Isabella Bank Corporation (ISBA) Q2 2025 Financial Results Summary

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# Isabella Bank Corporation (ISBA) Q2 2025 Financial Results Summary

Isabella Bank Corporation released its second quarter 2025 financial results on July 24, 2025. Below is a summary of the key financial metrics and highlights:

### Financial Performance Overview
– **Net Income**: $5.0 million, or $0.68 per diluted share, an increase of **43%** compared to $3.5 million, or $0.46 per diluted share in Q2 2024.
– **Core Net Income** (non-GAAP): $4.1 million, or $0.55 per diluted share, an increase of **11%** from $3.5 million, or $0.46 per diluted share in the same quarter last year.

### Key Financial Highlights (Q2 2025 vs. Q2 2024)
– **Return on Average Assets (ROA)**: 0.96%, up from **0.68%**.
– **Core ROA** (non-GAAP): 0.79%, up from **0.68%**.
– **Total Loan Growth**: Increased by **9%** annualized from Q1 2025.
– **Total Deposit Growth**: Increased by **11%** annualized from Q1 2025.
– **Net Interest Margin (NIM)** (non-GAAP): 3.14%, up from **2.82%**.
– **Noninterest Income**: Increased by **4%** from Q1 2025.
– **Nonperforming Loans to Total Loans**: 0.09%.

### Financial Condition Highlights
– **Total Assets**: Increased to $2.2 billion, a rise of **$53.6 million** from Q1 2025.
– **Total Loans**: Reached $1.4 billion, an increase of **$29.8 million**.
– **Core Loans** (non-GAAP): Led by commercial and residential growth.
– **Total Deposits**: $1.85 billion, up **$51.5 million** at the end of Q2.

### Notable Developments
– The bank recovered the entire overdraft charge-off from Q3 2024, which positively affected the provision for credit losses in the quarter.
– Stock volume increased significantly following the bank’s uplisting to Nasdaq in May 2025.
– The bank is focused on enhancing shareholder value through strong earnings, share repurchases, and continued dividends.

### Share Repurchase and Dividend Information
– **Share Repurchases**: Totaled 57,824 shares during Q2 at an average price of approximately **$26.03**, costing about **$1.5 million**.
– **Quarterly Dividend**: Declared at **$0.28** per share, consistent with prior quarters.

### Summary of Key Financial Ratios
– **Tangible Book Value per Share (non-GAAP)**: Increased to **$23.39** from $22.58 in Q1 2025.
– **Efficiency Ratio**: Improved to **70.53%** from **73.93%** in Q2 2024.

### Operational Insights
– **Provision for Credit Losses**: Reported a credit of $1.1 million, reflecting net recoveries.
– **Yield on Loans**: Increased to **5.71%** from **5.50%** in Q2 2024.
– **Cost of Interest-Bearing Liabilities**: Decreased to **2.24%**, down from **2.38%** in the same quarter last year.

### Market and Economic Considerations
– The bank is closely monitoring credit quality amidst ongoing economic uncertainties due to fluctuating interest rates, inflationary pressures, and potential changes in customer demand.

### Conclusion
Isabella Bank Corporation’s Q2 2025 results show significant improvement in net income, loan growth, and overall asset performance compared to the previous year, reflecting the bank’s effective management and growth strategies in a competitive environment.

### CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
_(Dollars in thousands except per share amounts)_

Three Months Ended
June 30 March 31 December 31 September 30 June 30
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

### CONSOLIDATED BALANCE SHEETS (UNAUDITED)
_(Dollars in thousands)_

June 30 March 31 December 31 September 30 June 30
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

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