Isabella Bank Corporation Reports Record Third Quarter 2026 Earnings

Higher lending yields and lower funding costs accompanied earnings growth, while nonaccrual loans increased from year-end.

Rhea-AI Summary

Isabella Bank Corporation (Nasdaq: ISBA) reported record third-quarter 2026 net income of $6.6 million, up from the prior-year quarter. Diluted earnings rose to $0.86 from $0.71, including $657,000 in after-tax acquisition expenses. Net interest income increased to $19.4 million from $16.2 million, while fully tax-equivalent net interest margin, a non-GAAP measure, rose to 3.71% from 3.15%.

Nine-month net income reached $16.6 million versus $14.2 million. Deposits increased 4.0% from year-end 2025 to $1.9 billion, while loans declined $556,000 to $1.5 billion. Nonaccrual loans increased to $7.5 million from $4.6 million, and unrealized securities losses widened to $21.7 million from $9.9 million. All required regulatory and shareholder approvals for the Grand River Commerce acquisition have been received; the company expects closing on November 2, 2026, subject to customary closing conditions.

20 points · 0 major

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Positive

• Moderate pointThird-quarter net income rose to $6.6 million from $5.2 million; diluted EPS increased to $0.86 from $0.71.
• Moderate pointThird-quarter net interest income increased to $19.4 million from $16.2 million a year earlier.
• Moderate pointFully tax-equivalent net interest margin, non-GAAP, rose to 3.71% quarterly and 3.53% year-to-date, versus 3.15% and 3.12%.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Grand River acquisition received all required regulatory and shareholder approvals; Isabella expects closing November 2, 2026.
• Moderate pointDeposits increased 4.0% to $1.9 billion from December 31, 2025.
• Moderate pointAt-the-market stock offering added $12.5 million to equity, net of expenses. 4.2% of market cap
• Moderate pointNoninterest income increased to $4.6 million quarterly and $13.3 million year-to-date, versus $4.3 million and $11.5 million.
• Moderate pointNon-GAAP efficiency ratio improved to 64.74% quarterly and 66.95% year-to-date, versus 67.62% and 70.61%.

12 minor points

• Minor pointNine-month net income increased to $16.6 million from $14.2 million; diluted EPS rose to $2.24 from $1.92.
• Minor pointNine-month net interest income increased to $54.3 million from $45.8 million a year earlier.
• Minor pointSecurities yields increased to 3.20% quarterly and 2.83% year-to-date, versus 2.42% and 2.34% a year earlier.
• Minor pointLoan yields increased to 5.95% quarterly and 5.88% year-to-date, versus 5.78% and 5.75% a year earlier.
• Minor pointInterest-bearing liability costs fell to 2.08% quarterly and 2.10% year-to-date, versus 2.25% for both prior-year periods.
• Minor pointCash and cash equivalents increased $112.5 million from December 31, 2025.
• Minor pointBook value per share increased to $32.09 from $31.60 at December 31, 2025.
• Minor pointNon-GAAP tangible book value per share increased to $25.78 from $25.01 at December 31, 2025.
• Minor pointLoans accruing interest but 30–89 days overdue fell to 0.10% of loans from 0.44% at year-end.
• Minor pointThird-quarter credit-loss provision decreased to $50,000 from $209,000 a year earlier.
• Minor pointThird-quarter return on average assets increased to 1.17% from 0.94% a year earlier.
• Minor pointThird-quarter return on average shareholders’ equity increased to 10.43% from 9.28% a year earlier.

Negative

• Moderate pointNonaccrual loans increased to $7.5 million from $4.6 million at December 31, 2025.
• Moderate pointNine-month credit-loss provision reached $1.5 million, versus a $1.0 million credit a year earlier.
• Moderate pointUnrealized available-for-sale securities losses widened to $21.7 million from $9.9 million at December 31, 2025.
• Moderate pointThird-quarter noninterest expenses rose to $15.6 million from $14.0 million, including $672,000 in merger expenses.
• Moderate pointAt-the-market offering issued 322,685 shares, diluting existing holders.

5 minor points

• Minor pointNine-month net loan charge-offs were $844,000, versus $1,410,000 in net recoveries a year earlier.
• Minor pointThird-quarter net loan charge-offs increased to $207,000 from $74,000 a year earlier.
• Minor pointNine-month noninterest expenses rose to $45.7 million from $41.0 million, including $1.2 million in merger expenses.
• Minor pointLoans decreased $556,000 to $1.5 billion from December 31, 2025.
• Minor pointThird-quarter effective tax rate increased to 20% from 17% a year earlier.

News Explained

During the quarter, Isabella issued 322,685 shares through its ongoing at-the-market offering, increasing equity by $12.5 million net of expenses; issuing additional shares raises the share count and reduces existing holders’ percentage ownership absent offsetting changes.

