Interest income | ||||||||||
| Loans | $ | 20,145 | $ | 20,230 | $ | 18,863 | $ | 18,057 | 17,580 | |
| Available-for-sale securities | 2,656 | 2,749 | 2,804 | 2,884 | 2,926 | |||||
| Federal Home Loan Bank stock | 168 | 168 | 158 | 146 | 129 | |||||
| Federal funds sold and other | 200 | 194 | 263 | 293 | 421 | |||||
| Total interest income | 23,169 | 23,341 | 22,088 | 21,380 | 21,056 | |||||
| Interest expense | ||||||||||
| Deposits | 7,583 | 7,631 | 7,313 | 7,163 | 6,399 | |||||
| Short-term borrowings | 413 | 384 | 321 | 321 | 357 | |||||
| Federal Home Loan Bank advances | 352 | 571 | 638 | 388 | 422 | |||||
| Subordinated debt, net of unamortized issuance costs | 266 | 267 | 266 | 266 | 266 | |||||
| Total interest expense | 8,614 | 8,853 | 8,538 | 8,138 | 7,444 | |||||
| Net interest income | 14,555 | 14,488 | 13,550 | 13,242 | 13,612 | |||||
| Provision for credit losses | 376 | 946 | 170 | 392 | 684 | |||||
| Net interest income after provision for credit losses | 14,179 | 13,542 | 13,380 | 12,850 | 12,928 | |||||
| Noninterest income | ||||||||||
| Service charges and fees | 2,293 | 2,159 | 2,128 | 2,046 | 2,212 | |||||
| Wealth management fees | 1,051 | 1,003 | 1,048 | 939 | 932 | |||||
| Earnings on bank-owned life insurance policies | 259 | 252 | 253 | 243 | 239 | |||||
| Net gain on sale of mortgage loans | 75 | 37 | 67 | 34 | 85 | |||||
| Other | 294 | 77 | 112 | 206 | 48 | |||||
| Total noninterest income | 3,972 | 3,528 | 3,608 | 3,468 | 3,516 | |||||
| Noninterest expenses | ||||||||||
| Compensation and benefits | 7,340 | 7,251 | 6,970 | 7,015 | 6,116 | |||||
| Occupancy and equipment | 2,554 | 2,645 | 2,619 | 2,706 | 2,554 | |||||
| Other professional services | 584 | 588 | 527 | 513 | 576 | |||||
| ATM and debit card fees | 516 | 503 | 487 | 469 | 487 | |||||
| FDIC insurance premiums | 309 | 291 | 280 | 252 | 233 | |||||
| Other | 2,027 | 1,950 | 2,012 | 1,721 | 1,949 | |||||
| Total noninterest expenses | 13,330 | 13,228 | 12,895 | 12,676 | 11,915 | |||||
| Income before income tax expense | 4,821 | 3,842 | 4,093 | 3,642 | 4,529 | |||||
| Income tax expense | 825 | 561 | 612 | 511 | 726 | |||||
| Net income | $ | 3,996 | $ | 3,281 | $ | 3,481 | $ | 3,131 | $ | 3,803 |
| Earnings per common share | ||||||||||
| Basic | $ | 0.54 | $ | 0.44 | $ | 0.47 | $ | 0.42 | $ | 0.51 |
| Diluted | 0.54 | 0.44 | 0.46 | 0.42 | 0.51 | |||||
| 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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | ||||||
| INTEREST EARNING ASSETS | ||||||||||
| Loans (1) | 5.67 | % | 5.73 | % | 5.52 | % | 5.38 | % | 5.20 | % |
| Available-for-sale securities | 2.18 | % | 2.21 | % | 2.24 | % | 2.26 | % | 2.23 | % |
| Federal Home Loan Bank stock | 5.24 | % | 5.24 | % | 4.98 | % | 4.60 | % | 4.04 | % |
| Fed funds sold | 4.59 | % | 5.55 | % | 5.51 | % | 5.72 | % | 5.71 | % |
| Other | 5.00 | % | 5.29 | % | 7.53 | % | 4.67 | % | 6.20 | % |
| Total interest earning assets | 4.74 | % | 4.77 | % | 4.61 | % | 4.47 | % | 4.35 | % |
| INTEREST BEARING LIABILITIES | ||||||||||
| Interest bearing demand deposits | 0.41 | % | 0.33 | % | 0.39 | % | 0.48 | % | 0.63 | % |
| Savings | 2.17 | % | 2.28 | % | 2.18 | % | 2.11 | % | 1.76 | % |
| Certificates of deposit | 4.07 | % | 4.13 | % | 4.01 | % | 3.84 | % | 3.60 | % |
| Short-term borrowings | 3.30 | % | 3.17 | % | 3.18 | % | 3.18 | % | 2.83 | % |
| Federal Home Loan Bank advances | 4.77 | % | 5.60 | % | 5.64 | % | 5.64 | % | 5.64 | % |
| Subordinated debt, net of unamortized issuance costs | 3.60 | % | 3.61 | % | 3.64 | % | 3.65 | % | 3.60 | % |
