Isabella Bank Corporation Reports Third Quarter 2025 Results

Isabella Bank Corporation (Nasdaq:ISBA) ("Isabella" or the "Company") reported net income of $5.2 million for the third quarter 2025 and $14.2 million for the nine months ended September 30, 2025. Earnings per diluted share were $0.71 for the third quarter 2025 and $1.92 for the first nine months of 2025. THIRD QUARTER 2025 HIGHLIGHTS Core loans grew $32 million, or 2% Total deposits grew $76 million, or 4% Net interest income increased 11.6% compared to third quarter 2024 Net interest margin ("NIM") was 3.15%, up from 2.96% during the third quarter of 2024 Strong credit quality, with a ratio of nonperforming loans to total loans of 0.24% as of September 30, 2025 "Our strong third quarter results were driven by continued expansion in core loans and deposits," said Isabella's Chief Executive Officer, Jerome Schwind. "Earning assets continued to reprice with low and stable funding costs, generating NIM growth," he added. "Our loan growth this year has been driven by the commercial and residential mortgage loan portfolios. Our deposit growth includes larger deposits from not-for-profit entities and while some of our deposit growth is considered short-term, we continue to build new relationships across our geographic footprint. "We also launched initiatives to strengthen noninterest revenue through fee-based income during the quarter, which coupled with noninterest expense control, have contributed to our overall financial performance. "Our stock trading volume and price remain robust since uplisting our shares to the Nasdaq Capital Market earlier this year," Schwind added. "Our financial results and stock performance position us well for growth and to continue to deliver long-term value to our shareholders." FINANCIAL CONDITION (as of September 30, 2025, compared to December 31, 2024, unless otherwise noted) Total assets were $2.3 billion as of September 30, 2025, up $173.4 million, primarily due to an increase of $127.5 million in interest bearing cash balances, $22.9 million in available-for-sale ("AFS") securities, and $10.8 million in the value of bank-owned life insurance ("BOLI") policies. AFS securities at fair value were $512 million as of September 30, 2025, increasing $11.4 million during the third quarter and $22.9 million compared to December 31, 2024. The increase during the year was largely driven by purchases of $62.1 million and an improvement in unrealized losses of $13.9 million, partially offset by amortizations and maturities totaling $53.1 million. Net unrealized losses on securities totaled $12.6 million as of September 30, 2025, compared to $26.5 million at December 31, 2024. Net unrealized losses as a percentage of total AFS securities decreased to 2% from 5%, primarily due to the treasury portfolio rapidly approaching maturity. Total loans were $1.4 billion at the end of the third quarter, increasing $34.4 million during the third quarter and $8.3 million since December 31, 2024. While core loans have grown $66.4 million during 2025, advances to mortgage brokers decreased $58 million due to lower participation demand from the counterparty. During the year, the commercial and industrial and commercial real estate portfolios grew $17.5 million and $34.9 million, respectively. Residential mortgages increased $31.2 million since year-end 2024 with $13.4 million of growth in the third quarter on construction drawdowns and seasonal patterns. 