Isabella Bank Corporation Reports First Quarter 2025 Results

Rhea-AI Summary

Isabella Bank (OTCQX: ISBA) reported strong Q1 2025 results with net income of $3.9 million ($0.53 per diluted share), up from $3.1 million in Q1 2024. Key highlights include:

- ROA increased to 0.77% from 0.61%
- Net interest margin rose to 3.06% from 2.79%
- Commercial & industrial loan growth of 7% (annualized)
- Non-maturity deposit growth of 14% (annualized)

The bank's total assets reached $2.1 billion, with total loans at $1.4 billion. Notable developments include a $10.6 million investment in new BOLI policies and completion of 45,582 share repurchases valued at $1.1 million. The bank maintains strong credit quality with net loan recoveries and successfully recovered a $1.6 million overdraft charge from Q3 2024. The company expects full implementation of BOLI restructuring and new revenue enhancements by Q3 2025.

MT. PLEASANT, Mich., April 17, 2025 /PRNewswire/ -- Isabella Bank Corporation (OTCQX: ISBA) (the "Company" or "we") reported first quarter 2025 net income of $3.9 million, or $0.53 per diluted share, compared to $3.1 million, or $0.42 per diluted share in the same quarter of 2024. The non-GAAP measure of core earnings in the first quarter 2025 totaled $4.3 million, or $0.57 per diluted share, compared to $3.1 million, or $0.41 per diluted share for the same quarter of 2024.

FIRST QUARTER 2025 HIGHLIGHTS (compared to first quarter 2024, unless otherwise stated)

• Return on assets (ROA) of 0.77%, up from 0.61%
• Commercial & industrial loan growth of 7%, annualized
• Non-maturity deposit growth of 14%, annualized
• Net interest margin of 3.06%, up from 2.79%
• Annualized net loan recoveries to average loans of 0.02%, compared to net charge-offs of 0.01%

"The Company had a strong first quarter as we expanded net interest margin (NIM), increased fee-based income and continued to improve credit quality," said Jerome Schwind, Chief Executive Officer. "NIM has continued an upward trend since the first quarter of 2024 because of earning asset repricing and a lower cost of funds.

"In addition, our credit quality remains strong, and we have a successful history of collecting even when loans are charged off. In the first quarter, we recovered a significant amount of contractual interest related to nonperforming loans, which improved NIM by four basis points. Additionally, in the first week of April, we fully recovered a $1.6 million overdraft charge that was incurred in the third quarter of 2024. All loans to the overdrawn customer have been paid in full. Our ability to recover funds is a testament to our disciplined approach to credit quality and the strong relationships that we build in the communities we serve."

Schwind said the company also executed a strategy during the quarter to restructure a large portion of our bank-owned life insurance policies into a higher-yielding separate account. "While some new policies were added and accretive in the first quarter," he said, "the full transition and impact is expected by the third quarter 2025. We also have completed a study of all other components of fee-based income, and revenue enhancements are expected to launch by the end of the third quarter 2025.

"We are pleased with our start to 2025," Schwind added. "Our team is committed to our customers and communities, and we continue to focus on our fee businesses, balance sheet management, and credit performance. These strategic priorities drive all areas of revenue and expense control, expanding both return on assets and return on capital for the long term."

FINANCIAL CONDITION (March 31, 2025 compared to December 31, 2024, unless otherwise noted)
Total assets were $2.1 billion, up $16.3 million, primarily due to an increase of $38.7 million in interest bearing cash, $19.0 million in gross securities, and $11.0 million increase in bank-owned life insurance (BOLI) assets, offset by a $60.1 million decrease in advances to mortgage brokers.

