Isabella Bank Corporation (OTCQX: ISBA) (the “Company” or “we”) reported fourth quarter 2024 net income of $4.0 million, or $0.54 per diluted share, an increase compared to $3.8 million, or $0.51 per diluted share in the same quarter of 2023. The non-GAAP measure of core earnings in the fourth quarter 2024 totaled $3.9 million, or $0.52 per diluted share, an increase compared to $3.8 million, or $0.50 per diluted share for the same quarter of 2023.
For the full year, net income was $13.9 million, or $1.86 per diluted share, compared to $18.2 million, or $2.40 per diluted share for 2023. The non-GAAP measure of 2024 core earnings was $15.0 million, or $2.01 per diluted share, compared to $18.0 million, or $2.37 per diluted share, in 2023.
FOURTHQUARTER 2024 HIGHLIGHTS (compared to fourth quarter 2023, unless otherwise stated)
— Return on assets of 0.76%, compared to 0.73%
— Core loan growth of 4% annualized, compared to 6%
— Net interest margin of 2.99%, compared to 2.83%
— Noninterest income growth of 13%, compared to 3%
— Net loan charge-offs to average loans of 0.01%, compared to 0.03%
“Over the past several quarters we've emphasized that our financial performance is based on the strength of our core operations and maintaining our earnings momentum, and this quarter reflected the same focus,” said the Chief Executive Officer Jerome Schwind. He noted that net interest margin expanded again in the fourth quarter, when non-recurring loan recoveries are excluded, and continue to grow core loans while adhering to our disciplined credit culture.
“We enter 2025 looking forward to continued repricing of low fixed rate loans to variable rates, and the redeployment of more than $70 million of securities that will amortize and mature during the year,” Schwind added. “Our teams also have been working on initiatives that will drive higher noninterest income, mostly in the second half of 2025. We are well-positioned to deliver long-term value to our shareholders in 2025 and beyond.
“What sets Isabella Bank apart is the talent, dedication, and teamwork of our employees, who continue to deliver exceptional service and financial strength, as noted by reader's choice awards across our market,” Schwind added. In September 2024, the Company was honored as the Best Bank in Isabella County by The Morning Sun People's Choice Awards. In December 2024, Midland Daily News recognized Isabella Bank as the Best Bank in Midland County through its Reader's Choice Awards. Most recently, in January 2025, The Pioneer named Isabella Bank the Best Bank in Mecosta County serving the Big Rapids region in its Pioneer All Area Reader's Choice Awards.
FINANCIAL CONDITION (December31, 2024 compared to September30, 2024, unless otherwise noted)
Total assets were $2.1 billion, down $20.7 million, primarily due to relatively flat total loans and a decline in available-for-sale (AFS) securities from amortization, maturities and a lower valuation of the portfolio in the fourth quarter.
AFS securities were $489.0 million, down $17.8 million, at the end of fourth quarter 2024. The decrease was due to a $5.5 million increase in the net unrealized loss and $17.7 million of amortization and maturities related to agency and municipal securities, offset by $5,400 of municipal bond purchases. Net unrealized losses on securities totaled $26 million and $21 million at the end of the fourth and third quarters, respectively. Net unrealized losses as a percentage of total AFS securities increased to 5% from 4% at the end of the third quarter of 2024 due to an increase in bond yields. While bond rates may vary from quarter to quarter, unrealized losses are expected to decrease as bonds approach their maturity dates over the next two years.
Totalloans remained steady at $1.42 billion at the end of the fourth quarter, due to an increase of $11.0 million in residential loans and $4.3 million in commercial and industrial loans, offset by a $13.1 million decrease in advances to mortgage brokers. The increase in residential loans was related to steady new volume and continued slowing of prepayments. The growth in commercial and industrial loans primarily was in the hotel and construction industries. While commercial real estate loans remained relatively flat with the third quarter of 2024, the fourth quarter included a payoff of a $6.4 million relationship that had an elevated credit risk. Core loans, which excluded advances to mortgage brokers, grew $12.4 million or 4% on an annualized basis.
