EX-99.1 2 earningsrelease_20241231xe.htm EX-99.1 Document

Exhibit 99.1
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Isabella Bank Corporation Reports Fourth Quarter 2024 Results
MT. PLEASANT, MICHIGAN — January 30, 2025 — 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.
FOURTH QUARTER 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 (December 31, 2024 compared to September 30, 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.
Total loans 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 due and 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 December 31, 2024, compared to $22.14 on September 30, 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 (December 31, 2024 to December 31, 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).
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
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
PER SHARE
Basic earnings$0.54 $0.44 $0.47 $0.42 $0.51 
Diluted earnings0.54 0.44 0.46 0.42 0.51 
Core diluted earnings (2)
0.52 0.61 0.46 0.41 0.50 
Dividends0.28 0.28 0.28 0.28 0.28 
Book value (1)
28.32 28.63 27.06 26.80 27.04 
Tangible book value (1)
21.82 22.14 20.60 20.35 20.59 
Market price (1)
25.99 21.21 18.20 19.40 21.50 
Common shares outstanding (1) (3)
7,424,893 7,438,720 7,474,016 7,488,101 7,485,889 
Average number of diluted common shares outstanding (3)
7,453,033 7,473,184 7,494,828 7,507,739 7,526,515 
PERFORMANCE RATIOS
Return on average total assets0.76 %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' equity7.47 %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' equity9.66 %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 MANAGEMENT
Wealth assets under management (1)
658,042 679,858 647,850 660,645 641,027 
ASSET QUALITY
Nonaccrual loans (1)
282 547 994 1,283 982 
Foreclosed assets (1)
544 546 629 579 406 
Net loan charge-offs (recoveries)102 1,359 393 46 381 
Net loan charge-offs (recoveries) to average loans outstanding0.01 %0.10 %0.03 %0.00 %0.03 %
Nonperforming 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 leverage8.86 %8.77 %8.83 %8.80 %8.76 %
Common equity tier 1 capital12.21 %12.08 %12.37 %12.36 %12.54 %
Tier 1 risk-based capital12.21 %12.08 %12.37 %12.36 %12.54 %
Total risk-based capital15.06 %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

A


CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
ASSETS
Cash and demand deposits due from banks$22,830 $27,019 $22,690 $22,987 $25,628 
Fed Funds sold and interest bearing balances due from banks1,712 359 869 2,231 8,044 
Total cash and cash equivalents24,542 27,378 23,559 25,218 33,672 
Available-for-sale securities, at fair value489,029 506,806 505,646 517,585 528,148 
Federal Home Loan Bank stock12,762 12,762 12,762 12,762 12,762 
Mortgage loans held-for-sale242 504 637 366 — 
Loans1,423,571 1,424,283 1,381,636 1,365,508 1,349,463 
Less allowance for credit losses12,895 12,635 13,095 13,390 13,108 
Net loans1,410,676 1,411,648 1,368,541 1,352,118 1,336,355 
Premises and equipment27,659 27,674 27,843 27,951 27,639 
Bank-owned life insurance policies34,882 34,625 34,382 34,131 33,892 
Goodwill and other intangible assets48,283 48,283 48,283 48,284 48,284 
Other assets38,166 37,221 38,486 39,161 38,216 
Total assets$2,086,241 $2,106,901 $2,060,139 $2,057,576 $2,058,968 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Demand deposits$416,373 $421,493 $412,193 $413,272 $428,505 
Interest bearing demand deposits341,366 376,592 338,329 349,401 320,737 
Savings601,730 600,150 603,328 639,491 628,079 
Certificates of deposit387,591 383,597 368,449 366,143 346,374 
Total deposits1,747,060 1,781,832 1,722,299 1,768,307 1,723,695 
Short-term borrowings53,567 52,434 44,194 42,998 46,801 
Federal Home Loan Bank advances30,000 15,000 45,000 — 40,000 
Subordinated debt, net of unamortized issuance costs29,424 29,402 29,380 29,357 29,335 
Total borrowed funds112,991 96,836 118,574 72,355 116,136 
Other liabilities15,914 15,248 17,017 16,240 16,735 
Total liabilities1,875,965 1,893,916 1,857,890 1,856,902 1,856,566 
Shareholders’ equity
Common stock126,224 125,218 126,126 126,656 127,323 
Shares to be issued for deferred compensation obligations2,383 3,981 3,951 3,890 3,693 
Retained earnings103,024 101,065 99,808 98,318 97,282 
Accumulated other comprehensive income (loss)(21,355)(17,279)(27,636)(28,190)(25,896)
Total shareholders’ equity210,276 212,985 202,249 200,674 202,402 
Total liabilities and shareholders' equity$2,086,241 $2,106,901 $2,060,139 $2,057,576 $2,058,968 