Key Figures

Quarterly net income: $6.6 million Diluted EPS: $0.86 per diluted share Net interest margin: 3.71% +3 more

Quarterly net income

$6.6 million

Third quarter 2026; compared with $5.2 million in third quarter 2025

Diluted EPS

$0.86 per diluted share

Third quarter 2026; compared with $0.71 in third quarter 2025

Net interest margin

3.71%

Third quarter 2026; compared with 3.15% in third quarter 2025

Nine-month net income

$16.6 million

Nine months ended September 30, 2026; compared with $14.2 million in 2025

Nine-month diluted EPS

$2.24 per diluted share

Nine months ended September 30, 2026; compared with $1.92 in 2025

Expected acquisition close

November 2, 2026

Required regulatory and shareholder approvals received; subject to customary closing conditions

Previous Earnings Reports

3 past events · Latest: Jul 23

Same Type 3 events

1. Jul 23

   Earnings report

   24h Move

   -3.5%

   Net income was essentially unchanged year over year while net interest margin improved.

2. Apr 23

   Earnings report

   24h Move

   -4.3%

   Net income rose year over year and net interest margin improved.

3. Oct 27

   Earnings report

   24h Move

   -1.0%

   Reported quarterly income and net interest margin provide the year-over-year comparison cited in this report.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

net interest margin, available-for-sale securities, allowance for credit losses, at-the-market stock offering

4 terms

net interest margin financial

"Net interest margin (NIM) improved to"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

available-for-sale securities financial

"The AFS securities portfolio decreased"

Available-for-sale securities are investments in stocks, bonds or similar instruments that a company does not intend to trade frequently but may sell before they mature. They matter to investors because changes in the market value of these holdings show up as paper gains or losses on the company's balance sheet rather than immediately in profit, so they can affect reported net worth and the timing of income without changing day-to-day earnings. Think of them like items on a household shelf you might sell later: their value moves with the market even if you haven’t cashed out.

allowance for credit losses financial

"The allowance for credit losses (ACL) increased"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

at-the-market stock offering financial

"as part of the ongoing at-the-market stock offering"

An at-the-market stock offering is a way for a company to raise cash by selling newly issued shares directly into the open market at the current trading price over time, rather than all at once. Investors should care because it provides flexible funding with potentially lower immediate price pressure, but it also gradually reduces each existing share’s slice of ownership and can affect market supply and share price.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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MOUNT PLEASANT, MI / ACCESS Newswire / October 29, 2026 / Isabella Bank Corporation (Nasdaq:ISBA) ("Isabella" or the "Company") reported net income of $6.6 million, or $0.86 per diluted share, for the third quarter 2026 compared to $5.2 million, or $0.71 per diluted share, for the third quarter 2025.

THIRD QUARTER 2026 HIGHLIGHTS

• Record net income of $6.6 million, which included after-tax expenses of $657,000 related to the proposed acquisition of Grand River Commerce, Inc.
• Net interest margin (NIM) improved to 3.71%, up from 3.15% in third quarter 2025
• All required regulatory and shareholder approvals received to complete the Grand River acquisition, which is expected to close on November 2, 2026, subject to the satisfaction or waiver of customary closing conditions

"Isabella Bank Corporation reported a record quarter of net income, supported by continued expansion in our net interest margin," said President and CEO Jerome Schwind. "We are pleased with the increase in deposit balances, which further strengthens the Corporation's funding position. Overall, the quarter reflected positive earnings momentum.

"We also have received required regulatory and shareholder approvals to complete the acquisition of Grand River Commerce and Grand River Bank," Schwind added. "This is a key milestone and the transaction is on track for our anticipated November 2, 2026 close. Importantly, this merger supports our disciplined growth strategy by expanding our customer base and presence in West Michigan. We are keenly focused on a smooth integration and clear communication with customers and employees to assure continued strong customer service."

FINANCIAL CONDITION (September 30, 2026 to December 31, 2025 comparison)

Total assets increased $31.1 million, or 1.4%, to $2.2 billion as of September 30, 2026. This increase was primarily due to an increase of $112.5 million in cash and cash equivalents, offset by an $88.3 million decline in available-for-sale (AFS) securities.

The AFS securities portfolio decreased $88.3 million, or 17.7%, to $409.5 million as of September 30, 2026. The decrease was a result of maturities and principal paydowns of $177.1 million, offset by $100.7 million in purchases. Net unrealized losses on AFS securities were $21.7 million as of September 30, 2026, compared to $9.9 million at December 31, 2025. Net unrealized losses as a percentage of the amortized cost of AFS securities increased to 5.0%, compared to 1.9% at December 31, 2025.

Loans decreased $556,000 to $1.5 billion as of September 30, 2026. The commercial real estate and residential real estate loan portfolios grew $29.9 million and $29.7 million, respectively, but were offset by declines in advances to mortgage brokers and consumer loans of $39.0 million and $10.6 million, respectively. 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 continues to decrease amid declining demand, continued competition, and disciplined adherence to credit quality standards.

