What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-14 · 134 added, 215 removed, 1051 unchanged (25% of the section changed)

13 unchanged sentences

Premises and equipment 28,108 27,659

BOLI policies 34,625 33,892

Cash surrender value of BOLI 45,833 34,882

Goodwill and other intangible assets 48,282 48,283

4 unchanged sentences

Interest bearing demand deposits 243,939 237,548

Money market deposits 473,138 423,883

Savings 286,399 281,665

20 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Interest income

8 unchanged sentences

FHLB advances 38 388

Subordinated debt, net of unamortized issuance costs 267 267 799 799

Subordinated debt 266 266

Total interest expense 8,108 8,138

Net interest income 14,525 13,242

Provision for credit losses 946 ( 292 ) 1,508 ( 55 )

(Reversal of) provision for credit losses ( 107 ) 392

Net interest income after provision for credit losses 14,632 12,850

2 unchanged sentences

Wealth management fees 979 939

Earnings on BOLI policies 252 229 748 681

Earnings on BOLI 372 243

Net gain on sale of mortgage loans 30 34

6 unchanged sentences

ATM and debit card fees 486 469

Marketing 459 426

FDIC insurance premiums 303 252

12 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Net income $ 3,949 $ 3,131

15 unchanged sentences

Income (Loss) Totals

July 1, 2023 7,496,826 $ 126,278 $ 5,395 $ 93,175 $ ( 36,417 ) $ 188,431

Comprehensive income (loss) — — — 4,413 ( 5,314 ) ( 901 )

Issuance of common stock 17,473 362 — — — 362

Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 1,803 ( 1,803 ) — — —

Share-based payment awards under the Directors Plan — — 49 — — 49

Share-based compensation expense recognized in earnings under the RSP — 91 — — — 91

Common stock purchased for deferred compensation obligations — ( 357 ) — — — ( 357 )

Common stock repurchased ( 23,742 ) ( 497 ) — — — ( 497 )

Cash dividends paid ($ 0.28 per common share)

— — — ( 2,055 ) — ( 2,055 )

September 30, 2023 7,490,557 $ 127,680 $ 3,641 $ 95,533 $ ( 41,731 ) $ 185,123

July 1, 2024 7,474,016 $ 126,126 $ 3,951 $ 99,808 $ ( 27,636 ) $ 202,249

Comprehensive income (loss) — — — 3,281 10,357 13,638

Issuance of common stock 17,580 350 — — — 350

Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 23 ( 23 ) — — —

Share-based payment awards under the Directors Plan — — 53 — — 53

Share-based compensation expense recognized in earnings under the RSP — 26 — — — 26

Common stock purchased for deferred compensation obligations — ( 290 ) — — — ( 290 )

Common stock repurchased ( 52,876 ) ( 1,017 ) — — — ( 1,017 )

Cash dividends paid ($ 0.28 per common share)

— — — ( 2,024 ) — ( 2,024 )

September 30, 2024 7,438,720 $ 125,218 $ 3,981 $ 101,065 $ ( 17,279 ) $ 212,985

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) continued

(Dollars in thousands except per share amounts)

Common Shares

Outstanding Amount Common Shares to be

Obligations Retained

Earnings Accumulated

Comprehensive

Income (Loss) Totals

January 1, 2023 7,559,421 $ 128,651 $ 5,005 $ 89,748 $ ( 37,194 ) $ 186,210

Cumulative effect of accounting change - adoption of ASC 326 — — — ( 2,417 ) — ( 2,417 )

December 31, 2023 7,485,889 $ 127,323 $ 3,693 $ 97,282 $ ( 25,896 ) $ 202,402

Comprehensive income (loss) — — — 3,131 ( 2,294 ) 837

Issuance of common stock 22,456 447 — — — 447

Common stock issued for deferred compensation under the RSP 16,240 — — — — —

Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 21 ( 21 ) — — —

5 unchanged sentences

— — — ( 2,095 ) — ( 2,095 )