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 $15.4 million as loans continue to roll off amid decreasing demand, competition, and an adherence to credit quality standards. The allowance for credit losses ("ACL") increased $172 thousand during the third quarter and $254 thousand since December 31, 2024, reaching $13.1 million as of September 30, 2025. The increase for each period reflects core loan growth, offset by improvement in historical loss experience driven by the recovery of previously charged-off loans during the year. Nonaccrual loan balances increased $2.3 million during the quarter to $3.4 million, primarily due to the downgrade of one commercial real estate loan to nonaccrual status during the quarter. Past due and accruing accounts between 30 to 89 days, as a percentage of total loans, was 0.03% compared to 0.40% at December 31, 2024. Overall credit quality remains strong. BOLI assets were $45.7 million at September 30, 2025, an increase of $10.8 million from December 31, 2024. The growth was mostly driven by a $10.6 million investment of new policies in a separate account product at the beginning of January. During the year, over $13 million of existing general account policies were surrendered and/or exchanged and the funds were redeployed into a separate account BOLI. The separate account BOLI policies are expected to have higher yields than general account policies. Total deposits were $1.93 billion at September 30, 2025, increasing $76.2 million during the third quarter and $178.5 million since December 31, 2024. Money market deposits have increased $134.3 million during the year, with a large portion related to one relationship with large deposits that is expected to be withdrawn by the customer by the end of the year. Consumer demand for retail certificates of deposit accounts continues based on the current elevated market interest rate environment, resulting in a $17.2 million increase during the year. Total equity was $227.4 million, or $30.94 per share, at September 30, 2025 compared to $210.3 million, or $28.32 per share, at year-end 2024. Tangible book value per share was $24.37 as of September 30, 2025, compared to $21.82 on December 31, 2024. Net unrealized losses in the AFS securities portfolio reduced tangible book value per share by $1.36 and $2.82 for the respective periods. Share repurchases totaled 19,096 during the third quarter and 122,502 during the first nine months of 2025 at an average price of approximately $32.00 and $26.60, respectively. RESULTS OF OPERATIONS (Comparison of the three and nine months ended September 30, 2025, and 2024, unless otherwise noted) Net income in the third quarter of 2025 was $5.2 million, or $0.71 per diluted share, compared with $3.3 million, or $0.44 per diluted share, in the same quarter 2024. Net income for the year-to-date period of 2025 was $14.2 million, or $1.92 per diluted share, compared with $9.9 million, or $1.32 per diluted share, in the same period of 2024. Net interest income was $16.2 million in the third quarter of 2025 and $14.5 million in the same quarter of 2024, representing 3.15% and 2.96% of earning assets, or NIM, respectively. The book yield from securities was 2.42% and 2.17% during the third quarters of 2025 and 2024, respectively. The yield on loans expanded to 5.78% in the third quarter 2025, up from 5.72% in the same 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 third quarter of 2025 decreased to 2.25% from 2.42% in the third quarter of 2024 due to reductions to rates in the money market and certificate of deposit products. NIM is expected to continue to expand as loans reprice and the cost of interest-bearing liabilities stabilizes. For the first nine months of 2025, net interest income was $45.8 million compared with $41.3 million in the same period of 2024. The comparison of NIM and yield on interest earning assets for the nine months ended September 30, 2025 were 3.12% and 4.80%, respectively, compared to 2.87% and 4.62%, respectively, for the same period in 2024. The yield on loans expanded to 5.75%, from 5.55%, and the cost of interest-bearing liabilities decreased to 2.25% from 2.36% for the first nine months of 2025 and 2024, respectively. The explanations for the improvement in NIM are consistent with those provided in the year-over-year three month comparison above. The provision for credit losses in the third quarter of 2025 was $209 thousand, which reflects a $172 thousand increase in the ACL on loans, net charge offs totaling $74 thousand, and an increase in the reserve