0000842517false00008425172024-10-242024-10-24

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2024
ISABELLA BANK CORPORATION
(Exact name of registrant as specified in its charter)
 
Michigan000-18415 38-2830092
(State or other jurisdiction
of incorporation)		(Commission
File Number)		 (IRS Employer
Identification No.)
401 North Main StreetMt. PleasantMichigan 48858-1649
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (989) 772-9471
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-l2)
☐Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240.l4d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.l3e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange on which registered
NoneN/AN/A
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On October 24, 2024, Isabella Bank Corporation issued a press release announcing its financial results for the quarter ended September 30, 2024.
A copy of the press release is filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing made by the registrant under the Securities Act of 1933, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
No.		Description
104Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 ISABELLA BANK CORPORATION
Dated: October 24, 2024 By: /s/ Jerome E. Schwind
  Jerome E. Schwind, President and CEO



INDEX TO EXHIBITS
Exhibit
No.		Description
104Cover page interactive data file - the cover page XBRL tags are embedded within the inline XBRL document


Exhibit 99.1
logo.jpg
Isabella Bank Corporation Reports Third Quarter 2024 Results
MT. PLEASANT, MICHIGAN — October 24, 2024 — Isabella Bank Corporation (OTCQX: ISBA) (the “Company” or "we") reported third quarter 2024 net income of $3.3 million, or $0.44 per diluted share, compared to $4.4 million or $0.58 per diluted share in the same quarter of 2023. The non-GAAP measure of core earnings in the third quarter 2024 totaled $4.6 million, or $0.61 per diluted share, compared to $4.4 million or $0.58 per diluted share for the same quarter of 2023.
THIRD QUARTER 2024 HIGHLIGHTS
•Return on assets of 0.62%, core return on assets of 0.87% (non-GAAP measure)
•Loan growth of 12% annualized
•Deposit growth of 14% annualized
•Net interest margin of 2.98%
•Nonaccrual loans to total loans ratio of 0.04%
“Profitability from operations improved during the third quarter as we delivered quarter-over-quarter expansion in net interest income with strong growth on both sides of the balance sheet while maintaining our disciplined approach to credit quality," said Isabella Bank Corporation's Chief Executive Officer Jerome Schwind. "Core earnings increased 31% over the second quarter 2024. That benefit was offset by a $1.6 million charge, as previously announced, related to overdrawn deposit accounts from a customer.
"Along with higher loan yields, our quarterly results include the benefit of recovering two previously charged-off commercial loans,” he added. "With continued improvement in our top-line results, our focus is on opportunities to boost return on assets and lower the efficiency ratio. I am proud of our teamwork, dedication to risk management, and our commitment to provide consistent, sustainable long-term earnings.”
FINANCIAL CONDITION (September 30, 2024 compared to June 30, 2024)
Total assets grew $46.8 million to $2.1 billion primarily due to loan growth funded by growth in deposits during the third quarter. Excess cash generated during the quarter was used to pay off wholesale borrowings totaling $24.7 million.
Securities available-for-sale increased $1.2 million to $506.8 million at the end of third quarter 2024. The increase was due to a $13.1 million improvement in the net unrealized loss, which was offset by $11.9 million of principal paydowns on mortgage-related securities and municipal security maturities. Net unrealized losses on securities totaled $21 million and $34 million at the end of the third and second quarters, respectively. Net unrealized losses as a percentage of total available-for-sale securities improved to 4% from 6% at the end of the second quarter of 2024 mostly due to a decrease in short-term bond yields. While bond rates may vary from quarter to quarter, we expect unrealized losses will continue to decrease as the bonds approach their maturity dates over the next three years.
Total loans grew $42.6 million to $1.42 billion at the end of the third quarter, led by a $36.9 million increase in advances to mortgage brokers. Residential loans increased $4.7 million on steady new volume and continued slowing of prepayments. Excluding advances to mortgage brokers, commercial loans increased $4.2 million due to continued growth in commercial and industrial loans and agricultural loans. At the end of September, $12.6 million