The allowance for credit losses (ACL) increased $671,000, or 4.9%, to $14.4 million as of September 30, 2026. The increase is due to loan growth and an increase in loss rates driven by loans charged off during the year. Nonaccrual loans were $7.5 million as of September 30, 2026 compared to $4.6 million at December 31, 2025. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.10% at September 30, 2026, compared to 0.44% at year-end 2025.

Total deposits increased $73.0 million, or 4.0%, to $1.9 billion as of September 30, 2026. The increase was a result of a $141.8 million increase in money market accounts and a $11.1 million increase in savings deposits. These increases were offset by a $51.3 million decline in certificates of deposit, a $16.6 million decline in noninterest bearing demand deposits, and a $12.1 million decline in interest bearing demand deposits.

Total equity was $245.6 million, or $32.09 per share, at September 30, 2026 compared to $231.4 million, or $31.60 per share, as of December 31, 2025. The increase in total equity is primarily due to the issuance of 322,685 shares as part of the ongoing at-the-market stock offering, increasing total equity by $12.5 million, net of expenses. Tangible book value per share (non-GAAP) was $25.78 as of September 30, 2026, compared to $25.01 as of December 31, 2025. Net unrealized losses in the AFS securities portfolio reduced tangible book value per share (non-GAAP) by $2.26 and $1.09 for the respective periods.

RESULTS OF OPERATIONS (for the three and nine months ended September 30, 2026, and 2025, unless otherwise noted)

Net income for the three months ended September 30, 2026 was $6.6 million, or $0.86 per diluted share, compared with $5.2 million, or $0.71 per diluted share, for the three months ended September 30, 2025. Net income for the nine months ended September 30, 2026 was $16.6 million, or $2.24 per diluted share, compared with $14.2 million, or $1.92 per diluted share, for the nine months ended September 30, 2025. Net income for the three and nine month periods ended September 30, 2026 included after-tax merger-related expenses of $657,000 and $1.1 million, respectively.

Net interest income was $19.4 million for the three months ended September 30, 2026 and $16.2 million for the three months ended September 30, 2025, representing 3.71% and 3.15% of interest earning assets, or NIM on a fully tax equivalent basis (non-GAAP), respectively. The book yield from securities was 3.20% and 2.42% for the three months ended September 30, 2026 and 2025, respectively. The yield on loans increased to 5.95% for the three months ended September 30, 2026 from 5.78% for the three months ended September 30, 2025. The increase 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 for the three months ended September 30, 2026 decreased to 2.08% from 2.25% for the three months ended September 30, 2025 primarily due to lower rates on money market and certificate of deposit products.

Net interest income was $54.3 million for the nine months ended September 30, 2026 and $45.8 million for the nine months ended September 30, 2025, representing 3.53% and 3.12% of earning assets, or NIM on a fully tax equivalent basis (non-GAAP), respectively. The book yield from securities was 2.83% and 2.34% for the nine months ended September 30, 2026 and 2025, respectively. The yield on loans increased to 5.88% for the nine months ended September 30, 2026 from 5.75% for the nine months ended September 30, 2025. The increase 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 for the nine months ended September 30, 2026 decreased to 2.10% from 2.25% for the nine months ended September 30, 2025 primarily due to lower rates on money market and certificate of deposit products.

The provision for credit losses was $50,000 for the three months ended September 30, 2026, as a result of net charge offs totaling $207,000, offset by an $81,000 decrease in the ACL on loans and a decrease in the reserve for unfunded commitments. The provision for credit losses for the three months ended September 30, 2025 was $209,000, which reflects a $172,000 increase in the ACL and net charge offs totaling $74,000, offset by a decrease in the reserve for unfunded commitments.

The provision for credit losses was $1.5 million for the nine months ended September 30, 2026, as compared to a credit of $1.0 million for the nine months ended September 30, 2025. Net charge offs for the nine months ended September 30, 2026 totaled $844,000, while there were net recoveries of $1.4 million for the nine months ended September 30, 2025.

Noninterest income for the three months ended September 30, 2026 and 2025 was $4.6 million and $4.3 million, respectively. Service charges and fees increased $202,000 and wealth management fees increased $94,000 due to growth in assets under management since second quarter 2025.

Noninterest income for the nine months ended September 30, 2026 and 2025 was $13.3 million and $11.5 million, respectively. Service charges and fees increased $1.1 million, wealth management fees increased $355,000 due to growth in assets under management, and earnings on bank-owned life insurance (BOLI) policies increased $220,000 due to additional investments in a separate account BOLI. Other noninterest income included gains of $137,000 and $163,000 related to death benefits from BOLI policies for the nine months ended September 30, 2026 and 2025, respectively.

Noninterest expenses for the three months ended September 30, 2026 and 2025 were $15.6 million and $14.0 million, respectively. Compensation and benefit expenses increased $867,000, reflecting annual merit increases, incentives, and higher medical insurance claims. Occupancy and equipment increased $156,000 and merger-related expenses were $672,000.