for unfunded commitments. The provision for loan losses in the same period of 2024 was $946 thousand, reflecting growth in core loans, unfunded commitments, and $1.8 million in charge offs. The increase in charge offs was related to overdrawn deposit accounts from a single customer. The year-to-date provision for credit loss was a credit of $1.0 million, as compared to a provision of $1.5 million in the third quarter 2024. Recoveries during 2025 totaled $2.1 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 2024 and $0.16 in 2025. Noninterest income for the three months ended September 30, 2025 and 2024 was $4.3 million and $3.5 million, respectively. Service charges and fees increased $219 thousand and was mostly the result of profitability initiatives designed to increase fee income. Wealth management fees grew $71 thousand due to growth in assets under management throughout the year. Earnings on BOLI policies increased $216 thousand over the prior year quarter due to new investments in a separate account BOLI, which was offset in part by a one-time expense of $120 thousand due to restructuring charges. Noninterest income during the third quarter of 2025 also includes a $163 thousand gain on the redemption of a BOLI policy. For the first nine months of 2025, noninterest income was $11.5 million, compared to $10.6 million in the same period of 2024. Increases in service charges and fees, wealth management fees, earnings on BOLI policies, and other income for the nine-month comparison are the same as the three-month comparison. Noninterest expenses for the three-month period ended September 30, 2025 increased $757 thousand compared to the same period in 2024. Compensation and benefit expenses increased $379 thousand reflecting annual merit increases in 2025, incentives, and higher medical insurance claims compared to the third quarter of 2024. Other professional services increased $263 thousand primarily due to an increase in outsourced services. For the first nine months of 2025, noninterest expenses were $41.0 million, compared to $38.8 million in the same period of 2024. Compensation and benefits increased $1.3 million for the same reasons as the three-month comparison. Other professional service fees increased $797 thousand principally due to $173 thousand of profitability initiative costs, $168 thousand in legal fees related to our uplisting of the Company's shares of common stock from the OTCQX market to the Nasdaq Capital Market, and an increased reliance on outsourced professional services. 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) the impacts related to or resulting from uncertainty 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 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) the receipt of required regulatory approvals; (xviii) changes in tax laws; (xix) the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; (xx) potential costs related to the impacts of climate change; (xxi) current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxii) 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 [A] SELECTED FINANCIAL DATA (UNAUDITED) (Dollars in thousands except per share amounts and ratios) The following table outlines selected financial data as of, and for the: Three Months Ended Nine Months Ended September 30 2025 June 30 2025 March 31 2025 December 31 2024 September 30 2024 September 30 2025 September 30 2024 PER SHARE Basic earnings $ 0.71 $ 0.68 $ 0.53 $ 0.54 $ 0.44 $ 1.93 $ 1.32 Diluted earnings 0.71 0.68 0.53 0.54 0.44 1.92 1.32 Dividends 0.28 0.28 0.28 0.28 0.28 0.84 0.84 Book value (1) 30.94 29.95 29.10 28.32 28.63 30.94 28.63 Tangible book value(1) (2) 24.37 23.39 22.58 21.82 22.14 24.37 22.14 Market price(1) 35.25 30.15 23.59 25.99 21.21 35.25 21.21 Common shares outstanding(1) (3) 7,350,567 7,361,684 7,408,010 7,424,893 7,438,720 7,350,567 7,438,720 Average number of diluted common shares outstanding (3) 7,371,652 7,398,109 7,432,162 7,451,718 7,473,184 7,399,441 7,492,404 PERFORMANCE RATIOS Return