of additional commercial real estate construction loans closed and the majority are expected to be funded early in the fourth quarter.
The allowance for credit losses decreased $460,000 to $12.6 million at the end of third quarter of 2024. Most of the decrease is due to improvement in historical loss experience, driven by the recovery of two previously charged-off loans in the quarter totaling $314,000. Nonaccrual loan balances decreased by $447,000 to $547,000 at the end of the third quarter of 2024. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.16% compared to 0.05% at the end of third quarter of 2023. The increase is mostly the result of one agricultural loan with a balance of $1.1 million that is now current.
Total deposits were up $59.5 million to $1.78 billion at the end of the third quarter. The increase is consistent with normal seasonal patterns at the end of the third quarter that are generally experienced in money market accounts due to an inflow from businesses and municipalities. Certificates of Deposit accounts (CDs) were up $15.1 million, attributed to new accounts and customers’ anticipation of lower deposit rates going into the fourth quarter 2024. Demand for retail CDs continues because of the rate environment.
Tangible book value per share was $22.14 as of September 30, 2024, compared to $20.60 on June 30, 2024. Net unrealized losses on available-for-sale securities reduced tangible book value per share by $2.23 and $3.60 for the respective periods. Share repurchases totaled 53,000 during the third quarter for a value of $1.0 million at an average price of $19.23.
RESULTS OF OPERATIONS (September 30, 2024 to September 30, 2023 quarterly comparison, unless otherwise noted)
Net interest margin as a percentage of earning assets (NIM) was 2.98%, compared to 2.85% last quarter and 2.99% in the third 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 2.21% and 2.23% during third quarters of 2024 and 2023, respectively. The weighted average maturity of our U.S. Treasury portfolio is less than 2 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 5.73% in third quarter, up from 5.17% in the same quarter of 2023. Excluding loan recoveries, the yield on loans was 5.65%. The expansion in loan yields is a result of higher rates on new loans and fixed rate commercial loans that have and continue repricing to variable rates. At the end of the third quarter, approximately 41% of commercial loans are fixed at rates that are lower than current market rates, but the majority will contractually reprice to variable rates over the next three to five years. Cost of interest-bearing liabilities increased to 2.43% from 1.77% in the third quarter of 2023, but have stabilized compared to the cost in the previous quarter of 2.39%.
The provision for credit losses was $946,000 in the third quarter, compared to a credit of $292,000 for the same period in 2023. The current year quarter includes the impact from the recovery of the contractual principal of two previously charged-off commercial loans totaling $314,000. That benefit was offset by a $1.6 million charge related to overdrawn deposit accounts from a single customer. The loans to the customer and related parties are well collateralized, and no additional credit provisioning was necessary in the third quarter. The credit in the prior year quarter mostly reflects loan recoveries in excess of charge-off activity.
Noninterest income was $3.5 million compared to $3.4 million in the third quarter of 2023. Customer service fees grew $99,000 based on a higher number of transactional accounts. Wealth management income increased $145,000, or 17%, due to higher assets under management (AUM). AUM increased $89.2 million over the prior year quarter driven by growth in new accounts and higher security valuations.
Noninterest expenses were $13.2 million in the third quarter 2024 compared to $12.7 million in same quarter of 2023. Compensation and benefit expenses increased $612,000 reflecting annual merit increases in 2024, and higher incentive compensation as compared to the third 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).
Contact
Lori Peterson, Director of Marketing
Phone: 989-779-6333 Fax: 989-775-5501
Forward-Looking Statements
Information in this release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended and Rule 3b-6 promulgated thereunder. We intend such forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995, and are included in this statement for purposes of these safe harbor provisions. Forward-looking statements generally relate to losses, impact of events, financial condition, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting the Company and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result", “expect”, “plan”, “believe”, “estimate”, “anticipate”, “strategy”, “trend”, “forecast”, “outlook”, “project”, “intend”, “assume”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 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 IndexConsolidated Financial Schedules (Unaudited)
ASelected Financial Data
BConsolidated Balance Sheets - Quarterly Trend
CConsolidated Statements of Income
DConsolidated Statements of Income - Quarterly Trend
EAverage Yields and Costs
FAverage Balances
GAsset Quality Analysis
HConsolidated Loan and Deposit Analysis
IReconciliation of Non-GAAP Financial Measures


SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
Three Months Ended
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
PER SHARE
Basic earnings$0.44 $0.47 $0.42 $0.51 $0.59 
Diluted earnings0.44 0.46 0.42 0.51 0.58 
Core diluted earnings (2)
0.61 0.46 0.41 0.50 0.58 
Dividends0.28 0.28 0.28 0.28 0.28 
Book value (1)
28.63 27.06 26.80 27.04 24.71 
Tangible book value (1)
22.14 20.60 20.35 20.59 18.27 
Market price (1)
21.21 18.20 19.40 21.50 21.05 
Common shares outstanding (1) (3)
7,438,720 7,474,016 7,488,101 7,485,889 7,490,557 
Average number of diluted common shares outstanding (3)
7,473,184 7,494,828 7,507,739 7,526,514 7,570,374 
PERFORMANCE RATIOS
Return on average total assets0.62 %0.68 %0.61 %0.73 %0.86 %
Core return on average total assets (2)
0.87 %0.68 %0.60 %0.73 %0.85 %
Return on average shareholders' equity6.26 %6.97 %6.19 %7.98 %9.17 %
Core return on average shareholders' equity (2)
8.70 %6.96 %6.08 %7.97 %9.05 %
Return on average tangible shareholders' equity8.15 %9.19 %8.12 %10.73 %12.27 %
Core return on average tangible shareholders' equity (2)
11.32 %9.17 %7.97 %10.71 %12.11 %
Net interest margin yield (fully taxable equivalent) (2)
2.98 %2.85 %2.79 %2.83 %2.99 %
Efficiency ratio (2)
72.30 %73.93 %74.84 %68.41 %70.56 %
Gross loan to deposit ratio (1)
79.93 %80.22 %77.22 %78.29 %75.43 %
Shareholders' equity to total assets (1)
10.11 %9.82 %9.75 %9.83 %8.74 %
Tangible shareholders' equity to tangible assets (1)
8.00 %7.65 %7.58 %7.66 %6.61 %
ASSETS UNDER MANAGEMENT
Wealth assets under management (1)
679,858 647,850 660,645 641,027 590,666 
ASSET QUALITY
Nonaccrual loans (1)
547 994 1,283 982 520 
Foreclosed assets (1)
546 629 579 406 509 
Net loan charge-offs (recoveries)1,359 393 46 381 (254)
Net loan charge-offs (recoveries) to average loans outstanding0.10 %0.03 %0.00 %0.03 %(0.02)%
Nonperforming loans to gross loans (1)
0.04 %0.07 %0.09 %0.08 %0.04 %
Nonperforming assets to total assets (1)
0.06 %0.08 %0.09 %0.07 %0.05 %
Allowance for credit losses to gross loans (1)
0.89 %0.95 %0.98 %0.97 %0.96 %
CAPITAL RATIOS (1)
Tier 1 leverage8.77 %8.83 %8.80 %8.76 %8.77 %
Common equity tier 1 capital12.08 %12.37 %12.36 %12.54 %12.43 %
Tier 1 risk-based capital12.08 %12.37 %12.36 %12.54 %12.43 %
Total risk-based capital14.90 %15.29 %15.31 %15.52 %15.39 %
(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