Available-for-sale (AFS) securities at fair value were $513.0 million, growing $24.0 million at the end of first quarter 2025. The increase was driven by $40.4 million in purchases of collateralized mortgage obligation securities with a weighted-average yield of 4.56%. Amortization and maturities of $21.1 million partially offset the increase from purchases. Net unrealized losses on securities totaled $21.5 million and $26.5 million at the end of the first and fourth quarters, respectively. Net unrealized losses as a percentage of total AFS securities decreased to 4% from 5% at the end of the fourth quarter of 2024 due to the treasury portfolio rapidly approaching maturity and a decrease in market yields. The par value and corresponding book yields that are estimated to mature or pay off by year include: $54.5 million in principal with a weighted-average book yield of 2.34% over the remainder of 2025; $217.4 million at 1.17% in 2026; and $63.4 million at 1.86% in 2027.  Some of these securities amortize so the actual principal paydown may differ from these estimates.

Total loans were $1.4 billion at the end of the first quarter, down $55.8 million mostly due to a $60.1 million decrease in advances to mortgage brokers. However, the decline in this non-core loan product has provided liquidity and the opportunity to refocus on loans that can be recorded on our balance sheet for longer terms and help to mitigate interest rate risk.

Core loans, which excludes advances to mortgage brokers, grew $4.2 million, driven by the commercial real estate (CRE) and commercial and industrial loan portfolios of $4.8 million and $4.3 million, respectively. Loan growth during the first quarter primarily was in the construction, real estate, and hospitality industries. The commercial pipeline is robust, with some anticipated loan closings in the first quarter extended into the second quarter 2025. Residential mortgages increased $6.5 million. Customers are favoring adjustable-rate loans, which are put on the balance sheet rather than sold in the secondary market. Core loan growth during the quarter was offset by a decline in the agricultural and consumer loan portfolios that continue to roll off amid decreasing demand, competition and our adherence to credit quality standards.

The allowance for credit losses decreased $160 thousand to $12.7 million at the end of the first quarter of 2025. The decline mostly reflects improvement in historical loss experience, driven by recoveries from three previously charged-off loans in the quarter totaling $136 thousand, which led to an $88 thousand reduction in the allowance. Nonaccrual loan balances decreased $109 thousand to $173 thousand. Past due and accruing accounts between 30 to 89 days, as a percentage of total loans, was 0.41% compared to 0.40% at the end of fourth quarter 2024.

BOLI assets increased by $11.0 million from December, mostly due to a $10.6 million investment of new policies in a separate account product at the beginning of January. The investment transaction included a surrender of $5.4 million of existing general account policies and redeployment into a separate account BOLI. As part of BOLI restructuring, another $9 million of general account policies will be exchanged for separate account BOLI, which is expected to be completed by the end of third quarter. The separate account BOLI currently yields 5.4%, compared to a weighted-average yield of 2.9% from existing general account policies.

Total deposits were $1.80 billion, increasing $50.8 million, at the end of the first quarter. The growth was driven by the interest-bearing demand, money market, and savings deposits, collectively increasing $60.4 million as we continue to deepen customer relationships. Certificates of Deposit accounts were up $2.6 million, driven by the rate environment.

Tangible book value per share was $22.58 as of March 31, 2025, compared to $21.82. Net unrealized losses on AFS securities reduced tangible book value per share by $2.30 and $2.82 for the respective periods. Share repurchases totaled 45,582 during the first quarter for a value of $1.1 million at an average price of $25.12.

RESULTS OF OPERATIONS (March 31, 2025 to March 31, 2024 quarterly comparison, unless otherwise noted)
NIM was 3.06%, an increase from 2.98% in the fourth quarter 2024 and from 2.79% in the first quarter of 2024. During the first quarter, we recovered the full contractual interest from nonaccruing loans that paid off, which contributed four basis points to NIM. The book yield from securities was 2.20% and 2.25% during the first quarters of 2025 and 2024, respectively. The yield on loans expanded to 5.71% in the first quarter, up from 5.38% in the same quarter of 2024. Excluding loan recoveries, the yield on loans was 5.65%. The expansion in loan yields was a result of higher rates on new loans and variable rate commercial loans that have, and continue to, reprice. At the end of the first quarter, approximately 39% 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 was 2.26%, decreasing from 2.28% in the first quarter of 2024, and 2.38% in the previous quarter, due to reductions to rates in the money market and certificate of deposit products.