on average total assets 0.94 % 0.96 % 0.77 % 0.76 % 0.62 % 0.89 % 0.64 % Return on average shareholders' equity 9.28 % 9.19 % 7.48 % 7.47 % 6.26 % 8.67 % 6.47 % Return on average tangible shareholders' equity(1) 11.83 % 11.78 % 9.65 % 9.66 % 8.15 % 11.12 % 8.48 % Net interest margin yield (fully taxable equivalent)(1) 3.15 % 3.14 % 3.06 % 2.98 % 2.96 % 3.12 % 2.87 % Efficiency ratio 67.51 % 70.53 % 71.73 % 71.08 % 72.30 % 69.80 % 73.65 % Gross loan to deposit ratio(1) 74.36 % 75.57 % 76.07 % 81.48 % 79.93 % 74.36 % 79.93 % Shareholders' equity to total assets(1) 10.06 % 10.23 % 10.25 % 10.08 % 10.11 % 10.06 % 10.11 % Tangible shareholders' equity to tangible assets(1) 8.10 % 8.17 % 8.14 % 7.95 % 8.00 % 8.10 % 8.00 % ASSETS UNDER MANAGEMENT Wealth assets under management(1) 679,724 678,959 656,617 658,042 679,858 679,724 679,858 ASSET QUALITY Nonaccrual loans (1) 3,443 1,164 173 282 547 3,443 547 Foreclosed assets (1) 1,018 667 649 544 546 1,018 546 Net loan charge-offs (recoveries) 74 (1,432 ) (52 ) 102 1,359 (1,410 ) 1,798 Net loan charge-offs (recoveries) to average loans outstanding 0.01 % (0.10) % 0.00 % 0.01 % 0.10 % (0.10) % 0.13 % Nonperforming loans to gross loans(1) 0.24 % 0.09 % 0.01 % 0.02 % 0.04 % 0.24 % 0.04 % Nonperforming assets to total assets(1) 0.20 % 0.09 % 0.04 % 0.04 % 0.06 % 0.20 % 0.06 % Allowance for credit losses to gross loans(1) 0.92 % 0.93 % 0.93 % 0.91 % 0.89 % 0.92 % 0.89 % CAPITAL RATIOS(1) Tier 1 leverage 8.71 % 9.04 % 8.96 % 8.86 % 8.77 % 8.71 % 8.77 % Common equity tier 1 capital 12.37 % 12.46 % 12.58 % 12.21 % 12.08 % 12.37 % 12.08 % Tier 1 risk-based capital 12.37 % 12.46 % 12.58 % 12.21 % 12.08 % 12.37 % 12.08 % Total risk-based capital 15.20 % 15.34 % 15.50 % 15.06 % 14.90 % 15.20 % 14.90 % (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 [B] CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) September 30 2025 June 30 2025 March 31 2025 December 31 2024 September 30 2024 ASSETS Cash and demand deposits due from banks $ 32,124 $ 34,246 $ 28,786 $ 22,830 $ 27,019 Fed Funds sold and interest bearing balances due from banks 129,177 74,308 40,393 1,712 359 Total cash and cash equivalents 161,301 108,554 69,179 24,542 27,378 Available-for-sale securities, at fair value 511,970 500,560 513,040 489,029 506,806 Federal Home Loan Bank stock 5,600 5,600 5,600 12,762 12,762 Mortgage loans held-for-sale 737 55 127 242 504 Loans 1,431,905 1,397,513 1,367,724 1,423,571 1,424,283 Less allowance for credit losses 13,149 12,977 12,735 12,895 12,635 Net loans 1,418,756 1,384,536 1,354,989 1,410,676 1,411,648 Premises and equipment 28,659 28,171 28,108 27,659 27,674 Cash surrender value of bank-owned life insurance policies 45,651 45,774 45,833 34,882 34,625 Goodwill and other intangible assets 48,282 48,282 48,282 48,283 48,283 Other assets 38,698 34,636 37,429 38,166 37,221 Total assets $ 2,259,654 $ 2,156,168 $ 2,102,587 $ 2,086,241 $ 2,106,901 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Demand deposits $ 421,027 $ 493,477 $ 404,194 $ 416,373 $ 421,493 Interest bearing demand deposits 248,666 223,376 243,939 237,548 228,902 Money market deposits 558,212 446,845 473,138 423,883 471,745 Savings 292,899 289,746 286,399 281,665 276,095 Certificates of deposit 404,798 395,932 390,239 387,591 383,597 Total deposits 1,925,602 1,849,376 1,797,909 1,747,060 1,781,832 Short-term borrowings 62,022 43,208 47,310 53,567 52,434 Federal Home Loan Bank advances - - - 30,000 15,000 Subordinated debt, net of unamortized issuance costs 29,492 29,469 29,447 29,424 29,402 Total borrowed funds 91,514 72,677 76,757 112,991 96,836 Other liabilities 15,118 13,615 12,365 15,914 15,248 Total liabilities 2,032,234 1,935,668 1,887,031 1,875,965 1,893,916 Shareholders' equity Common stock 124,284 124,607 125,547 126,224 125,218 Shares to be issued for deferred compensation obligations 2,373 2,331 2,508 2,383 3,981 Retained earnings 111,172 107,949 104,940 103,024 101,065 Accumulated other comprehensive loss (10,409 ) (14,387 ) (17,439 ) (21,355 ) (17,279 ) Total shareholders' equity 227,420 220,500 215,556 210,276 212,985 Total liabilities and shareholders' equity $ 2,259,654 $ 2,156,168 $ 2,102,587 $ 2,086,241 $ 2,106,901 [C] CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts) Three Months Ended Nine Months Ended September 30 2025 June 30 2025 March 31 2025 December 31 2024 September 30 2024 September 30 2025 September 30 2024 Interest income Loans $ 20,583 $ 19,832 $ 19,348 $ 20,145 $ 20,230 $ 59,763 $ 57,150 Available-for-sale securities 2,994 3,032 2,643 2,656 2,749 8,669 8,437 Federal Home Loan Bank stock 70 125 160 168 168 355 472 Federal funds sold and other 1,235 253 482 200 194 1,970 750 Total interest income 24,882 23,242 22,633 23,169 23,341 70,757 66,809 Interest expense Deposits 8,012 7,391 7,463 7,583 7,631 22,866 22,107 Short-term borrowings 441 324 341 413 384 1,106 1,026 Federal Home Loan Bank advances - 132 38 352 571 170 1,597 Subordinated debt 267 266 266 266 267 799 799 Total interest expense 8,720 8,113 8,108 8,614 8,853 24,941 25,529 Net interest income 16,162 15,129 14,525 14,555 14,488 45,816 41,280 Provision (reversal) for credit losses 209 (1,099 ) (107 ) 376 946 (997 ) 1,508 Net interest income after provision for credit losses 15,953 16,228 14,632 14,179 13,542 46,813 39,772 Noninterest income Service charges and fees 2,352 2,071 1,974 2,186 2,133 6,397 6,089 Wealth management fees 1,074 1,084 979 1,051 1,003 3,137 2,990 Earnings on bank-owned life insurance policies 468 300 372 259 252 1,140 748 Net gain on sale of mortgage loans 38 47 30 75 37 115 138 Other 376 184 173 401 103 733 639 Total noninterest income 4,308 3,686 3,528 3,972 3,528 11,522 10,604 Noninterest expenses Compensation and benefits 7,630 7,496 7,383 7,340 7,251 22,509 21,236 Occupancy and equipment 2,628 2,650 2,600 2,554 2,645 7,878 7,970 Other professional services 851 863 711 584 588 2,425 1,628 ATM and debit card fees 595 555 486 516 503 1,636 1,459 Marketing 514 469 459 458 403 1,442 1,254 FDIC insurance premiums 271 267 303 309 291 841 823 Other losses 47 339 115 209 347 501 908 Other 1,449 1,106 1,242 1,360 1,200 3,797 3,521 Total noninterest expenses 13,985 13,745 13,299 13,330 13,228 41,029 38,799 Income before income tax expense 6,276 6,169 4,861 4,821 3,842 17,306 11,577 Income tax expense 1,036 1,138 912 825 561 3,086 1,684 Net income $ 5,240 $ 5,031 $ 3,949 $ 3,996 $ 3,281 $ 14,220 $ 9,893 Earnings per common share Basic $ 0.71 $ 0.68 $ 0.53 $ 0.54 $ 0.44 $ 1.93 $ 1.32 Diluted 0.71 0.68 0.53 0.54 0.44 1.92 1.32 Cash dividends per common share 0.28 0.28 0.28 0.28 0.28 0.84 0.84 [D] 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 September 30, 2025 June 30, 2025 September 30, 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) $ 1,409,928 $ 20,583 5.78 % $ 1,388,684 $ 19,832 5.71 % $ 1,403,810 $ 20,230 5.72 % AFS securities (2) 517,286 3,172 2.42 % 534,352 3,210 2.38 % 536,379 2,981 2.17 % Federal Home Loan Bank stock 5,600 70 4.95 % 5,600 125 8.94 % 12,762 168 5.26 % Fed funds sold 186 2 4.35 % 6 - 3.83 % 4 - 5.36 % Other(3) 123,183 1,233 3.92 % 20,487 253 4.92 % 14,597 194 5.18 % Total interest earning assets 2,056,183 25,060 4.83 % 1,949,129 23,420 4.81 % 1,967,552 23,573 4.75 % NONEARNING ASSETS Allowance for credit losses (13,057 ) (13,369 ) (13,125 ) Cash and demand deposits due from banks 25,591 22,026 25,903 Premises and equipment 28,313 28,306 27,868 Other assets 109,692 106,595 87,002 Total assets $ 2,206,722 $ 2,092,687 $ 2,095,200 INTEREST BEARING LIABILITIES Interest bearing demand deposits $ 234,105 144 0.24 % $ 236,076 220 0.37 % $ 232,018 161 0.28 % Money market deposits 534,127 3,533 2.63 % 449,110 2,857 2.55 % 451,216 3,148 2.77 % Savings 289,442 560 0.77 % 286,434 544 0.76 % 274,828 423 0.61 % Certificates of deposit 399,781 3,775 3.75 % 395,450 3,770 3.82 % 375,936 3,899 4.13 % Short-term borrowings 52,700 441 3.32 % 41,661 324 3.11 % 48,304 384 3.17 % Federal Home Loan Bank advances - - - % 11,539 132 4.53 % 40,435 571 5.52 % Subordinated debt, net of