Isabella Bank Corporation Reports Second Quarter 2025 Results

Rhea-AI Summary

Isabella Bank Corporation (NASDAQ:ISBA) reported strong Q2 2025 financial results with net income of $5.0 million ($0.68 per diluted share), up from $3.5 million ($0.46 per diluted share) in Q2 2024. Core net income reached $4.1 million ($0.55 per diluted share).

Key highlights include 9% annualized loan growth and 11% annualized deposit growth from Q1 2025. The bank's net interest margin improved to 3.14% from 2.82% year-over-year. Total assets reached $2.2 billion, with total loans at $1.4 billion and deposits at $1.85 billion. The bank maintained strong credit quality with nonperforming loans at just 0.09% of total loans.

Following its Nasdaq uplisting in May, Isabella Bank saw increased stock trading volume and completed share repurchases of 57,824 shares at an average price of $26.03 during Q2 2025.

Positive

• Net income increased 43% YoY to $5.0 million in Q2 2025
• Strong loan growth of 9% annualized from Q1 2025
• Deposit growth of 11% annualized from Q1 2025
• Net interest margin improved to 3.14% from 2.82% YoY
• Recovery of entire overdraft charge-off from Q3 2024
• Nonperforming loans remain low at 0.09% of total loans
• Wealth management assets under management grew to $679 million

Negative

• $17.6 million in net unrealized losses on available-for-sale securities
• 38% of commercial loans fixed at below-market rates
• Noninterest expenses increased by $0.8 million YoY to $13.7 million
• One unique commercial real estate loan downgraded to nonaccrual status

Insights

Banking Financial Analyst

Isabella Bank reported strong Q2 2025 with 43% higher earnings, expanding margins, and healthy loan/deposit growth despite temporary deposit boost.

Isabella Bank Corporation delivered an impressive $5.0 million in Q2 2025 net income ($0.68 per diluted share), representing a substantial 43% increase from the $3.5 million ($0.46 per share) reported in Q2 2024. The bank's core performance metrics show broad improvement, with return on average assets (ROA) increasing to 0.96% from 0.68% year-over-year.

The earnings growth was primarily driven by net interest margin (NIM) expansion to 3.14% from 2.82% in Q2 2024, reflecting successful asset repricing while maintaining stable funding costs. This margin improvement, a critical metric for bank profitability, indicates the bank is effectively navigating the interest rate environment.

Loan growth was robust at 9% annualized from Q1, led by commercial lending. However, investors should note this outsized growth partly resulted from delayed Q1 closings and may not be sustainable, as management explicitly cautioned about potential moderation in future quarters.

The 11% annualized deposit growth appears impressive but requires careful interpretation. A significant portion came from a single large temporary deposit from a non-profit entity that's expected to be withdrawn by year-end. This deposit volatility represents a key consideration for liquidity planning.

Credit quality remains excellent with nonperforming loans at just 0.09% of total loans. The $1.1 million credit to loan loss provisions was primarily driven by a $1.6 million recovery from a previously charged-off overdraft from a single customer in Q3 2024 - a non-recurring benefit that artificially boosts this quarter's results.

The bank's Nasdaq uplisting in May 2025 has increased trading volume and potentially provides currency for acquisitions. Tangible book value increased to $23.39 from $22.58 in the previous quarter, though both figures remain suppressed by unrealized securities losses of $17.6 million ($1.90 per share impact).

The capital allocation strategy includes continued share repurchases, with 57,824 shares bought at an average price of $26.03 during the quarter, along with dividend payments - demonstrating management's commitment to shareholder returns.

MOUNT PLEASANT, MI / ACCESS Newswire / July 24, 2025 / Isabella Bank Corporation (Nasdaq:ISBA) ("Isabella" or the "Company") reported second quarter 2025 net income of $5.0 million, or $0.68 per diluted share, compared to $3.5 million, or $0.46 per diluted share, in the same quarter of 2024. Core net income (non-GAAP) in the second quarter of 2025 totaled $4.1 million, or $0.55 per diluted share, compared to $3.5 million, or $0.46 per diluted share, for the same quarter of 2024.

