Isabella Bank Corporation Reports Fourth Quarter and 2025 Annual Earnings

Isabella Bank Corporation (Nasdaq:ISBA) ("Isabella" or the "Company") reported net income of $4.7 million, or $0.64 per diluted share, for the fourth quarter 2025 compared to $4.0 million, or $0.54 per diluted share, for the fourth quarter 2024. Net income for the year endedDecember 31, 2025 was $18.9 million, or $2.56 per diluted share, compared to $13.9 million, or $1.86 per diluted share, for the year endedDecember 31, 2024. 2025 HIGHLIGHTS Loans, excluding advances to mortgage brokers, grew $99 million, or 7% Isabella Wealth assets under management increased $49 million, or 7%, to $707 million Total deposits increased $73 million, or 4% Net income growth of 36% from 2024 Net interest margin ("NIM") improved to 3.16%, up from 2.90% in 2024 Credit quality was strong, with a ratio of nonperforming loans to total loans of 0.30% at December 31, 2025 "Isabella Bank Corporation had an outstanding 2025, driven by growth across our markets and increases in our loans, deposits, and wealth management services," said CEO Jerome Schwind. "During the year, we also launched initiatives to strengthen our noninterest income, which are already contributing positive results. We continue to attract new customers while remaining focused on our current customers," he added. "We uplisted our stock to the Nasdaq in May, and have seen significant volume and price growth since then," Schwind added. "Together, our strong financial results and stock performance position us well as we enter 2026." FINANCIAL CONDITION Total assets were $2.2 billion as of December 31, 2025, up $123.2 million compared to December 31, 2024, primarily due to increases of $112.8 million in loans, $11.3 million in the value of bank-owned life insurance ("BOLI") policies, and $8.8 million in available-for-sale ("AFS") securities. AFS securities at fair value were $497.8 million as of December 31, 2025, increasing $8.8 million compared to December 31, 2024. The increase during the year was largely driven by purchases of $67.3 million and an improvement in net unrealized losses of $16.6 million, partially offset by amortizations and maturities totaling $75.2 million. Net unrealized losses on AFS securities totaled $9.9 million as of December 31, 2025, compared to $26.5 million at December 31, 2024. Net unrealized losses as a percentage of the fair value of AFS securities decreased to 2% from 5%, primarily due to the treasury portfolio rapidly approaching maturity. Loans were $1.5 billion as of December 31, 2025, increasing $112.8 million compared to December 31, 2024. Adjusted loans, which excludes advances to mortgage brokers, grew $99.2 million since year-end 2024. Advances to mortgage brokers increased $13.6 million in 2025 due to increased participation demand from the counterparty. During the year, the commercial real estate and commercial and industrial portfolios grew $48.0 million and $19.8 million, respectively. Residential mortgages increased $47.0 million since year-end 2024. Most residential originations were adjustable-rate products, which are retained on the balance sheet rather than sold in the secondary market. The consumer loan portfolio declined $18.1 million during 2025 amid decreasing demand, competition, and an adherence to credit quality standards. The allowance for credit losses ("ACL") was $13.7 million at December 31, 2025, an increase of $832,000 from December 31, 2024. The increase reflects loan growth and an increase of specific reserves, offset by improvement in historical loss experience driven by the recovery of previously charged-off loans during the year. Nonaccrual loans remained low during 2025 and were $4.6 million as of December 31, 2025. Past due and accruing accounts between 30 to 89 days, as a percentage of loans, were 0.44% at December 31, 2025 compared to 0.40% at December 31, 2024. Overall credit quality remains strong. BOLI assets were $46.1 million at December 31, 