The provision for credit losses in the first quarter 2025 was a credit of $107 thousand, which reflects the $160 thousand change in the allowance for credit losses on loans and net recoveries totaling $52 thousand, offset by an increase in the reserve for unfunded commitments. The provision for loan losses in the same period of 2024 was $392 thousand reflecting $265 thousand for specific reserves and $46 thousand in net charge-offs.

Noninterest income was $3.5 million in the first quarter of 2025, the same as in the first quarter of 2024. Wealth management income increased $40 thousand on relatively flat assets under management (AUM) as compared to AUM in the first quarter of 2024. AUM in the first quarter 2025 decreased 0.22% while the S&P 500 declined 4.6% in the same period. Earnings on BOLI policies increased $129 thousand over the prior year quarter due to new investments in a separate account BOLI. Other noninterest income in the first quarter 2025 included a $55 thousand loss on foreclosed assets, compared to a $69 thousand gain in the first quarter 2024.

Noninterest expenses were $13.3 million in the first quarter 2025 compared to $12.7 million in same quarter of 2024. The change mostly was due to higher compensation and benefit expenses totaling $368 thousand, which reflect annual merit increases in 2025 and more medical insurance claims compared to the first quarter of 2024. Professional services included $121 thousand in legal fees related to our previously announced Nasdaq uplisting application.

Income tax expense was $912 thousand, compared to $511 thousand in the first quarter of 2024 and the effective tax rate (ETR) was 19% and 14%, respectively. The ETR in the first quarter 2025 included a one-time expense totaling $166 thousand due to the taxes owed from the lifetime earnings on BOLI policies that were surrendered during the quarter. Excluding the one-time charge, the ETR was 15%, which is higher than the prior year quarter on higher pretax income.

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).

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, 2024, 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
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
PER SHARE
Basic earnings	$        0.53		$        0.54		$        0.44		$        0.47		$        0.42
Diluted earnings	0.53		0.54		0.44		0.46		0.42
Core diluted earnings (1)	0.57		0.52		0.61		0.46		0.41
Dividends	0.28		0.28		0.28		0.28		0.28
Book value (2)	29.10		28.32		28.63		27.06		26.80
Tangible book value (2)	22.58		21.82		22.14		20.60		20.35
Market price (2)	23.59		25.99		21.21		18.20		19.40
Common shares outstanding (2) (3)	7,408,010		7,424,893		7,438,720		7,474,016		7,488,101
Average number of diluted common shares outstanding (3)	7,432,162		7,451,718		7,473,184		7,494,828		7,507,739
PERFORMANCE RATIOS
Return on average total assets	0.77 %		0.76 %		0.62 %		0.68 %		0.61 %
Core return on average total assets (1)	0.83 %		0.74 %		0.87 %		0.68 %		0.60 %
Return on average shareholders' equity	7.48 %		7.47 %		6.26 %		6.97 %		6.19 %
Core return on average shareholders' equity (1)	8.05 %		7.29 %		8.70 %		6.96 %		6.08 %
Return on average tangible shareholders' equity	9.65 %		9.66 %		8.15 %		9.19 %		8.12 %
Core return on average tangible shareholders' equity (1)	10.40 %		9.43 %		11.32 %		9.17 %		7.97 %
Net interest margin yield (fully taxable equivalent) (1)	3.06 %		2.98 %		2.96 %		2.82 %		2.79 %
Efficiency ratio (1)	72.39 %		71.20 %		72.30 %		73.93 %		74.84 %
Gross loan to deposit ratio (2)	76.07 %		81.48 %		79.93 %		80.22 %		77.22 %
Shareholders' equity to total assets (2)	10.25 %		10.08 %		10.11 %		9.82 %		9.75 %
Tangible shareholders' equity to tangible assets (2)	8.14 %		7.95 %		8.00 %		7.65 %		7.58 %
ASSETS UNDER MANAGEMENT
Wealth assets under management (2)	656,617		658,042		679,858		647,850		660,645
ASSET QUALITY
Nonaccrual loans (2)	173		282		547		994		1,283
Foreclosed assets (2)	649		544		546		629		579
Net loan charge-offs (recoveries)	(52)		102		1,359		393		46
Net loan charge-offs (recoveries) to average loans outstanding	0.00 %		0.01 %		0.10 %		0.03 %		0.00 %
Nonperforming loans to gross loans (2)	0.01 %		0.02 %		0.04 %		0.07 %		0.09 %
Nonperforming assets to total assets (2)	0.04 %		0.04 %		0.06 %		0.08 %		0.09 %
Allowance for credit losses to gross loans (2)	0.93 %		0.91 %		0.89 %		0.95 %		0.98 %
CAPITAL RATIOS (2)
Tier 1 leverage	8.96 %		8.86 %		8.77 %		8.83 %		8.80 %
Common equity tier 1 capital	12.48 %		12.21 %		12.08 %		12.37 %		12.36 %
Tier 1 risk-based capital	12.48 %		12.21 %		12.08 %		12.37 %		12.36 %
Total risk-based capital	15.37 %		15.06 %		14.90 %		15.29 %		15.31 %