unamortized issuance costs 29,477 267 3.61 % 29,455 266 3.61 % 29,388 267 3.62 % Total interest bearing liabilities 1,539,632 8,720 2.25 % 1,449,725 8,113 2.24 % 1,452,125 8,853 2.42 % NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 428,144 409,262 418,973 Other liabilities 14,976 14,158 15,658 Shareholders' equity 223,970 219,542 208,444 Total liabilities and shareholders' equity $ 2,206,722 $ 2,092,687 $ 2,095,200 Net interest income (FTE) $ 16,340 $ 15,307 $ 14,720 Net yield on interest earning assets (FTE) (4) 3.15 % 3.14 % 2.96 % (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. [E] AVERAGE BALANCES, INTEREST RATE, AND NET INTEREST INCOME (UNAUDITED) (continued) (Dollars in thousands) Nine Months Ended September 30, 2025 September 30, 2024 Average Balance Tax Equivalent Interest Average Yield/Rate Average Balance Tax Equivalent Interest Average Yield/Rate INTEREST EARNING ASSETS Loans(1) $ 1,389,936 $ 59,763 5.75 % $ 1,376,122 $ 57,150 5.55 % AFS securities (2) 522,049 9,210 2.34 % 546,376 9,153 2.23 % Federal Home Loan Bank stock 7,384 355 6.41 % 12,762 472 4.93 % Fed funds sold 66 2 4.35 % 6 - 5.35 % Other(3) 63,959 1,968 3.92 % 17,941 750 5.49 % Total interest earning assets 1,983,394 71,298 4.80 % 1,953,207 67,525 4.62 % NONEARNING ASSETS Allowance for credit losses (13,104 ) (13,216 ) Cash and demand deposits due from banks 23,844 24,623 Premises and equipment 28,195 27,962 Other assets 106,430 83,878 Total assets $ 2,128,759 $ 2,076,454 INTEREST BEARING LIABILITIES Interest bearing demand deposits $ 236,989 606 0.34 % $ 238,703 542 0.30 % Money market deposits 481,571 9,319 2.59 % 445,604 9,437 2.83 % Savings 287,425 1,642 0.76 % 280,447 1,154 0.55 % Certificates of deposit 394,395 11,299 3.83 % 366,672 10,974 4.00 % Short-term borrowings 46,008 1,106 3.21 % 43,197 1,026 3.18 % Federal Home Loan Bank advances 4,945 170 4.53 % 37,883 1,597 5.54 % Subordinated debt, net of unamortized issuance costs 29,455 799 3.61 % 29,365 799 3.63 % Total interest bearing liabilities 1,480,788 24,941 2.25 % 1,441,871 25,529 2.36 % NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 413,568 414,179 Other liabilities 15,131 16,183 Shareholders' equity 219,272 204,221 Total liabilities and shareholders' equity $ 2,128,759 $ 2,076,454 Net interest income (FTE) $ 46,357 $ 41,996 Net yield on interest earning assets (FTE) (4) 3.12 % 2.87 % (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. September 30 2025 June 30 2025 March 31 2025 December 31 2024 September 30 2024 Commercial and industrial (4) $ 218,132 $ 207,719 $ 205,172 $ 200,623 $ 197,372 Commercial real estate (4) 626,642 614,383 596,282 591,718 590,255 Advances to mortgage brokers 5,056 3,005 3,015 63,080 76,187 Agricultural 97,794 96,842 94,359 99,694 96,794 Total commercial loans 947,624 921,949 898,828 955,115 960,608 Residential real estate 412,056 398,668 387,348 380,872 369,846 Consumer 72,225 76,896 81,548 87,584 93,829 Gross loans $ 1,431,905 $ 1,397,513 $ 1,367,724 $ 1,423,571 $ 1,424,283 (4) Certain amounts reported as commercial and industrial loans have been reclassified as commercial real estate loans to conform to the September 30, 2025 presentation [F] RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands except per share amounts and ratios) September 30 2025 June 30 2025 March 31 2025 December 31 2024 September 30 2024 Gross loans $ 1,431,905 $ 1,397,513 $ 1,367,724 $ 1,423,571 $ 1,424,283 Advances to mortgage brokers 5,056 3,005 3,015 63,080 76,187 Core loans $ 1,426,849 $ 1,394,508 $ 1,364,709 $ 1,360,491 $ 1,348,096 Total shareholders' equity $ 227,420 $ 220,500 $ 215,556 $ 210,276 $ 212,985 Goodwill and other intangible assets 48,282 48,282 48,282 48,283 48,283 Tangible equity (A) 179,138 172,218 167,274 161,993 164,702 Common shares outstanding (1) (B) 7,350,567 7,361,684 7,408,010 7,424,893 7,438,720 Tangible book value per share (A/B) 24.37 23.39 22.58 21.82 22.14 (1) Whole shares. SOURCE: Isabella Bank Corporation View the original press release on ACCESS Newswire