A


CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
ASSETS
Cash and demand deposits due from banks$27,019 $22,690 $22,987 $25,628 $48,862 
Fed Funds sold and interest bearing balances due from banks359 869 2,231 8,044 67,017 
Total cash and cash equivalents27,378 23,559 25,218 33,672 115,879 
Available-for-sale securities, at fair value506,806 505,646 517,585 528,148 516,897 
Federal Home Loan Bank stock12,762 12,762 12,762 12,762 12,762 
Mortgage loans held-for-sale504 637 366 — 105 
Loans1,424,283 1,381,636 1,365,508 1,349,463 1,334,674 
Less allowance for credit losses12,635 13,095 13,390 13,108 12,767 
Net loans1,411,648 1,368,541 1,352,118 1,336,355 1,321,907 
Premises and equipment27,674 27,843 27,951 27,639 26,960 
Bank-owned life insurance policies34,625 34,382 34,131 33,892 33,654 
Goodwill and other intangible assets48,283 48,283 48,284 48,284 48,285 
Other assets37,221 38,486 39,161 38,216 42,041 
Total assets$2,106,901 $2,060,139 $2,057,576 $2,058,968 $2,118,490 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Demand deposits$421,493 $412,193 $413,272 $428,505 $445,043 
Interest bearing demand deposits376,592 338,329 349,401 320,737 363,558 
Savings600,150 603,328 639,491 628,079 628,795 
Certificates of deposit383,597 368,449 366,143 346,374 332,078 
Total deposits1,781,832 1,722,299 1,768,307 1,723,695 1,769,474 
Short-term borrowings52,434 44,194 42,998 46,801 52,330 
Federal Home Loan Bank advances15,000 45,000 — 40,000 65,000 
Subordinated debt, net of unamortized issuance costs29,402 29,380 29,357 29,335 29,312 
Total borrowed funds96,836 118,574 72,355 116,136 146,642 
Other liabilities15,248 17,017 16,240 16,735 17,251 
Total liabilities1,893,916 1,857,890 1,856,902 1,856,566 1,933,367 
Shareholders’ equity
Common stock125,218 126,126 126,656 127,323 127,680 
Shares to be issued for deferred compensation obligations3,981 3,951 3,890 3,693 3,641 
Retained earnings101,065 99,808 98,318 97,282 95,533 
Accumulated other comprehensive income (loss)(17,279)(27,636)(28,190)(25,896)(41,731)
Total shareholders’ equity212,985 202,249 200,674 202,402 185,123 
Total liabilities and shareholders' equity$2,106,901 $2,060,139 $2,057,576 $2,058,968 $2,118,490 



B


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Nine Months Ended 
 September 30
 20242023
Interest income
Loans$57,150 $48,090 
Available-for-sale securities8,437 9,230 
Federal Home Loan Bank stock472 226 
Federal funds sold and other750 1,029 
Total interest income66,809 58,575 
Interest expense
Deposits22,107 11,953 
Short-term borrowings1,026 604 
Federal Home Loan Bank advances1,597 887 
Subordinated debt, net of unamortized issuance costs799 799 
Total interest expense25,529 14,243 
Net interest income41,280 44,332 
Provision for credit losses1,508 (55)
Net interest income after provision for credit losses39,772 44,387 
Noninterest income
Service charges and fees6,333 6,085 
Wealth management fees2,990 2,625 
Earnings on bank-owned life insurance policies748 681 
Net gain on sale of mortgage loans138 232 
Other395 688 
Total noninterest income10,604 10,311 
Noninterest expenses
Compensation and benefits21,236 19,789 
Occupancy and equipment7,970 7,743 
Other professional services1,628 1,764 
ATM and debit card fees1,459 1,280 
FDIC insurance premiums823 689 
Other5,683 6,130 
Total noninterest expenses38,799 37,395 
Income before income tax expense11,577 17,303 
Income tax expense1,684 2,939 
Net income$9,893 $14,364 
Earnings per common share
Basic$1.32 $1.91 
Diluted1.32 1.89 
Cash dividends per common share0.84 0.84 





C


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
Interest income
Loans$20,230 $18,863 $18,057 $17,580 17,270 
Available-for-sale securities2,749 2,804 2,884 2,926 2,963 
Federal Home Loan Bank stock168 158 146 129 91 
Federal funds sold and other194 263 293 421 161 
Total interest income23,341 22,088 21,380 21,056 20,485 
Interest expense
Deposits7,631 7,313 7,163 6,399 5,015 
Short-term borrowings384 321 321 357 284 
Federal Home Loan Bank advances571 638 388 422 617 
Subordinated debt, net of unamortized issuance costs267 266 266 266 267 
Total interest expense8,853 8,538 8,138 7,444 6,183 
Net interest income14,488 13,550 13,242 13,612 14,302 
Provision for credit losses946 170 392 684 (292)
Net interest income after provision for credit losses13,542 13,380 12,850 12,928 14,594 
Noninterest income
Service charges and fees2,159 2,128 2,046 2,212 2,060 
Wealth management fees1,003 1,048 939 932 858 
Earnings on bank-owned life insurance policies252 253 243 239 229 
Net gain on sale of mortgage loans37 67 34 85 109 
Other77 112 206 48 158 
Total noninterest income3,528 3,608 3,468 3,516 3,414 
Noninterest expenses
Compensation and benefits7,251 6,970 7,015 6,116 6,639 
Occupancy and equipment2,645 2,619 2,706 2,554 2,535 
Other professional services588 527 513 576 672 
ATM and debit card fees503 487 469 487 471 
FDIC insurance premiums291 280 252 233 228 
Other1,950 2,012 1,721 1,949 2,113 
Total noninterest expenses13,228 12,895 12,676 11,915 12,658 
Income before income tax expense3,842 4,093 3,642 4,529 5,350 
Income tax expense561 612 511 726 937 
Net income$3,281 $3,481 $3,131 $3,803 $4,413 
Earnings per common share
Basic$0.44 $0.47 $0.42 $0.51 $0.59 
Diluted0.44 0.46 0.42 0.51 0.58 
Cash dividends per common share0.28 0.28 0.28 0.28 0.28 