(1)	Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I
(2)	At end of period
(3)	Whole shares

A

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
ASSETS
Cash and demand deposits due from banks	$         28,786		$         22,830		$         27,019		$         22,690		$         22,987
Fed Funds sold and interest bearing balances due from banks	40,393		1,712		359		869		2,231
Total cash and cash equivalents	69,179		24,542		27,378		23,559		25,218
Available-for-sale securities, at fair value	513,040		489,029		506,806		505,646		517,585
Federal Home Loan Bank stock	5,600		12,762		12,762		12,762		12,762
Mortgage loans held-for-sale	127		242		504		637		366
Loans	1,367,724		1,423,571		1,424,283		1,381,636		1,365,508
Less allowance for credit losses	12,735		12,895		12,635		13,095		13,390
Net loans	1,354,989		1,410,676		1,411,648		1,368,541		1,352,118
Premises and equipment	28,108		27,659		27,674		27,843		27,951
Cash surrender value of bank-owned life insurance policies	45,833		34,882		34,625		34,382		34,131
Goodwill and other intangible assets	48,282		48,283		48,283		48,283		48,284
Other assets	37,429		38,166		37,221		38,486		39,161
Total assets	$    2,102,587		$    2,086,241		$    2,106,901		$    2,060,139		$    2,057,576
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Demand deposits	$       404,194		$       416,373		$       421,493		$       412,193		$       413,272
Interest bearing demand deposits	243,939		237,548		228,902		232,660		250,314
Money market deposits	473,138		423,883		471,745		429,150		453,014
Savings	286,399		281,665		276,095		279,847		285,564
Certificates of deposit	390,239		387,591		383,597		368,449		366,143
Total deposits	1,797,909		1,747,060		1,781,832		1,722,299		1,768,307
Short-term borrowings	47,310		53,567		52,434		44,194		42,998
Federal Home Loan Bank advances	—		30,000		15,000		45,000		—
Subordinated debt, net of unamortized issuance costs	29,447		29,424		29,402		29,380		29,357
Total borrowed funds	76,757		112,991		96,836		118,574		72,355
Other liabilities	12,365		15,914		15,248		17,017		16,240
Total liabilities	1,887,031		1,875,965		1,893,916		1,857,890		1,856,902
Shareholders' equity
Common stock	125,547		126,224		125,218		126,126		126,656
Shares to be issued for deferred compensation obligations	2,508		2,383		3,981		3,951		3,890
Retained earnings	104,940		103,024		101,065		99,808		98,318
Accumulated other comprehensive income (loss)	(17,439)		(21,355)		(17,279)		(27,636)		(28,190)
Total shareholders' equity	215,556		210,276		212,985		202,249		200,674
Total liabilities and shareholders' equity	$    2,102,587		$    2,086,241		$    2,106,901		$    2,060,139		$    2,057,576