| Total interest bearing liabilities | 2.38 | % | 2.43 | % | 2.39 | % | 2.28 | % | 2.11 | % |
| Net yield on interest earning assets (FTE) (2) | 2.99 | % | 2.98 | % | 2.85 | % | 2.79 | % | 2.83 | % |
| Net interest spread | 2.36 | % | 2.34 | % | 2.22 | % | 2.19 | % | 2.24 | % |
(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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | ||||||
| INTEREST EARNING ASSETS | ||||||||||
| Loans (1) | $ | 1,412,578 | $ | 1,403,810 | $ | 1,375,523 | $ | 1,348,749 | $ | 1,340,271 |
| Available-for-sale securities (2) | 522,733 | 536,379 | 545,827 | 557,030 | 564,068 | |||||
| Federal Home Loan Bank stock | 12,762 | 12,762 | 12,762 | 12,762 | 12,762 | |||||
| Fed funds sold | 8 | 4 | 7 | 7 | 13 | |||||
| Other (3) | 15,905 | 14,597 | 14,054 | 25,210 | 26,823 | |||||
| Total interest earning assets | 1,963,986 | 1,967,552 | 1,948,173 | 1,943,758 | 1,943,937 | |||||
| NONEARNING ASSETS | ||||||||||
| Allowance for credit losses | (12,598) | (13,125) | (13,431) | (13,100) | (12,780) | |||||
| Cash and demand deposits due from banks | 22,800 | 25,903 | 23,931 | 24,018 | 23,244 | |||||
| Premises and equipment | 27,773 | 27,868 | 27,999 | 28,022 | 27,444 | |||||
| Other assets | 92,608 | 87,002 | 80,539 | 84,059 | 71,592 | |||||
| Total assets | $ | 2,094,569 | $ | 2,095,200 | $ | 2,067,211 | $ | 2,066,757 | $ | 2,053,437 |
| INTEREST BEARING LIABILITIES | ||||||||||
| Interest bearing demand deposits | $ | 345,529 | $ | 358,383 | $ | 342,931 | $ | 345,842 | $ | 317,996 |
| Savings | 599,833 | 599,679 | 613,601 | 633,904 | 634,539 | |||||
| Certificates of deposit | 386,871 | 375,936 | 366,440 | 357,541 | 338,852 | |||||
| Short-term borrowings | 49,777 | 48,151 | 40,593 | 40,623 | 50,049 | |||||
| Federal Home Loan Bank advances | 29,346 | 40,588 | 45,510 | 27,692 | 29,674 | |||||
| Subordinated debt, net of unamortized issuance costs | 29,410 | 29,388 | 29,365 | 29,342 | 29,320 | |||||
| Total interest bearing liabilities | 1,440,766 | 1,452,125 | 1,438,440 | 1,434,944 | 1,400,430 | |||||
| NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Demand deposits | 425,116 | 418,973 | 411,282 | 412,228 | 446,747 | |||||
| Other liabilities | 15,775 | 15,658 | 16,755 | 16,151 | 17,302 | |||||
| Shareholders’ equity | 212,912 | 208,444 | 200,734 | 203,434 | 188,958 | |||||
| Total liabilities and shareholders’ equity | $ | 2,094,569 | $ | 2,095,200 | $ | 2,067,211 | $ | 2,066,757 | $ | 2,053,437 |
(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 our quarter-to-date asset quality analysis as of, and for the three-month periods ended:
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NONPERFORMING ASSETS | |||||||||||||||
| Commercial and industrial | $ | — | $ | 120 | $ | 271 | $ | 567 | $ | 491 | |||||
| Commercial real estate | — | — | — | 234 | — | ||||||||||
| Agricultural | — | — | 167 | 189 | 205 | ||||||||||
| Residential real estate | 282 | 427 | 556 | 293 | 286 | ||||||||||
| Consumer | — | — | — | — | — | ||||||||||
| Total nonaccrual loans | 282 | 547 | 994 | 1,283 | 982 | ||||||||||
| Accruing loans past due 90 days or more | 19 | 64 | 15 | — | 87 | ||||||||||
| Total nonperforming loans | 301 | 611 | 1,009 | 1,283 | 1,069 | ||||||||||
| Foreclosed assets | 544 | 546 | 629 | 579 | 406 | ||||||||||
| Debt securities | — | 12 | 12 | 12 | 12 | ||||||||||
| Total nonperforming assets | $ | 845 | $ | 1,169 | $ | 1,650 | $ | 1,874 | $ | 1,487 | |||||
| Nonperforming loans to gross loans | 0.02 | % | 0.04 | % | 0.07 | % | 0.09 | % | 0.08 | % | |||||