The allowance for credit losses increased $260 thousand to $12.9 million at the end of the fourth quarter of 2024. The increase mostly reflects $118 thousand from core loan growth, and the impact from a few commercial loans migrating to a special mention risk rating during the quarter. The downgraded loans are well collateralized and are not an indication of a negative trend in the broader portfolio. Nonaccrual loan balances decreased $265 thousand to $282 thousand at the end of the fourth quarter of 2024. Past dueand accruing accounts between 30 to 89 days, as a percentage of total loans, was 0.40% compared to 0.16% at the end of third quarter 2024. The increase primarily was due to customers who typically make payments about 30 days in arrears, which becomes overdue in months with 31 days. Accordingly, the increase is not believed to be an indication of deteriorating credit quality.
Total deposits were $1.75 billion, down $34.8 million, at the end of the fourth quarter. The slight decrease primarily was due to an outflow from businesses and municipalities consistent with normal seasonal patterns, in addition to some expected outflows to fund large, regional projects. Certificates of Deposit accounts (CDs) were up $4.0 million, driven by the rate environment that attracted customers and investors as a safe place with a competitive rate.
Tangible book value per share was $21.82 as of December31, 2024, compared to $22.14 on September30, 2024. Net unrealized losses on AFS securities reduced tangible book value per share by $2.82 and $2.23 for the respective periods. Share repurchases totaled 27,608 during the fourth quarter for a value of $657 thousand at an average price of $23.80.
RESULTS OF OPERATIONS(December31, 2024 to December31, 2023 quarterly comparison, unless otherwise noted)
Net interest margin (NIM) was 2.99%, an increase from 2.98% last quarter and 2.83% in the fourth quarter of 2023. During the third quarter, we recovered the full contractual interest from two commercial loans that previously were charged off, which contributed 6 basis points to NIM. The book yield from securities was 2.18% and 2.23% during fourth quarters of 2024 and 2023, respectively. The weighted average maturity of our U.S. Treasury portfolio is less than 1.4 years, and the proceeds are expected to be reinvested in market rate loans and securities, or to pay off borrowed funds. The yield on loans expanded to 5.67% in fourth quarter, up from 5.20% in the same quarter of 2023. The expansion in loan yields was a result of higher rates on new loans and fixed rate commercial loans that have and continue to reprice to variable rates. At the end of the fourth quarter, approximately 40% of commercial loans were fixed at rates lower than current market rates, but the majority will contractually reprice to variable rates over the next four years. Cost of interest-bearing liabilities increased to 2.38% from 2.11% in the fourth quarter of 2023, but have stabilized compared to the cost in the previous quarter of 2.43%.
The provision for credit losses in the fourth quarter 2024 was $376 thousand, which reflects the $260 thousand change in the allowance for credit losses on loans and net charge-offs totaling $102 thousand. The provision for loan losses in the same period of 2023 was $684 thousand reflecting $200 thousand from growth in core loans and $381 thousand in net charge-offs. Charge-offs in the fourth quarter of 2023 included a $247 thousand write down of a commercial and industrial loan that was recovered in the third quarter of 2024.
Noninterest income was $4.0 million, an increase from $3.5 million in the fourth quarter of 2023. Customer service fees grew $81 thousand based on a higher number of transactional accounts. Wealth management income increased $119 thousand, or 13%, due to higher assets under management (AUM). Average AUM in the fourth quarter 2024 increased $53.6 million, or 9% over the prior year quarter, driven by growth in new accounts and higher security valuations. Other noninterest income in the fourth quarter 2024 included a $103 thousand recovery from a security that was written down in a previous year and $74 thousand from net gains on foreclosed assets.
Noninterest expenses were $13.3 million in the fourth quarter 2024 compared to $11.9 million in same quarter of 2023. The change mostly was due to higher compensation and benefit expenses totaling $1.2 million, which reflect annual merit increases in 2024 and more medical insurance claims compared to the fourth quarter of 2023.
About the Corporation
Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state-chartered community bank headquartered in Mt. Pleasant, Michigan. Isabella Bank was established in 1903 and has been committed to serving its customers' and communities' local banking needs for over 120 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services. The Bank has locations throughout eight Mid-Michigan counties: Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.
For more information about Isabella Bank Corporation, visit the Investor Relations link at www.isabellabank.com. Isabella Bank Corporation common stock is quoted on the OTCQX tier of the OTC Markets Group, Inc.'s electronic quotation system (www.otcmarkets.com) under the symbol “ISBA.” The Corporation's investor relations firm is Stonegate Capital Partners, Inc. (www.stonegateinc.com).