B

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts)
	Three Months Ended   March 31
	2025		2024
Interest income
Loans	$         19,348		$         18,057
Available-for-sale securities	2,643		2,884
Federal Home Loan Bank stock	160		146
Federal funds sold and other	482		293
Total interest income	22,633		21,380
Interest expense
Deposits	7,463		7,163
Short-term borrowings	341		321
Federal Home Loan Bank advances	38		388
Subordinated debt	266		266
Total interest expense	8,108		8,138
Net interest income	14,525		13,242
Provision for credit losses	(107)		392
Net interest income after provision for credit losses	14,632		12,850
Noninterest income
Service charges and fees	1,974		1,933
Wealth management fees	979		939
Earnings on bank-owned life insurance policies	372		243
Net gain on sale of mortgage loans	30		34
Other	173		319
Total noninterest income	3,528		3,468
Noninterest expenses
Compensation and benefits	7,383		7,015
Occupancy and equipment	2,600		2,706
Other professional services	711		513
ATM and debit card fees	486		469
Marketing	459		426
FDIC insurance premiums	303		252
Other	1,357		1,295
Total noninterest expenses	13,299		12,676
Income before income tax expense	4,861		3,642
Income tax expense	912		511
Net income	$           3,949		$           3,131
Earnings per common share
Basic	$              0.53		$              0.42
Diluted	0.53		0.42
Cash dividends per common share	0.28		0.28

C

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts)
	Three Months Ended
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
Interest income
Loans	$         19,348		$         20,145		$         20,230		$         18,863		18,057
Available-for-sale securities	2,643		2,656		2,749		2,804		2,884
Federal Home Loan Bank stock	160		168		168		158		146
Federal funds sold and other	482		200		194		263		293
Total interest income	22,633		23,169		23,341		22,088		21,380
Interest expense
Deposits	7,463		7,583		7,631		7,313		7,163
Short-term borrowings	341		413		384		321		321
Federal Home Loan Bank advances	38		352		571		638		388
Subordinated debt	266		266		267		266		266
Total interest expense	8,108		8,614		8,853		8,538		8,138
Net interest income	14,525		14,555		14,488		13,550		13,242
Provision for credit losses	(107)		376		946		170		392
Net interest income after provision for credit losses	14,632		14,179		13,542		13,380		12,850
Noninterest income
Service charges and fees	1,974		2,186		2,133		2,023		1,933
Wealth management fees	979		1,051		1,003		1,048		939
Earnings on bank-owned life insurance policies	372		259		252		253		243
Net gain on sale of mortgage loans	30		75		37		67		34
Other	173		401		103		217		319
Total noninterest income	3,528		3,972		3,528		3,608		3,468
Noninterest expenses
Compensation and benefits	7,383		7,340		7,251		6,970		7,015
Occupancy and equipment	2,600		2,554		2,645		2,619		2,706
Other professional services	711		584		588		527		513
ATM and debit card fees	486		516		503		487		469
Marketing	459		458		403		425		426
FDIC insurance premiums	303		309		291		280		252
Other	1,357		1,569		1,547		1,587		1,295
Total noninterest expenses	13,299		13,330		13,228		12,895		12,676
Income before income tax expense	4,861		4,821		3,842		4,093		3,642
Income tax expense	912		825		561		612		511
Net income	$           3,949		$           3,996		$           3,281		$           3,481		$           3,131
Earnings per common share
Basic	$              0.53		$              0.54		$              0.44		$              0.47		$              0.42
Diluted	0.53		0.54		0.44		0.46		0.42
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,  nonearning assets, interest bearing liabilities, and noninterest bearing liabilities. For analytical purposes, interest income is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%.  Federal Reserve Bank restricted equity holdings are included in other interest earning assets.
	Three Months Ended
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
INTEREST EARNING ASSETS
Loans (1)	5.71 %		5.66 %		5.72 %		5.50 %		5.38 %
Available-for-sale securities	2.20 %		2.15 %		2.17 %		2.17 %		2.25 %
Federal Home Loan Bank stock	5.82 %		5.25 %		5.26 %		4.97 %		4.57 %
Fed funds sold	4.32 %		4.54 %		5.36 %		5.30 %		5.43 %
Other	4.06 %		4.94 %		5.18 %		7.38 %		4.66 %
Total interest earning assets	4.75 %		4.72 %		4.75 %		4.59 %		4.47 %
INTEREST BEARING LIABILITIES
Interest bearing demand deposits	0.41 %		0.36 %		0.28 %		0.30 %		0.33 %
Money market deposits	2.58 %		2.71 %		2.77 %		2.85 %		2.86 %
Savings	0.76 %		0.64 %		0.61 %		0.56 %		0.47 %
Certificates of deposit	3.93 %		4.07 %		4.13 %		4.01 %		3.84 %
Short-term borrowings	3.18 %		3.22 %		3.17 %		3.18 %		3.17 %
Federal Home Loan Bank advances	4.53 %		4.88 %		5.52 %		5.55 %		5.54 %
Subordinated debt, net of unamortized issuance costs	3.62 %		3.62 %		3.62 %		3.63 %		3.63 %
Total interest bearing liabilities	2.26 %		2.38 %		2.42 %		2.38 %		2.28 %
Net yield on interest earning assets (FTE) (2)	3.06 %		2.98 %		2.96 %		2.82 %		2.79 %
Net interest spread	2.49 %		2.34 %		2.33 %		2.21 %		2.19 %