September 30, 2023 7,490,557 $ 127,680 $ 3,641 $ 95,533 $ ( 41,731 ) $ 185,123

January 1, 2024 7,485,889 $ 127,323 $ 3,693 $ 97,282 $ ( 25,896 ) $ 202,402

March 31, 2024 7,488,101 $ 126,656 $ 3,890 $ 98,318 $ ( 28,190 ) $ 200,674

December 31, 2024 7,424,893 $ 126,224 $ 2,383 $ 103,024 $ ( 21,355 ) $ 210,276

Comprehensive income (loss) — — — 3,949 3,916 7,865

Issuance of common stock 17,332 419 — — — 419

Issuance of common stock for vested shares under the RSP 16,240 — — — — —

Common stock issued for deferred compensation under the RSP 11,367 — — — — —

Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 42 ( 42 ) — — —

5 unchanged sentences

— — — ( 2,033 ) — ( 2,033 )

September 30, 2024 7,438,720 $ 125,218 $ 3,981 $ 101,065 $ ( 17,279 ) $ 212,985

March 31, 2025 7,408,010 $ 125,547 $ 2,508 $ 104,940 $ ( 17,439 ) $ 215,556

See notes to interim condensed consolidated financial statements (unaudited).

1 unchanged sentence

(Dollars in thousands)

Nine Months Ended

Three Months Ended

Operating activities

1 unchanged sentence

Reconciliation of net income to net cash provided by operating activities

Provision for credit losses 1,508 ( 55 )

(Reversal of) provision for credit losses ( 107 ) 392

Depreciation 535 506

Net amortization of AFS securities 307 353

Increase in cash value of BOLI policies, net of expenses ( 733 ) ( 666 )

Net gain on sale of mortgage loans ( 30 ) ( 34 )

Increase in cash value of BOLI ( 368 ) ( 239 )

Share-based payment awards 174 243

8 unchanged sentences

Purchases of AFS securities ( 40,362 ) —

Net loan principal (originations) collections ( 77,151 ) ( 70,614 )

Proceeds from sale of FHLB Stock 7,162 —

Net change in loans HFI 55,576 ( 16,354 )

Purchases of premises and equipment ( 984 ) ( 818 )

Funding of low income housing tax credit investments ( 1,690 ) ( 612 )

Purchases of BOLI policies ( 10,583 ) —

Low income housing tax credit investments ( 3,767 ) ( 3 )

Net cash provided by (used in) investing activities 28,100 ( 9,891 )

13 unchanged sentences

Interest paid $ 7,919 $ 7,844

Income taxes paid 1,800 2,250

Supplemental noncash information

Investment in low income housing tax credits — 5,000

Transfers of loans to foreclosed assets 218 199

2 unchanged sentences

(Dollars in thousands except per share amounts)

Note 1 – Basis of Presentation

Note 1 – Significant Accounting Policies

BASIS OF PRESENTATION AND CONSOLIDATION:

As used in these notes, as well as in Management's Discussion and Analysis of Financial Condition and Results of Operations, references to “the Corporation”, “Isabella”, “we”, “our”, “us”, and similar terms refer to the consolidated entity consisting of Isabella Bank Corporation and its subsidiary.

3 unchanged sentences

In our opinion, all adjustments considered necessary for a fair presentation have been included.

Operating results for the three and nine-month periods ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the three-month period ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

OPERATING SEGMENTS:

Segment information is prepared on the same basis that our CEO, who is our Chief Operating Decision Maker (“CODM”), manages our segments, evaluates financial results, and makes key operating decisions.

While the CODM monitors the revenue streams of our various products and services, operations are managed, and financial performance is evaluated on a corporate-wide basis.

Operating segments are aggregated into one as operating results for all segments are similar.

Accordingly, all of the banking-related operations are considered by management to be aggregated in one reportable operating segment.

The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and geographical regions are similar.

The CODM will evaluate the financial performance of our business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing our reportable segment and in the determination of allocating resources.

Further, the CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets.

Consolidated net income is used to benchmark results against our competitors.

Benchmarking and monitoring of budget to actual results are used in assessment performance and in establishing compensation.

Revenue from banking operations consists primarily of loan and investment interest, deposit related fees, and wealth fees.

Interest expense, provision for credit losses, compensation, and occupancy and equipment costs provide the significant expenses in our banking operations.

All operations are domestic.

RECLASSIFICATIONS:

Certain amounts reported in the interim 2024 consolidated financial statements have been reclassified to conform with the 2025 presentation.