D


AVERAGE YIELDS AND COSTS (UNAUDITED)
The following schedules present yield and daily average amounts outstanding for each major category of interest earning assets, non-earning 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
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
INTEREST EARNING ASSETS
Loans (1)
5.73 %5.52 %5.38 %5.20 %5.17 %
Available-for-sale securities2.21 %2.24 %2.26 %2.23 %2.23 %
Federal Home Loan Bank stock5.24 %4.98 %4.60 %4.04 %2.83 %
Fed funds sold5.55 %5.51 %5.72 %5.71 %5.47 %
Other5.29 %7.53 %4.67 %6.20 %3.62 %
Total interest earning assets4.77 %4.61 %4.47 %4.35 %4.27 %
INTEREST BEARING LIABILITIES
Interest bearing demand deposits0.33 %0.39 %0.48 %0.63 %0.28 %
Savings2.28 %2.18 %2.11 %1.76 %1.44 %
Certificates of deposit4.13 %4.01 %3.84 %3.60 %3.20 %
Short-term borrowings3.17 %3.18 %3.18 %2.83 %2.42 %
Federal Home Loan Bank advances5.60 %5.64 %5.64 %5.64 %5.51 %
Subordinated debt, net of unamortized issuance costs
3.61 %3.64 %3.65 %3.60 %3.62 %
Total interest bearing liabilities2.43 %2.39 %2.28 %2.11 %1.77 %
Net yield on interest earning assets (FTE) (2)
2.98 %2.85 %2.79 %2.83 %2.99 %
Net interest spread2.34 %2.22 %2.19 %2.24 %2.50 %
(1) Includes loans held-for-sale and nonaccrual loans
(2) Non-GAAP financial measure; refer to the Reconciliation of Non-GAAP Financial Measures (Unaudited) in table I


















E


AVERAGE BALANCES (UNAUDITED)
(Dollars in thousands)
Three Months Ended
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
INTEREST EARNING ASSETS
Loans (1)
$1,403,810 $1,375,523 $1,348,749 $1,340,271 $1,325,455 
Available-for-sale securities (2)
536,379 545,827 557,030 564,068 572,038 
Federal Home Loan Bank stock12,762 12,762 12,762 12,762 12,762 
Fed funds sold4 7 7 13 13 
Other (3)
14,597 14,054 25,210 26,823 17,638 
Total interest earning assets1,967,552 1,948,173 1,943,758 1,943,937 1,927,906 
NONEARNING ASSETS
Allowance for credit losses(13,125)(13,431)(13,100)(12,780)(12,937)
Cash and demand deposits due from banks25,903 23,931 24,018 23,244 25,287 
Premises and equipment27,868 27,999 28,022 27,444 26,629 
Other assets87,002 80,539 84,059 71,592 74,244 
Total assets$2,095,200 $2,067,211 $2,066,757 $2,053,437 $2,041,129 
INTEREST BEARING LIABILITIES
Interest bearing demand deposits$358,383 $342,931 $345,842 $317,996 $342,175 
Savings599,679 613,601 633,904 634,539 595,372 
Certificates of deposit375,936 366,440 357,541 338,852 324,399 
Short-term borrowings48,151 40,593 40,623 50,049 46,574 
Federal Home Loan Bank advances40,588 45,510 27,692 29,674 44,429 
Subordinated debt, net of unamortized issuance costs
29,388 29,365 29,342 29,320 29,298 
Total interest bearing liabilities1,452,125 1,438,440 1,434,944 1,400,430 1,382,247 
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits418,973 411,282 412,228 446,747 451,123 
Other liabilities15,658 16,755 16,151 17,302 16,802 
Shareholders’ equity208,444 200,734 203,434 188,958 190,957 
Total liabilities and shareholders’ equity$2,095,200 $2,067,211 $2,066,757 $2,053,437 $2,041,129 
(1) Includes loans held-for-sale and nonaccrual loans
(2) Average balances for available-for-sale securities are based on amortized cost
(3) Includes average interest-bearing deposits with other banks, net of Federal Reserve daily cash letter