(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
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
INTEREST EARNING ASSETS
Loans (1)	$    1,370,765		$    1,412,578		$    1,403,810		$    1,375,523		$    1,348,749
Available-for-sale securities (2)	514,479		522,733		536,379		545,827		557,030
Federal Home Loan Bank stock	11,011		12,762		12,762		12,762		12,762
Fed funds sold	4		8		4		7		7
Other (3)	47,374		15,905		14,597		14,054		25,210
Total interest earning assets	1,943,633		1,963,986		1,967,552		1,948,173		1,943,758
NONEARNING ASSETS
Allowance for credit losses	(12,884)		(12,598)		(13,125)		(13,431)		(13,100)
Cash and demand deposits due from banks	23,899		22,800		25,903		23,931		24,018
Premises and equipment	27,962		27,773		27,868		27,999		28,022
Other assets	102,927		92,608		87,002		80,539		84,059
Total assets	$    2,085,537		$    2,094,569		$    2,095,200		$    2,067,211		$    2,066,757
INTEREST BEARING LIABILITIES
Interest bearing demand deposits	$       240,860		$       232,271		$       232,018		$       238,866		$       245,299
Money market deposits	460,663		436,235		451,216		434,061		451,476
Savings	286,364		276,856		274,828		283,605		282,971
Certificates of deposit	387,820		386,871		375,936		366,440		357,541
Short-term borrowings	43,563		50,862		48,304		40,609		40,623
Federal Home Loan Bank advances	3,333		28,261		40,435		45,494		27,692
Subordinated debt, net of unamortized issuance costs	29,433		29,410		29,388		29,365		29,342
Total interest bearing liabilities	1,452,036		1,440,766		1,452,125		1,438,440		1,434,944
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits	403,024		425,116		418,973		411,282		412,228
Other liabilities	16,265		15,775		15,658		16,755		16,151
Shareholders' equity	214,212		212,912		208,444		200,734		203,434
Total liabilities and shareholders' equity	$    2,085,537		$    2,094,569		$    2,095,200		$    2,067,211		$    2,066,757