2 unchanged sentences

The amortized cost and fair value of AFS securities, with gross unrealized gains and losses, are as follows at:

September 30, 2024

March 31, 2025

Treasury $ 220,701 $ — $ 7,918 $ 212,783

13 unchanged sentences

Total $ 515,516 $ 9 $ 26,496 $ 489,029

The amortized cost and fair value of AFS securities by contractual maturity at September 30, 2024 are as follows:

The amortized cost and fair value of AFS securities by contractual maturity at March 31, 2025 are as follows:

Maturing Securities with Variable Monthly Payments or Noncontractual Maturities

14 unchanged sentences

Because of their variable monthly payments, mortgage-backed securities and collateralized mortgage obligations are not reported by a specific maturity group.

A summary of the sales activity of AFS securities is as follows for the:

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Proceeds from sales of AFS securities $ — $ — $ — $ 18,089

Realized gains (losses) — — — 67

Applicable income tax expense (benefit) — — — 14

The information in the following tables pertains to AFS securities with gross unrealized losses at September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

September 30, 2024

The information in the following tables pertains to AFS securities with gross unrealized losses at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

March 31, 2025

Less Than Twelve Months Twelve Months or More

17 unchanged sentences

Number of securities in an unrealized loss position:

The unrealized loss on our AFS securities portfolio resulted from the increase in short-term and intermediate-term interest rates.

As of September 30, 2024, no allowance for credit losses has been recognized on AFS securities in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality.

As of March 31, 2025, no allowance for credit losses has been recognized on AFS securities in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality.

This is based on our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our AFS securities and consideration of our historical credit loss experience and internal forecasts.

6 unchanged sentences

The following table provides a detailed listing of our loan portfolio at:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Balance Percent of Total Balance Percent of Total

30 unchanged sentences

Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the appropriate amortization method.

Net unamortized deferred loan costs were $ 3,317 and $ 3,330 at March 31, 2025 and December 31, 2024, respectively.

Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions.

3 unchanged sentences

Commercial and agricultural real estate loans commonly require loan-to-value limits of 80 % or less.

Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, property, or equipment.

Depending upon the type of loan, past credit history, and current operating results,

we may require the borrower to pledge accounts receivable, inventory, property, or equipment.

Government agency guarantee may be required.

29 unchanged sentences

Loans may be returned to accrual status after six months of continuous performance and achievement of current payment status.

Accrued interest receivable on loans was $ 6,494 and $ 6,384 at March 31, 2025 and December 31, 2024, respectively, which is included in other assets on the consolidated balance sheets.

The following table summarizes nonaccrual loan data by class of loans as of:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Total Nonaccrual Loans Nonaccrual Loans with No ACL Total Nonaccrual Loans Nonaccrual Loans with No ACL

Commercial and industrial

Secured $ 95 $ 95 $ 491 $ 435

Unsecured 25 25 — —

Agricultural mortgage — — 38 38

Agricultural other — — 167 167

Residential real estate

2 unchanged sentences

The following tables summarize the past due and current loans for the entire loan portfolio as of:

September 30, 2024

March 31, 2025

Accruing Loans 90 or More Days Past Due

53 unchanged sentences

The following tables display commercial and agricultural loans by credit risk ratings and year of origination as of:

September 30, 2024

March 31, 2025

2025 2024 2023 2022 2021 Prior Revolving

42 unchanged sentences

Current year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

September 30, 2024

March 31, 2025

2025 2024 2023 2022 2021 Prior Revolving

136 unchanged sentences

Current year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

We have certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk.

The Board reviews and approves these policies and procedures on a regular basis.

A reporting system supplements the review process by providing management and the Board with frequent reports related to loan production, loan quality, and concentration of credit, loan delinquencies, nonperforming loans and potential problem loans.

We seek to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits.

96 unchanged sentences

The following tables display residential real estate and consumer loans by payment status and year of origination as of:

September 30, 2024

March 31, 2025

2025 2024 2023 2022 2021 Prior Revolving

36 unchanged sentences

Current year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 13 $ — $ — $ 13

September 30, 2024

March 31, 2025

2025 2024 2023 2022 2021 Prior Revolving

67 unchanged sentences

• The borrower is unlikely to continue as a going concern (if the entity is a business).

There were no loan modification for the three months ended September 30, 2023.