Noninterest expenses for the nine months ended September 30, 2026 and 2025 were $45.7 million and $41.0 million, respectively. Compensation and benefit expenses increased $2.1 million for the same reasons as the quarterly comparison. Occupancy and equipment expenses increased $636,000 and merger-related expenses were $1.2 million.

Income tax expense for the three months ended September 30, 2026 and 2025 was $1.6 million and $1.0 million, respectively. The effective tax rate (ETR) for the same periods was 20% and 17%, respectively. Income tax expense for the nine months ended September 30, 2026 and 2025 was $3.8 million and $3.1 million, respectively. The ETR was 18% for both the nine months ended September 30, 2026 and 2025. The ETR in the first nine months of 2026 included the impact of certain non-deductible merger-related expenses. The ETR in the first nine months of 2025 included a one-time tax expense related to the lifetime earnings on BOLI policies that were surrendered.

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 chartered 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/. 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. The Company intends 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) uncertainty or perceived instability in the banking industry as a whole; (ii) increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior; (iii) the persistent inflationary pressures in the United States, and its impact on market interest rates, the labor market, the economy as a whole, and credit quality; (iv) elevated asset prices; (v) risks related to rising interest rates; (vi) the Company's ability to effectively execute its expansion strategy and manage its growth, including identifying and consummating suitable acquisitions; (vii) risks relating to the proposed acquisition of Grand River including, without limitation: the timing of consummation of the proposed transaction between Isabella and Grand River; the risk that any condition to closing of the proposed acquisition may not be satisfied or waived; the risk that the Merger may not be completed at all; the diversion of management time on issues related to the proposed acquisition; the expected impact of the proposed acquisition and on the combined entities' operations, financial condition, and financial results; the businesses of Isabella and Grand River may not be combined successfully, or such combination may take longer to accomplish than expected; the cost savings from the proposed acquisition may not be fully realized or may take longer to realize than expected; operating costs, customer loss and business disruption following the proposed acquisition, including adverse effects on relationships with employees, may be greater than expected; the risk of deposit and customer attrition; and increased competitive pressures on solicitations of customers by competitors; (viii) risks associated with concentrations of the Company's business in market areas, loans secured by real estate, and public funds deposits as a percentage of total deposits; (ix) adverse changes in customer sentiment, spending, borrowing, and savings habits; (x) risks associated with the Company's commercial loan portfolio and agricultural loan portfolio; (xi) risks related to the significant amount of credit that the Company has extended to a limited number of borrowers and in a limited geographic area; (xii) damage to the Company's reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; (xiii) the Company's ability to keep pace with technological change or difficulties that may experienced when implementing new technologies; (xiv) cybersecurity risk, including cyber incidents or other failures, disruptions or breaches of the Company's operational or security systems or infrastructure, or those of third-party vendors or other service providers, including as a result of a cyber-attack; (xv) costs and effects of litigation, investigations or similar matters to which the Company may be subject; (xvi) natural disasters, severe weather, acts of god, military conflicts (including the conflicts in the Middle East, the possible expansion of such conflicts and potential geopolitical and economic consequences), acts of terrorism, domestic civil unrest, geopolitical instability, public health outbreaks (such as coronavirus), other international or domestic calamities, and other events beyond the Company's control, including as a result of in the policies of the current U.S. presidential administration or Congress; (xvii) the impacts 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; (xviii) compliance with governmental and regulatory requirements, including the Dodd-Frank Act Wall Street Reform and Consumer Protection Act, Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, and others relating to banking, consumer protection, securities and tax matters; (xix) changes in accounting principles and standards; (xx) changes in the laws, rules, regulations, interpretations or policies that apply to the Company's business and operations, and any additional regulations, or repeals that may be forthcoming as a result thereof, which could cause the Company to incur additional costs and adversely affect the Company's business environment, operations and financial results; and (xxi) the Company's ability to navigate the uncertain impacts of current and future governmental monetary and fiscal policies, including the current and future policies of the Board of Governors of the Federal Reserve System and as a result of initiatives of the Trump administration. These forward-looking statements are based on current information and/or management's good faith belief as to future events. Although the Company believes 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 by 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 the Company undertakes 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 with 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.