Forward-Looking Statements Information in this release contains certain forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section21E of the Securities Exchange Act of 1934, as amended and Rule 3b-6 promulgated thereunder. We intend such forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995, and are included in this statement for purposes of these safe harbor provisions. Forward-looking statements generally relate to losses, impact of events, financial condition, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting the Company and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result”, “expect”, “plan”, “believe”, “estimate”, “anticipate”, “strategy”, “trend”, “forecast”, “outlook”, “project”, “intend”, “assume”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors described in the Company's Annual Report on Form 10-K for the year ended December31, 2023, or included in any subsequent filing by the Company with the Securities and Exchange Commission. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Company cautions you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations, and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Non-GAAP Financial Measures This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided in this release.
Table Index Consolidated Financial Schedules (Unaudited)A Selected Financial DataB Consolidated Balance Sheets – Quarterly TrendC Consolidated Statements of IncomeD Consolidated Statements of Income – Quarterly TrendE Average Yields and CostsF Average BalancesG Asset Quality AnalysisH Consolidated Loan and Deposit AnalysisI Reconciliation of Non-GAAP Financial Measures
SELECTED FINANCIAL DATA (UNAUDITED)(Dollars in thousands except per share amounts and ratios) Three Months Ended December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023PER SHAREBasic earnings $ 0.54 $ 0.44 $ 0.47 $ 0.42 $ 0.51Diluted earnings 0.54 0.44 0.46 0.42 0.51Core diluted earnings (2) 0.52 0.61 0.46 0.41 0.50Dividends 0.28 0.28 0.28 0.28 0.28Book value (1) 28.32 28.63 27.06 26.80 27.04Tangible book value (1) 21.82 22.14 20.60 20.35 20.59Market price (1) 25.99 21.21 18.20 19.40 21.50Common shares outstanding (1) (3) 7,424,893 7,438,720 7,474,016 7,488,101 7,485,889Average number of diluted common shares outstanding (3) 7,453,033 7,473,184 7,494,828 7,507,739 7,526,515PERFORMANCE RATIOSReturn on average total assets 0.76% 0.62% 0.68% 0.61% 0.73%Core return on average total assets (2) 0.74% 0.87% 0.68% 0.60% 0.73%Return on average shareholders' equity 7.47% 6.26% 6.97% 6.19% 7.98%Core return on average shareholders' equity (2) 7.29% 8.70% 6.96% 6.08% 7.97%Return on average tangible shareholders' equity 9.66% 8.15% 9.19% 8.12% 10.73%Core return on average tangible shareholders' equity (2) 9.43% 11.32% 9.17% 7.97% 10.71%Net interest margin yield (fully taxable equivalent) (2) 2.99% 2.98% 2.85% 2.79% 2.83%Efficiency ratio (2) 71.20% 72.30% 73.93% 74.84% 68.41%Gross loan to deposit ratio (1) 81.48% 79.93% 80.22% 77.22% 78.29%Shareholders' equity to total assets (1) 10.08% 10.11% 9.82% 9.75% 9.83%Tangible shareholders' equity to tangible assets (1) 7.95% 8.00% 7.65% 7.58% 7.66%ASSETS UNDER MANAGEMENTWealth assets under management (1) 658,042 679,858 647,850 660,645 641,027ASSET QUALITYNonaccrual loans (1) 282 547 994 1,283 982Foreclosed assets (1) 544 546 629 579 406Net loan charge-offs (recoveries) 102 1,359 393 46 381Net loan charge-offs (recoveries) to average loans 0.01% 0.10% 0.03% 0.00% 0.03%outstandingNonperforming loans to gross loans (1) 0.02% 0.04% 0.07% 0.09% 0.08%Nonperforming assets to total assets (1) 0.04% 0.06% 0.08% 0.09% 0.07%Allowance for credit losses to gross loans (1) 0.91% 0.89% 0.95% 0.98% 0.97%CAPITAL RATIOS (1)Tier 1 leverage 8.86% 8.77% 8.83% 8.80% 8.76%Common equity tier 1 capital 12.21% 12.08% 12.37% 12.36% 12.54%Tier 1 risk-based capital 12.21% 12.08% 12.37% 12.36% 12.54%Total risk-based capital 15.06% 14.90% 15.29% 15.31% 15.52%