SECOND QUARTER 2025 HIGHLIGHTS (as of or for the three months ended June 30, 2025, compared to the second quarter of 2024, unless otherwise noted)

• Return on average assets (ROA) of 0.96%, up from 0.68%; core ROA (non-GAAP) of 0.79%, up from 0.68%

• Total loan growth from the first quarter of 2025 of 9%, annualized

• Total deposit growth from the first quarter of 2025 of 11%, annualized

• Net interest margin, fully taxable equivalent ("NIM") (non-GAAP) of 3.14%, up from 2.82%

• Noninterest income up 4% from the first quarter of 2025

• Nonperforming loans to total loans of 0.09%

"It was a very good second quarter with improvements across most of our performance metrics," said Isabella's Chief Executive Officer, Jerome Schwind. "Our financial performance centered on growth in NIM, loans, and deposits.

"NIM increased as expected, expanding 8 basis points over the prior quarter with earning assets continuing to reprice on stable cost of funds. Loan growth was driven by the commercial loan portfolio, based on our pipeline in the first quarter and the continued concentrated efforts in this business line. The increase in total deposits was highlighted by an $89 million increase in non-maturity deposits, which mostly was due to a large deposit from a not-for-profit entity that is expected to be used by the customer by the end of the year. While short-term, this deposit is another example of our strong relationships with the communities we serve. As previously announced, the Bank also recovered the entire overdraft charge-off that occurred during the third quarter of 2024. This recovery positively affected the provision for credit losses for the quarter.

"Our teams continue to focus on the profitability of our operations and initiatives to enhance and grow non-interest income, and I am proud of their dedication throughout this process," Schwind said. "Our teams embrace our culture and are focused on serving our customers and building and executing our strategy.

"Since uplisting to the Nasdaq in May, our stock volume has increased significantly," Schwind added. "We view our higher stock price as an expanded source of potential currency and opportunity for further growth. As always, building shareholder value remains our focus, with strong earnings, share repurchases and continued dividends."

FINANCIAL CONDITION (as of or for the three months ended June 30, 2025, compared to March 31, 2025, unless otherwise noted)

Total assets were $2.2 billion, up $53.6 million, primarily due to an increase of $33.9 million in interest bearing cash balances and an increase of $29.8 million in core loans, which excludes advances to mortgage brokers (non-GAAP), partially offset by a $16.4 million decline in gross securities.

Available-for-sale ("AFS") securities at fair value were $501 million, decreasing $12.5 million at the end of second quarter 2025. The decline was driven by amortization and maturities of $26.8 million, partially offset by purchases totaling $10.6 million. Net unrealized losses on securities totaled $17.6 million, compared to $21.5 million at the end of the first quarter of 2025. Net unrealized losses as a percentage of total AFS securities decreased to 3% from 4% at the end of the first quarter of 2025, primarily due to the treasury portfolio rapidly approaching maturity. The par value and corresponding book yields that are estimated to mature or pay off by year include: $28.2 million in principal with a weighted-average book yield of 2.36% over the remainder of 2025; $217.4 million at 1.17% in 2026; and $63.0 million at 1.87% in 2027. Some of these securities amortize and actual principal paydown may differ from the estimates in this press release.

Total loans were $1.4 billion at the end of the second quarter, increasing $29.8 million from growth in core loans (non-GAAP) led by commercial and residential loans. Commercial loans, excluding advances to mortgage brokers, increased $23.1 million, or 10.3% on an annualized basis. The outsized growth is primarily the result of closing several loans that were originally expected to close in the first quarter, along with executing on our pipeline that was robust going into the second quarter 2025. While our commercial pipeline is strong at the beginning of the third quarter, future loan growth could be lower due to changes in timing and funding, customer demand, and overall economic conditions. Residential mortgages increased $11.3 million mostly due to drawdowns on construction loans and an increase in originations that are both associated with seasonal patterns. Loan growth during the quarter was partially offset by a decline in the agricultural and consumer loan portfolios that continue to roll off amid decreasing demand.

The allowance for credit losses increased $242 thousand to $13.0 million as of June 30, 2025. The increase reflects core loan growth during the period and changes in historical loss rates. Nonaccrual loan balances increased $991 thousand to $1.2 million, primarily due to the downgrade of one unique 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 0.08% compared to 0.41% at the end of first quarter 2025.

Total deposits were $1.85 billion, increasing $51.5 million, at the end of the second quarter. The growth was driven by demand deposits, which increased $89.3 million, primarily due to one customer with large deposits during the second quarter that is expected to be withdrawn by the customer by the end of they year. Consumer demand for retail certificates of deposit accounts continues based on the current elevated market interest rate environment, resulting in a $5.7 million increase during the period. Money market and interest-bearing demand deposits led to a $26.3 million and $20.6 million decline in deposits, respectively, as a result of seasonal trends.