The Company classifies 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 the 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 (continued)
F	Reconciliation of Non-GAAP Financial Measures

A
SELECTED FINANCIAL DATA (UNAUDITED)

The following table outlines selected financial data as of, and for the:

		Three Months Ended																Nine Months Ended
(dollars in thousands, except per share amounts)		September 30, 2026			June 30, 2026			March 31, 2026			December 31, 2025			September 30, 2025				September 30, 2026			September 30, 2025
PER SHARE
Basic earnings		$	0.86		$	0.69		$	0.68		$	0.64		$	0.71			$	2.24		$	1.93
Diluted earnings			0.86			0.69			0.68			0.64			0.71				2.24			1.92
Dividends			0.28			0.28			0.28			0.28			0.28				0.84			0.84
Book value (1)			32.09			32.60			31.90			31.60			30.94				32.09			30.94
Tangible book value (1) (2)			25.78			26.27			25.32			25.01			24.37				25.78			24.37
Market price (1)			37.47			39.50			45.67			50.00			35.25				37.47			35.25
Common shares outstanding (1) (3)			7,653,498			7,628,809			7,333,319			7,322,207			7,350,567				7,653,498			7,350,567
Average number of diluted common shares outstanding (3)			7,642,887			7,337,378			7,329,058			7,345,610			7,371,652				7,432,627			7,399,441
PERFORMANCE RATIOS
Return on average total assets			1.17	%		0.91	%		0.91	%		0.85	%		0.94	%			1.00	%		0.89	%
Return on average shareholders' equity			10.43	%		8.50	%		8.58	%		8.04	%		9.28	%			9.20	%		8.67	%
Return on average tangible shareholders' equity (2)			12.90	%		10.66	%		10.79	%		10.16	%		11.83	%			11.49	%		11.12	%
Net interest margin yield (fully taxable equivalent) (1) (2)			3.71	%		3.54	%		3.33	%		3.28	%		3.15	%			3.53	%		3.12	%
Efficiency ratio (2)			64.74	%		67.84	%		68.50	%		65.02	%		67.62	%			66.95	%		70.61	%
Loan to deposit ratio (1)			81.15	%		87.83	%		83.82	%		84.43	%		74.36	%			81.15	%		74.36	%
Shareholders' equity to total assets (1)			10.96	%		11.20	%		10.39	%		10.47	%		10.06	%			10.96	%		10.06	%
Tangible shareholders' equity to tangible assets (1)			9.00	%		9.23	%		8.43	%		8.47	%		8.10	%			9.00	%		8.10	%
ASSETS UNDER MANAGEMENT
Wealth assets under management (1)			745,954			750,840			701,510			707,118			679,724				745,954			679,724
ASSET QUALITY
Nonaccrual loans (1)			7,487			7,790			4,418			4,578			3,443				7,487			3,443
Foreclosed assets (1)			647			620			573			938			1,018				647			1,018
Net loan charge-offs (recoveries)			207			384			253			34			74				844			(1,410	)
Net loan charge-offs (recoveries) to average loans outstanding			0.01	%		0.02	%		0.02	%		0.00	%		0.01	%			0.06	%		(0.10	%)
Nonperforming loans to total loans (1)			0.49	%		0.49	%		0.28	%		0.30	%		0.24	%			0.49	%		0.24	%
Nonperforming assets to total assets (1)			0.36	%		0.38	%		0.22	%		0.25	%		0.20	%			0.36	%		0.20	%
Allowance for credit losses to loans (1)			0.94	%		0.91	%		0.90	%		0.89	%		0.92	%			0.94	%		0.92	%
CAPITAL RATIOS (1)
Tier 1 leverage			9.71	%		9.59	%		8.89	%		8.84	%		8.71	%			9.71	%		8.71	%
Common equity tier 1 capital			12.96	%		12.34	%		11.71	%		11.73	%		12.37	%			12.96	%		12.37	%
Tier 1 risk-based capital			12.96	%		12.34	%		11.71	%		11.73	%		12.37	%			12.96	%		12.37	%
Total risk-based capital			15.29	%		14.63	%		14.01	%		14.41	%		15.20	%			15.29	%		15.20	%