The following is a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty for the:

Three Months Ended September 30, 2024

Interest Rate Reduction

Three Months Ended March 31, 2025

Term Extension

Amortized Cost Basis % of Total Class of Financial Receivable

Agricultural other 181 0.60 %

Nine Months Ended September 30, 2024

Interest Rate Reduction Other-Than-Insignificant Payment Delay Term Extension Other-Than-Insignificant Payment Delay and Term Extension

Amortized Cost Basis % of Total Class of Financial Receivable Amortized Cost Basis % of Total Class of Financial Receivable Amortized Cost Basis % of Total Class of Financial Receivable Amortized Cost Basis % of Total Class of Financial Receivable

Commercial and industrial

2 unchanged sentences

Commercial mortgage owner occupied 1,524 0.83 %

Agricultural mortgage — 0.00 % 1,305 1.95 % — 0.00 % — 0.00 %

Agricultural other 181 0.60 % — 0.00 % — 0.00 % 1,038 3.46 %

Secured - indirect — 0.00 % — 0.00 % 1 0.00 % — 0.00 %

Total $ 2,056

Nine Months Ended September 30, 2023

Term Extension Interest Rate Reduction

and Term Extension

Three Months Ended March 31, 2024

Other-Than-Insignificant Payment Delay Term Extension

Amortized Cost Basis % of Total Class of Financial Receivable Amortized Cost Basis % of Total Class of Financial Receivable

Commercial and industrial

Secured $ — 0.00 % $ 13 0.01 %

Commercial real estate

Commercial mortgage non-owner occupied $ 1,034 0.48 % $ — 0.00 %

Agricultural mortgage 232 0.33 % 26 0.04 %

Agricultural other 34 0.12 % — 0.00 %

Residential real estate

Senior lien 5 0.00 % — 0.00 %

Commercial mortgage owner occupied 823 0.46 % — 0.00 %

Secured - indirect — 0.00 % 2 0.00 %

Total $ 823 $ 15

We do not modify any loans by forgiving principal or accrued interest.

We had committed to advance $ 112 and $ 0 in additional funds to be disbursed in connection with modified loans at September 30, 2024 and 2023, respectively, as displayed in the tables above.

We had committed to advance $ 0 and $ 43 in additional funds to be disbursed in connection with modified loans at March 31, 2025 and December 31, 2024, respectively, as displayed in the tables above.

The following is a summary of the financial effect of the modifications granted to borrowers experiencing financial difficulty for the:

Three Months Ended September 30

Weighted-Average Interest Rate Reduction Weighted-Average Interest Rate Reduction

Agricultural other 0.50 % N/A

Nine Months Ended September 30

Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (Years)

Three Months Ended March 31

Weighted-Average Term Extension (Years) Payment Delay Term Weighted-Average Term Extension (Years)

Commercial and industrial

Secured N/A 4 months 3.00 N/A N/A

Secured 4.4 years N/A 3 years

Commercial real estate

Commercial mortgage owner occupied N/A 7 months N/A N/A N/A

Commercial mortgage non-owner occupied N/A N/A N/A N/A 3.00

Agricultural mortgage N/A 5 months 0.50 4.50 % 1.08

Agricultural other 0.50 % 4 months 0.33 N/A 1.00

Residential real estate

Senior lien N/A N/A N/A N/A 2.60

Secured - indirect N/A N/A 1.33 N/A N/A

Commercial mortgage owner occupied 15 years 7 months N/A

Secured - indirect N/A N/A 1.3 years

We closely monitor the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.

The following tables summarize the amortized cost basis of loans that have been modified within the past 12 months prior to:

September 30, 2024

March 31, 2025

Current 30-59 Days

6 unchanged sentences

Commercial mortgage owner occupied 2,872 — — — 2,872

Commercial mortgage multifamily 2,917 — — — 2,917

Agricultural mortgage 1,584 — — — 1,584

Agricultural other 924 — — — 924

Secured - indirect 1 — — — 1

Total $ 7,548 $ — $ — $ — $ 7,548

September 30, 2023 (1)

March 31, 2024

Current 30-59 Days

2 unchanged sentences

More Past Due Total

Commercial and industrial

Secured $ 12 $ — $ — $ — $ 12

Commercial real estate

Commercial mortgage owner occupied 941 — — — 941

Commercial mortgage non-owner occupied 1,023 — — — 1,023

Commercial mortgage multifamily 2,976 — — — 2,976

Agricultural mortgage 22 — — — 22

Agricultural other 34 — — — 34

Residential real estate

Senior lien 5 — — — 5

Secured - indirect 2 — — — 2

Total $ 4,976 $ — $ — $ — $ 4,976

(1) We adopted ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures effective January 1, 2023, therefore, the September 30, 2023 presentation only includes loans since the guidance became effective.