F


ASSET QUALITY ANALYSIS (UNAUDITED)
(Dollars in thousands)
The following table outlines our quarter-to-date asset quality analysis as of, and for the three-month periods ended:
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
NONPERFORMING ASSETS
Commercial and industrial$120 $271 $567 $491 $17 
Commercial real estate— — 234 — — 
Agricultural— 167 189 205 208 
Residential real estate427 556 293 286 295 
Consumer— — — — — 
Total nonaccrual loans547 994 1,283 982 520 
Accruing loans past due 90 days or more64 15 — 87 — 
Total nonperforming loans611 1,009 1,283 1,069 520 
Foreclosed assets546 629 579 406 509 
Debt securities12 12 12 12 77 
Total nonperforming assets$1,169 $1,650 $1,874 $1,487 $1,106 
Nonperforming loans to gross loans0.04 %0.07 %0.09 %0.08 %0.04 %
Nonperforming assets to total assets0.06 %0.08 %0.09 %0.07 %0.05 %
Allowance for credit losses as a % of nonaccrual loans2,309.87 %1,317.40 %1,043.65 %1,334.83 %2,455.19 %
ALLOWANCE FOR CREDIT LOSSES
Allowance at beginning of period$13,095 $13,390 $13,108 $12,767 $12,833 
Charge-offs1,767 527 191 452 179 
Recoveries408 134 145 71 433 
Net loan charge-offs (recoveries)1,359 393 46 381 (254)
Provision for credit losses - loans899 98 328 722 (320)
Allowance at end of period$12,635 $13,095 $13,390 $13,108 $12,767 
Allowance for credit losses to gross loans0.89 %0.95 %0.98 %0.97 %0.96 %
Reserve for unfunded commitments498 450 379 315 352 
Provision for credit losses - unfunded commitments47 72 64 (38)28 
Reserve to unfunded commitments0.15 %0.14 %0.11 %0.10 %0.11 %
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial$(6)$334 $(2)$242 $(41)
Commercial real estate(318)(29)(6)(3)(3)
Agricultural— — (2)(6)— 
Residential real estate(20)(19)(63)(14)(266)
Consumer1,703 107 119 162 56 
Total$1,359 $393 $46 $381 $(254)
Net (recoveries) charge-offs (Quarter to Date annualized to average loans)0.39 %0.11 %0.01 %0.11 %(0.08)%
Net (recoveries) charge-offs (Year to Date annualized to average loans)0.17 %0.00 %0.00 %0.00 %(0.03)%
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due$2,226 $1,484 $7,938 $3,895 $715 
Accruing loans past due 90 days or more64 15 — 87 — 
Total accruing past due loans2,290 1,499 7,938 3,982 715 
Nonaccrual loans547 994 1,283 982 520 
Total past due and nonaccrual loans$2,837 $2,493 $9,221 $4,964 $1,235 



G


CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)
(Dollars in thousands)
Loan Analysis
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023		Annualized Growth %
Quarter to Date
Commercial and industrial$240,589 $238,245 $226,281 $209,738 $195,814 3.94 %
Commercial real estate547,038 547,005 561,123 564,244 566,639 0.02 %
Advances to mortgage brokers76,187 39,300 29,688 18,541 24,807 N/M
Agricultural96,794 94,996 93,695 99,994 99,233 7.57 %
Total commercial loans960,608 919,546 910,787 892,517 886,493 17.86 %
Residential real estate369,846 365,188 356,658 356,418 348,196 5.10 %
Consumer93,829 96,902 98,063 100,528 99,985 (12.68)%
Gross loans$1,424,283 $1,381,636 $1,365,508 $1,349,463 $1,334,674 12.35 %