⁽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, 2026				June 30, 2026				March 31, 2026				December 31, 2025				September 30, 2025
ASSETS
Cash and cash equivalents		$	138,540			$	41,774			$	50,105			$	26,041			$	161,301
Marketable securities available-for-sale, at fair value			409,541				439,289				492,744				497,791				511,970
Mortgage loans held-for-sale			303				410				360				423				737
Commercial and industrial			212,538				231,590				225,369				220,450				218,132
Commercial real estate			669,632				673,271				660,643				639,758				626,642
Advances to mortgage brokers			37,636				75,159				72,083				76,676				5,056
Agricultural			99,493				97,462				96,969				102,109				97,794
Residential real estate			457,613				449,992				438,333				427,880				412,056
Consumer			58,896				62,198				65,544				69,491				72,225
Loans held for investment			1,535,808				1,589,672				1,558,941				1,536,364				1,431,905
Allowance for credit losses			14,398				14,479				14,014				13,727				13,149
Loans, net			1,521,410				1,575,193				1,544,927				1,522,637				1,418,756
Federal Home Loan Bank stock, at cost			5,600				5,600				5,600				5,600				5,600
Premises and equipment			28,858				28,894				29,064				29,000				28,659
Cash surrender value of bank-owned life insurance policies			51,253				46,603				46,173				46,133				45,651
Goodwill and other intangible assets			48,282				48,282				48,282				48,282				48,282
Other assets			36,728				33,596				34,701				33,541				38,698
Total assets		$	2,240,515			$	2,219,641			$	2,251,956			$	2,209,448			$	2,259,654
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest bearing demand deposits		$	409,729			$	414,018			$	411,216			$	426,342			$	421,027
Interest bearing demand deposits			254,116				252,149				263,954				266,187				248,666
Money market deposits			578,454				453,478				477,544				436,631				558,212
Savings			291,508				300,867				300,732				280,429				292,899
Certificates of deposit			358,801				389,401				406,399				410,065				404,798
Total deposits			1,892,608				1,809,913				1,859,845				1,819,654				1,925,602
Short-term borrowings			57,874				116,012				113,530				68,000				62,022
Federal Home Loan Bank advances			-				-				-				45,000				-
Subordinated debt, net of unamortized issuance costs			29,581				29,559				29,537				29,514				29,492
Total borrowed funds			87,455				145,571				143,067				142,514				91,514
Other liabilities			14,867				15,453				15,083				15,884				15,118
Total liabilities			1,994,930				1,970,937				2,017,995				1,978,052				2,032,234
Shareholders' equity
Common stock			136,115				135,079				123,251				123,204				124,284
Shares to be issued for deferred compensation obligations			2,494				2,532				2,522				2,366				2,373
Retained earnings			124,341				119,844				116,790				113,849				111,172
Accumulated other comprehensive loss			(17,365	)			(8,751	)			(8,602	)			(8,023	)			(10,409	)
Total shareholders' equity			245,585				248,704				233,961				231,396				227,420
Total liabilities and shareholders' equity		$	2,240,515			$	2,219,641			$	2,251,956			$	2,209,448			$	2,259,654

C
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		Three Months Ended															Nine Months Ended
(dollars in thousands, except per share amounts)		September 30, 2026			June 30, 2026			March 31, 2026			December 31, 2025			September 30, 2025			September 30, 2026			September 30, 2025
Interest income
Loans, including fees		$	22,986		$	22,607		$	21,464		$	21,669		$	20,583		$	67,057		$	59,763
Available-for-sale securities
Taxable			2,939			2,902			2,489			2,539			2,478			8,330			7,094
Nontaxable			452			470			499			509			516			1,421			1,575
Federal Home Loan Bank stock, at cost			58			64			75			63			70			197			355
Federal funds sold and other			1,082			173			602			498			1,235			1,857			1,970
Total interest income			27,517			26,216			25,129			25,278			24,882			78,862			70,757
Interest expense
Deposits			6,835			6,778			7,112			7,380			8,012			20,725			22,866
Short-term borrowings			806			1,007			736			587			441			2,549			1,106
Federal Home Loan Bank advances			-			43			133			317			-			176			170
Subordinated debt			503			304			266			266			267			1,073			799
Total interest expense			8,144			8,132			8,247			8,550			8,720			24,523			24,941
Net interest income			19,373			18,084			16,882			16,728			16,162			54,339			45,816
Provision for (reversal of) credit losses			50			895			604			434			209			1,549			(997	)
Net interest income after provision for credit losses			19,323			17,189			16,278			16,294			15,953			52,790			46,813
Noninterest income
Service charges and fees			2,429			2,440			2,277			2,353			2,227			7,146			6,037
Wealth management fees			1,168			1,216			1,108			1,110			1,074			3,492			3,137
Income from bank-owned life insurance policies			478			434			448			485			468			1,360			1,140
Net gain on sale of mortgage loans			65			15			33			65			38			113			115
Other			426			270			495			431			501			1,191			1,093
Total noninterest income			4,566			4,375			4,361			4,444			4,308			13,302			11,522
Noninterest expenses
Compensation and benefits			8,497			8,147			7,928			7,532			7,630			24,572			22,509
Occupancy and equipment			2,784			2,890			2,840			2,663			2,628			8,514			7,878
Other professional services			745			807			1,015			815			851			2,567			2,425
ATM and debit card fees			573			629			558			575			595			1,760			1,636
Marketing			458			514			506			547			514			1,478			1,442
FDIC insurance premiums			297			288			306			339			271			891			841
Merger-related expenses			672			505			-			-			-			1,177			-
Other			1,622			1,606			1,509			1,450			1,496			4,737			4,298
Total noninterest expenses			15,648			15,386			14,662			13,921			13,985			45,696			41,029
Income before income tax expense			8,241			6,178			5,977			6,817			6,276			20,396			17,306
Income tax expense			1,636			1,137			985			2,127			1,036			3,758			3,086
Net income		$	6,605		$	5,041		$	4,992		$	4,690		$	5,240		$	16,638		$	14,220
Earnings per common share
Basic		$	0.86		$	0.69		$	0.68		$	0.64		$	0.71		$	2.24		$	1.93
Diluted			0.86			0.69			0.68			0.64			0.71			2.24			1.92
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)