(1) At end of period(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I(3) Whole shares
ACONSOLIDATED BALANCE SHEETS (UNAUDITED)(Dollars in thousands) December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023ASSETSCash and demand deposits due from banks $ 22,830 $ 27,019 $ 22,690 $ 22,987 $ 25,628Fed Funds sold and interest bearing balances 1,712 359 869 2,231 8,044due from banksTotal cash and cash equivalents 24,542 27,378 23,559 25,218 33,672Available-for-sale securities, at fair value 489,029 506,806 505,646 517,585 528,148Federal Home Loan Bank stock 12,762 12,762 12,762 12,762 12,762Mortgage loans held-for-sale 242 504 637 366 -Loans 1,423,571 1,424,283 1,381,636 1,365,508 1,349,463Less allowance for credit losses 12,895 12,635 13,095 13,390 13,108Net loans 1,410,676 1,411,648 1,368,541 1,352,118 1,336,355Premises and equipment 27,659 27,674 27,843 27,951 27,639Bank-owned life insurance policies 34,882 34,625 34,382 34,131 33,892Goodwill and other intangible assets 48,283 48,283 48,283 48,284 48,284Other assets 38,166 37,221 38,486 39,161 38,216Total assets $ 2,086,241 $ 2,106,901 $ 2,060,139 $ 2,057,576 $ 2,058,968LIABILITIES AND SHAREHOLDERS'EQUITYLiabilitiesDemand deposits $ 416,373 $ 421,493 $ 412,193 $ 413,272 $ 428,505Interest bearing demand deposits 341,366 376,592 338,329 349,401 320,737Savings 601,730 600,150 603,328 639,491 628,079Certificates of deposit 387,591 383,597 368,449 366,143 346,374Total deposits 1,747,060 1,781,832 1,722,299 1,768,307 1,723,695Short-term borrowings 53,567 52,434 44,194 42,998 46,801Federal Home Loan Bank advances 30,000 15,000 45,000 – 40,000Subordinated debt, net of unamortized issuance 29,424 29,402 29,380 29,357 29,335costsTotal borrowed funds 112,991 96,836 118,574 72,355 116,136Other liabilities 15,914 15,248 17,017 16,240 16,735Total liabilities 1,875,965 1,893,916 1,857,890 1,856,902 1,856,566Shareholders' equityCommon stock 126,224 125,218 126,126 126,656 127,323Shares to be issued for deferred compensation 2,383 3,981 3,951 3,890 3,693obligationsRetained earnings 103,024 101,065 99,808 98,318 97,282Accumulated other comprehensive income (21,355) (17,279) (27,636) (28,190) (25,896)(loss)Total shareholders' equity 210,276 212,985 202,249 200,674 202,402Total liabilities and shareholders' equity $ 2,086,241 $ 2,106,901 $ 2,060,139 $ 2,057,576 $ 2,058,968
BCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(Dollars in thousands except per share amounts) Year Ended December 31 2024 2023Interest incomeLoans $ 77,295 $ 65,670Available-for-sale securities 11,093 12,156Federal Home Loan Bank stock 640 355Federal funds sold and other 950 1,450Total interest income 89,978 79,631Interest expenseDeposits 29,690 18,352Short-term borrowings 1,439 961Federal Home Loan Bank advances 1,949 1,309Subordinated debt, net of unamortized issuance costs 1,065 1,065Total interest expense 34,143 21,687Net interest income 55,835 57,944Provision for credit losses 1,884 629Net interest income after provision for credit losses 53,951 57,315Noninterest incomeService charges and fees 8,626 8,297Wealth management fees 4,041 3,557Earnings on bank-owned life insurance policies 1,007 920Net gain on sale of mortgage loans 213 317Other 689 736Total noninterest income 14,576 13,827Noninterest expensesCompensation and benefits 28,576 25,905Occupancy and equipment 10,524 10,297Other professional services 2,212 2,340ATM and debit card fees 1,975 1,767FDIC insurance premiums 1,132 922Other 7,710 8,079Total noninterest expenses 52,129 49,310Income before income tax expense 16,398 21,832Income tax expense 2,509 3,665Net income $ 13,889 $ 18,167Earnings per common shareBasic $ 1.86 $ 2.42Diluted 1.86 2.40Cash dividends per common share 1.12 1.12
CCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(Dollars in thousands except per share amounts) Three Months Ended December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023Interest incomeLoans $ 20,145 $ 20,230 $ 18,863 $ 18,057 17,580Available-for-sale securities 2,656 2,749 2,804 2,884 2,926Federal Home Loan Bank stock 168 168 158 146 129Federal funds sold and other 200 194 263 293 421Total interest income 23,169 23,341 22,088 21,380 21,056Interest expenseDeposits 7,583 7,631 7,313 7,163 6,399Short-term borrowings 413 384 321 321 357Federal Home Loan Bank advances 352 571 638 388 422Subordinated debt, net of unamortized issuance 266 267 266 266 266costsTotal interest expense 8,614 8,853 8,538 8,138 7,444Net interest income 14,555 14,488 13,550 13,242 13,612Provision for credit losses 376 946 170 392 684Net interest income after provision for credit 14,179 13,542 13,380 12,850 12,928lossesNoninterest incomeService charges and fees 2,293 2,159 2,128 2,046 2,212Wealth management fees 1,051 1,003 1,048 939 932Earnings on bank-owned life insurance policies 259 252 253 243 239Net gain on sale of mortgage loans 75 37 67 34 85Other 294 77 112 206 48Total noninterest income 3,972 3,528 3,608 3,468 3,516Noninterest expensesCompensation and benefits 7,340 7,251 6,970 7,015 6,116Occupancy and equipment 2,554 2,645 2,619 2,706 2,554Other professional services 584 588 527 513 576ATM and debit card fees 516 503 487 469 487FDIC insurance premiums 309 291 280 252 233Other 2,027 1,950 2,012 1,721 1,949Total noninterest expenses 13,330 13,228 12,895 12,676 11,915Income before income tax expense 4,821 3,842 4,093 3,642 4,529Income tax expense 825 561 612 511 726Net income $ 3,996 $ 3,281 $ 3,481 $ 3,131 $ 3,803Earnings per common shareBasic $ 0.54 $ 0.44 $ 0.47 $ 0.42 $ 0.51Diluted 0.54 0.44 0.46 0.42 0.51Cash dividends per common share 0.28 0.28 0.28 0.28 0.28
DAVERAGE YIELDS AND COSTS (UNAUDITED)The following schedules present yield and daily average amounts outstanding for each major category of interest earningassets, non-earning assets, interest bearing liabilities, andnoninterestbearing liabilities. For analytical purposes, interestincome is reported on a fully taxable equivalent (FTE) basis using a federal income tax rate of 21%. Federal Reserve Bankrestricted equity holdings are included in other interest earning assets. Three Months Ended December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023INTEREST EARNING ASSETSLoans (1) 5.67% 5.73% 5.52% 5.38% 5.20%Available-for-sale securities 2.18% 2.21% 2.24% 2.26% 2.23%Federal Home Loan Bank stock 5.24% 5.24% 4.98% 4.60% 4.04%Fed funds sold 4.59% 5.55% 5.51% 5.72% 5.71%Other 5.00% 5.29% 7.53% 4.67% 6.20%Total interest earning assets 4.74% 4.77% 4.61% 4.47% 4.35%INTEREST BEARING LIABILITIESInterest bearing demand deposits 0.41% 0.33% 0.39% 0.48% 0.63%Savings 2.17% 2.28% 2.18% 2.11% 1.76%Certificates of deposit 4.07% 4.13% 4.01% 3.84% 3.60%Short-term borrowings 3.30% 3.17% 3.18% 3.18% 2.83%Federal Home Loan Bank advances 4.77% 5.60% 5.64% 5.64% 5.64%Subordinated debt, net of unamortized issuance 3.60% 3.61% 3.64% 3.65% 3.60%costsTotal interest bearing liabilities 2.38% 2.43% 2.39% 2.28% 2.11%Net yield on interest earning assets (FTE) (2) 2.99% 2.98% 2.85% 2.79% 2.83%Net interest spread 2.36% 2.34% 2.22% 2.19% 2.24%
(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
EAVERAGE BALANCES (UNAUDITED)(Dollars in thousands) Three Months Ended December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023INTEREST EARNING ASSETSLoans (1) $ 1,412,578 $ 1,403,810 $ 1,375,523 $ 1,348,749 $ 1,340,271Available-for-sale securities (2) 522,733 536,379 545,827 557,030 564,068Federal Home Loan Bank stock 12,762 12,762 12,762 12,762 12,762Fed funds sold 8 4 7 7 13Other (3) 15,905 14,597 14,054 25,210 26,823Total interest earning assets 1,963,986 1,967,552 1,948,173 1,943,758 1,943,937NONEARNING ASSETSAllowance for credit losses (12,598) (13,125) (13,431) (13,100) (12,780)Cash and demand deposits due from banks 22,800 25,903 23,931 24,018 23,244Premises and equipment 27,773 27,868 27,999 28,022 27,444Other assets 92,608 87,002 80,539 84,059 71,592Total assets $ 2,094,569 $ 2,095,200 $ 2,067,211 $ 2,066,757 $ 2,053,437INTEREST BEARING LIABILITIESInterest bearing demand deposits $ 345,529 $ 358,383 $ 342,931 $ 345,842 $ 317,996Savings 599,833 599,679 613,601 633,904 634,539Certificates of deposit 386,871 375,936 366,440 357,541 338,852Short-term borrowings 49,777 48,151 40,593 40,623 50,049Federal Home Loan Bank advances 29,346 40,588 45,510 27,692 29,674Subordinated debt, net of unamortized issuance 29,410 29,388 29,365 29,342 29,320costsTotal interest bearing liabilities 1,440,766 1,452,125 1,438,440 1,434,944 1,400,430NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITYDemand deposits 425,116 418,973 411,282 412,228 446,747Other liabilities 15,775 15,658 16,755 16,151 17,302Shareholders' equity 212,912 208,444 200,734 203,434 188,958Total liabilities and shareholders' equity $ 2,094,569 $ 2,095,200 $ 2,067,211 $ 2,066,757 $ 2,053,437
(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
FASSET QUALITY ANALYSIS (UNAUDITED)(Dollars in thousands)The following table outlines our quarter-to-date asset quality analysis as of, and for the three-month periods ended: December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023NONPERFORMING ASSETSCommercial and industrial $ – $ 120 $ 271 $ 567 $ 491Commercial real estate – – – 234 -Agricultural – – 167 189 205Residential real estate 282 427 556 293 286Consumer – – – – -Total nonaccrual loans 282 547 994 1,283 982Accruing loans past due 90 days or more 19 64 15 – 87Total nonperforming loans 301 611 1,009 1,283 1,069Foreclosed assets 544 546 629 579 406Debt securities – 12 12 12 12Total nonperforming assets $ 845 $ 1,169 $ 1,650 $ 1,874 $ 1,487Nonperforming loans to gross loans 0.02% 0.04% 0.07% 0.09% 0.08%Nonperforming assets to total assets 0.04% 0.06% 0.08% 0.09% 0.07%Allowance for credit losses as a % of nonaccrual N/M N/M N/M N/M N/Mloans (1)ALLOWANCE FOR CREDIT LOSSESAllowance at beginning of period $ 12,635 $ 13,095 $ 13,390 $ 13,108 $ 12,767Charge-offs 299 1,767 527 191 452Recoveries 197 408 134 145 71Net loan charge-offs (recoveries) 102 1,359 393 46 381Provision for credit losses – loans 362 899 98 328 722Allowance at end of period $ 12,895 $ 12,635 $ 13,095 $ 13,390 $ 13,108Allowance for credit losses to gross loans 0.91% 0.89% 0.95% 0.98% 0.97%Reserve for unfunded commitments 512 498 450 379 315Provision for credit losses – unfunded commitments 14 47 72 64 (38)Reserve to unfunded commitments 0.15% 0.15% 0.14% 0.11% 0.10%NET LOAN CHARGE-OFFS (RECOVERIES)Commercial and industrial $ 13 $ (6) $ 334 $ (2) $ 242Commercial real estate (2) (318) (29) (6) (3)Agricultural (4) – – (2) (6)Residential real estate (16) (20) (19) (63) (14)Consumer 111 1,703 107 119 162Total $ 102 $ 1,359 $ 393 $ 46 $ 381Net (recoveries) charge-offs (Quarter to Date 0.03% 0.39% 0.11% 0.01% 0.11%annualized to average loans)Net (recoveries) charge-offs (Year to Date annualized 0.14% 0.17% 0.00% 0.00% 0.01%to average loans)DELINQUENT AND NONACCRUAL LOANSAccruing loans 30-89 days past due $ 5,682 $ 2,226 $ 1,484 $ 7,938 $ 3,895Accruing loans past due 90 days or more 19 64 15 – 87Total accruing past due loans 5,701 2,290 1,499 7,938 3,982Nonaccrual loans 282 547 994 1,283 982Total past due and nonaccrual loans $ 5,983 $ 2,837 $ 2,493 $ 9,221 $ 4,964
GCONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)(Dollars in thousands)Loan Analysis December 31 September 30 June 30 March 31 December 31 Annualized 2024 2024 2024 2024 2023 Growth % Quarter to DateCommercial and industrial $ 244,894 $ 240,589 $ 238,245 $ 226,281 $ 209,738 7.16%Commercial real estate 547,447 547,038 547,005 561,123 564,244 0.30%Advances to mortgage brokers 63,080 76,187 39,300 29,688 18,541 (68.81)%Agricultural 99,694 96,794 94,996 93,695 99,994 11.98%Total commercial loans 955,115 960,608 919,546 910,787 892,517 (2.29)%Residential real estate 380,872 369,846 365,188 356,658 356,418 11.92%Consumer 87,584 93,829 96,902 98,063 100,528 (26.62)%Gross loans $ 1,423,571 $ 1,424,283 $ 1,381,636 $ 1,365,508 $ 1,349,463 (0.20)%
Deposit Analysis December 31 September 30 June 30 March 31 December 31 Annualized 2024 2024 2024 2024 2023 Growth % Quarter to DateNoninterest bearing demand $ 416,373 $ 421,493 $ 412,193 $ 413,272 $ 428,505 (4.86)%depositsInterest bearing demand 341,366 376,592 338,329 349,401 320,737 (37.42)%depositsSavings 601,730 600,150 603,328 639,491 628,079 1.05%Certificates of deposit 387,591 383,597 368,449 366,143 346,374 4.16%Total deposits $ 1,747,060 $ 1,781,832 $ 1,722,299 $ 1,768,307 $ 1,723,695 (7.81)%
HRECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)(Dollars in thousands except per share amounts and ratios) Three Months Ended December 31 September 30 June 30 March 31 December 31 2024 2024 2024 2024 2023Net income $ 3,996 $ 3,281 $ 3,481 $ 3,131 $ 3,803Nonrecurring itemsNet gains (losses) on foreclosed assets 74 4 6 69 8Overdraft (charge-off) recoveries (1) 66 (1,622) – – -Profitability initiative cost (23) – – – -Income tax impact (25) 340 (1) (14) (2)Total nonrecurring items 92 (1,278) 5 55 6Core net income (A) $ 3,904 $ 4,559 $ 3,476 $ 3,076 $ 3,797Noninterest expenses $ 13,330 $ 13,228 $ 12,895 $ 12,676 $ 11,915Amortization of acquisition intangibles 1 – 1 – 1Core noninterest expense (B) $ 13,329 $ 13,228 $ 12,894 $ 12,676 $ 11,914Net interest income $ 14,555 $ 14,488 $ 13,550 $ 13,242 $ 13,612Tax equivalent adjustment for net interest 213 232 237 246 246marginNet interest income (FTE) (C) 14,768 14,720 13,787 13,488 13,858Noninterest income 3,972 3,528 3,608 3,468 3,516Tax equivalent adjustment for efficiency 54 53 53 51 50ratioCore revenue (FTE) 18,794 18,301 17,448 17,007 17,424Nonrecurring itemsNet gains (losses) on foreclosed assets 74 4 6 69 8Total nonrecurring items 74 4 6 69 8Core revenue (D) $ 18,720 $ 18,297 $ 17,442 $ 16,938 $ 17,416Efficiency ratio (B/D) 71.20% 72.30% 73.93% 74.84% 68.41%Average earning assets (E) 1,963,986 1,967,552 1,948,173 1,943,758 1,943,937Net yield on interest earning assets (FTE) (C/E) 2.99% 2.98% 2.85% 2.79% 2.83%Average assets (F) 2,094,569 2,095,200 2,067,211 2,066,757 2,053,437Average shareholders' equity (G) 212,912 208,444 200,734 203,434 188,958Average tangible shareholders' equity (H) 164,629 160,161 152,451 155,150 140,674Average diluted shares outstanding (2) (I) 7,453,033 7,473,184 7,494,828 7,507,739 7,526,515Core diluted earnings per share (A/I) $ 0.52 $ 0.61 $ 0.46 $ 0.41 $ 0.50Core return on average assets (A/F) 0.74% 0.87% 0.68% 0.60% 0.73%Core return on average shareholders' (A/G) 7.29% 8.70% 6.96% 6.08% 7.97%equityCore return on average tangible (A/H) 9.43% 11.32% 9.17% 7.97% 10.71%shareholders' equity
(1) Includes provision for credit losses related to overdrawn deposit accounts from a single customer in the third quarter of 2024.(2) Whole shares
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SOURCE Isabella Bank Corporation
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