B


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Year Ended 
December 31
 20242023
Interest income
Loans$77,295 $65,670 
Available-for-sale securities11,093 12,156 
Federal Home Loan Bank stock640 355 
Federal funds sold and other950 1,450 
Total interest income89,978 79,631 
Interest expense
Deposits29,690 18,352 
Short-term borrowings1,439 961 
Federal Home Loan Bank advances1,949 1,309 
Subordinated debt, net of unamortized issuance costs1,065 1,065 
Total interest expense34,143 21,687 
Net interest income55,835 57,944 
Provision for credit losses1,884 629 
Net interest income after provision for credit losses53,951 57,315 
Noninterest income
Service charges and fees8,626 8,297 
Wealth management fees4,041 3,557 
Earnings on bank-owned life insurance policies1,007 920 
Net gain on sale of mortgage loans213 317 
Other689 736 
Total noninterest income14,576 13,827 
Noninterest expenses
Compensation and benefits28,576 25,905 
Occupancy and equipment10,524 10,297 
Other professional services2,212 2,340 
ATM and debit card fees1,975 1,767 
FDIC insurance premiums1,132 922 
Other7,710 8,079 
Total noninterest expenses52,129 49,310 
Income before income tax expense16,398 21,832 
Income tax expense2,509 3,665 
Net income$13,889 $18,167 
Earnings per common share
Basic$1.86 $2.42 
Diluted1.86 2.40 
Cash dividends per common share1.12 1.12 





C


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
Interest income
Loans$20,145 $20,230 $18,863 $18,057 17,580 
Available-for-sale securities2,656 2,749 2,804 2,884 2,926 
Federal Home Loan Bank stock168 168 158 146 129 
Federal funds sold and other200 194 263 293 421 
Total interest income23,169 23,341 22,088 21,380 21,056 
Interest expense
Deposits7,583 7,631 7,313 7,163 6,399 
Short-term borrowings413 384 321 321 357 
Federal Home Loan Bank advances352 571 638 388 422 
Subordinated debt, net of unamortized issuance costs266 267 266 266 266 
Total interest expense8,614 8,853 8,538 8,138 7,444 
Net interest income14,555 14,488 13,550 13,242 13,612 
Provision for credit losses376 946 170 392 684 
Net interest income after provision for credit losses14,179 13,542 13,380 12,850 12,928 
Noninterest income
Service charges and fees2,293 2,159 2,128 2,046 2,212 
Wealth management fees1,051 1,003 1,048 939 932 
Earnings on bank-owned life insurance policies259 252 253 243 239 
Net gain on sale of mortgage loans75 37 67 34 85 
Other294 77 112 206 48 
Total noninterest income3,972 3,528 3,608 3,468 3,516 
Noninterest expenses
Compensation and benefits7,340 7,251 6,970 7,015 6,116 
Occupancy and equipment2,554 2,645 2,619 2,706 2,554 
Other professional services584 588 527 513 576 
ATM and debit card fees516 503 487 469 487 
FDIC insurance premiums309 291 280 252 233 
Other2,027 1,950 2,012 1,721 1,949 
Total noninterest expenses13,330 13,228 12,895 12,676 11,915 
Income before income tax expense4,821 3,842 4,093 3,642 4,529 
Income tax expense825 561 612 511 726 
Net income$3,996 $3,281 $3,481 $3,131 $3,803 
Earnings per common share
Basic$0.54 $0.44 $0.47 $0.42 $0.51 
Diluted0.54 0.44 0.46 0.42 0.51 
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
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
INTEREST EARNING ASSETS
Loans (1)
5.67 %5.73 %5.52 %5.38 %5.20 %
Available-for-sale securities2.18 %2.21 %2.24 %2.26 %2.23 %
Federal Home Loan Bank stock5.24 %5.24 %4.98 %4.60 %4.04 %
Fed funds sold4.59 %5.55 %5.51 %5.72 %5.71 %
Other5.00 %5.29 %7.53 %4.67 %6.20 %
Total interest earning assets4.74 %4.77 %4.61 %4.47 %4.35 %
INTEREST BEARING LIABILITIES
Interest bearing demand deposits0.41 %0.33 %0.39 %0.48 %0.63 %
Savings2.17 %2.28 %2.18 %2.11 %1.76 %
Certificates of deposit4.07 %4.13 %4.01 %3.84 %3.60 %
Short-term borrowings3.30 %3.17 %3.18 %3.18 %2.83 %
Federal Home Loan Bank advances4.77 %5.60 %5.64 %5.64 %5.64 %
Subordinated debt, net of unamortized issuance costs
3.60 %3.61 %3.64 %3.65 %3.60 %
Total interest bearing liabilities2.38 %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 spread2.36 %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

