The following schedules present the daily average amount outstanding for each major category of interest earning assets, nonearning 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, 2026										June 30, 2026										September 30, 2025
(dollars in thousands)		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)		$	1,528,503		$	22,986			5.95	%		$	1,544,323		$	22,607			5.86	%		$	1,409,928		$	20,583			5.78	%
AFS securities (2)
Taxable			378,202			2,939			3.08	%			432,520			2,902			2.69	%			448,112			2,478			2.19	%
Nontaxable (3)			61,210			578			3.75	%			63,607			600			3.78	%			69,174			660			3.79	%
Federal Home Loan Bank stock, at cost			5,600			58			4.18	%			5,600			64			4.55	%			5,600			70			4.95	%
Federal funds sold			3			-			3.91	%			2			-			3.67	%			186			2			4.35	%
Other (4)			113,704			1,082			3.72	%			18,079			173			3.81	%			123,183			1,233			3.92	%
Total interest earning assets (3)			2,087,222			27,643			5.26	%			2,064,131			26,346			5.12	%			2,056,183			25,026			4.83	%
NONEARNING ASSETS
Allowance for credit losses			(14,471	)									(14,078	)									(13,057	)
Cash and demand deposits due from banks			24,854										22,544										25,591
Premises and equipment			28,802										29,086										28,313
Other assets			120,411										116,913										109,692
Total assets		$	2,246,818									$	2,218,596									$	2,206,722
INTEREST BEARING LIABILITIES
Interest bearing demand deposits		$	264,269			199			0.30	%		$	257,088			205			0.32	%		$	234,105			144			0.24	%
Money market deposits			503,054			3,030			2.39	%			452,737			2,625			2.33	%			534,127			3,533			2.63	%
Savings			288,515			456			0.63	%			302,375			503			0.67	%			289,442			560			0.77	%
Certificates of deposit			374,370			3,150			3.34	%			396,481			3,445			3.49	%			399,781			3,775			3.75	%
Short-term borrowings			94,938			806			3.37	%			115,713			1,007			3.49	%			52,700			441			3.32	%
Federal Home Loan Bank advances			-			-			0.00	%			4,396			43			3.86	%			-			-			0.00	%
Subordinated debt, net of unamortized issuance costs			29,567			503			6.82	%			29,545			304			4.11	%			29,477			267			3.61	%
Total interest bearing liabilities			1,554,713			8,144			2.08	%			1,558,335			8,132			2.09	%			1,539,632			8,720			2.25	%
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits			420,649										404,805										428,144
Other liabilities			20,103										17,462										14,976
Shareholders' equity			251,353										237,994										223,970
Total liabilities and shareholders' equity		$	2,246,818									$	2,218,596									$	2,206,722
Net interest income (FTE) (5)					$	19,499									$	18,214									$	16,306
Net yield on interest earning assets (FTE) (5)									3.71	%									3.54	%									3.15	%

⁽¹⁾ Includes loans held-for-sale and nonaccrual loans
⁽²⁾ Average balances for available-for-sale (AFS) securities are based on amortized cost
⁽³⁾ Includes FTE adjustments of $126,000, $130,000, and $144,000, respectively
⁽⁴⁾ Includes average interest bearing deposits with other banks, net of Federal Reserve daily cash letter
⁽⁵⁾ Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table F

E

		Nine Months Ended
		September 30, 2026												September 30, 2025
(dollars in thousands)		Average Balance				Tax Equivalent Interest				Average Yield / Rate				Average Balance				Tax Equivalent Interest				Average Yield / Rate
INTEREST EARNING ASSETS
Loans (1)		$	1,524,924			$	67,057				5.88	%		$	1,389,936			$	59,763				5.75	%
AFS securities (2)
Taxable			413,508				8,330				2.69	%			449,310				7,094				2.11	%
Nontaxable (3)			64,207				1,815				3.78	%			72,739				2,081				3.83	%
Federal Home Loan Bank stock, at cost			5,600				197				4.70	%			7,384				355				6.41	%
Federal funds sold			4				-				3.64	%			66				2				4.35	%
Other (4)			65,505				1,857				3.74	%			63,959				1,968				3.92	%
Total interest earning assets (3)			2,073,748				79,256				5.11	%			1,983,394				71,263				4.80	%
NONEARNING ASSETS
Allowance for credit losses			(14,079	)											(13,104	)
Cash and demand deposits due from banks			23,509												23,844
Premises and equipment			28,998												28,195
Other assets			118,002												106,430
Total assets		$	2,230,178											$	2,128,759
INTEREST BEARING LIABILITIES
Interest bearing demand deposits		$	262,479				698				0.36	%		$	236,989				606				0.34	%
Money market deposits			473,552				8,374				2.36	%			481,571				9,319				2.59	%
Savings			294,090				1,447				0.66	%			287,425				1,642				0.76	%
Certificates of deposit			392,657				10,206				3.48	%			394,395				11,299				3.83	%
Short-term borrowings			99,208				2,549				3.43	%			46,008				1,106				3.21	%
Federal Home Loan Bank advances			5,897				176				3.93	%			4,945				170				4.53	%
Subordinated debt, net of unamortized issuance costs			29,545				1,073				4.84	%			29,455				799				3.61	%
Total interest bearing liabilities			1,557,428				24,523				2.10	%			1,480,788				24,941				2.25	%
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits			412,190												413,568
Other liabilities			18,752												15,131
Shareholders' equity			241,808												219,272
Total liabilities and shareholders' equity		$	2,230,178											$	2,128,759
Net interest income (FTE) (5)						$	54,733											$	46,322
Net yield on interest earning assets (FTE) (5)											3.53	%											3.12	%