Tangible book value per share (non-GAAP) was $23.39 as of June 30, 2025, compared to $22.58. Net unrealized losses on AFS securities reduced tangible book value per share by $1.90 and $2.30 for the respective periods. Share repurchases totaled 57,824 during the second quarter for an aggregate purchase price of approximately $1.5 million at an average per share purchase price of approximately $26.03.

RESULTS OF OPERATIONS (June 30, 2025 to June 30, 2024 quarterly comparison, unless otherwise noted)

NIM was 3.14%, an increase from 3.06% in the first quarter 2025 and from 2.82% in the second quarter of 2024. The book yield from securities was 2.38% and 2.17% during the second quarters of 2025 and 2024, respectively. The yield on loans expanded to 5.71% in the second quarter, up from 5.50% in the same quarter of 2024. The expansion in loan yields was a result of higher interest rates on new loans and variable rate commercial loans that continue to reprice. At the end of the second quarter, approximately 38% of commercial loans were fixed at rates lower than current market rates, and the majority will contractually reprice to variable rates over the next four years. Cost of interest-bearing liabilities was 2.24%, decreasing from 2.26% in the previous quarter and from 2.38% in the second quarter of 2024, primarily 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.

The provision for credit losses in the second quarter 2025 was a credit of $1.1 million, which reflects net recoveries totaling $1.4 million, offset by the $242 thousand change in the allowance for credit losses on loans and an increase in the reserve for unfunded commitments. Recoveries of $1.6 million during the quarter were related to overdrawn deposit accounts from a single customer that were charged off during the third quarter of 2024. The provision for loan losses in the same period of 2024 was $170 thousand, reflecting growth in core loans and unfunded commitments.

The Company continues to closely monitor credit quality in light of the continued economic uncertainty caused by, among other factors, the prolonged elevated interest rate environment, stronger than expected employment data in recent periods, continued uncertainty regarding U.S. trade and tariff policy and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.

Noninterest income was $3.7 million in the second quarter of 2025 compared to $3.6 million for the same quarter of 2024. Service charges and fees increased $48 thousand because of profitability initiatives designed to increase fee income. Earnings on bank-owned life insurance ("BOLI") policies increased $47 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. Wealth management fees grew $36 thousand due to growth in assets under management ("AUM") as compared to the second quarter of 2024. AUM totaled $679 million, $657 million and $648 million as of June 30, 2025, March 31, 2025, and June 30, 2024, respectively.

Noninterest expenses were $13.7 million in the second quarter 2025 compared to $12.9 million in the same quarter of 2024. The change mostly was due to higher compensation and benefit expenses totaling $526 thousand, which reflect annual merit increases in 2025, incentives, and higher medical insurance claims compared to the second quarter of 2024. Professional services included $173 thousand in fees related to profitability initiative costs and $47 thousand in legal fees related to our Nasdaq uplisting.

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. 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 - 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

[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-month periods ended:

		Three Months Ended
		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
PER SHARE
Basic earnings		$	0.68			$	0.53			$	0.54			$	0.44			$	0.47
Diluted earnings			0.68				0.53				0.54				0.44				0.46
Core diluted earnings (1)			0.55				0.57				0.52				0.61				0.46
Dividends			0.28				0.28				0.28				0.28				0.28
Book value (2)			29.95				29.10				28.32				28.63				27.06
Tangible book value (1) (2)			23.39				22.58				21.82				22.14				20.60
Market price (2)			30.15				23.59				25.99				21.21				18.20
Common shares outstanding (2) (3)			7,361,684				7,408,010				7,424,893				7,438,720				7,474,016
Average number of diluted common shares outstanding (3)			7,398,109				7,432,162				7,451,718				7,473,184				7,494,828
PERFORMANCE RATIOS
Return on average total assets			0.96	%			0.77	%			0.76	%			0.62	%			0.68	%
Core return on average total assets (1)			0.79	%			0.83	%			0.74	%			0.87	%			0.68	%
Return on average shareholders' equity			9.19	%			7.48	%			7.47	%			6.26	%			6.97	%
Core return on average shareholders' equity (1)			7.48	%			8.05	%			7.29	%			8.70	%			6.96	%
Return on average tangible shareholders' equity (1)			11.78	%			9.65	%			9.66	%			8.15	%			9.19	%
Core return on average tangible shareholders' equity (1)			9.59	%			10.40	%			9.43	%			11.32	%			9.17	%
Net interest margin yield (fully taxable equivalent) (1)			3.14	%			3.06	%			2.98	%			2.96	%			2.82	%
Efficiency ratio (1)			70.53	%			71.73	%			71.08	%			72.30	%			73.93	%
Gross loan to deposit ratio (2)			75.57	%			76.07	%			81.48	%			79.93	%			80.22	%
Shareholders' equity to total assets (2)			10.23	%			10.25	%			10.08	%			10.11	%			9.82	%
Tangible shareholders' equity to tangible assets (1)(2)			8.17	%			8.14	%			7.95	%			8.00	%			7.65	%
ASSETS UNDER MANAGEMENT
Wealth assets under management (2)			678,959				656,617				658,042				679,858				647,850
ASSET QUALITY
Nonaccrual loans (2)			1,164				173				282				547				994
Foreclosed assets (2)			667				649				544				546				629
Net loan charge-offs (recoveries)			(1,432	)			(52	)			102				1,359				393
Net loan charge-offs (recoveries) to average loans outstanding			(0.10)	%			0.00	%			0.01	%			0.10	%			0.03	%
Nonperforming loans to gross loans (2)			0.09	%			0.01	%			0.02	%			0.04	%			0.07	%
Nonperforming assets to total assets (2)			0.09	%			0.04	%			0.04	%			0.06	%			0.08	%
Allowance for credit losses to gross loans (2)			0.93	%			0.93	%			0.91	%			0.89	%			0.95	%
CAPITAL RATIOS (2)
Tier 1 leverage			9.04	%			8.96	%			8.86	%			8.77	%			8.83	%
Common equity tier 1 capital			12.46	%			12.58	%			12.21	%			12.08	%			12.37	%
Tier 1 risk-based capital			12.46	%			12.58	%			12.21	%			12.08	%			12.37	%
Total risk-based capital			15.34	%			15.50	%			15.06	%			14.90	%			15.29	%

⁽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

[B] CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)

		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
ASSETS
Cash and demand deposits due from banks		$	34,246			$	28,786			$	22,830			$	27,019			$	22,690
Fed Funds sold and interest bearing balances due from banks			74,308				40,393				1,712				359				869
Total cash and cash equivalents			108,554				69,179				24,542				27,378				23,559
Available-for-sale securities, at fair value			500,560				513,040				489,029				506,806				505,646
Federal Home Loan Bank stock			5,600				5,600				12,762				12,762				12,762
Mortgage loans held-for-sale			55				127				242				504				637
Loans			1,397,513				1,367,724				1,423,571				1,424,283				1,381,636
Less allowance for credit losses			12,977				12,735				12,895				12,635				13,095
Net loans			1,384,536				1,354,989				1,410,676				1,411,648				1,368,541
Premises and equipment			28,171				28,108				27,659				27,674				27,843
Cash surrender value of bank-owned life insurance policies			45,774				45,833				34,882				34,625				34,382
Goodwill and other intangible assets			48,282				48,282				48,283				48,283				48,283
Other assets			34,636				37,429				38,166				37,221				38,486
Total assets		$	2,156,168			$	2,102,587			$	2,086,241			$	2,106,901			$	2,060,139
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Demand deposits		$	493,477			$	404,194			$	416,373			$	421,493			$	412,193
Interest bearing demand deposits			223,376				243,939				237,548				228,902				232,660
Money market deposits			446,845				473,138				423,883				471,745				429,150
Savings			289,746				286,399				281,665				276,095				279,847
Certificates of deposit			395,932				390,239				387,591				383,597				368,449
Total deposits			1,849,376				1,797,909				1,747,060				1,781,832				1,722,299
Short-term borrowings			43,208				47,310				53,567				52,434				44,194
Federal Home Loan Bank advances			-				-				30,000				15,000				45,000
Subordinated debt, net of unamortized issuance costs			29,469				29,447				29,424				29,402				29,380
Total borrowed funds			72,677				76,757				112,991				96,836				118,574
Other liabilities			13,615				12,365				15,914				15,248				17,017
Total liabilities			1,935,668				1,887,031				1,875,965				1,893,916				1,857,890
Shareholders' equity
Common stock			124,607				125,547				126,224				125,218				126,126
Shares to be issued for deferred compensation obligations			2,331				2,508				2,383				3,981				3,951
Retained earnings			107,949				104,940				103,024				101,065				99,808
Accumulated other comprehensive income (loss)			(14,387	)			(17,439	)			(21,355	)			(17,279	)			(27,636	)
Total shareholders' equity			220,500				215,556				210,276				212,985				202,249
Total liabilities and shareholders' equity		$	2,156,168			$	2,102,587			$	2,086,241			$	2,106,901			$	2,060,139