2025, an increase of $11.3 million from December 31, 2024. The growth was primarily a result of the purchase of $10.2 million of new policies in 2025. During the year, approximately $13 million of existing general account policies were surrendered and/or exchanged and redeployed into separate account policies. The separate account policies are expected to have higher yields. Total deposits were $1.8 billion at December 31, 2025, an increase of $72.6 million from December 31, 2024. Interest bearing demand deposit accounts increased by $28.6 million during 2025. Consumer demand for retail certificates of deposit accounts continues to be strong based on the current elevated market interest rate environment, resulting in a $22.5 million increase during the year. Total equity was $231.4 million, or $31.60 per share, at December 31, 2025 compared to $210.3 million, or $28.32 per share, at December 31, 2024. Tangible book value per share (non-GAAP) was $25.01 as of December 31, 2025, compared to $21.82 as of December 31, 2024. Net unrealized losses in the AFS securities portfolio reduced tangible book value per share by $1.09 and $2.82 for the respective periods. Share repurchases totaled 156,957 during 2025 at an average price of approximately $30.00. RESULTS OF OPERATIONS Net income in the fourth quarter of 2025 was $4.7 million, or $0.64 per diluted share, compared with $4.0 million, or $0.54 per diluted share, in the same quarter of 2024. Net income for the year endedDecember 31, 2025 was $18.9 million, or $2.56 per diluted share, compared with $13.9 million, or $1.86 per diluted share, for the year endedDecember 31, 2024. Net interest income was $16.7 million in the fourth quarter of 2025 compared to $14.6 million in the fourth quarter of 2024, representing 3.28% and 2.98% of earning assets, or NIM, respectively. The book yield on securities was 2.47% and 2.18% during the fourth quarters of 2025 and 2024, respectively. The yield on loans expanded to 5.74% in the fourth quarter of 2025 from 5.67% in the fourth quarter of 2024. The expansion in loan yields was primarily due to higher rates on new loans and variable rate commercial loans that continue to reprice. The cost of interest-bearing liabilities in the fourth quarter of 2025 decreased to 2.24% from 2.38% in the fourth quarter of 2024 primarily due to lower rates on the money market and certificate of deposit products. Net interest income was $62.5 million for the year endedDecember 31, 2025 compared with $55.8 million for the year endedDecember 31, 2024. NIM and the yield on interest earning assets for the year endedDecember 31, 2025 were 3.16% and 4.84%, respectively, compared to 2.90% and 4.65%, respectively, for the year endedDecember 31, 2024. The yield on loans increased to 5.75%, from 5.58%, and the cost of interest-bearing liabilities decreased to 2.25% from 2.37% for 2025 and 2024, respectively. The explanations for the improvement in NIM are consistent with those provided in the quarterly comparison above. The provision for credit losses in the fourth quarter of 2025 was $434,000, which reflects a $578,000 increase in the ACL on loans, net charge offs totaling $34,000, and a $178,000 decrease in the reserve for unfunded commitments. The provision for loan losses in the same period of 2024 was $376,000, reflecting growth in adjusted loans, unfunded commitments, and $102,000 in net charge offs. The year-to-date provision for credit loss was a credit of $563,000, as compared to a provision of $1.9 million in 2024. Recoveries during 2025 totaled $2.3 million, of which $1.6 million was related to the overdrawn deposit accounts from a single customer charged off during the third quarter of 2024. The $1.6 million charge off and subsequent recovery, net of tax, impacted diluted earnings per share by $0.17 in 2025 and $0.16 in 2024. Noninterest income was $4.4 million in the fourth quarter of 2025 compared to $4.0 million in the fourth quarter of 2024. Service charges and fees