⁽¹⁾ Includes loans held-for-sale and nonaccrual loans
⁽²⁾ Average balances for available-for-sale (AFS) securities are based on amortized cost
⁽³⁾ Includes FTE adjustments of $394,000 and $506,000, respectively
⁽⁴⁾ Includes average interest bearing deposits with other banks, net of Federal Reserve daily cash letter
⁽⁵⁾ Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table F

F
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

			Three Months Ended																Nine Months Ended
(dollars in thousands, except per share amounts)			September 30, 2026			June 30, 2026			March 31, 2026			December 31, 2025			September 30, 2025				September 30, 2026			September 30, 2025
Loans			$	1,535,808		$	1,589,672		$	1,558,941		$	1,536,364		$	1,431,905			$	1,535,808		$	1,431,905
Advances to mortgage brokers				37,636			75,159			72,083			76,676			5,056				37,636			5,056
Adjusted loans			$	1,498,172		$	1,514,513		$	1,486,858		$	1,459,688		$	1,426,849			$	1,498,172		$	1,426,849
Total shareholders' equity			$	245,585		$	248,704		$	233,961		$	231,396		$	227,420			$	245,585		$	227,420
Goodwill and other intangible assets				48,282			48,282			48,282			48,282			48,282				48,282			48,282
Tangible equity		(A)		197,303			200,422			185,679			183,114			179,138				197,303			179,138
Common shares outstanding (1)		(B)		7,653,498			7,628,809			7,333,319			7,322,207			7,350,567				7,653,498			7,350,567
Tangible book value per share		(A/B)	$	25.78		$	26.27		$	25.32		$	25.01		$	24.37			$	25.78		$	24.37
Noninterest expenses			$	15,648		$	15,386		$	14,662		$	13,921		$	13,985			$	45,696		$	41,029
Amortization of acquisition intangibles				-			-			-			-			-				-			1
Adjusted noninterest expense		(C)	$	15,648		$	15,386		$	14,662		$	13,921		$	13,985			$	45,696		$	41,028
Net interest income			$	19,373		$	18,084		$	16,882		$	16,728		$	16,162			$	54,339		$	45,816
Tax equivalent adjustment for net interest margin				126			130			138			138			144				394			506
Net interest income (FTE)				19,499			18,214			17,020			16,866			16,306				54,733			46,322
Noninterest income				4,566			4,375			4,361			4,444			4,308				13,302			11,522
Tax equivalent adjustment for bank-owned life insurance policies				101			91			94			102			98				286			239
Adjusted revenue (FTE)				24,166			22,680			21,475			21,412			20,712				68,321			58,083
Net gains (losses) on foreclosed assets				(3	)		-			70			3			31				67			(21	)
Adjusted revenue		(D)	$	24,169		$	22,680		$	21,405		$	21,409		$	20,681			$	68,254		$	58,104
Efficiency ratio		(C/D)		64.74	%		67.84	%		68.50	%		65.02	%		67.62	%			66.95	%		70.61	%

⁽¹⁾ Whole shares

SOURCE: Isabella Bank Corporation

View the original press release on ACCESS Newswire

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Isabella Bank’s third-quarter 2026 earnings?

Isabella Bank reported net income of $6.6 million, or $0.86 per diluted share, compared with $5.2 million, or $0.71 per diluted share, in third-quarter 2025. The 2026 quarter included $657,000 in after-tax expenses related to the proposed Grand River Commerce acquisition.

When does Isabella Bank expect to close the Grand River Commerce acquisition?

Isabella expects the Grand River Commerce acquisition to close on November 2, 2026. All required regulatory and shareholder approvals have been received, and closing remains subject to satisfaction or waiver of customary closing conditions.

Which loan categories changed at Isabella Bank during the first nine months of 2026?

Commercial real estate and residential real estate loans grew $29.9 million and $29.7 million, respectively, while advances to mortgage brokers declined $39.0 million and consumer loans declined $10.6 million. Most residential originations were adjustable-rate loans retained on the balance sheet rather than sold.

How did Isabella Bank’s deposit mix change through September 30, 2026?

Money market accounts increased $141.8 million and savings deposits increased $11.1 million from December 31, 2025. Certificates of deposit decreased $51.3 million, noninterest-bearing demand deposits decreased $16.6 million, and interest-bearing demand deposits decreased $12.1 million.