[C] CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)

		Six Months Ended June 30
		2025				2024
Interest income
Loans		$	39,180			$	36,920
Available-for-sale securities			5,675				5,688
Federal Home Loan Bank stock			285				304
Federal funds sold and other			735				556
Total interest income			45,875				43,468
Interest expense
Deposits			14,854				14,476
Short-term borrowings			665				642
Federal Home Loan Bank advances			170				1,026
Subordinated debt			532				532
Total interest expense			16,221				16,676
Net interest income			29,654				26,792
(Reversal of) provision for credit losses			(1,206	)			562
Net interest income after provision for credit losses			30,860				26,230
Noninterest income
Service charges and fees			4,045				3,956
Wealth management fees			2,063				1,987
Earnings on bank-owned life insurance policies			672				496
Net gain on sale of mortgage loans			77				101
Other			357				536
Total noninterest income			7,214				7,076
Noninterest expenses
Compensation and benefits			14,879				13,985
Occupancy and equipment			5,250				5,325
Other professional services			1,574				1,040
ATM and debit card fees			1,041				956
Marketing			928				851
FDIC insurance premiums			570				532
Other losses			454				561
Other			2,348				2,321
Total noninterest expenses			27,044				25,571
Income before income tax expense			11,030				7,735
Income tax expense			2,050				1,123
Net income		$	8,980			$	6,612
Earnings per common share
Basic		$	1.21			$	0.88
Diluted			1.21				0.88
Cash dividends per common share			0.56				0.56

[D] CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)

		Three Months Ended
		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
Interest income
Loans		$	19,832			$	19,348			$	20,145			$	20,230				18,863
Available-for-sale securities			3,032				2,643				2,656				2,749				2,804
Federal Home Loan Bank stock			125				160				168				168				158
Federal funds sold and other			253				482				200				194				263
Total interest income			23,242				22,633				23,169				23,341				22,088
Interest expense
Deposits			7,391				7,463				7,583				7,631				7,313
Short-term borrowings			324				341				413				384				321
Federal Home Loan Bank advances			132				38				352				571				638
Subordinated debt			266				266				266				267				266
Total interest expense			8,113				8,108				8,614				8,853				8,538
Net interest income			15,129				14,525				14,555				14,488				13,550
(Reversal of) provision for credit losses			(1,099	)			(107	)			376				946				170
Net interest income after provision for credit losses			16,228				14,632				14,179				13,542				13,380
Noninterest income
Service charges and fees			2,071				1,974				2,186				2,133				2,023
Wealth management fees			1,084				979				1,051				1,003				1,048
Earnings on bank-owned life insurance policies			300				372				259				252				253
Net gain on sale of mortgage loans			47				30				75				37				67
Other			184				173				401				103				217
Total noninterest income			3,686				3,528				3,972				3,528				3,608
Noninterest expenses
Compensation and benefits			7,496				7,383				7,340				7,251				6,970
Occupancy and equipment			2,650				2,600				2,554				2,645				2,619
Other professional services			863				711				584				588				527
ATM and debit card fees			555				486				516				503				487
Marketing			469				459				458				403				425
FDIC insurance premiums			267				303				309				291				280
Other losses			339				115				209				347				416
Other			1,106				1,242				1,360				1,200				1,171
Total noninterest expenses			13,745				13,299				13,330				13,228				12,895
Income before income tax expense			6,169				4,861				4,821				3,842				4,093
Income tax expense			1,138				912				825				561				612
Net income		$	5,031			$	3,949			$	3,996			$	3,281			$	3,481
Earnings per common share
Basic		$	0.68			$	0.53			$	0.54			$	0.44			$	0.47
Diluted			0.68				0.53				0.54				0.44				0.46
Cash dividends per common share			0.28				0.28				0.28				0.28				0.28