We had no loans that defaulted in the three and nine-month periods ended September 30, 2024 and 2023 which were modified within 12 months prior to the default date.

We had no loans that defaulted in the three-month periods ended March 31, 2025 and 2024 which were modified within 12 months prior to the default date.

The credit quality of our loan portfolio is continuously monitored and is reflected within the ACL for loans.

11 unchanged sentences

For a loan that does not share risk characteristics with other loans, an individual analysis is performed to measure an allowance.

Loans in nonaccrual status are individually evaluated for specific allocation of the allowance using the fair value of collateral, less costs to sell if foreclosure is probable, or the discounted cash flow method.

Loans in nonaccrual status are individually evaluated for specific allocation of the allowance using the fair value of collateral,

less costs to sell if foreclosure is probable, or the discounted cash flow method.

We do not recognize interest income on loans in nonaccrual status.

16 unchanged sentences

A summary of activity in the ACL by portfolio segment and the recorded investment in loans by segments follows for the:

Three Months Ended September 30, 2024

Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total

July 1, 2024 $ 1,264 $ 5,569 $ 258 $ 4,351 $ 1,653 $ 13,095

Charge-offs — — — — ( 1,767 ) ( 1,767 )

Recoveries 6 318 — 20 64 408

Credit loss expense ( 46 ) ( 710 ) — ( 40 ) 1,695 899

September 30, 2024 $ 1,224 $ 5,177 $ 258 $ 4,331 $ 1,645 $ 12,635

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total

January 1, 2024 $ 968 $ 5,878 $ 270 $ 4,336 $ 1,656 $ 13,108

December 31, 2024 $ 1,316 $ 5,171 $ 287 $ 4,521 $ 1,600 $ 12,895

Charge-offs — — — ( 1 ) ( 171 ) ( 172 )

Recoveries 80 2 — 14 128 224

Credit loss expense 582 ( 1,054 ) ( 14 ) ( 107 ) 1,918 1,325

September 30, 2024 $ 1,224 $ 5,177 $ 258 $ 4,331 $ 1,645 $ 12,635

Three Months Ended September 30, 2023

Reversal of credit losses ( 157 ) 1 ( 21 ) 66 ( 101 ) ( 212 )

March 31, 2025 $ 1,239 $ 5,174 $ 266 $ 4,600 $ 1,456 $ 12,735

Three Months Ended March 31, 2024

Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total

July 1, 2023 $ 822 $ 5,968 $ 264 $ 4,173 $ 1,606 $ 12,833

Charge-offs ( 29 ) — — — ( 150 ) ( 179 )

Recoveries 70 3 — 266 94 433

Credit loss expense ( 34 ) ( 101 ) 5 ( 281 ) 91 ( 320 )

September 30, 2023 $ 829 $ 5,870 $ 269 $ 4,158 $ 1,641 $ 12,767

Nine Months Ended September 30, 2023

Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Unallocated Total

January 1, 2023 $ 860 $ 461 $ 577 $ 617 $ 961 $ 6,374 $ 9,850

Impact of the adoption of ASC 326 ( 58 ) 5,532 ( 247 ) 3,535 356 ( 6,374 ) 2,744

December 31, 2023 $ 968 $ 5,878 $ 270 $ 4,336 $ 1,656 $ 13,108

Charge-offs — — — ( 1 ) ( 190 ) ( 191 )

Recoveries 2 6 2 64 71 145

Credit loss expense ( 18 ) ( 146 ) ( 63 ) ( 307 ) 441 — ( 93 )

September 30, 2023 $ 829 $ 5,870 $ 269 $ 4,158 $ 1,641 $ — $ 12,767

The following table illustrates the two main components of the ACL as of:

Provision for credit losses 297 19 ( 7 ) ( 91 ) 110 328

March 31, 2024 $ 1,267 $ 5,903 $ 265 $ 4,308 $ 1,647 $ 13,390

The following table illustrates the two main components of the ACL as of:

2025 December 31

2024 September 30

2024 March 31

Individually evaluated $ — $ — $ — $ 137 $ 349

6 unchanged sentences

The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan segment as of:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Loan Balance Specific Allocation Loan Balance Specific Allocation

8 unchanged sentences

Appraisals are updated every one to two years depending on the type of loan and the total exposure of the borrower.