E


AVERAGE BALANCES (UNAUDITED)
(Dollars in thousands)
Three Months Ended
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
INTEREST EARNING ASSETS
Loans (1)
$1,412,578 $1,403,810 $1,375,523 $1,348,749 $1,340,271 
Available-for-sale securities (2)
522,733 536,379 545,827 557,030 564,068 
Federal Home Loan Bank stock12,762 12,762 12,762 12,762 12,762 
Fed funds sold8 4 7 7 13 
Other (3)
15,905 14,597 14,054 25,210 26,823 
Total interest earning assets1,963,986 1,967,552 1,948,173 1,943,758 1,943,937 
NONEARNING ASSETS
Allowance for credit losses(12,598)(13,125)(13,431)(13,100)(12,780)
Cash and demand deposits due from banks22,800 25,903 23,931 24,018 23,244 
Premises and equipment27,773 27,868 27,999 28,022 27,444 
Other assets92,608 87,002 80,539 84,059 71,592 
Total assets$2,094,569 $2,095,200 $2,067,211 $2,066,757 $2,053,437 
INTEREST BEARING LIABILITIES
Interest bearing demand deposits$345,529 $358,383 $342,931 $345,842 $317,996 
Savings599,833 599,679 613,601 633,904 634,539 
Certificates of deposit386,871 375,936 366,440 357,541 338,852 
Short-term borrowings49,777 48,151 40,593 40,623 50,049 
Federal Home Loan Bank advances29,346 40,588 45,510 27,692 29,674 
Subordinated debt, net of unamortized issuance costs
29,410 29,388 29,365 29,342 29,320 
Total interest bearing liabilities1,440,766 1,452,125 1,438,440 1,434,944 1,400,430 
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits425,116 418,973 411,282 412,228 446,747 
Other liabilities15,775 15,658 16,755 16,151 17,302 
Shareholders’ equity212,912 208,444 200,734 203,434 188,958 
Total 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












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:
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
NONPERFORMING ASSETS
Commercial and industrial$— $120 $271 $567 $491 
Commercial real estate— — — 234 — 
Agricultural— — 167 189 205 
Residential real estate282 427 556 293 286 
Consumer— — — — — 
Total nonaccrual loans282 547 994 1,283 982 
Accruing loans past due 90 days or more19 64 15 — 87 
Total nonperforming loans301 611 1,009 1,283 1,069 
Foreclosed assets544 546 629 579 406 
Debt securities— 12 12 12 12 
Total nonperforming assets$845 $1,169 $1,650 $1,874 $1,487 
Nonperforming loans to gross loans0.02 %0.04 %0.07 %0.09 %0.08 %
Nonperforming assets to total assets0.04 %0.06 %0.08 %0.09 %0.07 %
Allowance for credit losses as a % of nonaccrual loans (1)
N/MN/MN/MN/MN/M
ALLOWANCE FOR CREDIT LOSSES
Allowance at beginning of period$12,635 $13,095 $13,390 $13,108 $12,767 
Charge-offs299 1,767 527 191 452 
Recoveries197 408 134 145 71 
Net loan charge-offs (recoveries)102 1,359 393 46 381 
Provision for credit losses - loans362 899 98 328 722 
Allowance at end of period$12,895 $12,635 $13,095 $13,390 $13,108 
Allowance for credit losses to gross loans0.91 %0.89 %0.95 %0.98 %0.97 %
Reserve for unfunded commitments512 498 450 379 315 
Provision for credit losses - unfunded commitments14 47 72 64 (38)
Reserve to unfunded commitments0.15 %0.15 %0.14 %0.11 %0.10 %
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial$13 $(6)$334 $(2)$242 
Commercial real estate(2)(318)(29)(6)(3)
Agricultural(4)— — (2)(6)
Residential real estate(16)(20)(19)(63)(14)
Consumer111 1,703 107 119 162 
Total$102 $1,359 $393 $46 $381 
Net (recoveries) charge-offs (Quarter to Date annualized to average loans)0.03 %0.39 %0.11 %0.01 %0.11 %
Net (recoveries) charge-offs (Year to Date annualized to average loans)0.14 %0.17 %0.00 %0.00 %0.01 %
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due$5,682 $2,226 $1,484 $7,938 $3,895 
Accruing loans past due 90 days or more19 64 15 — 87 
Total accruing past due loans5,701 2,290 1,499 7,938 3,982 
Nonaccrual loans282 547 994 1,283 982 
Total past due and nonaccrual loans$5,983 $2,837 $2,493 $9,221 $4,964 
(1) N/M: Not meaningful