[E] 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
		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
INTEREST EARNING ASSETS
Loans (1)			5.71	%			5.71	%			5.66	%			5.72	%			5.50	%
Available-for-sale securities			2.38	%			2.20	%			2.15	%			2.17	%			2.17	%
Federal Home Loan Bank stock			8.94	%			5.82	%			5.25	%			5.26	%			4.97	%
Fed funds sold			3.83	%			4.32	%			4.54	%			5.36	%			5.30	%
Other			4.92	%			4.06	%			4.94	%			5.18	%			7.38	%
Total interest earning assets			4.81	%			4.75	%			4.72	%			4.75	%			4.59	%
INTEREST BEARING LIABILITIES
Interest bearing demand deposits			0.37	%			0.41	%			0.36	%			0.28	%			0.30	%
Money market deposits			2.55	%			2.58	%			2.71	%			2.77	%			2.85	%
Savings			0.76	%			0.76	%			0.64	%			0.61	%			0.56	%
Certificates of deposit			3.82	%			3.93	%			4.07	%			4.13	%			4.01	%
Short-term borrowings			3.11	%			3.18	%			3.22	%			3.17	%			3.18	%
Federal Home Loan Bank advances			4.53	%			4.53	%			4.88	%			5.52	%			5.55	%
Subordinated debt, net of unamortized issuance costs			3.61	%			3.62	%			3.62	%			3.62	%			3.63	%
Total interest bearing liabilities			2.24	%			2.26	%			2.38	%			2.42	%			2.38	%
Net yield on interest earning assets (FTE) (2)			3.14	%			3.06	%			2.98	%			2.96	%			2.82	%
Net interest spread			2.57	%			2.49	%			2.34	%			2.33	%			2.21	%

⁽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

[F] AVERAGE BALANCES (UNAUDITED)
(Dollars in thousands)

		Three Months Ended
		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
INTEREST EARNING ASSETS
Loans (1)		$	1,388,684			$	1,370,765			$	1,412,578			$	1,403,810			$	1,375,523
Available-for-sale securities (2)			534,352				514,479				522,733				536,379				545,827
Federal Home Loan Bank stock			5,600				11,011				12,762				12,762				12,762
Fed funds sold			6				4				8				4				7
Other (3)			20,487				47,374				15,905				14,597				14,054
Total interest earning assets			1,949,129				1,943,633				1,963,986				1,967,552				1,948,173
NONEARNING ASSETS
Allowance for credit losses			(13,369	)			(12,884	)			(12,598	)			(13,125	)			(13,431	)
Cash and demand deposits due from banks			22,026				23,899				22,800				25,903				23,931
Premises and equipment			28,306				27,962				27,773				27,868				27,999
Other assets			106,595				102,927				92,608				87,002				80,539
Total assets		$	2,092,687			$	2,085,537			$	2,094,569			$	2,095,200			$	2,067,211
INTEREST BEARING LIABILITIES
Interest bearing demand deposits		$	236,076			$	240,860			$	232,271			$	232,018			$	238,866
Money market deposits			449,110				460,663				436,235				451,216				434,061
Savings			286,434				286,364				276,856				274,828				283,605
Certificates of deposit			395,450				387,820				386,871				375,936				366,440
Short-term borrowings			41,661				43,563				50,862				48,304				40,609
Federal Home Loan Bank advances			11,539				3,333				28,261				40,435				45,494
Subordinated debt, net of unamortized issuance costs			29,455				29,433				29,410				29,388				29,365
Total interest bearing liabilities			1,449,725				1,452,036				1,440,766				1,452,125				1,438,440
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits			409,262				403,024				425,116				418,973				411,282
Other liabilities			14,158				16,265				15,775				15,658				16,755
Shareholders' equity			219,542				214,212				212,912				208,444				200,734
Total liabilities and shareholders' equity		$	2,092,687			$	2,085,537			$	2,094,569			$	2,095,200			$	2,067,211

⁽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

[G] ASSET QUALITY ANALYSIS (UNAUDITED)
(Dollars in thousands)

The following table outlines our asset quality analysis as of, and for the three-month periods ended:

		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
NONPERFORMING ASSETS
Commercial and industrial		$	17			$	-			$	-			$	120			$	271
Commercial real estate			533				-				-				-				-
Agricultural			-				-				-				-				167
Residential real estate			614				173				282				427				556
Consumer			-				-				-				-				-
Total nonaccrual loans			1,164				173				282				547				994
Accruing loans past due 90 days or more			31				26				19				64				15
Total nonperforming loans			1,195				199				301				611				1,009
Foreclosed assets			667				649				544				546				629
Debt securities			-				-				-				12				12
Total nonperforming assets		$	1,862			$	848			$	845			$	1,169			$	1,650
Nonperforming loans to gross loans			0.09	%			0.01	%			0.02	%			0.04	%			0.07	%
Nonperforming assets to total assets			0.09	%			0.04	%			0.04	%			0.06	%			0.08	%
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		$	12,735			$	12,895			$	12,635			$	13,095			$	13,390
Charge-offs			390				172				299				1,767				527
Recoveries			1,822				224				197				408				134
Net loan charge-offs (recoveries)			(1,432	)			(52	)			102				1,359				393
(Reversal of) provision for credit losses - loans			(1,190	)			(212	)			362				899				98
Allowance at end of period		$	12,977			$	12,735			$	12,895			$	12,635			$	13,095
Allowance for credit losses to gross loans			0.93	%			0.93	%			0.91	%			0.89	%			0.95	%
Reserve for unfunded commitments			708				617				512				498				450
Provision for credit losses - unfunded commitments			91				105				14				47				72
Reserve to unfunded commitments			0.16	%			0.14	%			0.15	%			0.15	%			0.14	%
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial		$	68			$	(80	)		$	13			$	(6	)		$	334
Commercial real estate			(50	)			(2	)			(2	)			(318	)			(29	)
Agricultural			-				-				(4	)			-				-
Residential real estate			(16	)			(13	)			(16	)			(20	)			(19	)
Consumer			(1,434	)			43				111				1,703				107
Total		$	(1,432	)		$	(52	)		$	102			$	1,359			$	393
Net (recoveries) charge-offs (Quarter to Date annualized to average loans)			(0.41)	%			(0.02)	%			0.03	%			0.39	%			0.11	%
Net (recoveries) charge-offs (Year to Date annualized to average loans)			(0.22)	%			(0.02)	%			0.14	%			0.17	%			0.06	%
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due		$	1,076			$	5,555			$	5,682			$	2,226			$	1,484
Accruing loans past due 90 days or more			31				26				19				64				15
Total accruing past due loans			1,107				5,581				5,701				2,290				1,499
Nonaccrual loans			1,164				173				282				547				994
Total past due and nonaccrual loans		$	2,271			$	5,754			$	5,983			$	2,837			$	2,493

⁽¹⁾ N/M: Not meaningful

[H] CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)
(Dollars in thousands)

Loan Analysis

		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024				Annualized Growth % Quarter to Date
Commercial and industrial (1)		$	207,719			$	205,172			$	200,623			$	197,372			$	198,769				4.97	%
Commercial real estate (1)			614,383				596,282				591,718				590,255				586,481				12.14	%
Advances to mortgage brokers			3,005				3,015				63,080				76,187				39,300				(1.33)	%
Agricultural			96,842				94,359				99,694				96,794				94,996				10.53	%
Total commercial loans			921,949				898,828				955,115				960,608				919,546				10.29	%
Residential real estate			398,668				387,348				380,872				369,846				365,188				11.69	%
Consumer			76,896				81,548				87,584				93,829				96,902				(22.82)	%
Gross loans		$	1,397,513			$	1,367,724			$	1,423,571			$	1,424,283			$	1,381,636				8.71	%

⁽¹⁾ Certain amounts reported as commercial and industrial loans have been reclassified as commercial real estate loans to conform to the June 30, 2025 presentation

Deposit Analysis

		June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024				Annualized Growth % Quarter to Date
Noninterest bearing demand deposits		$	493,477			$	404,194			$	416,373			$	421,493			$	412,193				88.36	%
Interest bearing demand deposits			223,376				243,939				237,548				228,902				232,660				(33.72)	%
Money market deposits			446,845				473,138				423,883				471,745				429,150				(22.23)	%
Savings			289,746				286,399				281,665				276,095				279,847				4.67	%
Certificates of deposit			395,932				390,239				387,591				383,597				368,449				5.84	%
Total deposits		$	1,849,376			$	1,797,909			$	1,747,060			$	1,781,832			$	1,722,299				11.45	%

[I] RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)