| Nonperforming assets to total assets | 0.04 | % | 0.06 | % | 0.08 | % | 0.09 | % | 0.07 | % | |||||
| 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 | $ | 12,635 | $ | 13,095 | $ | 13,390 | $ | 13,108 | $ | 12,767 | |||||
| Charge-offs | 299 | 1,767 | 527 | 191 | 452 | ||||||||||
| Recoveries | 197 | 408 | 134 | 145 | 71 | ||||||||||
| Net loan charge-offs (recoveries) | 102 | 1,359 | 393 | 46 | 381 | ||||||||||
| Provision for credit losses - loans | 362 | 899 | 98 | 328 | 722 | ||||||||||
| Allowance at end of period | $ | 12,895 | $ | 12,635 | $ | 13,095 | $ | 13,390 | $ | 13,108 | |||||
| Allowance for credit losses to gross loans | 0.91 | % | 0.89 | % | 0.95 | % | 0.98 | % | 0.97 | % | |||||
| Reserve for unfunded commitments | 512 | 498 | 450 | 379 | 315 | ||||||||||
| Provision for credit losses - unfunded commitments | 14 | 47 | 72 | 64 | (38) | ||||||||||
| Reserve to unfunded commitments | 0.15 | % | 0.15 | % | 0.14 | % | 0.11 | % | 0.10 | % | |||||
| NET LOAN CHARGE-OFFS (RECOVERIES) | |||||||||||||||
| Commercial and industrial | $ | 13 | $ | (6) | $ | 334 | $ | (2) | $ | 242 | |||||
| Commercial real estate | (2) | (318) | (29) | (6) | (3) | ||||||||||
| Agricultural | (4) | — | — | (2) | (6) | ||||||||||
| Residential real estate | (16) | (20) | (19) | (63) | (14) | ||||||||||
| Consumer | 111 | 1,703 | 107 | 119 | 162 | ||||||||||
| Total | $ | 102 | $ | 1,359 | $ | 393 | $ | 46 | $ | 381 | |||||
| Net (recoveries) charge-offs (Quarter to Date annualized to average loans) | 0.03 | % | 0.39 | % | 0.11 | % | 0.01 | % | 0.11 | % | |||||
| Net (recoveries) charge-offs (Year to Date annualized to average loans) | 0.14 | % | 0.17 | % | 0.00 | % | 0.00 | % | 0.01 | % | |||||
| DELINQUENT AND NONACCRUAL LOANS | |||||||||||||||
| Accruing loans 30-89 days past due | $ | 5,682 | $ | 2,226 | $ | 1,484 | $ | 7,938 | $ | 3,895 | |||||
| Accruing loans past due 90 days or more | 19 | 64 | 15 | — | 87 | ||||||||||
| Total accruing past due loans | 5,701 | 2,290 | 1,499 | 7,938 | 3,982 | ||||||||||
| Nonaccrual loans | 282 | 547 | 994 | 1,283 | 982 | ||||||||||
| Total past due and nonaccrual loans | $ | 5,983 | $ | 2,837 | $ | 2,493 | $ | 9,221 | $ | 4,964 |
(1) N/M: Not meaningful
G
CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)
(Dollars in thousands)
Loan Analysis
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | Annualized Growth %<br>Quarter to Date | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial and industrial | $ | 244,894 | $ | 240,589 | $ | 238,245 | $ | 226,281 | $ | 209,738 | 7.16 | % |
| Commercial real estate | 547,447 | 547,038 | 547,005 | 561,123 | 564,244 | 0.30 | % | |||||
| Advances to mortgage brokers | 63,080 | 76,187 | 39,300 | 29,688 | 18,541 | (68.81) | % | |||||
| Agricultural | 99,694 | 96,794 | 94,996 | 93,695 | 99,994 | 11.98 | % | |||||
| Total commercial loans | 955,115 | 960,608 | 919,546 | 910,787 | 892,517 | (2.29) | % | |||||
| Residential real estate | 380,872 | 369,846 | 365,188 | 356,658 | 356,418 | 11.92 | % | |||||
| Consumer | 87,584 | 93,829 | 96,902 | 98,063 | 100,528 | (26.62) | % | |||||
| Gross loans | $ | 1,423,571 | $ | 1,424,283 | $ | 1,381,636 | $ | 1,365,508 | $ | 1,349,463 | (0.20) | % |
Deposit Analysis
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | Annualized Growth %<br>Quarter to Date | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Noninterest bearing demand deposits | $ | 416,373 | $ | 421,493 | $ | 412,193 | $ | 413,272 | $ | 428,505 | (4.86) | % |