(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:
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
NONPERFORMING ASSETS
Commercial and industrial	$               —		$               —		$             120		$             271		$             567
Commercial real estate	—		—		—		—		234
Agricultural	—		—		—		167		189
Residential real estate	173		282		427		556		293
Consumer	—		—		—		—		—
Total nonaccrual loans	173		282		547		994		1,283
Accruing loans past due 90 days or more	26		19		64		15		—
Total nonperforming loans	199		301		611		1,009		1,283
Foreclosed assets	649		544		546		629		579
Debt securities	—		—		12		12		12
Total nonperforming assets	$             848		$             845		$          1,169		$          1,650		$          1,874
Nonperforming loans to gross loans	0.01 %		0.02 %		0.04 %		0.07 %		0.09 %
Nonperforming assets to total assets	0.04 %		0.04 %		0.06 %		0.08 %		0.09 %
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	$        12,895		$        12,635		$        13,095		$        13,390		$        13,108
Charge-offs	172		299		1,767		527		191
Recoveries	224		197		408		134		145
Net loan charge-offs (recoveries)	(52)		102		1,359		393		46
Provision for credit losses - loans	(212)		362		899		98		328
Allowance at end of period	$        12,735		$        12,895		$        12,635		$        13,095		$        13,390
Allowance for credit losses to gross loans	0.93 %		0.91 %		0.89 %		0.95 %		0.98 %
Reserve for unfunded commitments	617		512		498		450		379
Provision for credit losses - unfunded commitments	105		14		47		72		64
Reserve to unfunded commitments	0.14 %		0.15 %		0.15 %		0.14 %		0.11 %
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial	$             (80)		$               13		$               (6)		$             334		$               (2)
Commercial real estate	(2)		(2)		(318)		(29)		(6)
Agricultural	—		(4)		—		—		(2)
Residential real estate	(13)		(16)		(20)		(19)		(63)
Consumer	43		111		1,703		107		119
Total	$             (52)		$             102		$          1,359		$             393		$               46
Net (recoveries) charge-offs (Quarter to Date annualized to average loans)	(0.02) %		0.03 %		0.39 %		0.11 %		0.01 %
Net (recoveries) charge-offs (Year to Date annualized to average loans)	(0.02) %		0.14 %		0.17 %		0.00 %		0.01 %
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due	$          5,555		$          5,682		$          2,226		$          1,484		$          7,938
Accruing loans past due 90 days or more	26		19		64		15		—
Total accruing past due loans	5,581		5,701		2,290		1,499		7,938
Nonaccrual loans	173		282		547		994		1,283
Total past due and nonaccrual loans	$          5,754		$          5,983		$          2,837		$          2,493		$          9,221

(1)	N/M:  Not meaningful

G

CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED) (Dollars in thousands)
Loan Analysis
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024		Annualized Growth % Quarter to Date
Commercial and industrial	$       249,220		$       244,894		$       240,589		$       238,245		$       226,281		7.07 %
Commercial real estate	552,234		547,447		547,038		547,005		561,123		3.50 %
Advances to mortgage brokers	3,015		63,080		76,187		39,300		29,688		N/M
Agricultural	94,359		99,694		96,794		94,996		93,695		(21.41) %
Total commercial loans	898,828		955,115		960,608		919,546		910,787		(23.57) %
Residential real estate	387,348		380,872		369,846		365,188		356,658		6.80 %
Consumer	81,548		87,584		93,829		96,902		98,063		(27.57) %
Gross loans	$    1,367,724		$    1,423,571		$    1,424,283		$    1,381,636		$    1,365,508		(15.69) %
Deposit Analysis
	March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024		Annualized Growth % Quarter to Date
Noninterest bearing demand deposits	$       404,194		$       416,373		$       421,493		$       412,193		$       413,272		(11.70) %
Interest bearing demand deposits	243,939		237,548		228,902		232,660		250,314		10.76 %
Money market deposits	473,138		423,883		471,745		429,150		453,014		46.48 %
Savings	286,399		281,665		276,095		279,847		285,564		6.72 %
Certificates of deposit	390,239		387,591		383,597		368,449		366,143		2.73 %
Total deposits	$    1,797,909		$    1,747,060		$    1,781,832		$    1,722,299		$    1,768,307		11.64 %