increased $275,000 and was mostly the result of internal initiatives designed to align our fees within our market. Earnings on BOLI policies increased $226,000 due to new investments in a separate account BOLI, which was offset in part by a one-time expense of $120,000 due to restructuring charges. Wealth management fees grew $59,000 due to growth in assets under management throughout the year. For the year endedDecember 31, 2025, noninterest income was $16.0 million, compared to $14.6 million for the year endedDecember 31, 2024. The $1.4 million increase compared to the prior year was primarily driven by increased earnings on BOLI policies of $618,000, service charges and fees of $583,000, and wealth management fees of $206,000. Noninterest expenses were $13.9 million in the fourth quarter of 2025 compared to $13.3 million in the fourth quarter of 2024. Other professional services increased $231,000 primarily due to an increase in outsourced services. Compensation and benefit expenses increased $192,000 reflecting annual merit increases and increased incentives compared to the fourth quarter of 2024. For the year ended December 31, 2025, noninterest expenses were $55.0 million, up $2.8 million compared to the year ended December 31, 2024. Theincrease was primarily driven by increased compensation and benefits of $1.5 million and other professional services of $1.0 million. The increase in compensation and benefits was due to annual merit increases, higher medical insurance claims throughout the year, and increased incentives. The increase in other professional services was due to an increase in outsourced services, costs associated with profitability initiatives, and legal fees related to the uplisting to the Nasdaq. Income tax expense was $2.1 million in the fourth quarter 2025, compared to $825,000 in the fourth quarter 2024. The effective tax rate (ETR) was 31% and 17% for the aforementioned periods, respectively. The ETR in the fourth quarter 2025 included a one-time expense totaling $942,000 to write-off deferred tax assets. For the year ended December 31, 2025, income tax expense was $5.2 million, compared to $2.5 million for the year endedDecember 31, 2024. The ETR was 22% for the year ended 2025, compared to 15% for the year ended 2024. Income tax expense in 2025 included a one-time expense totaling $195,000 due to the taxes owed from the lifetime earnings on BOLI policies that were surrendered during the year. Excluding the one-time charges during 2025, the ETR was 17%, which was higher than the prior year due to higher pretax income. 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 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. Factors that could cause such differences include, but are not limited to: (i) the impact on us or our customers of a decline in general economic conditions, and any regulatory responses thereto; (ii) slower economic growth rates or potential recession in the United States and our market areas; (iii) uncertainty or perceived instability in the banking industry as a whole; (iv) increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior; (v) the impact of changes in market interest rates, whether due to a continuation of the elevated interest rate environment or further reductions in interest rates and a resulting decline in net interest income; (vi) the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas; (vii) the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; (viii) changes in unemployment rates in the United States and our market areas; (ix) adverse changes in customer spending, borrowing and savings habits; (x) declines in commercial real estate values and prices; (xi) a deterioration of the credit rating for the United States long-term sovereign debt or the impact of uncertain or changing political conditions, including federal government shutdowns and uncertainty regarding United States fiscal debt, deficit and budget matters; (xii) cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; (xiii) severe