G


CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)
(Dollars in thousands)
Loan Analysis
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023		Annualized Growth %
Quarter to Date
Commercial and industrial$244,894 $240,589 $238,245 $226,281 $209,738 7.16 %
Commercial real estate547,447 547,038 547,005 561,123 564,244 0.30 %
Advances to mortgage brokers63,080 76,187 39,300 29,688 18,541 (68.81)%
Agricultural99,694 96,794 94,996 93,695 99,994 11.98 %
Total commercial loans955,115 960,608 919,546 910,787 892,517 (2.29)%
Residential real estate380,872 369,846 365,188 356,658 356,418 11.92 %
Consumer87,584 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
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023		Annualized Growth %
Quarter to Date
Noninterest bearing demand deposits$416,373 $421,493 $412,193 $413,272 $428,505 (4.86)%
Interest bearing demand deposits341,366 376,592 338,329 349,401 320,737 (37.42)%
Savings601,730 600,150 603,328 639,491 628,079 1.05 %
Certificates of deposit387,591 383,597 368,449 366,143 346,374 4.16 %
Total deposits$1,747,060 $1,781,832 $1,722,299 $1,768,307 $1,723,695 (7.81)%















H


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands except per share amounts and ratios)
Three Months Ended
December 31
2024		September 30
2024		June 30
2024		March 31
2024		December 31
2023
Net income$3,996 $3,281 $3,481 $3,131 $3,803 
Nonrecurring items
Net gains (losses) on foreclosed assets74 4 6 69 8 
Overdraft (charge-off) recoveries (1)
66 (1,622)— — — 
Profitability initiative cost(23)— — — — 
Income tax impact(25)340 (1)(14)(2)
Total nonrecurring items92 (1,278)5 55 6 
Core net income(A)$3,904 $4,559 $3,476 $3,076 $3,797 
Noninterest expenses$13,330 $13,228 $12,895 $12,676 $11,915 
Amortization of acquisition intangibles1 — 1 — 1 
Core noninterest expense(B)$13,329 $13,228 $12,894 $12,676 $11,914 
Net interest income$14,555 $14,488 $13,550 $13,242 $13,612 
Tax equivalent adjustment for net interest margin213 232 237 246 246 
Net interest income (FTE)(C)14,768 14,720 13,787 13,488 13,858 
Noninterest income3,972 3,528 3,608 3,468 3,516 
Tax equivalent adjustment for efficiency ratio54 53 53 51 50 
Core revenue (FTE)18,794 18,301 17,448 17,007 17,424 
Nonrecurring items
Net gains (losses) on foreclosed assets74 4 6 69 8 
Total nonrecurring items74 4 6 69 8 
Core revenue(D)$18,720 $18,297 $17,442 $16,938 $17,416 
Efficiency 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 1,943,937 
Net 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 2,053,437 
Average shareholders' equity(G)212,912 208,444 200,734 203,434 188,958 
Average tangible shareholders' equity(H)164,629 160,161 152,451 155,150 140,674 
Average diluted shares outstanding (2)
(I)7,453,033 7,473,184 7,494,828 7,507,739 7,526,515 
Core diluted earnings per share(A/I)$0.52 $0.61 $0.46 $0.41 $0.50 
Core return on average assets(A/F)0.74 %0.87 %0.68 %0.60 %0.73 %
Core return on average shareholders' equity(A/G)7.29 %8.70 %6.96 %6.08 %7.97 %
Core return on average tangible shareholders' equity(A/H)9.43 %11.32 %9.17 %7.97 %10.71 %
(1) Includes provision for credit losses related to overdrawn deposit accounts from a single customer in the third quarter of 2024.
(2) Whole shares
I