Deposit Analysis
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023		Annualized Growth %
Quarter to Date
Noninterest bearing demand deposits$421,493 $412,193 $413,272 $428,505 $445,043 9.02 %
Interest bearing demand deposits376,592 338,329 349,401 320,737 363,558 45.24 %
Savings600,150 603,328 639,491 628,079 628,795 (2.11)%
Certificates of deposit383,597 368,449 366,143 346,374 332,078 16.45 %
Total deposits$1,781,832 $1,722,299 $1,768,307 $1,723,695 $1,769,474 13.83 %















H


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
Three Months Ended
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
Net income$3,281 $3,481 $3,131 $3,803 $4,413 
Nonrecurring items:
Net gains on sale of available-for-sale securities— — — — — 
Net gains (losses) on foreclosed assets4 6 69 8 75 
Other(1,622)— — — — 
Income tax impact340 (1)(14)(2)(16)
Total nonrecurring items(1,278)5 55 6 59 
Core net income(A)$4,559 $3,476 $3,076 $3,797 $4,354 
Noninterest expenses$13,228 $12,895 $12,676 $11,915 $12,658 
Amortization of acquisition intangibles— 1 — 1 — 
Core noninterest expense(B)$13,228 $12,894 $12,676 $11,914 $12,658 
Net interest income$14,488 $13,550 $13,242 $13,612 $14,302 
Tax equivalent adjustment for net interest margin232 237 246 246 250 
Net interest income (FTE)(C)14,720 13,787 13,488 13,858 14,552 
Noninterest income3,528 3,608 3,468 3,516 3,414 
Tax equivalent adjustment for efficiency ratio53 53 51 50 48 
Core revenue (FTE)18,301 17,448 17,007 17,424 18,014 
Nonrecurring items
Net gains on sale of available-for-sale securities— — — — — 
Net gains (losses) on foreclosed assets4 6 69 8 75 
Total nonrecurring items4 6 69 8 75 
Core revenue(D)$18,297 $17,442 $16,938 $17,416 $17,939 
Efficiency ratio(B/D)72.30 %73.93 %74.84 %68.41 %70.56 %
Average earning assets(E)1,967,552 1,948,173 1,943,758 1,943,937 1,927,906 
Net yield on interest earning assets (FTE)(C/E)2.98 %2.85 %2.79 %2.83 %2.99 %
Average assets(F)2,095,200 2,067,211 2,066,757 2,053,437 2,041,129 
Average shareholders' equity(G)208,444 200,734 203,434 188,958 190,957 
Average tangible shareholders' equity(H)160,161 152,451 155,150 140,674 142,672 
Average diluted shares outstanding (1)
(I)7,473,184 7,494,828 7,507,739 7,526,515 7,570,374 
Core diluted earnings per share(A/I)$0.61 $0.46 $0.41 $0.50 $0.58 
Core return on average assets(A/F)0.87 %0.68 %0.60 %0.73 %0.85 %
Core return on average shareholders' equity(A/G)8.70 %6.96 %6.08 %7.97 %9.05 %
Core return on average tangible shareholders' equity(A/H)11.32 %9.17 %7.97 %10.71 %12.11 %
(1) Whole shares

I

v3.24.3
Cover
Oct. 24, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 24, 2024
Entity Registrant Name ISABELLA BANK CORP
Entity Incorporation, State or Country Code MI
Entity File Number 000-18415
Entity Tax Identification Number 38-2830092
Entity Address, Address Line One 401 North Main Street
Entity Address, City or Town Mt. Pleasant
Entity Address, State or Province MI
Entity Address, Postal Zip Code 48858-1649
City Area Code 989
Local Phone Number 772-9471
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Amendment Flag false
Entity Emerging Growth Company false
Entity Central Index Key 0000842517
Isabella Bank (QX) (USOTC:ISBA)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more Isabella Bank (QX) Charts.
Isabella Bank (QX) (USOTC:ISBA)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more Isabella Bank (QX) Charts.