weather, natural disasters, acts of war or terrorism, geopolitical instability, domestic civil unrest or other external events, including as a result of in the policies of the current U.S. presidential administration or Congress; (xiv) in the impact of tariffs, sanctions and other trade policies of the United States and its global trading counterparts and the resulting impact on the Company and its customers; (xv) competition and market expansion opportunities; (xvi) changes in non-interest expenditures or in the anticipated benefits of such expenditures; (xvii) changes in accounting principles and standards, including those related to loan loss recognition under the current expected credit loss, or CECL, methodology; (xviii) the receipt of required regulatory approvals; (xix) changes in tax laws; (xx) the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; (xxi) potential costs related to the impacts of climate change; (xxii) current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxiii) changes in applicable laws and regulations. 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, 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 C Consolidated Statements of Income D Average Balances, Interest Rate, and Net Interest Income E Average Balances, Interest Rate, and Net Interest Income F Reconciliation of Non-GAAP Financial Measures 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 Months Ended Year Ended December 31 2025 September 30 2025 June 30 2025 March 31 2025 December 31 2024 December 31 2025 December 31 2024 PER SHARE Basic earnings $ 0.64 $ 0.71 $ 0.68 $ 0.53 $ 0.54 $ 2.56 $ 1.86 Diluted earnings 0.64 0.71 0.68 0.53 0.54 2.56 1.86 Dividends 0.28 0.28 0.28 0.28 0.28 1.12 1.12 Book value (1) 31.60 30.94 29.95 29.10 28.32 31.60 28.32 Tangible book value(1) (2) 25.01 24.37 23.39 22.58 21.82 25.01 21.82 Market price(1) 50.00 35.25 30.15 23.59 25.99 50.00 25.99 Common shares outstanding(1) (3) 7,322,207 7,350,567 7,361,684 7,408,010 7,424,893 7,322,207 7,424,893 Average number of diluted common shares outstanding (3) 7,345,610 7,371,652 7,398,109 7,432,162 7,451,718 7,385,862 7,482,374 PERFORMANCE RATIOS Return on average total assets 0.85 % 0.94 % 0.96 % 0.77 % 0.76 % 0.88 % 0.67 % Return on average shareholders' equity 8.04 % 9.28 % 9.19 % 7.48 % 7.47 % 8.51 % 6.73 % Return on average tangible shareholders' equity(2) 10.16 % 11.83 % 11.78 % 9.65 % 9.66 % 10.87 % 8.78 % Net interest margin yield (fully taxable equivalent)(1) 3.28 % 3.15 % 3.14 % 3.06 % 2.98 % 3.16 % 2.90 % Efficiency ratio(2) 65.02 % 67.62 % 72.14 % 72.39 % 71.20 % 69.11 % 73.01 % Loan to deposit ratio(1) 84.43 % 74.36 % 75.57 % 76.07 % 81.48 % 84.43 % 81.48 % Shareholders' equity to total assets(1) 10.47 % 10.06 % 10.23 % 10.25 % 10.08 % 10.47 % 10.08 % Tangible shareholders' equity to tangible assets(1) 8.47 % 8.10 % 8.17 % 8.14 % 7.95 % 8.47 % 7.95 % ASSETS UNDER MANAGEMENT Wealth assets under management(1) 707,118 679,724 678,959 656,617 658,042 707,118 658,042 ASSET QUALITY Nonaccrual loans (1) 4,578 3,443 1,164 173 282 4,578 282 Foreclosed assets (1) 938 1,018 667 649 544 938 544 Net loan charge-offs (recoveries) 34 74 (1,432 ) (52 ) 102 (1,376 ) 1,900 Net loan charge-offs (recoveries) to average loans outstanding 0.00 % 0.01 % (0.10 )% 0.00 % 0.01 % (0.10 )% 0.14 % Nonperforming loans to total loans(1) 0.30 % 0.24 % 0.09 % 0.01 % 0.02 % 0.30 % 0.02 % Nonperforming assets to total assets(1) 0.25 % 0.20 % 0.09 % 0.04 % 0.04 % 0.25 % 0.04 % Allowance for credit losses to loans(1) 0.89 % 0.92 % 0.93 % 0.93 % 0.91 % 0.89 % 0.91 % CAPITAL RATIOS(1) Tier 1 leverage 8.84 % 8.71 % 9.04 % 8.96 % 8.86 % 8.84 % 8.86 % Common equity tier 1 capital 11.73 % 12.37 % 12.46 % 12.58 % 12.21 % 11.73 % 12.21 % Tier 1 risk-based capital 11.73 % 12.37 % 12.46 % 12.58 % 12.21 % 11.73 % 12.21 % Total risk-based capital 14.41 % 15.20 % 15.34 % 15.50 % 15.06 % 14.41 % 15.06 % (1) At end of period. (2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table F (3) Whole shares A CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) December 31 2025 September 30 2025 June 30 2025 March 31 2025 December 31 2024 ASSETS Cash and demand deposits due from banks $ 22,935 $ 32,124 $ 34,246 $ 28,786 $ 22,830 Fed Funds sold and interest bearing balances due from banks 3,106 129,177 74,308 40,393 1,712 Total cash and cash equivalents 26,041 161,301 108,554 69,179 24,542 Available-for-sale securities, at fair value 497,791 511,970 500,560 513,040 489,029 Federal Home Loan Bank stock 5,600 5,600 5,600 5,600 12,762 Mortgage loans held-for-sale 423 737 55 127 242 Loans 1,536,364 1,431,905 1,397,513 1,367,724 1,423,571 Less allowance for credit losses 13,727 13,149 12,977 12,735 12,895 Net loans 1,522,637 1,418,756 1,384,536 1,354,989 1,410,676 Premises and equipment 29,000 28,659 28,171 28,108 27,659 Cash surrender value of bank-owned life insurance policies 46,133 45,651 45,774 45,833 34,882 Goodwill and other intangible assets 48,282 48,282 48,282 48,282 48,283 Other assets 33,541 38,698 34,636 37,429 38,166 Total assets $ 2,209,448 $ 2,259,654 $ 2,156,168 $ 2,102,587 $ 2,086,241 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Demand deposits $ 426,342 $ 421,027 $ 493,477 $ 404,194 $ 416,373 Interest bearing demand deposits 266,187 248,666 223,376 243,939 237,548 Money market deposits 436,631 558,212 446,845 473,138 423,883 Savings 280,429 292,899 289,746 286,399 281,665 Certificates of deposit 410,065 404,798 395,932 390,239 387,591 Total deposits 1,819,654 1,925,602 1,849,376 1,797,909 1,747,060 Short-term borrowings 68,000 62,022 43,208 47,310 53,567 Federal Home Loan Bank advances 45,000 - - - 30,000 Subordinated debt, net of unamortized issuance costs 29,514 29,492 29,469 29,447 29,424 Total borrowed funds 142,514 91,514 72,677 76,757 112,991 Other liabilities 15,884 15,118 13,615 12,365 15,914 Total liabilities 1,978,052 2,032,234 1,935,668 1,887,031 1,875,965 Shareholders' equity Common stock 123,204 124,284 124,607 125,547 126,224 Shares to be issued for deferred compensation obligations 2,366 2,373 2,331 2,508 2,383 Retained earnings 113,849 111,172 107,949 104,940 103,024 Accumulated other comprehensive loss (8,023 ) (10,409 ) (14,387 ) (17,439 ) (21,355 ) Total shareholders' equity 231,396 227,420 220,500 215,556 210,276 Total liabilities and shareholders' equity $ 2,209,448 $ 2,259,654 $ 2,156,168 $ 2,102,587 $ 2,086,241 B CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts) Three Months Ended Year Ended December 31 2025 September 30 2025 June 30 2025 March 31 2025 December 31 2024 December 31 2025 December 31 2024 Interest income Loans $ 21,669 $ 20,583 $ 19,832 $ 19,348 $ 20,145 $ 81,432 $ 77,295 Available-for-sale securities 3,048 2,994 3,032 2,643 2,656 11,717 11,093 Federal Home Loan Bank stock 63 70 125 160 168 418 640 Federal funds sold and other 498 1,235 253 482 200 2,468 950 Total interest income 25,278 24,882 23,242 22,633 23,169 96,035 89,978 Interest expense Deposits 7,380 8,012 7,391 7,463 7,583 30,246 29,690 Short-term borrowings 587 441 324 341 413 1,693 1,439 Federal Home Loan Bank advances 317 - 132 38 352 487 1,949 Subordinated debt 266 267 266 266 266 1,065 1,065 Total interest expense 8,550 8,720 8,113 8,108 8,614 33,491 34,143 Net interest income 16,728 16,162 15,129 14,525 14,555 62,544 55,835 Provision (reversal) for credit losses 434 209 (1,099 ) (107 ) 376 (563 ) 1,884 Net interest income after provision for credit losses 16,294 15,953 16,228 14,632 14,179 63,107 53,951 Noninterest income Service charges and fees 2,461 2,352 2,071 1,974 2,186 8,858 8,275 Wealth management fees 1,110 1,074 1,084 979 1,051 4,247 4,041 Earnings on bank-owned life insurance policies 485 468 300 372 259 1,625 1,007 Net gain on sale of mortgage loans 65 38 47 30 75 180 213 Other 323 376 184 173 401 1,056 1,040 Total noninterest income 4,444 4,308 3,686 3,528 3,972 15,966 14,576 Noninterest expenses Compensation and benefits 7,532 7,630 7,496 7,383 7,340 30,041 28,576 Occupancy and equipment 2,663 2,628 2,650 2,600 2,554 10,541 10,524 Other professional services 815 851 863 711 584 3,240 2,212 ATM and debit card fees 575 595 555 486 516 2,211 1,975 Marketing 547 514 469 459 458 1,989 1,712 FDIC insurance premiums 339 271 267 303 309 1,180 1,132 Memberships and subscriptions 276 272 272 247 239 1,067 928 Other losses 142 47 339 115 209 643 1,117 Other 1,032 1,177 834 995 1,121 4,038 3,953 Total noninterest expenses 13,921 13,985 13,745 13,299 13,330 54,950 52,129 Income before income tax expense 6,817 6,276 6,169 4,861 4,821 24,123 16,398 Income tax expense 2,127 1,036 1,138 912 825 5,213 2,509 Net income $ 4,690 $ 5,240 $ 5,031 $ 3,949 $ 3,996 $ 18,910 $ 13,889 Earnings per common share Basic $ 0.64 $ 0.71 $ 0.68 $ 0.53 $ 0.54 $ 2.56 $ 1.86 Diluted 0.64 0.71 0.68 0.53 0.54 2.56 1.86 Cash dividends per common share 0.28 0.28 0.28 0.28 0.28 1.12 1.12 C AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED) (Dollars in thousands) The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a fully tax equivalent ("FTE") basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. Federal Reserve Bank ("FRB") restricted equity holdings are included in other interest earning assets. Three Months Ended December 31, 2025 September 30, 2025 December 31, 2024 Average Balance Tax Equivalent Interest Average Yield / Rate Average Balance Tax Equivalent Interest Average Yield / Rate Average Balance Tax Equivalent Interest Average Yield / Rate INTEREST EARNING ASSETS Loans(1) $ 1,493,654 $ 21,669 5.74 % $ 1,409,928 $ 20,583 5.78 % $ 1,412,578 $ 20,145 5.67 % AFS securities (2) 515,050 3,186 2.47 % 517,286 3,138 2.42 % 522,733 2,869 2.18 % Federal Home Loan Bank stock 5,600 63 4.54 % 5,600 70 4.95 % 12,762 168 5.24 % Fed funds sold 9 - 3.86 % 186 2 4.35 % 8 - 4.59 % Other(3) 28,344 498 6.88 % 123,183 1,233 3.92 % 15,905 200 5.00 % Total interest earning assets 2,042,657 25,416 4.94 % 2,056,183 25,026 4.83 % 1,963,986 23,382 4.74 % NONEARNING ASSETS Allowance for credit losses (13,213 ) (13,057 ) (12,598 ) Cash and demand deposits due from banks 23,239 25,591 22,800 Premises and equipment 29,009 28,313 27,773 Other assets 117,201 109,692 92,608 Total assets $ 2,198,893 $ 2,206,722 $ 2,094,569 INTEREST BEARING LIABILITIES Interest bearing demand deposits $ 249,809 211 0.34 % $ 234,105 144 0.24 % $ 232,271 212 0.36 % Money market deposits 449,129 2,900 2.56 % 534,127 3,533 2.63 % 436,235 2,970 2.71 % Savings 282,306 498 0.70 % 289,442 560 0.77 % 276,856 446 0.64 % Certificates of deposit 408,861 3,771 3.66 % 399,781 3,775 3.75 % 386,871 3,955 4.07 % Short-term borrowings 67,521 587 3.45 % 52,700 441 3.32 % 50,862 413 3.22 % Federal Home Loan Bank advances 30,163 317 4.12 % - - - % 28,261 352 4.88 % Subordinated debt, net of unamortized issuance costs 29,500 266 3.61 % 29,477 267 3.61 % 29,410 266 3.62 % Total interest bearing liabilities 1,517,289 8,550 2.24 % 1,539,632 8,720 2.25 % 1,440,766 8,614 2.38 % NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 432,038 428,144 425,116 Other liabilities 18,182 14,976 15,775 Shareholders' equity 231,384 223,970 212,912 Total liabilities and shareholders' equity $ 2,198,893 $ 2,206,722 $ 2,094,569 Net interest income (FTE) $ 16,866 $ 16,306 $ 14,768 Net yield on interest earning assets (FTE) 3.28 % 3.15 % 2.98 % (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. D AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED) (continued) (Dollars in thousands) Year Ended December 31, 2025 December 31, 2024 Average Balance Tax Equivalent Interest Average Yield/Rate Average Balance Tax Equivalent Interest Average Yield/Rate INTEREST EARNING ASSETS Loans(1) $ 1,416,079 $ 81,432 5.75 % $ 1,385,287 $ 77,295 5.58 % AFS securities (2) 520,284 12,361 2.38 % 540,433 12,023 2.22 % Federal Home Loan Bank stock 6,934 418 6.03 % 12,762 640 5.01 % Fed funds sold 52 2 4.37 % 7 - 5.19 % Other(3) 54,982 2,466 4.49 % 17,430 950 5.45 % Total interest earning assets 1,998,331 96,679 4.84 % 1,955,919 90,908 4.65 % NONEARNING ASSETS Allowance for credit losses (13,132 ) (13,061 ) Cash and demand deposits due from banks 23,690 24,165 Premises and equipment 28,400 27,915 Other assets 109,142 86,073 Total assets $ 2,146,431 $ 2,081,011 INTEREST BEARING LIABILITIES Interest bearing demand deposits $ 240,220 817 0.34 % $ 237,086 754 0.32 % Money market deposits 473,394 12,219 2.58 % 443,251 12,407 2.80 % Savings 286,134 2,140 0.75 % 279,544 1,600 0.57 % Certificates of deposit 398,040 15,070 3.79 % 371,750 14,929 4.02 % Short-term borrowings 51,430 1,693 3.29 % 45,124 1,439 3.19 % Federal Home Loan Bank advances 11,301 487 4.31 % 35,464 1,949 5.50 % Subordinated debt, net of unamortized issuance costs 29,466 1,065 3.61 % 29,376 1,065 3.62 % Total interest bearing liabilities 1,489,985 33,491 2.25 % 1,441,595 34,143 2.37 % NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 418,225 416,927 Other liabilities 15,896 16,088 Shareholders' equity 222,325 206,401 Total liabilities and shareholders' equity $ 2,146,431 $ 2,081,011 Net interest income (FTE) $ 63,188 $ 56,765 Net yield on interest earning assets (FTE) 3.16 % 2.90 % (1) Includes loans held-for-sale and nonaccrual loans (loan summary below) (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. December 31 2025 September 30 2025 June 30 2025 March 31 2025 December 31 2024 Commercial and industrial (4) $ 220,450 $ 218,132 $ 207,719 $ 205,172 $ 200,623 Commercial real estate (4) 639,758 626,642 614,383 596,282 591,718 Advances to mortgage brokers 76,676 5,056 3,005 3,015 63,080 Agricultural 102,109 97,794 96,842 94,359 99,694 Total commercial loans 1,038,993 947,624 921,949 898,828 955,115 Residential real estate 427,880 412,056 398,668 387,348 380,872 Consumer 69,491 72,225 76,896 81,548 87,584 Loans $ 1,536,364 $ 1,431,905 $ 1,397,513 $ 1,367,724 $ 1,423,571 (4) Certain amounts reported as commercial and industrial loans have been reclassified as commercial real estate loans to conform to the December 31, 2025 presentation E RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands except per share amounts and ratios) Three Months Ended Year Ended December 31 2025 September 30 2025 June 30 2025 March 31 2025 December 31 2024 December 31 2025 December 31 2024 Loans $ 1,536,364 $ 1,431,905 $ 1,397,513 $ 1,367,724 $ 1,423,571 $ 1,536,364 $ 1,423,571 Advances to mortgage brokers 76,676 5,056 3,005 3,015 63,080 76,676 63,080 Adjusted loans $ 1,459,688 $ 1,426,849 $ 1,394,508 $ 1,364,709 $ 1,360,491 $ 1,459,688 $ 1,360,491 Total shareholders' equity $ 231,396 $ 227,420 $ 220,500 $ 215,556 $ 210,276 $ 231,396 $ 210,276 Goodwill and other intangible assets 48,282 48,282 48,282 48,282 48,283 48,282 48,283 Tangible equity (A) 183,114 179,138 172,218 167,274 161,993 183,114 161,993 Common shares outstanding (1) (B) 7,322,207 7,350,567 7,361,684 7,408,010 7,424,893 7,322,207 7,424,893 Tangible book value per share (A/B) $ 25.01 $ 24.37 $ 23.39 $ 22.58 $ 21.82 $ 25.01 $ 21.82 Noninterest expenses $ 13,921 $ 13,985 $ 13,745 $ 13,299 $ 13,330 $ 54,950 $ 52,129 Amortization of acquisition intangibles - - - 1 1 1 1 Adjusted noninterest expense (C) $ 13,921 $ 13,985 $ 13,745 $ 13,298 $ 13,329 $ 54,949 $ 52,128 Net interest income $ 16,728 $ 16,162 $ 15,129 $ 14,525 $ 14,555 $ 62,544 $ 55,835 Tax equivalent adjustment for net interest margin 138 144 178 184 213 644 930 Net interest income (FTE) 16,866 16,306 15,307 14,709 14,768 63,188 56,765 Noninterest income 4,444 4,308 3,686 3,528 3,972 15,966 14,576 Tax equivalent adjustment for efficiency ratio 102 98 63 78 54 341 211 Adjusted revenue (FTE) 21,412 20,712 19,056 18,315 18,794 79,495 71,552 Net gains (losses) on foreclosed assets 3 31 3 (55 ) 74 (18 ) 153 Adjusted revenue (D) $ 21,409 $ 20,681 $ 19,053 $ 18,370 $ 18,720 $ 79,513 $ 71,399 Efficiency ratio (C/D) 65.02 % 67.62 % 72.14 % 72.39 % 71.20 % 69.11 % 73.01 % (1) Whole shares. F SOURCE: Isabella Bank Corporation View the original press release on ACCESS Newswire