H

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands except per share amounts and ratios)
		Three Months Ended
		March 31 2025		December 31 2024		September 30 2024		June 30 2024		March 31 2024
Net income		$        3,949		$        3,996		$        3,281		$        3,481		$        3,131
Nonrecurring items
Net gains (losses) on foreclosed assets		(55)		74		4		6		69
Overdraft (charge-off) recoveries (1)		—		66		(1,622)		—		—
Profitability initiative cost		—		(23)		—		—		—
Legal fees related to Nasdaq (2)		(121)		—		—		—		—
Income tax impact		37		(25)		340		(1)		(14)
Tax expense on bank-owned life insurance surrender (3)		(166)		—		—		—		—
Total nonrecurring items		(305)		92		(1,278)		5		55
Core net income	(A)	$        4,254		$        3,904		$        4,559		$        3,476		$        3,076
Noninterest expenses		$     13,299		$     13,330		$     13,228		$     12,895		$     12,676
Amortization of acquisition intangibles		1		1		—		1		—
Core noninterest expense	(B)	$     13,298		$     13,329		$     13,228		$     12,894		$     12,676
Net interest income		$     14,525		$     14,555		$     14,488		$     13,550		$     13,242
Tax equivalent adjustment for net interest margin		184		213		232		237		246
Net interest income (FTE)	(C)	14,709		14,768		14,720		13,787		13,488
Noninterest income		3,528		3,972		3,528		3,608		3,468
Tax equivalent adjustment for efficiency ratio		78		54		53		53		51
Core revenue (FTE)		18,315		18,794		18,301		17,448		17,007
Nonrecurring items
Net gains (losses) on foreclosed assets		(55)		74		4		6		69
Total nonrecurring items		(55)		74		4		6		69
Core revenue	(D)	$     18,370		$     18,720		$     18,297		$     17,442		$     16,938
Efficiency ratio	(B/D)	72.39 %		71.20 %		72.30 %		73.93 %		74.84 %
Average earning assets	(E)	1,943,633		1,963,986		1,967,552		1,948,173		1,943,758
Net yield on interest earning assets (FTE)	(C/E)	3.06 %		2.98 %		2.96 %		2.82 %		2.79 %
Average assets	(F)	2,085,537		2,094,569		2,095,200		2,067,211		2,066,757
Average shareholders' equity	(G)	214,212		212,912		208,444		200,734		203,434
Average tangible shareholders' equity	(H)	165,929		164,629		160,161		152,451		155,150
Average diluted shares outstanding (4)	(I)	7,432,162		7,451,718		7,473,184		7,494,828		7,507,739
Core diluted earnings per share	(A/I)	$          0.57		$          0.52		$          0.61		$          0.46		$          0.41
Core return on average assets	(A/F)	0.83 %		0.74 %		0.87 %		0.68 %		0.60 %
Core return on average shareholders' equity	(A/G)	8.05 %		7.29 %		8.70 %		6.96 %		6.08 %
Core return on average tangible shareholders' equity	(A/H)	10.40 %		9.43 %		11.32 %		9.17 %		7.97 %
(1) Includes provision for credit losses related to overdrawn deposit accounts from a single customer in the third quarter of 2024
(2) Included in Other professional services in the consolidated statements of income
(3) Surrender fees related to transition from general to separate bank-owned life insurance policies
(4) Whole shares

 

View original content:https://www.prnewswire.com/news-releases/isabella-bank-corporation-reports-first-quarter-2025-results-302431938.html

SOURCE Isabella Bank Corporation

FAQ

What are Isabella Bank's (ISBA) key financial metrics for Q1 2025?

ISBA reported Q1 2025 net income of $3.9 million ($0.53 per share), ROA of 0.77%, and net interest margin of 3.06%. Total assets were $2.1 billion with total loans at $1.4 billion.

How much did Isabella Bank's (ISBA) share repurchase program cost in Q1 2025?

Isabella Bank repurchased 45,582 shares during Q1 2025 for $1.1 million at an average price of $25.12 per share.

What is Isabella Bank's (ISBA) deposit growth rate in Q1 2025?

ISBA reported a 14% annualized growth in non-maturity deposits, with total deposits reaching $1.80 billion, increasing by $50.8 million in Q1 2025.

How does Isabella Bank's Q1 2025 performance compare to Q1 2024?

ISBA's Q1 2025 net income increased to $3.9 million from $3.1 million in Q1 2024, with ROA improving from 0.61% to 0.77% and net interest margin rising from 2.79% to 3.06%.

What significant recoveries did Isabella Bank (ISBA) achieve in early 2025?

ISBA fully recovered a $1.6 million overdraft charge from Q3 2024 in early April 2025, demonstrating strong credit quality management.