Loans evaluated for expected credit losses on an individual basis include $ 357 in collateral dependent loans.

Loans evaluated for expected credit losses on an individual basis as of March 31, 2025 include $ 145 in collateral dependent loans secured by residential real estate.

Note 4 – Borrowed Funds

2 unchanged sentences

A summary of short-term borrowed funds without stated maturity dates was as follows for the:

Three Months Ended September 30

Maximum Month End Balance Average Balance Weighted Average Interest Rate During the Period Maximum Month End Balance Average Balance Weighted Average Interest Rate During the Period

Securities sold under agreements to repurchase without stated maturity dates $ 56,051 $ 48,151 3.18 % $ 54,327 $ 46,574 1.90 %

Federal funds purchased — — 0.00 % — 1 6.13 %

FRB Discount Window 5,300 153 5.18 % — 135 5.30 %

Nine Months Ended September 30

Three Months Ended March 31

Maximum Month End Balance Average Balance Weighted Average Interest Rate During the Period Maximum Month End Balance Average Balance Weighted Average Interest Rate During the Period

3 unchanged sentences

Securities sold under agreements to repurchase are classified as secured borrowings and are reflected at the amount of cash received in connection with the transaction.

The securities underlying the agreements have a carrying value and a fair value of $ 68,327 and $ 67,764 at September 30, 2024 and December 31, 2023, respectively.

The securities underlying the agreements have a carrying value and a fair value of $ 58,094 and $ 67,539 at March 31, 2025 and December 31, 2024, respectively.

Such securities remain under our control.

1 unchanged sentence

Securities sold under repurchase agreements without stated maturity dates were as follows as of:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amount Rate Amount Rate

14 unchanged sentences

In the event of maturities, calls, significant principal repayments, or significant decline in market values, we have an adequate level of AFS securities to pledge to satisfy collateral requirements.

As of September 30, 2024, we had the ability to borrow up to an additional $ 360,440 without pledging additional collateral.

As of March 31, 2025, we had the ability to borrow up to an additional $ 377,824 without pledging additional collateral.

FHLB advances

1 unchanged sentence

The following table lists the maturities and weighted average interest rates of FHLB advances as of:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amount Rate Amount Rate

6 unchanged sentences

The following table summarizes our outstanding notes as of:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amount Rate Amount Rate

8 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Average number of common shares outstanding for basic calculation 7,419,739 7,493,334

Average potential effect of common shares in the Directors Plan (1)

— 45,637 — 44,415

Average potential effect of common shares in the RSP 12,423 14,405

4 unchanged sentences

Diluted 0.53 0.42

(1) Exclusive of shares held in the Rabbi Trust

Note 6 – Capital Ratios and Shareholders' Equity

As of September 30, 2024 and December 31, 2023, the most recent notifications from the FRB and the FDIC categorized us as well capitalized under the regulatory framework for prompt corrective action.

As of March 31, 2025 and December 31, 2024, the most recent notifications from the FRB and the FDIC categorized us as well capitalized under the regulatory framework for prompt corrective action.

To be categorized as well capitalized, an institution must maintain total risk-based, Tier 1 risk-based, Common Equity Tier 1, and Tier 1 leverage ratios as set forth in the following tables.

3 unchanged sentences

The following tables set forth these requirements and our ratios as of:

September 30, 2024

Actual Minimum

Requirement Minimum To Be Well

Capitalized Under Prompt Corrective Action Provisions

March 31, 2025

Actual Minimum Capital

Required Plus Capital Conservation Buffer Minimum Capital

Required To Be Considered

Well Capitalized (1)

Amount Ratio Amount Ratio Amount Ratio

12 unchanged sentences

December 31, 2024

Actual Minimum

Requirement Minimum To Be Well

Capitalized Under Prompt Corrective Action Provisions

Actual Minimum Capital

Required Plus Capital Conservation Buffer Minimum Capital

Required To Be Considered

Well Capitalized (1)

Amount Ratio Amount Ratio Amount Ratio

11 unchanged sentences

Consolidated 183,348 8.86 % 82,803 4.00 % N/A N/A

(1) "Well-capitalized" minimum Common Equity Tier 1 to Risk-Weighted and Leverage Ratio are not formally defined under applicable regulations for bank holding companies.