| Interest bearing demand deposits | 341,366 | 376,592 | 338,329 | 349,401 | 320,737 | (37.42) | % | |||||
| Savings | 601,730 | 600,150 | 603,328 | 639,491 | 628,079 | 1.05 | % | |||||
| Certificates of deposit | 387,591 | 383,597 | 368,449 | 366,143 | 346,374 | 4.16 | % | |||||
| Total deposits | $ | 1,747,060 | $ | 1,781,832 | $ | 1,722,299 | $ | 1,768,307 | $ | 1,723,695 | (7.81) | % |
H
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
| Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31<br>2024 | September 30<br>2024 | June 30<br>2024 | March 31<br>2024 | December 31<br>2023 | ||||||||||||
| Net income | $ | 3,996 | $ | 3,281 | $ | 3,481 | $ | 3,131 | $ | 3,803 | ||||||
| Nonrecurring items | ||||||||||||||||
| Net gains (losses) on foreclosed assets | 74 | 4 | 6 | 69 | 8 | |||||||||||
| Overdraft (charge-off) recoveries (1) | 66 | (1,622) | — | — | — | |||||||||||
| Profitability initiative cost | (23) | — | — | — | — | |||||||||||
| Income tax impact | (25) | 340 | (1) | (14) | (2) | |||||||||||
| Total nonrecurring items | 92 | (1,278) | 5 | 55 | 6 | |||||||||||
| Core net income | (A) | $ | 3,904 | $ | 4,559 | $ | 3,476 | $ | 3,076 | $ | 3,797 | |||||
| Noninterest expenses | $ | 13,330 | $ | 13,228 | $ | 12,895 | $ | 12,676 | $ | 11,915 | ||||||
| Amortization of acquisition intangibles | 1 | — | 1 | — | 1 | |||||||||||
| Core noninterest expense | (B) | $ | 13,329 | $ | 13,228 | $ | 12,894 | $ | 12,676 | $ | 11,914 | |||||
| Net interest income | $ | 14,555 | $ | 14,488 | $ | 13,550 | $ | 13,242 | $ | 13,612 | ||||||
| Tax equivalent adjustment for net interest margin | 213 | 232 | 237 | 246 | 246 | |||||||||||
| Net interest income (FTE) | (C) | 14,768 | 14,720 | 13,787 | 13,488 | 13,858 | ||||||||||
| Noninterest income | 3,972 | 3,528 | 3,608 | 3,468 | 3,516 | |||||||||||
| Tax equivalent adjustment for efficiency ratio | 54 | 53 | 53 | 51 | 50 | |||||||||||
| Core revenue (FTE) | 18,794 | 18,301 | 17,448 | 17,007 | 17,424 | |||||||||||
| Nonrecurring items | ||||||||||||||||
| Net gains (losses) on foreclosed assets | 74 | 4 | 6 | 69 | 8 | |||||||||||
| Total nonrecurring items | 74 | 4 | 6 | 69 | 8 | |||||||||||
| Core revenue | (D) | $ | 18,720 | $ | 18,297 | $ | 17,442 | $ | 16,938 | $ | 17,416 | |||||
| Efficiency ratio | (B/D) | 71.20 | % | 72.30 | % | 73.93 | % | 74.84 | % | 68.41 | % | |||||
| Average earning assets | (E) | 1,963,986 | 1,967,552 | 1,948,173 | 1,943,758 | 1,943,937 | ||||||||||
| Net yield on interest earning assets (FTE) | (C/E) | 2.99 | % | 2.98 | % | 2.85 | % | 2.79 | % | 2.83 | % | |||||
| Average assets | (F) | 2,094,569 | 2,095,200 | 2,067,211 | 2,066,757 | 2,053,437 | ||||||||||
| Average shareholders' equity | (G) | 212,912 | 208,444 | 200,734 | 203,434 | 188,958 | ||||||||||
| Average tangible shareholders' equity | (H) | 164,629 | 160,161 | 152,451 | 155,150 | 140,674 | ||||||||||
| Average diluted shares outstanding (2) | (I) | 7,453,033 | 7,473,184 | 7,494,828 | 7,507,739 | 7,526,515 | ||||||||||
| Core diluted earnings per share | (A/I) | $ | 0.52 | $ | 0.61 | $ | 0.46 | $ | 0.41 | $ | 0.50 | |||||
| Core return on average assets | (A/F) | 0.74 | % | 0.87 | % | 0.68 | % | 0.60 | % | 0.73 | % | |||||
| Core return on average shareholders' equity | (A/G) | 7.29 | % | 8.70 | % | 6.96 | % | 6.08 | % | 7.97 | % | |||||
| Core return on average tangible shareholders' equity | (A/H) | 9.43 | % | 11.32 | % | 9.17 | % | 7.97 | % | 10.71 | % |
(1) Includes provision for credit losses related to overdrawn deposit accounts from a single customer in the third quarter of 2024.
(2) Whole shares
I