			Three Months Ended
			June 30 2025				March 31 2025				December 31 2024				September 30 2024				June 30 2024
Net income			$	5,031			$	3,949			$	3,996			$	3,281			$	3,481
Net gains (losses) on foreclosed assets				-				(55	)			74				4				6
Overdraft (charge-off) recoveries (1)				1,556				-				66				(1,622	)			-
Profitability initiative cost (2)				(173	)			-				(23	)			-				-
Legal fees related to Nasdaq (2)				(47	)			(121	)			-				-				-
Income tax impact on items above				(281	)			37				(25	)			340				(1	)
Exchange fees on bank-owned life insurance transfers (3)				(120	)			-				-				-				-
Income tax expense on bank-owned life insurance surrender (4)				-				(166	)			-				-				-
Core net income	(A)		$	4,096			$	4,254			$	3,904			$	4,559			$	3,476
Noninterest expenses			$	13,745			$	13,299			$	13,330			$	13,228			$	12,895
Amortization of acquisition intangibles				-				1				1				-				1
Non-core expenses				220				121				23				-				-
Core noninterest expense	(B)		$	13,525			$	13,177			$	13,306			$	13,228			$	12,894
Net interest income			$	15,129			$	14,525			$	14,555			$	14,488			$	13,550
Tax equivalent adjustment for net interest margin				178				184				213				232				237
Net interest income (FTE)	(C)			15,307				14,709				14,768				14,720				13,787
Noninterest income				3,686				3,528				3,972				3,528				3,608
Tax equivalent adjustment for efficiency ratio				63				78				54				53				53
Core revenue (FTE)				19,056				18,315				18,794				18,301				17,448
Non-core revenue (loss)				(120	)			(55	)			74				4				6
Core revenue	(D)		$	19,176			$	18,370			$	18,720			$	18,297			$	17,442
Efficiency ratio	(B/D)			70.53	%			71.73	%			71.08	%			72.30	%			73.93	%
Average earning assets	(E)			1,949,129				1,943,633				1,963,986				1,967,552				1,948,173
Net yield on interest earning assets (FTE)	(C/E)			3.14	%			3.06	%			2.98	%			2.96	%			2.82	%
Average assets	(F)			2,092,687				2,085,537				2,094,569				2,095,200				2,067,211
Average shareholders' equity	(G)			219,542				214,212				212,912				208,444				200,734
Average tangible shareholders' equity	(H)			171,260				165,929				164,629				160,161				152.451
Average diluted shares outstanding (5)	(I)			7,398,109				7,432,162				7,451,718				7,473,184				7,494,828
Core diluted earnings per share	(A/I)		$	0.55			$	0.57			$	0.52			$	0.61			$	0.46
Core return on average assets	(A/F)			0.79	%			0.83	%			0.74	%			0.87	%			0.68	%
Core return on average shareholders' equity	(A/G)			7.48	%			8.05	%			7.29	%			8.70	%			6.96	%
Core return on average tangible shareholders' equity	(A/H)			9.59	%			10.40	%			9.43	%			11.32	%			9.17	%

⁽¹⁾ Includes reversal of provision for credit losses in the first quarter of 2025 and provision for credit losses in the third quarter of 2024 related to overdrawn deposit accounts from a single customer.
⁽²⁾ Included in Other professional services in the consolidated statements of income
⁽³⁾ Income tax expense on life to date earnings on bank-owned life insurance policies surrendered
⁽⁴⁾ Included as a reduction to Earnings on bank-owned life insurance policies in the consolidated statements of income
⁽⁵⁾ Whole shares

SOURCE: Isabella Bank Corp.

View the original press release on ACCESS Newswire

FAQ

What were Isabella Bank's (ISBA) Q2 2025 earnings per share?

Isabella Bank reported Q2 2025 earnings of $0.68 per diluted share, up from $0.46 in Q2 2024. Core earnings were $0.55 per diluted share.

How much did Isabella Bank's deposits grow in Q2 2025?

Isabella Bank's deposits grew by 11% annualized from Q1 2025, with total deposits reaching $1.85 billion. The growth was primarily driven by an $89.3 million increase in demand deposits.

What is Isabella Bank's current net interest margin (NIM)?

Isabella Bank's net interest margin was 3.14% in Q2 2025, up from 3.06% in Q1 2025 and 2.82% in Q2 2024.

How did Isabella Bank's loan portfolio perform in Q2 2025?

Isabella Bank's loan portfolio grew 9% annualized from Q1 2025, led by commercial and residential loans. Commercial loans increased by $23.1 million (10.3% annualized), while maintaining strong credit quality with nonperforming loans at 0.09%.

What was Isabella Bank's total asset size in Q2 2025?

Isabella Bank's total assets were $2.2 billion as of Q2 2025, representing an increase of $53.6 million from the previous quarter.