Total capital includes Tier 1 capital and Tier 2 capital.

1 unchanged sentence

There are no significant regulatory constraints placed on our capital.

At September 30, 2024, the Bank exceeded all minimum capital requirements.

At March 31, 2025, the Bank exceeded all minimum capital requirements.

The following table summarizes the changes in AOCI by component for the:

Three Months Ended September 30

Securities Defined

Pension Plan Total Unrealized

Securities Defined

Pension Plan Total

Balance, July 1 $ ( 26,939 ) $ ( 697 ) $ ( 27,636 ) $ ( 35,051 ) $ ( 1,366 ) $ ( 36,417 )

OCI before reclassifications 13,081 — 13,081 ( 6,708 ) — ( 6,708 )

Amounts reclassified from AOCI — — — — — —

Subtotal 13,081 — 13,081 ( 6,708 ) — ( 6,708 )

Tax effect ( 2,724 ) — ( 2,724 ) 1,394 — 1,394

OCI, net of tax 10,357 — 10,357 ( 5,314 ) — ( 5,314 )

Balance, September 30 $ ( 16,582 ) $ ( 697 ) $ ( 17,279 ) $ ( 40,365 ) $ ( 1,366 ) $ ( 41,731 )

Nine Months Ended September 30

Three Months Ended March 31

Securities Defined

2 unchanged sentences

Pension Plan Total

Balance, January 1 $ ( 25,199 ) $ ( 697 ) $ ( 25,896 ) $ ( 35,828 ) $ ( 1,366 ) $ ( 37,194 )

Balance, December 31 $ ( 20,958 ) $ ( 397 ) $ ( 21,355 ) $ ( 25,199 ) $ ( 697 ) $ ( 25,896 )

OCI before reclassifications 5,014 — 5,014 ( 2,926 ) — ( 2,926 )

3 unchanged sentences

OCI, net of tax 3,916 — 3,916 ( 2,294 ) — ( 2,294 )

Balance, September 30 $ ( 16,582 ) $ ( 697 ) $ ( 17,279 ) $ ( 40,365 ) $ ( 1,366 ) $ ( 41,731 )

Included in OCI for the three and nine-month periods ended September 30, 2024 and 2023 are changes in unrealized gains and losses related to certain auction rate money market preferred stocks.

Balance, March 31 $ ( 17,042 ) $ ( 397 ) $ ( 17,439 ) $ ( 27,493 ) $ ( 697 ) $ ( 28,190 )

Included in OCI for the three-month periods ended March 31, 2025 and 2024 are changes in unrealized gains and losses related to certain auction rate money market preferred stocks.

These investments, for federal income tax purposes, have no deferred federal income taxes related to unrealized gains or losses given the nature of the investments.

A summary of the components of unrealized gains on AFS securities included in OCI follows for the:

Three Months Ended September 30

Auction Rate Money Market Preferred Stocks All Other AFS Securities Total Auction Rate Money Market Preferred Stocks All Other AFS Securities Total

Unrealized gains (losses) arising during the period $ 109 $ 12,972 $ 13,081 $ ( 67 ) $ ( 6,641 ) $ ( 6,708 )

Tax effect — ( 2,724 ) ( 2,724 ) — 1,394 1,394

Unrealized gains (losses), net of tax $ 109 $ 10,248 $ 10,357 $ ( 67 ) $ ( 5,247 ) $ ( 5,314 )

Nine Months Ended September 30

Auction Rate Money Market Preferred Stocks All Other AFS Securities Total Auction Rate Money Market Preferred Stocks All Other AFS Securities Total

Three Months Ended March 31

Auction Rate Money Market Preferred All Other AFS Securities Total Auction Rate Money Market Preferred All Other AFS Securities Total

Unrealized gains (losses) arising during the period $ ( 215 ) $ 5,229 $ 5,014 $ 82 $ ( 3,008 ) $ ( 2,926 )

25 unchanged sentences

However, some loans are individually evaluated for ACL purposes, and a specific ACL may be established.

To measure reserve, the fair value of the loan is estimated using the fair value of the collateral, less costs to sell if foreclosure is probable, or the present value of expected future cash flows discounted at the

loan’s effective interest rate.

Loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.

5 unchanged sentences

The following tables list the quantitative information about loans measured at fair value on a nonrecurring basis as of:

September 30, 2024

March 31, 2025

Valuation Technique Fair Value Unobservable Input Actual Range Weighted Average

5 unchanged sentences

Discounted value $ 254 Real Estate 20 %

Equipment 25 % - 35 %

Accounts receivable 25 %

Collateral discount rates may have ranges to accommodate differences in the age of the independent appraisal, broker price opinion, or internal evaluation.

4 unchanged sentences

The following table lists the quantitative information about OMSR fair value measurement as of:

September 30, 2024

March 31, 2025

Valuation Technique Fair Value Unobservable Input Rate

1 unchanged sentence

Discount rate 11 %

During the third quarter of 2024, the classification of OMSR was changed from Level 2 to Level 3.

We elected to reevaluate our process for testing for impairment, which included a change in the third-party provider for the valuation.

Our valuation is generated using a model-based approach that relies upon significant assumptions not observable in the market.

As such, the Level 3 classification is most appropriate based on the valuation approach.

As a result of the change described above, Level 3 transfers in and Level 2 transfer out totaled $2,277 as of September 30, 2024.

There were no other transfers to or from Levels 1, 2, or 3 as of September 30, 2024 or December 31, 2023.

December 31, 2024

Valuation Technique Fair Value Unobservable Input Rate

Discounted cash flow $ 2,483 Constant prepayment rate 7 %

Discount rate 11 %

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

5 unchanged sentences

The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis were as follows as of:

September 30, 2024

March 31, 2025

Value Estimated

10 unchanged sentences

3,086 N/A — — —

OMSR 2,218 2,277 — — 2,277

Deposits without stated maturities 1,407,670 1,407,670 1,407,670 — —

18 unchanged sentences

3,086 N/A — — —

OMSR 2,422 3,164 — 3,164 —

Deposits without stated maturities 1,359,469 1,359,469 1,359,469 — —

9 unchanged sentences

The table below presents the recorded amount of assets and liabilities measured at fair value on:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

10 unchanged sentences

Collateral dependent (net of ACL) 145 — — 145 254 — — 254

OMSR 2,218 — — 2,218 2,422 — 2,422 —

Foreclosed assets 649 — — 649 544 — — 544

1 unchanged sentence

Percent of assets and liabilities measured at fair value 0.00 % 99.85 % 0.15 % 0.00 % 99.84 % 0.16 %

We recorded an impairment related to OMSR of $ 21 through earnings for the three and nine month periods ended September 30, 2024 and $ 0 for the three and nine month periods ended September 30, 2023.

We also recorded an impairment related to foreclosed assets of $ 0 through earnings for the three and nine month periods ended September 30, 2024 and $ 27 and $ 36 for the three and nine month periods ended September 30, 2023 We had no other assets or liabilities recorded at fair value with changes in fair value recognized through earnings, on a recurring basis or nonrecurring basis, as of September 30, 2024.

We recorded an impairment related to foreclosed assets of $ 63 through earnings for the three month periods ended March 31, 2025 and $ 0 for the three month period ended March 31, 2024.

We had no other assets or liabilities recorded at fair value with changes in fair value recognized through earnings, on a recurring basis or nonrecurring basis, as of March 31, 2025.

Further, we had no unrealized gains and losses included in OCI for recurring Level 3 fair value measurements held at the end of the reporting period.

Note 8 – Subsequent Events

On April 2, 2025, we recovered the full contractual balance of overdrawn deposit accounts from one customer.

These accounts were charged off during the third quarter of 2024 in the amount of $1,622.

Additionally, we collected all legal fees associated with the loss and the full contractual balance of all commercial loans outstanding with this customer.

The recovery of losses and fees will be reflected in our second quarter 2025 results.

We evaluated subsequent events after March 31, 2025 through the date our interim condensed consolidated financial statements were issued for potential recognition and disclosure.

No other subsequent events require financial statement recognition or disclosure between March 31, 2025 and the date our interim condensed consolidated financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements