ISBA filing — read by section

isba-20260331 
 
 

 UNITED STATES 
 SECURITIES AND EXCHANGE COMMISSION 
 Washington, D.C. 20549 
 
 

 FORM 10-Q 
 
 

 
 ☒ Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 

 For the quarterly period ended March 31, 2026 
 or 
 
 ☐ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 

 For the transition period from to 
 Commission File Number: 0-18415 
 
 

 Isabella Bank Corp oration 
 (Exact name of registrant as specified in its charter) 
 
 

 
 Michigan 38-2830092 
 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 
 
 401 N. Main St Mt. Pleasant MI 48858 
 (Address of principal executive offices) (Zip code) 

 ( 989 ) 772-9471 
 (Registrant’s telephone number, including area code) 
 N/A 
 (Former name, former address and former fiscal year, if changed since last report) 
 
 

 Securities registered pursuant to Section 12(b) of the Act: 
 
 Title of each class Trading Symbol(s) Name of each exchange on which registered 
 Common stock, no par value per share ISBA The Nasdaq Stock Market LLC 
 

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No 
 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
 
 Large accelerated filer ☐ Accelerated filer ☒ 
 
 Non-accelerated filer ☐ Smaller reporting company ☒ 
 
 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. ☐ 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No 
 The number of common shares outstanding of the registrant’s Common Stock (no par value) was 7,332,561 as of May 4, 2026. 
 
 

 
 Table of Contents 

 ISABELLA BANK CORPORATION 
 QUARTERLY REPORT ON FORM 10-Q 
 Table of Contents 
 
 PART I – FINANCIAL INFORMATION 
 4 
 
 
 Item 1. Financial Statements 
 4 
 
 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 36 
 
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk 
 49 
 
 
 Item 4. Controls and Procedures 
 49 
 
 
 PART II – OTHER INFORMATION 
 50 
 
 
 Item 1. Legal Proceedings 
 50 
 
 
 Item 1A. Risk Factors 
 50 
 
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
 50 
 
 
 Item 3. Defaults Upon Senior Securities 
 50 
 
 
 Item 4. Mine Safety Disclosures 
 50 
 
 
 Item 5. Other Information 
 50 
 
 
 Item 6. Exhibits 
 51 
 
 
 SIGNATURES 
 52 
 

 2 

 
 Table of Contents 

 Glossary of Acronyms and Abbreviations 
 The acronyms and abbreviations identified below may be used throughout this Quarterly Report on Form 10-Q for the three-month period ended March 31, 2026 (this “Form 10-Q”) or in our other SEC filings. You may find it helpful to refer back to this page while reading this report. 
 
 ACL: Allowance for credit losses FHLB: Federal Home Loan Bank of Chicago 
 AFS: Available-for-sale FRB: Board of Governors of the Federal Reserve System 
 ALCO: Asset-Liability Committee Freddie Mac: Federal Home Loan Mortgage Corporation 
 ALLL: Allowance for loan and lease losses FTE: Fully taxable equivalent 
 AOCI: Accumulated other comprehensive income GAAP: U.S. generally accepted accounting principles 
 ASC: FASB Accounting Standards Codification HFS: Held-for-sale 
 ASU: FASB Accounting Standards Update HFI: Held-for-investment 
 ATM: Automated teller machine IRR: Interest rate risk 
 AUM: Assets under management IT: Information Technology 
 BHC Act: Bank Holding Company Act of 1956 N/A: Not applicable 
 Board: Board of Directors of Isabella Bank Corporation N/M: Not meaningful 
 BOLI: Bank-owned life insurance Nasdaq: Nasdaq Stock Market Index 
 CECL: Current expected credit losses NAV: Net asset value 
 CFPB: Consumer Financial Protection Bureau NIM: Net interest margin 
 CIK: Central Index Key NSF: Non-sufficient funds 
 DIF: Deposit Insurance Fund OCI: Other comprehensive income (loss) 
 DIFS: Michigan Department of Insurance and Financial Services OMSR: Originated mortgage servicing rights 
 Directors Plan: Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors PCAOB: Public Company Accounting Oversight Board 
 Dividend Reinvestment Plan: Isabella Bank Corporation Stockholder Dividend Reinvestment Plan and Employee Stock Purchase Plan Rabbi Trust: A trust established to fund our Directors Plan 
 ESPP: Isabella Bank Corporation 2025 Employee Stock Purchase Plan RSP: Isabella Bank Corporation Restricted Stock Plan 
 ETR: Effective tax rate SEC: U.S. Securities and Exchange Commission 
 Exchange Act: Securities Exchange Act of 1934, as amended SOFR: Secured Overnight Financing Rate 
 FASB: Financial Accounting Standards Board SOX: Sarbanes-Oxley Act of 2002 
 FDIC: Federal Deposit Insurance Corporation XBRL: eXtensible Business Reporting Language 
 FFIEC: Federal Financial Institutions Examinations Council Yield Curve: U.S. Treasury Yield Curve 

 3 

 
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 PART I – FINANCIAL INFORMATION 
 
 Item 1. Financial Statements. 
 
 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS 
 (Dollars in thousands) 
 (unaudited) 
 March 31
2026 December 31
2025 
 ASSETS 
 Cash and demand deposits due from banks $ 23,896 $ 22,935 
 Federal funds sold and interest bearing balances due from banks 26,209 3,106 
 Total cash and cash equivalents 50,105 26,041 
 
 Marketable securities AFS (amortized cost of $ 503,366 and $ 507,689 , respectively) 
 492,744 497,791 
 Mortgage loans HFS 360 423 
 
 Loans held for investment 1,558,941 1,536,364 
 Allowance for credit losses ( 14,014 ) ( 13,727 ) 
 Loans, net 1,544,927 1,522,637 
 
 FHLB stock, at cost 5,600 5,600 
 Premises and equipment 29,064 29,000 
 Cash surrender value of BOLI 46,173 46,133 
 Goodwill and other intangible assets 48,282 48,282 
 Other assets 34,701 33,541 
 Total assets $ 2,251,956 $ 2,209,448 
 LIABILITIES AND SHAREHOLDERS’ EQUITY 
 Liabilities 
 Noninterest bearing demand deposits $ 411,216 $ 426,342 
 Interest bearing demand deposits 263,954 266,187 
 Money market deposits 477,544 436,631 
 Savings 300,732 280,429 
 Certificates of deposit 406,399 410,065 
 Total deposits 1,859,845 1,819,654 
 Short-term borrowings 113,530 68,000 
 FHLB advances — 45,000 
 Subordinated debt, net of unamortized issuance costs 29,537 29,514 
 Other liabilities 15,083 15,884 
 Total liabilities 2,017,995 1,978,052 
 Shareholders’ equity 
 Common stock — no par value, 15,000,000 shares authorized: issued and outstanding 7,333,319 shares at March 31, 2026 and 7,322,207 shares at December 31, 2025 
 123,251 123,204 
 Shares to be issued for deferred compensation obligations 2,522 2,366 
 Retained earnings 116,790 113,849 
 Accumulated other comprehensive loss ( 8,602 ) ( 8,023 ) 
 Total shareholders’ equity 233,961 231,396 
 Total liabilities and shareholders’ equity $ 2,251,956 $ 2,209,448 

 
 
 
 
 
 
 
 
 
 
 See notes to interim condensed consolidated financial statements (unaudited). 
 4 

 
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 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 
 (Dollars in thousands except per share amounts) 
 
 Three Months Ended 
 March 31 
 2026 2025 
 Interest income 
 Loans, including fees $ 21,464 $ 19,348 
 AFS securities 
 Taxable 2,489 2,103 
 Nontaxable 499 540 
 FHLB stock 75 160 
 Federal funds sold and other 602 482 
 Total interest income 25,129 22,633 
 Interest expense 
 Deposits 7,112 7,463 
 Short-term borrowings 736 341 
 FHLB advances 133 38 
 Subordinated debt 266 266 
 Total interest expense 8,247 8,108 
 Net interest income 16,882 14,525 
 Provision for (reversal of) credit losses 604 ( 107 ) 
 Net interest income after provision for credit losses 16,278 14,632 
 Noninterest income 
 Service charges and fees 2,372 1,974 
 Wealth management fees 1,108 979 
 Increase in the cash surrender value of BOLI 448 372 
 Net gain on sale of mortgage loans 33 30 
 Other 400 173 
 Total noninterest income 4,361 3,528 
 Noninterest expenses 
 Compensation and benefits 7,928 7,383 
 Occupancy and equipment 2,840 2,600 
 Other professional services 1,015 711 
 ATM and debit card fees 558 486 
 Marketing 506 459 
 FDIC insurance premiums 306 303 
 Other 1,509 1,357 
 Total noninterest expenses 14,662 13,299 
 Income before income tax expense 5,977 4,861 
 Income tax expense 985 912 
 Net income $ 4,992 $ 3,949 
 Earnings per common share 
 Basic $ 0.68 $ 0.53 
 Diluted 0.68 0.53 
 Cash dividends per common share 0.28 0.28 

 
 
 
 
 
 
 See notes to interim condensed consolidated financial statements (unaudited). 
 5 

 
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 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) 
 (Dollars in thousands) 
 
 Three Months Ended 
 March 31 
 2026 2025 
 Net income $ 4,992 $ 3,949 
 Unrealized gains (losses) on AFS securities ( 724 ) 5,014 
 Tax effect (1) 
 145 ( 1,098 ) 
 Unrealized gains (losses) on AFS securities, net of tax ( 579 ) 3,916 
 Comprehensive income $ 4,413 $ 7,865 

 (1) See “Note 6 – Capital Ratios and Shareholders' Equity” of these consolidated financial statements for tax effect reconciliation. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See notes to interim condensed consolidated financial statements (unaudited). 
 6 

 
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 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) 
 (Dollars in thousands except per share amounts) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 Common Stock 
 Common Shares
Outstanding Amount Common Shares to be
Issued for
Deferred
Compensation
Obligations Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Totals 
 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 
 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 ) — — — 
 Share-based payment awards under the Directors Plan — — 167 — — 167 
 Share-based compensation expense recognized in earnings under the RSP — 7 — — — 7 
 Common stock repurchased ( 45,582 ) ( 1,145 ) — — — ( 1,145 ) 
 Cash dividends paid ($ 0.28 per common share) 
 — — — ( 2,033 ) — ( 2,033 ) 
 March 31, 2025 7,408,010 $ 125,547 $ 2,508 $ 104,940 $ ( 17,439 ) $ 215,556 
 
 December 31, 2025 7,322,207 $ 123,204 $ 2,366 $ 113,849 $ ( 8,023 ) $ 231,396 
 Comprehensive income (loss) — — — 4,992 ( 579 ) 4,413 
 Issuance of common stock 9,682 433 — — — 433 
 Common stock issued for deferred compensation under the RSP 9,492 — — — — — 
 Share-based payment awards under the Directors Plan — — 156 — — 156 
 Share-based compensation expense recognized in earnings under the RSP — 16 — — — 16 
 Common stock repurchased ( 8,062 ) ( 402 ) — — — ( 402 ) 
 Cash dividends paid ($ 0.28 per common share) 
 — — — ( 2,051 ) — ( 2,051 ) 
 March 31, 2026 7,333,319 $ 123,251 $ 2,522 $ 116,790 $ ( 8,602 ) $ 233,961 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See notes to interim condensed consolidated financial statements (unaudited). 
 7 

 
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 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
 (Dollars in thousands) 
 
 Three Months Ended 
 March 31 
 2026 2025 
 Operating activities 
 Net income $ 4,992 $ 3,949 
 Reconciliation of net income to net cash provided by operating activities 
 Provision for (reversal of) credit losses 604 ( 107 ) 
 Depreciation 562 535 
 Net amortization of AFS securities 188 307 
 Net gain on sale of mortgage loans ( 33 ) ( 30 ) 
 Increase in the cash surrender value of BOLI, net of expenses ( 444 ) ( 368 ) 
 Gains from redemption of BOLI policies ( 131 ) — 
 Share-based payment awards 172 174 
 Origination of loans HFS ( 1,575 ) ( 1,043 ) 
 Proceeds from loan sales 1,671 1,188 
 Net changes in: 
 Other assets ( 1,450 ) ( 200 ) 
 Other liabilities ( 778 ) 241 
 Net cash provided by (used in) operating activities 3,778 4,646 
 Investing activities 
 Proceeds from maturities, calls and prepayments of AFS securities 53,053 21,058 
 Purchases of AFS securities ( 48,918 ) ( 40,362 ) 
 Net change in loans HFI ( 22,924 ) 55,576 
 Purchases of premises and equipment ( 536 ) ( 984 ) 
 Purchases of BOLI policies — ( 10,583 ) 
 Proceeds from redemption of BOLI policies 535 — 
 Proceeds from sale of FHLB stock — 7,162 
 Proceeds from sales of foreclosed assets 375 58 
 Low income housing tax credit investments — ( 3,767 ) 
 Net cash provided by (used in) investing activities ( 18,415 ) 28,158 
 Financing activities 
 Net increase (decrease) in deposits 40,191 50,849 
 Net increase (decrease) in short-term borrowings 45,530 ( 6,257 ) 
 Net increase (decrease) in FHLB advances ( 45,000 ) ( 30,000 ) 
 Cash dividends paid on common stock ( 2,051 ) ( 2,033 ) 
 Proceeds from issuance of common stock 433 419 
 Common stock repurchased ( 402 ) ( 1,145 ) 
 Net cash provided by (used in) financing activities 38,701 11,833 
 Increase (decrease) in cash and cash equivalents 24,064 44,637 
 Cash and cash equivalents at beginning of period 26,041 24,542 
 Cash and cash equivalents at end of period $ 50,105 $ 69,179 

 8 

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 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued) 
 (Dollars in thousands) 
 
 Supplemental cash flows information 
 Interest paid $ 8,121 $ 7,919 
 Federal income taxes paid — — 
 Supplemental noncash information 
 Transfers of loans to foreclosed assets 30 218 
 Transfers of foreclosed assets to premises and equipment 90 — 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See notes to interim condensed consolidated financial statements (unaudited). 
 9 

 
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 NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 
 (Dollars in thousands except per share amounts and ratios, unless otherwise noted) 
 
 Note 1 – Significant Accounting Policies 
 Basis of Presentation and Consolidation 
 The consolidated financial statements include the accounts of Isabella Bank Corporation, a registered financial holding company, and its wholly owned banking subsidiary, Isabella Bank. All intercompany balances and accounts have been eliminated in consolidation. References to “we,” “our,” “us,” and “the Corporation” refer to Isabella Bank Corporation, a Michigan corporation and registered financial holding company, our wholly-owned banking subsidiary, Isabella Bank, and our other consolidated subsidiaries. References to “the Bank” refer to Isabella Bank. 
 The accompanying unaudited interim condensed consolidated financial statements in this Form 10-Q have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 13, 2026 (the “2025 Annual Report on Form 10-K”). All financial data presented in these notes, as well as in Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q, including financial data presented in the tables and explanations thereof, are expressed in thousands except per share amounts and ratios and unless otherwise noted. 
 Operating Segments 
 Segment information is prepared on the same basis that our Chief Executive Officer, 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 our results against our competitors. Benchmarking and monitoring of budget to actual results are used in assessing 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. 
 Changes in Significant Accounting Policies 
 Our accounting policies are materially the same as those discussed in Note 1 to the Consolidated Financial Statements included in our 2025 Annual Report on Form 10-K. 
 Subsequent Events 
 We evaluated subsequent events after March 31, 2026 through the date our interim condensed consolidated financial statements were issued for potential recognition and disclosure. Management determined that no subsequent events require financial statement recognition or disclosure between March 31, 2026 and the date our interim condensed consolidated financial statements were issued. 
 10 

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 Pending Accounting Standards 
 ASU No. 2024-03: “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” 
 In November 2024, ASU No. 2024-03 was issued to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling general and administrative expense, and research and development). The new authoritative guidance is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, as clarified in ASU No. 2025-01 issued in January 2025. The new authoritative guidance under ASU No. 2024-03 is not expected to have a significant impact on our operations or financial statement disclosures. 
 
 Note 2 – AFS Securities 
 The amortized cost and fair value of AFS securities, with gross unrealized gains and losses, are as follows as of the dates indicated: 
 March 31, 2026 
 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value 
 U.S. Treasury $ 160,172 $ — $ 1,809 $ 158,363 
 States and political subdivisions 69,332 28 3,026 66,334 
 Auction rate money market preferred 3,200 — 820 2,380 
 Agency mortgage-backed securities 22,074 — 1,161 20,913 
 Agency collateralized mortgage obligations 242,138 699 4,021 238,816 
 Corporate 6,450 — 512 5,938 
 Total $ 503,366 $ 727 $ 11,349 $ 492,744 

 
 December 31, 2025 
 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value 
 U.S. Treasury $ 200,327 $ — $ 2,793 $ 197,534 
 States and political subdivisions 71,857 45 2,697 69,205 
 Auction rate money market preferred 3,200 — 787 2,413 
 Agency mortgage-backed securities 23,373 — 1,121 22,252 
 Agency collateralized mortgage obligations 202,482 1,149 3,165 200,466 
 Corporate 6,450 — 529 5,921 
 Total $ 507,689 $ 1,194 $ 11,092 $ 497,791 

 We made an accounting policy election to exclude accrued interest receivable on AFS securities from the amortized cost basis of AFS securities, as displayed above. Accrued interest receivable on AFS securities was $ 2,251 and $ 1,723 at March 31, 2026 and December 31, 2025, respectively, which is included in other assets on the consolidated balance sheets. Additional policy information related to AFS securities are discussed in detail in Note 1, Significant Accounting Policies in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. 
 11 

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 The amortized cost and fair value of AFS securities by contractual maturity as of March 31, 2026 are as follows: 
 Maturing Securities with Variable Monthly Payments or Noncontractual Maturities 
 Due in
One Year
or Less After One
Year But
Within
Five Years After Five
Years But
Within
Ten Years After
Ten Years Total 
 U.S. Treasury $ 160,172 $ — $ — $ — $ — $ 160,172 
 States and political subdivisions 10,294 17,366 19,985 21,687 — 69,332 
 Auction rate money market preferred — — — — 3,200 3,200 
 Agency mortgage-backed securities — — — — 22,074 22,074 
 Agency collateralized mortgage obligations — — — — 242,138 242,138 
 Corporate — — 6,450 — — 6,450 
 Total amortized cost $ 170,466 $ 17,366 $ 26,435 $ 21,687 $ 267,412 $ 503,366 
 Fair value $ 168,655 $ 17,236 $ 24,480 $ 20,264 $ 262,109 $ 492,744 

 Expected maturities for government sponsored enterprises and states and political subdivisions may differ from contractual maturities as issuers may have the right to call or prepay obligations. 
 As the auction rate money market preferred investments have continual call dates, they are not reported by a specific maturity group. Because of their variable monthly payments, agency mortgage-backed securities and collateralized mortgage obligations are not reported by a specific maturity group. 
 The information in the following tables pertains to AFS securities with gross unrealized losses as of March 31, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous loss position for which an allowance for credit losses has not been recorded. 
 March 31, 2026 
 Less Than Twelve Months Twelve Months or More 
 Gross
Unrealized
Losses Fair
Value Gross
Unrealized
Losses Fair
Value Total
Unrealized
Losses 
 U.S. Treasury $ — $ — $ 1,809 $ 158,363 $ 1,809 
 States and political subdivisions 265 13,426 2,761 30,338 3,026 
 Auction rate money market preferred — — 820 2,380 820 
 Agency mortgage-backed securities — — 1,161 20,913 1,161 
 Agency collateralized mortgage obligations 521 66,333 3,500 110,791 4,021 
 Corporate — — 512 5,938 512 
 Total $ 786 $ 79,759 $ 10,563 $ 328,723 $ 11,349 
 Number of securities in an unrealized loss position: 57 156 213 

 
 December 31, 2025 
 Less Than Twelve Months Twelve Months or More 
 Gross
Unrealized
Losses Fair
Value Gross
Unrealized
Losses Fair
Value Total
Unrealized
Losses 
 U.S. Treasury $ — $ — $ 2,793 $ 197,534 $ 2,793 
 States and political subdivisions 993 13,446 1,704 24,823 2,697 
 Auction rate money market preferred — — 787 2,413 787 
 Agency mortgage-backed securities — — 1,121 22,252 1,121 
 Agency collateralized mortgage obligations 39 9,042 3,126 120,016 3,165 
 Corporate — — 529 5,921 529 
 Total $ 1,032 $ 22,488 $ 10,060 $ 372,959 $ 11,092 
 Number of securities in an unrealized loss position: 38 138 176 

 12 

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 As of March 31, 2026, no ACL 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. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Management does not currently intend to sell any of the securities classified as AFS in the table above, and believes it is more likely than not that we will not have to sell any such securities before a recovery of cost. Unrealized losses are generally due to a continued elevated market interest rate environment compared to the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their respective maturity date or repricing date, or if the market yields for such investments decline. 
 
 Note 3 – Loans and ACL 
 Loan Composition 
 The following table provides a detailed listing of our loan portfolio, excluding loans HFS, as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Balance Percent of Total Balance Percent of Total 
 Commercial and industrial 
 Secured $ 191,139 12.26 % $ 189,071 12.31 % 
 Unsecured 34,230 2.20 % 31,379 2.04 % 
 Total commercial and industrial 225,369 14.46 % 220,450 14.35 % 
 Commercial real estate 
 Commercial mortgage owner occupied 240,433 15.42 % 229,906 14.96 % 
 Commercial mortgage non-owner occupied 226,465 14.53 % 223,984 14.58 % 
 Commercial mortgage 1-4 family investor 104,504 6.70 % 101,400 6.60 % 
 Commercial mortgage multifamily 89,241 5.73 % 84,468 5.50 % 
 Total commercial real estate 660,643 42.38 % 639,758 41.64 % 
 Advances to mortgage brokers 72,083 4.62 % 76,676 4.99 % 
 Agricultural 
 Agricultural mortgage 68,540 4.40 % 69,769 4.54 % 
 Agricultural other 28,429 1.82 % 32,340 2.11 % 
 Total agricultural 96,969 6.22 % 102,109 6.65 % 
 Residential real estate 
 Senior lien 380,867 24.43 % 372,287 24.23 % 
 Junior lien 11,021 0.71 % 10,970 0.71 % 
 Home equity lines of credit 46,445 2.98 % 44,623 2.91 % 
 Total residential real estate 438,333 28.12 % 427,880 27.85 % 
 Consumer 
 Secured - direct 27,698 1.78 % 28,648 1.86 % 
 Secured - indirect 34,524 2.21 % 37,456 2.44 % 
 Unsecured 3,322 0.21 % 3,387 0.22 % 
 Total consumer 65,544 4.20 % 69,491 4.52 % 
 Total $ 1,558,941 100.00 % $ 1,536,364 100.00 % 

 We grant commercial, agricultural, residential real estate, and consumer loans to customers primarily in Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, health care, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans are unsecured. 
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 Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ACL, and deferred fees or costs. Unless a loan has a nonaccrual status, interest income is accrued over the term of the loan based on the principal amount outstanding. We made an accounting policy election to exclude accrued interest receivable on loans from the amortized cost basis of loans. Accrued interest receivable on loans was $ 7,111 and $ 6,666 at March 31, 2026 and December 31, 2025, respectively, which is included in other assets on the consolidated balance sheets. 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 interest method. Net unamortized deferred loan costs were $ 2,929 and $ 2,989 as of March 31, 2026 and December 31, 2025, 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. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $ 18,000 . Borrowers with direct credit needs of more than $ 18,000 may be serviced through the use of loan participations with other commercial banks. 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. Government agency guarantees may be required. Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports of our borrowers. 
 We offer adjustable-rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac. 
 Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100 % of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80 % unless the loan qualifies for government guarantees. 
 Underwriting criteria for originated residential real estate loans generally include: 
 • Evaluation of the borrower’s ability to make monthly payments. 
 • Evaluation of the value of the property securing the loan. 
 • Ensuring the payment of principal, interest, taxes, and hazard insurance generally does not exceed 28 % of a borrower’s gross income. 
 • Ensuring all debt servicing does not exceed 40 % of income. 
 • Verification of acceptable credit reports. 
 • Verification of employment, income, and financial information. 
 Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system. Loans in excess of $ 1,000 require the approval of one or more of the following Bank committees: Internal Loan Committee, the Executive Loan Committee, or the Board of Directors. 
 Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market. 
 14 

 Table of Contents 

 Nonaccrual and Past Due Loans 
 Nonaccrual loan policies, including a description of nonaccrual loans, are discussed in detail in Note 1, Significant Accounting Policies, and Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. The following table summarizes nonaccrual loan data by class of loans as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Total Nonaccrual Loans Nonaccrual Loans with No ACL Total Nonaccrual Loans Nonaccrual Loans with No ACL 
 Commercial and industrial 
 Secured $ 508 $ 75 $ 442 $ — 
 Commercial real estate 
 Commercial mortgage owner occupied 743 — 766 — 
 Commercial mortgage 1-4 family investor 3,000 3,000 3,000 3,000 
 Residential real estate 
 Senior lien 167 167 370 370 
 Total $ 4,418 $ 3,242 $ 4,578 $ 3,370 

 
 The following tables summarize the past due and current loans for the entire loan portfolio as of the dates indicated: 
 March 31, 2026 
 Past Due: Accruing Loans 90 or More Days Past Due 
 30-59
Days 60-89
Days 90 Days
or More Current Total 
 Commercial and industrial 
 Secured $ 114 $ 5 $ 508 $ 190,512 $ 191,139 $ — 
 Unsecured 23 — — 34,207 34,230 — 
 Total commercial and industrial 137 5 508 224,719 225,369 — 
 Commercial real estate 
 Commercial mortgage owner occupied — 154 743 239,536 240,433 — 
 Commercial mortgage non-owner occupied — — — 226,465 226,465 — 
 Commercial mortgage 1-4 family investor 245 — 3,000 101,259 104,504 — 
 Commercial mortgage multifamily — — — 89,241 89,241 — 
 Total commercial real estate 245 154 3,743 656,501 660,643 — 
 Advances to mortgage brokers — — — 72,083 72,083 — 
 Agricultural 
 Agricultural mortgage — — — 68,540 68,540 — 
 Agricultural other — — — 28,429 28,429 — 
 Total agricultural — — — 96,969 96,969 — 
 Residential real estate 
 Senior lien 4,980 — 85 375,802 380,867 — 
 Junior lien — — — 11,021 11,021 — 
 Home equity lines of credit — — — 46,445 46,445 — 
 Total residential real estate 4,980 — 85 433,268 438,333 — 
 Consumer 
 Secured - direct 8 — — 27,690 27,698 — 
 Secured - indirect 221 26 — 34,277 34,524 — 
 Unsecured 10 — — 3,312 3,322 — 
 Total consumer 239 26 — 65,279 65,544 — 
 Total $ 5,601 $ 185 $ 4,336 $ 1,548,819 $ 1,558,941 $ — 

 15 

 Table of Contents 

 
 December 31, 2025 
 Past Due: Accruing Loans 90 or More Days Past Due 
 30-59
Days 60-89
Days 90 Days
or More Current Total 
 Commercial and industrial 
 Secured $ 121 $ 443 $ — $ 188,507 $ 189,071 $ — 
 Unsecured — — — 31,379 31,379 — 
 Total commercial and industrial 121 443 — 219,886 220,450 — 
 Commercial real estate 
 Commercial mortgage owner occupied — 766 — 229,140 229,906 — 
 Commercial mortgage non-owner occupied 839 — — 223,145 223,984 — 
 Commercial mortgage 1-4 family investor 67 — 3,000 98,333 101,400 — 
 Commercial mortgage multifamily — — — 84,468 84,468 — 
 Total commercial real estate 906 766 3,000 635,086 639,758 — 
 Advances to mortgage brokers — — — 76,676 76,676 — 
 Agricultural 
 Agricultural mortgage — — — 69,769 69,769 — 
 Agricultural other 60 — — 32,280 32,340 — 
 Total agricultural 60 — — 102,049 102,109 — 
 Residential real estate 
 Senior lien 5,012 385 — 366,890 372,287 — 
 Junior lien 12 — — 10,958 10,970 — 
 Home equity lines of credit 115 — — 44,508 44,623 — 
 Total residential real estate 5,139 385 — 422,356 427,880 — 
 Consumer 
 Secured - direct 21 — — 28,627 28,648 — 
 Secured - indirect 284 30 — 37,142 37,456 — 
 Unsecured 1 5 — 3,381 3,387 — 
 Total consumer 306 35 — 69,150 69,491 — 
 Total $ 6,532 $ 1,629 $ 3,000 $ 1,525,203 $ 1,536,364 $ — 

 
 
 16 

 Table of Contents 

 Credit Quality Ratings and Indicators 
 We have certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors 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 . Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are discussed in detail in Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. 
 The following tables display commercial and agricultural loans by credit risk ratings and year of origination as of the dates indicated: 
 March 31, 2026 
 2026 2025 2024 2023 2022 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Commercial and industrial: Secured 
 Risk ratings 1-3 $ 2,545 $ 239 $ 10,105 $ 8,000 $ 1,492 $ 5,646 $ 37,932 $ — $ 65,959 
 Risk rating 4 11,583 18,767 16,063 12,148 5,040 4,718 31,652 — 99,971 
 Risk rating 5 — 1,162 2,236 125 15,092 28 2,826 — 21,469 
 Risk rating 6 — 96 70 19 — 41 3,006 — 3,232 
 Risk rating 7 — 22 433 — — — 53 — 508 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 14,128 $ 20,286 $ 28,907 $ 20,292 $ 21,624 $ 10,433 $ 75,469 $ — $ 191,139 
 2026 year-to-date gross charge-offs $ — $ 2 $ — $ — $ — $ — $ 1 $ — $ 3 
 Commercial and industrial: Unsecured 
 Risk ratings 1-3 $ 51 $ 800 $ 25 $ 2,241 $ 347 $ 288 $ 3,254 $ — $ 7,006 
 Risk rating 4 3,255 9,444 719 627 586 257 10,209 — 25,097 
 Risk rating 5 — 1 — 60 — 463 1,524 — 2,048 
 Risk rating 6 — — 79 — — — — — 79 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 3,306 $ 10,245 $ 823 $ 2,928 $ 933 $ 1,008 $ 14,987 $ — $ 34,230 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: Owner occupied 
 Risk ratings 1-3 $ 86 $ 5,270 $ 4,045 $ 8,402 $ 1,361 $ 32,910 $ 1,756 $ — $ 53,830 
 Risk rating 4 9,341 36,272 32,180 19,881 27,003 48,248 3,395 — 176,320 
 Risk rating 5 — 1,830 962 543 1,007 3,267 387 — 7,996 
 Risk rating 6 — — 1,319 154 — 71 — — 1,544 
 Risk rating 7 — — 743 — — — — — 743 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 9,427 $ 43,372 $ 39,249 $ 28,980 $ 29,371 $ 84,496 $ 5,538 $ — $ 240,433 
 2026 year-to-date gross charge-offs $ — $ — $ — $ 154 $ — $ — $ — $ — $ 154 

 17 

 Table of Contents 

 
 March 31, 2026 
 2026 2025 2024 2023 2022 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Commercial real estate: Non-owner occupied 
 Risk ratings 1-3 $ — $ 3,324 $ 263 $ 4,963 $ 5,839 $ 12,328 $ 102 $ — $ 26,819 
 Risk rating 4 2,466 26,841 7,138 21,148 44,033 56,803 3,808 — 162,237 
 Risk rating 5 — 248 9,875 7,756 10,091 7,936 486 — 36,392 
 Risk rating 6 — — — 974 — 43 — — 1,017 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 2,466 $ 30,413 $ 17,276 $ 34,841 $ 59,963 $ 77,110 $ 4,396 $ — $ 226,465 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: 1-4 family investor 
 Risk ratings 1-3 $ 316 $ 741 $ 718 $ 223 $ 2,583 $ 2,420 $ 5,277 $ — $ 12,278 
 Risk rating 4 2,819 15,596 9,057 6,452 7,478 38,321 7,853 — 87,576 
 Risk rating 5 — 293 — 135 213 121 339 — 1,101 
 Risk rating 6 — — — 509 — 40 — — 549 
 Risk rating 7 — — — 3,000 — — — — 3,000 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 3,135 $ 16,630 $ 9,775 $ 10,319 $ 10,274 $ 40,902 $ 13,469 $ — $ 104,504 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: Multifamily 
 Risk ratings 1-3 $ — $ — $ 877 $ — $ 1,579 $ 1,861 $ 246 $ — $ 4,563 
 Risk rating 4 5,512 21,365 5,020 940 18,603 28,841 220 — 80,501 
 Risk rating 5 — — 478 907 — 2,792 — — 4,177 
 Risk rating 6 — — — — — — — — — 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 5,512 $ 21,365 $ 6,375 $ 1,847 $ 20,182 $ 33,494 $ 466 $ — $ 89,241 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Advances to mortgage brokers 
 Risk ratings 1-3 $ 72,083 $ — $ — $ — $ — $ — $ — $ — $ 72,083 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Agricultural mortgage 
 Risk ratings 1-3 $ — $ 2,590 $ 884 $ 546 $ 3,292 $ 5,296 $ 37 $ — $ 12,645 
 Risk rating 4 628 4,330 3,875 3,225 10,532 17,000 1,329 — 40,919 
 Risk rating 5 153 1,384 267 1,119 448 6,593 1,363 — 11,327 
 Risk rating 6 — — — — 2,068 1,581 — — 3,649 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 781 $ 8,304 $ 5,026 $ 4,890 $ 16,340 $ 30,470 $ 2,729 $ — $ 68,540 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 
 
 
 
 18 

 Table of Contents 

 
 March 31, 2026 
 2026 2025 2024 2023 2022 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Agricultural other 
 Risk ratings 1-3 $ 206 $ 859 $ 376 $ 345 $ 609 $ 450 $ 2,891 $ — $ 5,736 
 Risk rating 4 722 1,836 594 679 540 434 9,323 — 14,128 
 Risk rating 5 15 881 51 107 13 1,322 2,541 — 4,930 
 Risk rating 6 — 3,476 — 72 — — 87 — 3,635 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 943 $ 7,052 $ 1,021 $ 1,203 $ 1,162 $ 2,206 $ 14,842 $ — $ 28,429 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 
 December 31, 2025 
 2025 2024 2023 2022 2021 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Commercial and industrial: Secured 
 Risk ratings 1-3 $ 257 $ 10,256 $ 8,605 $ 1,841 $ 3,660 $ 2,471 $ 36,713 $ — $ 63,803 
 Risk rating 4 20,722 19,606 13,553 5,939 5,653 1,278 30,804 — 97,555 
 Risk rating 5 2,271 2,290 139 15,215 45 — 4,085 — 24,045 
 Risk rating 6 81 75 19 — 30 6 3,015 — 3,226 
 Risk rating 7 — 442 — — — — — — 442 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 23,331 $ 32,669 $ 22,316 $ 22,995 $ 9,388 $ 3,755 $ 74,617 $ — $ 189,071 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial and industrial: Unsecured 
 Risk ratings 1-3 $ 867 $ 25 $ 2,165 $ 156 $ 10 $ 312 $ 3,302 $ — $ 6,837 
 Risk rating 4 11,882 955 813 1,240 188 274 7,080 — 22,432 
 Risk rating 5 2 — 61 — 476 — 1,488 — 2,027 
 Risk rating 6 — 83 — — — — — — 83 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 12,751 $ 1,063 $ 3,039 $ 1,396 $ 674 $ 586 $ 11,870 $ — $ 31,379 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: Owner occupied 
 Risk ratings 1-3 $ 5,021 $ 4,101 $ 8,467 $ 1,385 $ 17,482 $ 16,095 $ 1,419 $ — $ 53,970 
 Risk rating 4 33,004 33,403 20,559 27,541 26,605 23,021 2,380 — 166,513 
 Risk rating 5 1,687 192 557 1,149 131 2,866 372 — 6,954 
 Risk rating 6 — 1,327 304 — 72 — — — 1,703 
 Risk rating 7 — 766 — — — — — — 766 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 39,712 $ 39,789 $ 29,887 $ 30,075 $ 44,290 $ 41,982 $ 4,171 $ — $ 229,906 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 19 

 Table of Contents 

 
 December 31, 2025 
 2025 2024 2023 2022 2021 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Commercial real estate: Non-owner occupied 
 Risk ratings 1-3 $ 3,346 $ 273 $ 4,996 $ 5,910 $ 9,132 $ 3,360 $ 102 $ — $ 27,119 
 Risk rating 4 26,715 7,300 21,512 44,632 31,180 26,464 1,595 — 159,398 
 Risk rating 5 249 9,938 7,641 10,192 1,612 6,343 466 — 36,441 
 Risk rating 6 — — 982 — — 44 — — 1,026 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 30,310 $ 17,511 $ 35,131 $ 60,734 $ 41,924 $ 36,211 $ 2,163 $ — $ 223,984 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: 1-4 family investor 
 Risk ratings 1-3 $ 615 $ 764 $ 225 $ 2,631 $ 1,445 $ 1,126 $ 3,068 $ — $ 9,874 
 Risk rating 4 15,675 9,486 7,180 7,873 26,081 13,609 6,983 — 86,887 
 Risk rating 5 269 — 137 216 — 122 338 — 1,082 
 Risk rating 6 — — 515 — — 42 — — 557 
 Risk rating 7 — — 3,000 — — — — — 3,000 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 16,559 $ 10,250 $ 11,057 $ 10,720 $ 27,526 $ 14,899 $ 10,389 $ — $ 101,400 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate: Multifamily 
 Risk ratings 1-3 $ — $ 885 $ 363 $ 1,603 $ 852 $ 1,099 $ 288 $ — $ 5,090 
 Risk rating 4 20,842 5,030 957 18,892 10,087 19,158 220 — 75,186 
 Risk rating 5 — 480 914 — — 2,798 — — 4,192 
 Risk rating 6 — — — — — — — — — 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 20,842 $ 6,395 $ 2,234 $ 20,495 $ 10,939 $ 23,055 $ 508 $ — $ 84,468 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Advances to mortgage brokers 
 Risk ratings 1-3 $ 76,676 $ — $ — $ — $ — $ — $ — $ — $ 76,676 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Agricultural mortgage 
 Risk ratings 1-3 $ 2,647 $ 714 $ 419 $ 2,993 $ 1,990 $ 3,945 $ 338 $ — $ 13,046 
 Risk rating 4 4,426 4,098 3,449 11,231 5,864 11,802 1,642 — 42,512 
 Risk rating 5 852 269 1,083 418 5,829 622 952 — 10,025 
 Risk rating 6 535 — — 2,068 69 1,514 — — 4,186 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 8,460 $ 5,081 $ 4,951 $ 16,710 $ 13,752 $ 17,883 $ 2,932 $ — $ 69,769 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 
 
 
 
 
 
 20 

 Table of Contents 

 
 December 31, 2025 
 2025 2024 2023 2022 2021 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Agricultural other 
 Risk ratings 1-3 $ 860 $ 503 $ 434 $ 671 $ 221 $ 277 $ 4,054 $ — $ 7,020 
 Risk rating 4 2,055 801 738 610 483 62 11,202 — 15,951 
 Risk rating 5 881 55 133 17 889 391 2,308 — 4,674 
 Risk rating 6 3,476 — 88 — 61 — 1,070 — 4,695 
 Risk rating 7 — — — — — — — — — 
 Risk rating 8 — — — — — — — — — 
 Risk rating 9 — — — — — — — — — 
 Total $ 7,272 $ 1,359 $ 1,393 $ 1,298 $ 1,654 $ 730 $ 18,634 $ — $ 32,340 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due status. The following tables display loans by payment status and year of origination as of the dates indicated: 
 March 31, 2026 
 2026 2025 2024 2023 2022 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Residential real estate: Senior lien 
 Current $ 16,893 $ 74,061 $ 52,807 $ 33,821 $ 40,765 $ 153,614 $ — $ 3,759 $ 375,720 
 Past due 30-89 days — 440 105 720 523 3,192 — — 4,980 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — 85 — — 82 — — 167 
 Total $ 16,893 $ 74,501 $ 52,997 $ 34,541 $ 41,288 $ 156,888 $ — $ 3,759 $ 380,867 
 2026 year-to-date gross charge-offs $ — $ — $ 1 $ — $ — $ — $ — $ — $ 1 
 Residential real estate: Junior lien 
 Current $ 517 $ 4,578 $ 3,163 $ 1,972 $ 483 $ 308 $ — $ — $ 11,021 
 Past due 30-89 days — — — — — — — — — 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 517 $ 4,578 $ 3,163 $ 1,972 $ 483 $ 308 $ — $ — $ 11,021 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Residential real estate: Home equity lines of credit 
 Current $ — $ — $ — $ — $ — $ — $ 46,445 $ — $ 46,445 
 Past due 30-89 days — — — — — — — — — 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ — $ — $ — $ — $ — $ — $ 46,445 $ — $ 46,445 
 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Consumer: Secured - direct 
 Current $ 2,878 $ 6,500 $ 5,622 $ 4,805 $ 3,585 $ 4,300 $ — $ — $ 27,690 
 Past due 30-89 days — — 8 — — — — — 8 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 2,878 $ 6,500 $ 5,630 $ 4,805 $ 3,585 $ 4,300 $ — $ — $ 27,698 
 2026 year-to-date gross charge-offs $ — $ — $ 23 $ — $ — $ — $ — $ — $ 23 

 
 21 

 Table of Contents 

 
 March 31, 2026 
 2026 2025 2024 2023 2022 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Consumer: Secured - indirect 
 Current $ 765 $ 3,946 $ 4,176 $ 12,918 $ 4,449 $ 8,023 $ — $ — $ 34,277 
 Past due 30-89 days — 86 — 111 — 50 — — 247 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 765 $ 4,032 $ 4,176 $ 13,029 $ 4,449 $ 8,073 $ — $ — $ 34,524 
 2026 year-to-date gross charge-offs $ — $ — $ — $ 50 $ — $ 16 $ — $ — $ 66 
 Consumer: Unsecured 
 Current $ 480 $ 1,356 $ 510 $ 99 $ 28 $ 2 $ 837 $ — $ 3,312 
 Past due 30-89 days — 6 4 — — — — — 10 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 480 $ 1,362 $ 514 $ 99 $ 28 $ 2 $ 837 $ — $ 3,322 
 2026 year-to-date gross charge-offs $ 83 $ 14 $ 2 $ — $ — $ 1 $ 3 $ — $ 103 

 
 December 31, 2025 
 2025 2024 2023 2022 2021 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Residential real estate: Senior lien 
 Current $ 72,854 $ 43,102 $ 35,251 $ 42,022 $ 65,769 $ 93,563 $ — $ 14,223 $ 366,784 
 Past due 30-89 days 112 284 633 774 830 2,500 — — 5,133 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — 179 191 — — 370 
 Total $ 72,966 $ 43,386 $ 35,884 $ 42,796 $ 66,778 $ 96,254 $ — $ 14,223 $ 372,287 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1 
 Residential real estate: Junior lien 
 Current $ 4,786 $ 3,252 $ 2,075 $ 507 $ 67 $ 271 $ — $ — $ 10,958 
 Past due 30-89 days — 12 — — — — — — 12 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 4,786 $ 3,264 $ 2,075 $ 507 $ 67 $ 271 $ — $ — $ 10,970 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 
 Residential real estate: Home equity lines of credit 
 Current $ — $ — $ — $ — $ — $ — $ 44,467 $ 41 $ 44,508 
 Past due 30-89 days — — — — — — 115 — 115 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ — $ — $ — $ — $ — $ — $ 44,582 $ 41 $ 44,623 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 

 22 

 Table of Contents 

 
 December 31, 2025 
 2025 2024 2023 2022 2021 Prior Revolving
Loans Revolving Loans Converted to Term Total 
 Consumer: Secured - direct 
 Current $ 7,870 $ 6,374 $ 5,501 $ 4,088 $ 2,238 $ 2,556 $ — $ — $ 28,627 
 Past due 30-89 days — — 11 9 — 1 — — 21 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 7,870 $ 6,374 $ 5,512 $ 4,097 $ 2,238 $ 2,557 $ — $ — $ 28,648 
 2025 year-to-date gross charge-offs $ — $ 1 $ 19 $ 36 $ — $ 12 $ — $ — $ 68 
 Consumer: Secured - indirect 
 Current $ 4,327 $ 4,457 $ 14,532 $ 5,133 $ 3,609 $ 5,084 $ — $ — $ 37,142 
 Past due 30-89 days — 82 198 — — 34 — — 314 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 4,327 $ 4,539 $ 14,730 $ 5,133 $ 3,609 $ 5,118 $ — $ — $ 37,456 
 2025 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 13 $ — $ — $ 13 
 Consumer: Unsecured 
 Current $ 1,686 $ 689 $ 171 $ 34 $ 5 $ — $ 796 $ — $ 3,381 
 Past due 30-89 days 5 — — — — — 1 — 6 
 Past due 90 or more days — — — — — — — — — 
 Nonaccrual — — — — — — — — — 
 Total $ 1,691 $ 689 $ 171 $ 34 $ 5 $ — $ 797 $ — $ 3,387 
 2025 year-to-date gross charge-offs $ 80 $ 1 $ 9 $ — $ — $ — $ — $ — $ 90 

 
 
 23 

 Table of Contents 

 Loan Modifications 
 A loan modification includes terms outside of normal lending practices to a borrower experiencing financial difficulty. 
 Typical modifications granted include, but are not limited to: 
 • Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics. 
 • Extending the maturity date or amortization period beyond typical lending guidelines for loans with similar risk characteristics. 
 • Agreeing to an interest-only payment structure, delaying principal payments, or delaying payments. 
 • Forgiving principal. 
 To determine if a borrower is experiencing financial difficulty, factors we consider include: 
 • The borrower is currently in default on any debt. 
 • The borrower would likely default on any debt if the concession is not granted. 
 • The borrower’s cash flow is insufficient to service all debt if the concession is not granted. 
 • The borrower has declared, or is in the process of declaring, bankruptcy. 
 • The borrower is unlikely to continue as a going concern (if the entity is a business). 
 The following is a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty for the periods indicated: 
 
 
 
 
 
 
 
 
 
 

 
 Three Months Ended March 31, 2026 
 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 
 Secured $ — 0.00 % $ — 0.00 % $ 10 0.01 % $ — 0.00 % 
 Commercial real estate 
 Commercial mortgage owner occupied 154 0.06 % 2,044 0.85 % — 0.00 % — 0.00 % 
 Agricultural 
 Agricultural other — 0.00 % — 0.00 % — 0.00 % 2,700 9.50 % 
 Total $ 154 $ 2,044 $ 10 $ 2,700 

 
 
 
 
 
 
 
 

 
 Three Months Ended March 31, 2025 
 Term Extension 
 Amortized Cost Basis % of Total Class of Financial Receivable 
 Commercial and industrial 
 Secured $ 532 0.24 % 
 Commercial real estate 
 Commercial mortgage owner occupied 1,524 0.83 % 
 Total $ 2,056 

 We do not modify any loans by forgiving principal or accrued interest. We had committed to advance $ 0 and $ 221 in additional funds to be disbursed in connection with modified loans as of March 31, 2026 and December 31, 2025, respectively, as displayed in the tables above. 
 24 

 Table of Contents 

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

 
 Three Months Ended March 31 
 2026 2025 
 Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Weighted-Average Term Extension (Years) 
 Commercial and industrial 
 Secured N/A N/A 3.25 4.4 
 Commercial real estate 
 Commercial mortgage owner occupied 4.00 % 6 months N/A 15.0 
 Agricultural 
 Agricultural other N/A 5 months 0.47 N/A 

 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 12 months prior to the dates indicated: 
 March 31, 2026 
 Current 30-59 Days
Past Due 60-89 Days
Past Due 90 Days or
More Past Due Total 
 Commercial and industrial 
 Secured $ 2,691 $ — $ — $ 433 $ 3,124 
 Commercial real estate 
 Commercial mortgage owner occupied 2,044 — 154 — 2,198 
 Agricultural 
 Agricultural mortgage 1,389 — — — 1,389 
 Agricultural other 3,476 — — — 3,476 
 Residential real estate 
 Senior lien — — — 85 85 
 Total $ 9,600 $ — $ 154 $ 518 $ 10,272 

 
 March 31, 2025 
 Current 30-59 Days
Past Due 60-89 Days
Past Due 90 Days or
More Past Due Total 
 Commercial and industrial 
 Secured $ 2,168 $ — $ — $ — $ 2,168 
 Commercial real estate 
 Commercial mortgage owner occupied 2,872 — — — 2,872 
 Agricultural 
 Agricultural mortgage 1,584 — — — 1,584 
 Agricultural other 924 — — — 924 
 Total $ 7,548 $ — $ — $ — $ 7,548 

 
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 The following table summarizes the amortized cost basis of loans that defaulted in the three-month period ended March 31, 2026 and were modified within 12 months prior to the default date. There were none that defaulted in the three-month period ended March 31, 2025 and were modified within 12 months prior to the default date. 
 March 31, 2026 
 Other-Than-Insignificant Payment Delay Other-Than-Insignificant Payment Delay and Term Extension 
 Commercial and industrial 
 Secured $ — $ 433 
 Residential real estate 
 Senior lien 85 — 
 Total $ 85 $ 433 

 ACL - Loans 
 The credit quality of our loan portfolio is continuously monitored and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within our loan portfolio. The ACL is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. 
 The ACL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. 
 The primary factors behind the determination of the level of the ACL are specific allocations for loans individually evaluated, historical loss percentages, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods. 
 The methodology for estimating the amount of expected credit losses reported in the ACL is described within Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. 
 A summary of activity in the ACL for loans, excluding unfunded commitments, by portfolio segment and the recorded investment in loans by segments follows for the periods indicated: 
 
 
 
 
 
 
 
 

 
 Three Months Ended March 31, 2026 
 Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total 
 December 31, 2025 $ 1,136 $ 5,949 $ 327 $ 5,059 $ 1,256 $ 13,727 
 Charge-offs ( 3 ) ( 154 ) — ( 1 ) ( 192 ) ( 350 ) 
 Recoveries 4 21 — 15 57 97 
 Provision for (reversal of) credit losses 9 406 ( 27 ) 75 77 540 
 March 31, 2026 $ 1,146 $ 6,222 $ 300 $ 5,148 $ 1,198 $ 14,014 

 
 
 
 
 
 
 
 
 

 
 Three Months Ended March 31, 2025 
 Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total 
 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 
 Provision for (reversal of) credit losses ( 157 ) 1 ( 21 ) 66 ( 101 ) ( 212 ) 
 March 31, 2025 $ 1,239 $ 5,174 $ 266 $ 4,600 $ 1,456 $ 12,735 

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 The following table illustrates the components of the ACL as of the dates indicated: 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 ACL 
 Individually evaluated $ 227 $ 259 $ — $ — $ — 
 Collectively evaluated 13,787 13,468 13,149 12,977 12,735 
 Total $ 14,014 $ 13,727 $ 13,149 $ 12,977 $ 12,735 
 ACL to loans 
 Individually evaluated 0.01 % 0.02 % 0.00 % 0.00 % 0.00 % 
 Collectively evaluated 0.89 % 0.87 % 0.92 % 0.93 % 0.93 % 
 Total 0.90 % 0.89 % 0.92 % 0.93 % 0.93 % 

 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 the dates indicated: 
 March 31, 2026 December 31, 2025 
 Loan Balance Specific Allocation Loan Balance Specific Allocation 
 Commercial and industrial $ 433 $ 84 $ 442 $ 95 
 Commercial real estate 3,743 143 3,766 164 
 Agricultural — — — — 
 Residential real estate 167 — 370 — 
 Consumer — — — — 
 Total $ 4,343 $ 227 $ 4,578 $ 259 

 We have designated loans classified as collateral dependent for which we apply the practical expedient to measure the ACL based on the fair value of the collateral less cost to sell when the repayment is expected to be provided substantially by the sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. 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 as of March 31, 2026 include $ 4,343 in collateral dependent loans secured by commercial real estate, commercial equipment, and residential real estate of $ 3,743 , $ 433 , and $ 167 , respectively. 
 
 
 
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 Note 4 – Borrowed Funds 
 Short-term borrowings 
 Short-term borrowings include securities sold under repurchase agreements without stated maturity dates, federal funds purchased, and FRB Discount Window advances, which all generally mature within one to three days from the transaction date. 
 A summary of short-term borrowed funds without stated maturity dates was as follows for the periods indicated: 
 
 
 
 
 
 
 

 
 Three Months Ended March 31 
 2026 2025 
 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 $ 115,582 $ 86,658 3.41 % $ 47,310 $ 43,513 3.21 % 
 Federal funds purchased — 2 4.71 % — 21 5.43 % 
 FRB Discount Window 3,700 225 2.41 % — 29 4.51 % 

 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 $ 139,962 and $ 87,752 as of March 31, 2026 and December 31, 2025, respectively. Such securities remain under our control. We may be required to provide additional collateral based on changes to the fair value of underlying securities. 
 Securities sold under repurchase agreements without stated maturity dates were as follows as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Amount Rate Amount Rate 
 Securities sold under agreements to repurchase without stated maturity dates $ 113,530 3.50 % $ 68,000 3.45 % 

 We had pledged AFS securities and 1-4 family residential real estate loans in the following amounts as of the dates indicated: 
 March 31
2026 December 31
2025 
 Pledged to secure borrowed funds $ 306,092 $ 424,163 
 Pledged to secure repurchase agreements 139,962 87,752 
 Pledged for public deposits and for other purposes necessary or required by law 69,632 69,337 
 Total $ 515,686 $ 581,252 

 AFS securities pledged to repurchase agreements consisted of the following as of the dates indicated: 
 March 31
2026 December 31
2025 
 U.S. Treasury $ 59,387 $ 78,992 
 Agency mortgage-backed securities 6,569 6,928 
 Agency collateralized mortgage obligations 74,006 1,832 
 Total $ 139,962 $ 87,752 

 AFS securities pledged to repurchase agreements are monitored to ensure the appropriate level is collateralized. 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 March 31, 2026, we had the ability to borrow up to an additional $ 397,670 without pledging additional collateral. 
 
 
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 FHLB advances 
 
 
 FHLB advances are collateralized by a blanket lien on all qualified 1-4 family residential real estate loans, specific AFS securities, and FHLB stock. 
 The following table lists the maturities and weighted average interest rates of FHLB advances as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Amount Rate Amount Rate 
 Fixed rate due 2026 $ — N/A $ 45,000 3.92 % 

 Subordinated notes 
 We have $ 30,000 in aggregate principal amount of 3.25 % Fixed-to-Floating Rate Subordinated Notes due 2031 (the "Notes"). The Notes initially bear a fixed interest rate of 3.25 % until June 15, 2026, after which time and until maturity on June 15, 2031, the interest rate will reset quarterly to an annual floating rate equal to the then-current 3-month SOFR plus 256 basis points. The Notes are redeemable by us at any time at our option, in whole or in part, on or after June 15, 2026. The Notes are not subject to redemption at the option of the holders. Additionally, the Notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations. 
 The following table summarizes our outstanding subordinated notes as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Amount Rate Amount Rate 
 Fixed rate at 3.25 % to floating, due 2031 
 $ 30,000 3.25 % $ 30,000 3.25 % 
 Unamortized issuance costs ( 463 ) ( 486 ) 
 Total subordinated debt, net $ 29,537 $ 29,514 

 
 Note 5 – Computation of Earnings Per Common Share 
 Basic earnings per common share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued relate solely to outstanding shares in the Directors Plan, grant awards under the RSP, and purchase options under the ESPP. 
 Earnings per common share have been computed based on the following for the periods indicated: 
 Three Months Ended 
 March 31 
 2026 2025 
 Average number of common shares outstanding for basic calculation 7,325,789 7,419,739 
 Dilutive effect of stock compensation, awards, and options 3,269 12,423 
 Average number of common shares outstanding used to calculate diluted earnings per common share 7,329,058 7,432,162 
 Net income $ 4,992 $ 3,949 
 Earnings per common share 
 Basic $ 0.68 $ 0.53 
 Diluted 0.68 0.53 

 
 
 
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 Note 6 – Capital Ratios and Shareholders' Equity 
 As of March 31, 2026 and December 31, 2025, the most recent notifications from the FRB and the FDIC categorized us as “well capitalized” under the FDIC's regulatory framework for prompt corrective action and the Basel III capital guidelines. To be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1, and Tier 1 leverage ratios as set forth in the following tables. The minimum requirements presented below include the minimum required capital levels based on the Basel III capital guidelines. Capital requirements to be considered “well capitalized” are based upon the FDIC's prompt corrective action regulations, as amended to reflect the changes under the Basel III capital guidelines. There were no conditions or events since the notifications that we believe have changed our categorizations. The following tables set forth these capital requirements and our ratios, both on a bank-only and on a consolidated basis, as of the dates indicated: 
 March 31, 2026 
 Actual Minimum Capital
Required Plus Capital Conservation Buffer Minimum Capital 
 Required To Be Considered 
 Well Capitalized (1) 
 
 Amount Ratio Amount Ratio Amount Ratio 
 Common equity Tier 1 capital to risk weighted assets 
 Isabella Bank $ 187,870 11.36 % $ 115,800 7.00 % $ 107,528 6.50 % 
 Consolidated 194,281 11.71 % 116,144 7.00 % N/A N/A 
 Tier 1 capital to risk weighted assets 
 Isabella Bank 187,870 11.36 % 140,614 8.50 % 132,342 8.00 % 
 Consolidated 194,281 11.71 % 141,032 8.50 % N/A N/A 
 Total capital to risk weighted assets 
 Isabella Bank 202,442 12.24 % 173,699 10.50 % 165,428 10.00 % 
 Consolidated 232,482 14.01 % 174,216 10.50 % N/A N/A 
 Tier 1 capital to average assets 
 Isabella Bank 187,870 8.62 % 87,188 4.00 % 108,985 5.00 % 
 Consolidated 194,281 8.89 % 87,410 4.00 % N/A N/A 

 
 December 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 
 Common equity Tier 1 capital to risk weighted assets 
 Isabella Bank $ 182,116 11.20 % $ 113,783 7.00 % $ 105,656 6.50 % 
 Consolidated 191,137 11.73 % 114,114 7.00 % N/A N/A 
 Tier 1 capital to risk weighted assets 
 Isabella Bank 182,116 11.20 % 138,165 8.50 % 130,038 8.00 % 
 Consolidated 191,137 11.73 % 138,568 8.50 % N/A N/A 
 Total capital to risk weighted assets 
 Isabella Bank 196,336 12.08 % 170,675 10.50 % 162,547 10.00 % 
 Consolidated 234,871 14.41 % 171,172 10.50 % N/A N/A 
 Tier 1 capital to average assets 
 Isabella Bank 182,116 8.45 % 86,170 4.00 % 107,713 5.00 % 
 Consolidated 191,137 8.84 % 86,476 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. Tier 2 capital includes a permissible portion of the allowances for credit losses and outstanding subordinated debt, net of unamortized issuance costs. There are no significant regulatory constraints placed on our capital. As of March 31, 2026, the Bank exceeded all minimum Basel III risk-based capital requirements with the capital conservation buffer. 
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 State banking regulations place certain restrictions on dividends paid by banks to their shareholders. Dividends paid by the Corporation’s bank subsidiary would be prohibited if the effect thereof would cause the bank subsidiary’s capital to be reduced below applicable minimum capital requirements. 
 The following table summarizes the changes in AOCI by component for the periods indicated: 
 
 
 
 
 
 
 
 
 

 
 Three Months Ended March 31 
 2026 2025 
 Unrealized
Gains
(Losses) on
AFS
Securities Defined
Benefit
Pension Plan Total Unrealized
Gains
(Losses) on
AFS
Securities Defined
Benefit
Pension Plan Total 
 Balance, December 31 $ ( 7,985 ) $ ( 38 ) $ ( 8,023 ) $ ( 20,958 ) $ ( 397 ) $ ( 21,355 ) 
 OCI before reclassifications ( 724 ) — ( 724 ) 5,014 — 5,014 
 Tax effect 145 — 145 ( 1,098 ) — ( 1,098 ) 
 OCI, net of tax ( 579 ) — ( 579 ) 3,916 — 3,916 
 Balance, March 31 $ ( 8,564 ) $ ( 38 ) $ ( 8,602 ) $ ( 17,042 ) $ ( 397 ) $ ( 17,439 ) 

 Included in OCI for the three-month periods ended March 31, 2026 and 2025 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 periods indicated: 
 
 
 
 
 
 
 

 
 Three Months Ended March 31 
 2026 2025 
 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 $ ( 33 ) $ ( 691 ) $ ( 724 ) $ ( 215 ) $ 5,229 $ 5,014 
 Tax effect — 145 145 — ( 1,098 ) ( 1,098 ) 
 Unrealized gains (losses), net of tax $ ( 33 ) $ ( 546 ) $ ( 579 ) $ ( 215 ) $ 4,131 $ 3,916 

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 Note 7 – Fair Value 
 Under fair value measurement and disclosure authoritative guidance, we group assets and liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value, based on the prioritization of inputs in the valuation techniques. These levels are: 
 
 Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets. 
 Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market. 
 Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. 

 The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. Transfers between measurement levels are recognized at the end of reporting periods. 
 Fair value measurement requires the use of an exit price notion which may differ from entrance pricing. Generally, we believe our assets and liabilities classified as Level 1 or Level 2 approximate an exit price notion. 
 Following is a description of the valuation methodologies, key inputs, and an indication of the level of the fair value hierarchy in which the assets or liabilities are classified. 
 AFS securities: AFS securities are recorded at fair value on a recurring basis. Level 1 fair value measurement is based upon quoted prices for identical instruments. Level 2 fair value measurement is based upon quoted prices for similar instruments. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss and liquidity assumptions. The values for Level 1 and Level 2 investment securities are generally obtained from an independent third party. On a quarterly basis, we compare the values provided to alternative pricing sources. 
 Loans held for investment: We do not record loans at fair value on a recurring basis. 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. 
 We review the net realizable values of the underlying collateral for collateral dependent loans on at least a quarterly basis for all loan types. To determine the collateral value, we utilize independent appraisals, broker price opinions, or internal evaluations. We review these valuations to determine whether an additional discount should be applied given the age of market information that may have been considered as well as other factors such as costs to sell an asset if it is determined that the collateral will be liquidated in connection with the ultimate settlement of the loan. We use these valuations to determine if any specific reserves or charge-offs are necessary. We may obtain new valuations in certain circumstances, including when there has been significant deterioration in the condition of the collateral, if the foreclosure process has begun, or if the existing valuation is deemed to be outdated. 
 
 
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 The following tables list the quantitative information about loans measured at fair value on a nonrecurring basis as of the dates indicated: 
 March 31, 2026 
 Valuation Technique Fair Value Unobservable Input Actual Range Weighted Average 
 Collateral Dependent Loans Discount applied to collateral: 
 Discounted value $ 4,116 Real Estate 20 % - 25 % 
 20 % 
 Liquor license 75 % 75 % 
 Furniture, fixtures & equipment 40 % 40 % 

 
 December 31, 2025 
 Valuation Technique Fair Value Unobservable Input Actual Range Weighted Average 
 Collateral Dependent Loans Discount applied to collateral: 
 Discounted value $ 4,319 Real Estate 20 % - 25 % 
 20 % 
 Liquor license 75 % 75 % 
 Furniture, fixtures & equipment 40 % 40 % 

 Collateral discount rates may have ranges to accommodate differences in the age of the independent appraisal, broker price opinion, or internal evaluation. 
 OMSR: OMSR (which are included in other assets) are subject to impairment testing. To test for impairment, we utilize a discounted cash flow analysis using interest rates and prepayment speed assumptions currently quoted for comparable instruments and discount rates. If the valuation model reflects a value less than the carrying value, OMSR are adjusted to fair value through a valuation allowance as determined by the model. As such, we classify OMSR subject to nonrecurring fair value adjustments as Level 3. 
 The following table lists the quantitative information about OMSR fair value measurement as of the dates indicated: 
 March 31, 2026 
 Valuation Technique Fair Value Unobservable Input Rate 
 Discounted cash flow $ 2,207 Constant prepayment rate 7 % 
 Discount rate 11 % 

 
 December 31, 2025 
 Valuation Technique Fair Value Unobservable Input Rate 
 Discounted cash flow $ 2,090 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. Although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement. 
 Estimated Fair Values of Financial Instruments Not Recorded at Fair Value in their Entirety on a Recurring Basis 
 Disclosure of the estimated fair values of financial instruments, which differ from carrying values, often requires the use of estimates. In cases where quoted market values in an active market are not available, we use present value techniques and other valuation methods to estimate the fair values of our financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. 
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 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 the dates indicated: 
 March 31, 2026 
 Carrying
Value Estimated
Fair Value Level 1 Level 2 Level 3 
 ASSETS 
 Cash and cash equivalents $ 50,105 $ 50,105 $ 50,105 $ — $ — 
 Mortgage loans HFS 360 366 — 366 — 
 Loans, net 1,544,927 1,509,640 — — 1,509,640 
 FHLB stock (1) 
 5,600 N/A — — — 
 Accrued interest receivable 9,486 9,486 9,486 — — 
 Equity securities without readily determinable fair values (1) 
 3,086 N/A — — — 
 LIABILITIES 
 Deposits without stated maturities 1,453,446 1,453,446 1,453,446 — — 
 Deposits with stated maturities 406,399 404,939 — 404,939 — 
 Short-term borrowings 113,530 109,883 — 109,883 — 
 FHLB advances — — — — — 
 Subordinated debt, net of unamortized issuance costs 
 29,537 29,452 — 29,452 — 
 Accrued interest payable 942 942 942 — — 

 
 December 31, 2025 
 Carrying
Value Estimated
Fair Value Level 1 Level 2 Level 3 
 ASSETS 
 Cash and cash equivalents $ 26,041 $ 26,041 $ 26,041 $ — $ — 
 Mortgage loans HFS 423 429 — 429 — 
 Loans, net 1,522,637 1,488,282 — — 1,488,282 
 FHLB stock (1) 
 5,600 N/A — — — 
 Accrued interest receivable 8,397 8,397 8,397 — — 
 Equity securities without readily determinable fair values (1) 
 3,086 N/A — — — 
 LIABILITIES 
 Deposits without stated maturities 1,409,589 1,409,589 1,409,589 — — 
 Deposits with stated maturities 410,065 409,191 — 409,191 — 
 Short-term borrowings 68,000 66,355 — 66,355 — 
 FHLB advances 45,000 45,004 — 45,004 — 
 Subordinated debt, net of unamortized issuance costs 
 29,514 29,095 — 29,095 — 
 Accrued interest payable 1,059 1,059 1,059 — — 

 (1) Due to the characteristics of equity securities without readily determinable fair values, they are not disclosed under a specific fair value hierarchy. When an impairment or write-down related to these securities is recorded, such amount would be classified as a nonrecurring Level 3 fair value adjustment. 
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 Financial Instruments Recorded at Fair Value 
 The table below presents the recorded amount of assets and liabilities measured at fair value on the dates indicated: 
 March 31, 2026 December 31, 2025 
 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 
 Recurring items 
 AFS securities 
 U.S. Treasury $ 158,363 $ — $ 158,363 $ — $ 197,534 $ — $ 197,534 $ — 
 States and political subdivisions 66,334 — 66,334 — 69,205 — 69,205 — 
 Auction rate money market preferred 2,380 — 2,380 — 2,413 — 2,413 — 
 Agency mortgage-backed securities 20,913 — 20,913 — 22,252 — 22,252 — 
 Agency collateralized mortgage obligations 238,816 — 238,816 — 200,466 — 200,466 — 
 Corporate 5,938 — 5,938 — 5,921 — 5,921 — 
 Total AFS securities 492,744 — 492,744 — 497,791 — 497,791 — 
 Nonrecurring items 
 Collateral dependent loans (net of ACL) 4,116 — — 4,116 4,319 — — 4,319 
 Foreclosed assets 573 — — 573 938 — — 938 
 Total $ 497,433 $ — $ 492,744 $ 4,689 $ 503,048 $ — $ 497,791 $ 5,257 
 Percent of assets and liabilities measured at fair value 0.00 % 99.06 % 0.94 % 0.00 % 98.95 % 1.05 % 

 We recorded impairments related to foreclosed assets of $ 0 and $ 63 for the three month periods ended March 31, 2026 and 2025, respectively. 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, 2026. 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. 
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 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 
 (Dollars in thousands except per share amounts and ratios, unless otherwise noted) 
 The following is management's discussion and analysis of our financial condition and results of operations for the unaudited periods covered by this Form 10-Q. This analysis should be read in conjunction with our 2025 Annual Report on Form 10-K and with the unaudited interim condensed consolidated financial statements and notes, beginning on page 4 of this Form 10-Q. Unless we state otherwise or the context otherwise requires, references in this Form 10-Q to “we,” “our,” “us,” and “the Corporation” refer to Isabella Bank Corporation, a Michigan corporation and registered financial holding company, our wholly-owned banking subsidiary, Isabella Bank, and our other consolidated subsidiaries. References to “the Bank” refer to Isabella Bank. 
 
 General 
 Isabella Bank Corporation is a registered financial holding company that was incorporated in September 1988 under Michigan law. The Corporation's wholly owned subsidiary, Isabella Bank, has 31 offices located throughout Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. The area includes significant agricultural production, manufacturing, retail, gaming and tourism, and several colleges and universities. 
 
 Forward-Looking Statements 
 This Form 10-Q contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “likely,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” and “annualized,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. 
 There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: 
 • Uncertainty or perceived instability in the banking industry as a whole; 
 • increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior; 
 • the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas, and its impact on market interest rates, the labor market, the economy as a whole, and credit quality; 
 • our ability to effectively execute our expansion strategy and manage our growth, including identifying and consummating suitable acquisitions; 
 • risks associated with concentrations of our business in market areas, loans secured by real estate, and public funds deposits as a percentage of total deposits; 
 • adverse changes in customer spending, borrowing, and savings habits; 
 • risks associated with our commercial loan portfolio and agricultural loan portfolio; 
 • risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area; 
 • damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; 
 • our ability to keep pace with technological change or difficulties we may experience when implementing new technologies; 
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 • cybersecurity risk, including cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of a cyber-attack; 
 • costs and effects of litigation, investigations or similar matters to which we may be subject; 
 • natural disasters, severe weather, acts of god, military conflicts (including the conflicts in the Middle East, the possible expansion of such conflicts and potential geopolitical and economic consequences), acts of terrorism, domestic civil unrest, geopolitical instability, public health outbreaks (such as coronavirus), other international or domestic calamities, and other events beyond our control, including as a result of in the policies of the current U.S. presidential administration or Congress; 
 • the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts and the resulting impact on the Corporation and its customers; 
 • compliance with governmental and regulatory requirements, including the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (“EGRRCPA”), and others relating to banking, consumer protection, securities and tax matters; 
 • changes in accounting principles and standards; 
 • changes in the laws, rules, regulations, interpretations or policies that apply to the Corporation’s business and operations, and any additional regulations, or repeals that may be forthcoming as a result thereof, which could cause the Corporation to incur additional costs and adversely affect the Corporation’s business environment, operations and financial results; and 
 • our ability to navigate the uncertain impacts of current and future governmental monetary and fiscal policies, including the current and future policies of the Board of Governors of the Federal Reserve System (“Federal Reserve”) and as a result of initiatives of the Trump administration. 
 The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Form 10-Q and the risk factors set forth in our 2025 Annual Report on Form 10-K. Because of these risks and other uncertainties, our actual future results, performance or achievements, or industry results, may be materially different from the results indicated by the forward-looking statements in this Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. Accordingly, you should not rely on any forward-looking statements, which represent our beliefs, assumptions, and estimates only as of the dates on which such forward-looking statements were made. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by applicable law. 
 
 Non-GAAP Financial Measures 
 Our accounting and reporting policies conform to GAAP and the prevailing practices in the financial services industry. However, we also evaluate our performance by reference to certain additional financial measures discussed in this Form 10-Q that we identify as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios, or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both. 
 Management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. However, there may be limits in the usefulness of these measures to investors. The way we calculate the non-GAAP financial measures that we discuss in this Form 10-Q may differ from that of other companies reporting measures with similar names. Investors should understand how such other banking organizations calculate their financial measures similar to, or with names like, the non-GAAP financial measures we have discussed in this Form 10-Q when comparing such non-GAAP financial measures. 
 As a result, the non-GAAP financial measures that we discuss in this Form 10-Q should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the 
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 manner in which we calculate the non-GAAP financial measures that we discuss in this report may differ from that of other companies reporting measures with similar names. 
 
 Available Information 
 The Corporation maintains an Internet web site at ir.isabellabank.com. The Corporation makes available, free of charge, on its web site (under ir.isabellabank.com/sec-filings/default) the Corporation’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Exchange Act as soon as reasonably practicable after the Corporation files such material with, or furnishes it to, the SEC. The Corporation also makes available, free of charge, through its web site (under ir.isabellabank.com/governance/governance-documents) links to the Corporation’s Code of Conduct and Business Ethics and the charters for its board committees. In addition, the SEC maintains an Internet site (at www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 
 The Corporation routinely posts important information for investors on its web site (under ir.isabellabank.com and, more specifically, under the News tab at ir.isabellabank.com/news). The Corporation intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Corporation’s web site, in addition to following the Corporation’s press releases, SEC filings, public conference calls, presentations and webcasts. 
 The information contained on, or that may be accessed through, the Corporation’s web site is not incorporated by reference into, and is not a part of, this Form 10-Q. 
 Reclassifications 
 Certain amounts reported in the interim 2025 consolidated financial statements have been reclassified to conform with the 2026 presentation. The most significant of these changes related to amounts that were previously reported as commercial and industrial loans being reclassified as commercial real estate loans. 
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 Executive Summary 
 Financial Condition (March 31, 2026 to December 31, 2025 comparison) 
 Total assets increased $42,508 to $2,251,956 as of March 31, 2026. This increase was primarily due to an increase of $23,103 in interest bearing cash and a $22,577 increase in loans. 
 The AFS securities portfolio decreased $5,047 to $492,744 as of March 31, 2026. The decrease was a result of maturities and principal paydowns of $53,053, offset by $48,918 in purchases. Net unrealized losses on AFS securities were $10,622 as of March 31, 2026, compared to $9,898 at December 31, 2025. Net unrealized losses as a percentage of the amortized cost of AFS securities were consistent compared to December 31, 2025, at 2%. 
 Loans increased $22,577 to $1,558,941 as of March 31, 2026. Adjusted loans (non-GAAP), which exclude advances to mortgage brokers, increased $27,170, primarily by growth in the commercial real estate and residential real estate portfolios of $20,885 and $10,453, respectively. Most residential originations were adjustable rate products, which are put on the balance sheet rather than sold in the secondary market. The consumer loan portfolio continues to decrease amid declining demand, competition, and our adherence to credit quality standards. Advances to mortgage brokers decreased $4,593 during the quarter due to lower participation demand from our counterparty. 
 The ACL increased $287 to $14,014 as of March 31, 2026. The increase is due to loan growth and an increase in loss rates driven by loans charged off during the quarter. Nonaccrual loans were $4,418 as of March 31, 2026 compared to $4,578 at December 31, 2025. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.37% at March 31, 2026, compared to 0.44% at year-end 2025. We believe that our credit quality remains strong. 
 Total deposits increased $40,191 to $1,859,845 as of March 31, 2026. The growth was primarily a result of new customer relationships and included a $40,913 increase in money market accounts and a $20,303 increase in savings deposits. The growth was offset by a $15,126 decline in noninterest bearing deposits and a $3,666 decline in certificates of deposit. 
 Total equity was $233,961, or $31.90 per share, at March 31, 2026 compared to $231,396, or $31.60 per share, as of December 31, 2025. Our tangible book value per share (non-GAAP) was $25.32 as of March 31, 2026, compared to $25.01 as of December 31, 2025. Net unrealized losses in the AFS securities portfolio reduced tangible book value per share (non-GAAP) by $1.17 and $1.09 for the respective periods. Share repurchases totaled 8,062 during the first three months of 2026 for a value of $402 at an average repurchase price of $49.86 per share. 
 We continue to have robust liquidity levels and capital. As of March 31, 2026, we had $817,775 of unencumbered sources of liquidity and strong consolidated capital ratios; the Tier 1 Leverage Ratio was 8.89%, Tier 1 risk-based capital was 11.71%, and Total risk-based capital was 14.01%. 
 Comparison of Operating Results for the three months ended March 31, 2026, and 2025, unless otherwise noted 
 Net income in first quarter 2026 was $4,992, or $0.68 per diluted share, compared with $3,949, or $0.53 per diluted share, in first quarter 2025. 
 Net interest income was $16,882 in first quarter 2026 and $14,525 in first quarter 2025, representing 3.33% and 3.06% of earning assets, or NIM on an FTE basis, respectively. The book yield from securities was 2.52% and 2.20% during the first quarters of 2026 and 2025, respectively. Our yield on loans expanded to 5.78% in first quarter 2026 from 5.71% in first quarter 2025. The increase in loan yields was primarily due to higher rates on new loans and variable rate commercial loans that continue to reprice. Our cost of interest-bearing liabilities in first quarter 2026 decreased to 2.14% from 2.26% in first quarter 2025 due to lower rates on money market and certificate of deposit products. 
 The provision for credit losses was $604 in first quarter 2026, driven by a $287 increase in the ACL on loans, net charge offs totaling $253, and an increase in the reserve for unfunded commitments. The provision for credit losses in first quarter 2025 was a credit of $107 due to the change in ACL on loans and $52 in net recoveries, offset by an increase in the reserve for unfunded commitments. 
 Noninterest income for the three months ended March 31, 2026 and 2025 was $4,361 and $3,528, respectively. Service charges and fees increased $398 as a result of internal initiatives designed to align our fees with the market. Wealth management fees grew $129 due to growth in assets under management since first quarter 2025. Earnings on BOLI policies increased $76 compared to first quarter 2025 due to additional investments in a separate account BOLI in 2025. Other noninterest income in 2026 includes a $131 gain related to a death benefit from a BOLI policy. 
 Noninterest expenses for the three-month period ended March 31, 2026 increased $1,363 in comparison to the same period in 2025. Compensation and benefit expenses increased $545, reflecting annual merit increases, incentives, and higher medical 
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 insurance claims compared to first quarter 2025. Other professional services increased $304 as a result of costs related to profitability initiatives and product implementation costs. 
 Income tax expense for the three months ended March 31, 2026 and 2025 was $985 and $912, respectively, while the ETR for the same periods was 16% and 19%, respectively. The ETR in the first three months of 2025 included a one-time tax expense totaling $166 due to the taxes owed from the lifetime earnings on BOLI policies that were surrendered during first quarter 2025. Excluding the one-time charge, the ETR was 15% for the first three months of 2025. 
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 Selected Financial Data (Unaudited) 
 The following table outlines our results of operations and provides certain performance measures as of the dates and for the periods indicated: 
 Three Months Ended 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 PER SHARE 
 Basic earnings $ 0.68 $ 0.64 $ 0.71 $ 0.68 $ 0.53 
 Diluted earnings 0.68 0.64 0.71 0.68 0.53 
 Dividends 0.28 0.28 0.28 0.28 0.28 
 Book value (1) 
 31.90 31.60 30.94 29.95 29.10 
 Tangible book value (1) (2) 
 25.32 25.01 24.37 23.39 22.58 
 Market price (1) 
 45.67 50.00 35.25 30.15 23.59 
 PERFORMANCE RATIOS 
 Return on average total assets 0.91 % 0.85 % 0.94 % 0.96 % 0.77 % 
 Return on average shareholders’ equity 8.58 % 8.04 % 9.28 % 9.19 % 7.48 % 
 Return on average tangible shareholders’ equity (2) 
 10.79 % 10.16 % 11.83 % 11.78 % 9.65 % 
 Net interest margin yield (FTE) 3.33 % 3.28 % 3.15 % 3.14 % 3.06 % 
 Efficiency ratio (2) 
 68.50 % 65.02 % 67.62 % 72.14 % 72.39 % 
 Loan to deposit ratio (1) 
 83.82 % 84.43 % 74.36 % 75.57 % 76.07 % 
 Shareholders’ equity to total assets (1) 
 10.39 % 10.47 % 10.06 % 10.23 % 10.25 % 
 Tangible shareholders’ equity to tangible assets (1) (2) 
 8.43 % 8.47 % 8.10 % 8.17 % 8.14 % 
 FINANCIAL DATA 
 Total assets (1) 
 $ 2,251,956 $ 2,209,448 $ 2,259,654 $ 2,156,168 $ 2,102,587 
 AFS securities (1) 
 492,744 497,791 511,970 500,560 513,040 
 Loans (1) 
 1,558,941 1,536,364 1,431,905 1,397,513 1,367,724 
 ACL (1) 
 14,014 13,727 13,149 12,977 12,735 
 Deposits (1) 
 1,859,845 1,819,654 1,925,602 1,849,376 1,797,909 
 Borrowed funds (1) 
 143,067 142,514 91,514 72,677 76,757 
 Shareholders' equity (1) 
 233,961 231,396 227,420 220,500 215,556 
 Wealth assets under management (1) 
 701,510 707,118 679,724 678,959 656,617 
 Net income 4,992 4,690 5,240 5,031 3,949 
 Interest income 25,129 25,278 24,882 23,242 22,633 
 Interest expense 8,247 8,550 8,720 8,113 8,108 
 Net interest income 16,882 16,728 16,162 15,129 14,525 
 Provision for (reversal of) credit losses 604 434 209 (1,099) (107) 
 Noninterest income 4,361 4,444 4,308 3,686 3,528 
 Noninterest expenses 14,662 13,921 13,985 13,745 13,299 

 (1) At end of period. 
 (2) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q. 
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 Average Balances, Interest Rates, and Net Interest Income 
 The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities as of the dates and for the periods indicated. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. FRB restricted equity holdings are included in other interest earning assets. 
 Three Months Ended 
 March 31, 2026 December 31, 2025 March 31, 2025 
 Average
Balance Tax
Equivalent
Interest Average
Yield /
Rate Average
Balance Tax
Equivalent
Interest Average
Yield /
Rate Average
Balance Tax
Equivalent
Interest Average
Yield /
Rate 
 INTEREST EARNING ASSETS 
 Loans (1) 
 $ 1,501,654 $ 21,464 5.78 % $ 1,493,654 $ 21,669 5.74 % $ 1,370,765 $ 19,348 5.71 % 
 AFS securities (2) (3) 
 498,254 3,126 2.52 % 515,050 3,186 2.47 % 514,479 2,827 2.20 % 
 FHLB stock 5,600 75 5.36 % 5,600 63 4.54 % 11,011 160 5.82 % 
 Federal funds sold 7 — 3.54 % 9 — 3.86 % 4 — 4.32 % 
 Other (4) 
 64,190 602 3.75 % 28,344 498 6.88 % 47,374 482 4.06 % 
 Total interest earning assets (3) 
 2,069,705 25,267 4.94 % 2,042,657 25,416 4.94 % 1,943,633 22,817 4.75 % 
 NONEARNING ASSETS 
 Allowance for credit losses (13,680) (13,213) (12,884) 
 Cash and demand deposits due from banks 23,113 23,239 23,899 
 Premises and equipment 29,110 29,009 27,962 
 Other assets 116,639 117,201 102,927 
 Total assets $ 2,224,887 $ 2,198,893 $ 2,085,537 
 INTEREST BEARING LIABILITIES 
 Interest bearing demand deposits $ 266,101 294 0.45 % $ 249,809 211 0.34 % $ 240,860 242 0.41 % 
 Money market deposits 464,438 2,719 2.37 % 449,129 2,900 2.56 % 460,663 2,929 2.58 % 
 Savings 291,413 488 0.68 % 282,306 498 0.70 % 286,364 538 0.76 % 
 Certificates of deposit 407,483 3,611 3.59 % 408,861 3,771 3.66 % 387,820 3,754 3.93 % 
 Short-term borrowings 86,885 736 3.44 % 67,521 587 3.45 % 43,563 341 3.18 % 
 FHLB advances 13,444 133 3.96 % 30,163 317 4.12 % 3,333 38 4.53 % 
 Subordinated debt, net of unamortized issuance costs 
 29,522 266 3.61 % 29,500 266 3.61 % 29,433 266 3.62 % 
 Total interest bearing liabilities 1,559,286 8,247 2.14 % 1,517,289 8,550 2.24 % 1,452,036 8,108 2.26 % 
 NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS’ EQUITY 
 Demand deposits 411,011 432,038 403,024 
 Other liabilities 18,653 18,182 16,265 
 Shareholders’ equity 235,937 231,384 214,212 
 Total liabilities and shareholders’ equity $ 2,224,887 $ 2,198,893 $ 2,085,537 
 Net interest income (FTE) (5) 
 $ 17,020 $ 16,866 $ 14,709 
 Net yield on interest earning assets (FTE) (5) 
 3.33 % 3.28 % 3.06 % 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 (1) Includes loans HFS and nonaccrual loans. 
 (2) Average balances for AFS securities are based on amortized cost. 
 (3) Includes FTE adjustments of $138, $138, and $184, respectively. 
 (4) Includes average interest bearing deposits with other banks, net of FRB daily cash letter. 
 (5) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q. 
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 Loans 
 The following table displays loan balances as of the dates indicated: 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 Commercial and industrial $ 225,369 $ 220,450 $ 218,132 $ 207,719 $ 205,172 
 Commercial real estate 660,643 639,758 626,642 614,383 596,282 
 Advances to mortgage brokers 72,083 76,676 5,056 3,005 3,015 
 Agricultural 96,969 102,109 97,794 96,842 94,359 
 Residential real estate 438,333 427,880 412,056 398,668 387,348 
 Consumer 65,544 69,491 72,225 76,896 81,548 
 Total $ 1,558,941 $ 1,536,364 $ 1,431,905 $ 1,397,513 $ 1,367,724 

 The following table presents the composition of our commercial real estate portfolio by industry as of the dates indicated: 
 March 31, 2026 December 31, 2025 
 Balance Percent of Total Balance Percent of Total 
 Investment and development $ 140,784 21.31 % $ 134,013 20.95 % 
 1-4 family residential investment 97,059 14.69 % 93,806 14.66 % 
 Hotels 92,326 13.98 % 90,571 14.16 % 
 Residential multifamily 76,549 11.59 % 71,695 11.21 % 
 Health care 59,582 9.02 % 59,573 9.31 % 
 Storage facilities 37,028 5.60 % 37,145 5.81 % 
 Retail trade 34,235 5.18 % 34,479 5.39 % 
 Manufacturing 18,083 2.74 % 18,281 2.86 % 
 Accommodation services 16,970 2.57 % 15,604 2.44 % 
 Construction 15,449 2.34 % 16,193 2.53 % 
 Educational services 10,433 1.58 % 10,582 1.65 % 
 Wholesale trade 11,173 1.69 % 11,123 1.74 % 
 Other 50,972 7.71 % 46,693 7.29 % 
 Total commercial real estate $ 660,643 100.00 % $ 639,758 100.00 % 

 Commercial real estate loans are subject to a varying degree of risk from changes in interest rates and economic conditions. To control these risks, we maintain strict underwriting standards, lending limits to a single borrower, loan to collateral value limits, and a defined market area. We also monitor and limit loan concentrations to specific industries. Our practices also include appropriate loan reviews, and monitoring of past due levels, concentrations, industry trends, and other qualitative factors. 
 
 Deposits 
 The following table displays deposit balances as of the dates indicated: 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 Noninterest bearing demand deposits $ 411,216 $ 426,342 $ 421,027 $ 493,477 $ 404,194 
 Interest bearing demand deposits 263,954 266,187 248,666 223,376 243,939 
 Money market deposits 477,544 436,631 558,212 446,845 473,138 
 Savings 300,732 280,429 292,899 289,746 286,399 
 Certificates of deposit 406,399 410,065 404,798 395,932 390,239 
 Total $ 1,859,845 $ 1,819,654 $ 1,925,602 $ 1,849,376 $ 1,797,909 

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 Asset Quality Analysis 
 The following table outlines our asset quality analysis as of the dates and for the periods indicated: 
 
 Three Months Ended 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 NONPERFORMING ASSETS 
 Commercial and industrial $ 508 $ 442 $ 16 $ 17 $ — 
 Commercial real estate 3,743 3,766 3,000 533 — 
 Agricultural — — — — — 
 Residential real estate 167 370 427 614 173 
 Consumer — — — — — 
 Total nonaccrual loans 4,418 4,578 3,443 1,164 173 
 Accruing loans past due 90 days or more — — 18 31 26 
 Total nonperforming loans 4,418 4,578 3,461 1,195 199 
 Foreclosed assets 573 938 1,018 667 649 
 Debt securities — — — — — 
 Total nonperforming assets $ 4,991 $ 5,516 $ 4,479 $ 1,862 $ 848 
 Nonperforming loans to total loans 0.28 % 0.30 % 0.24 % 0.09 % 0.01 % 
 Nonperforming assets to total assets 0.22 % 0.25 % 0.20 % 0.09 % 0.04 % 
 Nonaccrual loans to total loans 0.28 % 0.30 % 0.24 % 0.08 % 0.01 % 
 ACL as a % of nonaccrual loans 317.20 % 299.85 % 381.91 % N/M N/M 
 ALLOWANCE FOR CREDIT LOSSES 
 Allowance at beginning of period $ 13,727 $ 13,149 $ 12,977 $ 12,735 $ 12,895 
 Charge-offs 350 155 175 390 172 
 Recoveries 97 121 101 1,822 224 
 Net loan charge-offs (recoveries) 253 34 74 (1,432) (52) 
 Provision for (reversal of) credit losses - loans 540 612 246 (1,190) (212) 
 Allowance at end of period $ 14,014 $ 13,727 $ 13,149 $ 12,977 $ 12,735 
 ACL to loans 0.90 % 0.89 % 0.92 % 0.93 % 0.93 % 
 Reserve for unfunded commitments 557 493 671 708 617 
 Provision for (reversal of) credit losses - unfunded commitments 64 (178) (37) 91 105 
 Reserve to unfunded commitments 0.15 % 0.14 % 0.16 % 0.16 % 0.14 % 
 NET LOAN CHARGE-OFFS (RECOVERIES) 
 Commercial and industrial $ (1) $ 8 $ (6) $ 68 $ (80) 
 Commercial real estate 133 (4) (4) (50) (2) 
 Agricultural — (4) — — — 
 Residential real estate (14) (53) (16) (16) (13) 
 Consumer 135 87 100 (1,434) 43 
 Total $ 253 $ 34 $ 74 $ (1,432) $ (52) 
 Net (recoveries) charge-offs to average loans 0.02 % 0.00 % 0.01 % (0.10 %) 0.00 % 
 DELINQUENT AND NONACCRUAL LOANS 
 Accruing loans 30-89 days past due $ 5,786 $ 6,689 $ 500 $ 1,076 $ 5,555 
 Accruing loans past due 90 days or more — — 18 31 26 
 Total accruing past due loans 5,786 6,689 518 1,107 5,581 
 Nonaccrual loans 4,418 4,578 3,443 1,164 173 
 Total past due and nonaccrual loans $ 10,204 $ 11,267 $ 3,961 $ 2,271 $ 5,754 

 
 
 
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 Capital 
 Capital consists solely of common stock, retained earnings, and accumulated other comprehensive income (loss). We are authorized to raise capital through dividend reinvestment, employee and director stock purchases, and shareholder stock purchases. Pursuant to these authorizations, we issued 9,682 shares or $433 of common stock during the first three months of 2026, as compared to 17,332 shares or $419 of common stock during the same period in 2025. We offer the Directors Plan in which participants purchase stock units through deferred fees, in lieu of cash payments. Pursuant to this plan, we increased shareholders’ equity by $156 and $167 during the three-month periods ended March 31, 2026 and 2025, respectively. We also grant restricted stock awards pursuant to the RSP. Pursuant to this plan, we increased shareholders’ equity by $16 during the first three months of 2026, as compared to $7 during the same period in 2025. 
 We have publicly announced a common stock repurchase program. Pursuant to this repurchase program, we repurchased 8,062 shares or $402 of common stock during the first three months of 2026 and 45,582 shares or $1,145 of common stock during the first three months of 2025. As of March 31, 2026, we were authorized to repurchase up to an additional 453,210 shares of common stock under the repurchase program. 
 The FRB has established minimum risk-based capital guidelines. Pursuant to these guidelines, a framework has been established that assigns risk weights to each category of on and off-balance-sheet items to arrive at risk adjusted total assets. Regulatory capital is divided by the risk adjusted assets with the resulting ratio compared to the minimum standard to determine whether a corporation has adequate capital. As of March 31, 2026, we and the Bank were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since March 31, 2026 that would materially adversely change such capital classifications. From time to time, we may need to raise additional capital to support our and the Bank’s further growth and to maintain our “well capitalized” status. 
 The following table sets forth our consolidated capital ratios as of the dates indicated: 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 Common equity tier 1 capital 11.71 % 11.73 % 12.37 % 12.46 % 12.58 % 
 Tier 1 capital 11.71 % 11.73 % 12.37 % 12.46 % 12.58 % 
 Total capital 14.01 % 14.41 % 15.20 % 15.34 % 15.50 % 
 Tier 1 leverage 8.89 % 8.84 % 8.71 % 9.04 % 8.96 % 

 
 Liquidity 
 Liquidity is monitored regularly by our ALCO, which consists of members of senior management. The committee reviews projected cash flows, key ratios, and liquidity available from both primary and secondary sources. 
 Our primary sources of liquidity are retail deposits, cash and cash equivalents, and unencumbered AFS securities. Cash, cash equivalents and unencumbered AFS securities totaled $303,441, or 13.47% of assets, as of March 31, 2026, compared to $337,011, or 15.25%, as of December 31, 2025. The decrease in the amount and percentage of primary liquidity is primarily due to a decrease in AFS securities, offset by an increase in cash and cash equivalents. Liquidity is important for financial institutions because of their need to meet loan funding commitments, depositor withdrawal requests, and various other commitments including expansion of operations, investment opportunities, and payment of cash dividends. Based on these same factors, daily liquidity could vary significantly. 
 Our secondary sources include the ability to borrow from the FHLB, from the FRB, and through various correspondent banks in the form of federal funds purchased and lines of credit. These funding methods typically carry a higher interest rate than traditional market deposit accounts. Some borrowed funds, including FHLB advances, FRB Discount Window advances, and repurchase agreements, require us to pledge assets, typically in the form of AFS securities or loans, as collateral. As of March 31, 2026, we had available lines of credit of $397,670. 
 We monitor our daily liquidity position to meet our cash flow needs. We also forecast anticipated funding needs for changes in interest rates and economic conditions, the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits, and regulatory capital requirements. Our liquidity stress testing is designed with consideration of these and other factors that could pose undue risk to liquidity. 
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 Our liquidity position remained strong as of March 31, 2026, which is illustrated in the following table: 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 Total cash and cash equivalents $ 50,105 $ 26,041 $ 161,301 $ 108,554 $ 69,179 
 Brokered CD capacity 130,000 130,000 130,000 120,000 120,000 
 Available lines of credit 
 Federal funds lines with correspondent banks 93,000 93,000 93,000 93,000 93,000 
 FHLB borrowings 270,159 218,088 257,288 249,890 250,884 
 FRB Discount Window 29,511 29,428 29,267 29,084 28,940 
 Other lines of credit 5,000 5,000 5,000 5,000 5,000 
 Total available lines of credit 397,670 345,516 384,555 376,974 377,824 
 Unencumbered lendable value of FRB collateral, estimated (1) 
 240,000 280,000 300,000 320,000 340,000 
 Total cash and liquidity $ 817,775 $ 781,557 $ 975,856 $ 925,528 $ 907,003 
 
 Uninsured deposits $ 727,884 $ 695,537 $ 726,514 $ 726,240 $ 687,341 
 Coverage ratio of uninsured deposits with total cash and liquidity 112 % 112 % 134 % 127 % 132 % 

 (1) In cludes estimated unencumbered lendable value of FHLB collateral of $170,000 as of March 31, 2026. 
 
 Fair Value 
 We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. AFS securities, cash flow hedge derivative instruments and certain liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as mortgage loans AFS, collateral dependent loans, goodwill, foreclosed assets, OMSR, and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write downs of individual assets. 
 For further information regarding fair value measurements see “Note 7 – Fair Value” of our interim condensed consolidated financial statements included with this Form 10-Q. 
 
 Interest Rate Sensitivity and Market Risk 
 As a financial institution, our primary market risks are interest rate risk and liquidity risk. IRR is the exposure of our net interest income to changes in interest rates. IRR results from the difference in the maturity or repricing frequency of a financial institution's interest earning assets and its interest-bearing liabilities. Managing IRR is the fundamental method by which financial institutions earn income and create shareholder value. Excessive exposure to IRR could pose a significant risk to our earnings and capital. 
 The FRB has adopted a policy requiring banks to effectively manage the various risks that can have a material impact on safety and soundness. The risks include credit, interest rate, liquidity, operational, and reputational. We have policies, procedures, and internal controls for measuring and managing these risks. Specifically, our ALCO policy and procedures include defining acceptable types and terms of investments and funding sources, liquidity requirements, limits on investments in long-term assets, limiting the mismatch in repricing opportunities of assets and liabilities, and the frequency of measuring and reporting to our Board of Directors. 
 The primary technique to measure IRR is simulation analysis. Simulation analysis forecasts the effects on the balance sheet structure and net interest income under a variety of scenarios that incorporate changes in interest rates, the shape of yield curves, interest rate relationships, loan prepayments, and funding sources. These forecasts are compared against net interest income projected in a stable interest rate environment. While many assets and liabilities reprice either at maturity or in accordance with their contractual terms, several balance sheet components demonstrate characteristics that require an evaluation to more accurately reflect their repricing behavior. Key assumptions in the simulation analysis include prepayments on loans, probable calls of investment securities, changes in market conditions, loan volumes and loan pricing, deposit sensitivity, and customer preferences. These assumptions are inherently uncertain as they are subject to fluctuation and revision in a dynamic rate environment. As a result, the simulation analysis cannot precisely forecast the impact of rising and falling interest rates on net interest income. Actual results will differ from simulated results due to many other factors, including changes in balance 
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 sheet components, interest rate changes, changes in market conditions, and management strategies. We regularly monitor our projected net interest income sensitivity to ensure that it remains within established limits. 
 Gap analysis, the secondary method to measure IRR, measures the cash flows and/or the earliest repricing of our interest-bearing assets and liabilities. This analysis is useful for measuring trends in the repricing characteristics of the balance sheet. Significant assumptions are required in this process because of the embedded repricing options contained in assets and liabilities. Residential real estate and consumer loans allow the borrower to repay the balance prior to maturity without penalty, while commercial and agricultural loans may have prepayment penalties. The amount of prepayments is dependent upon many factors, including the interest rate of a given loan in comparison to the current offering rates, the level of home sales, and the overall availability of credit in the marketplace. Generally, a decrease in interest rates will result in an increase in cash flows from these assets. Savings and demand accounts may generally be withdrawn on request without prior notice. The timing of cash flows from these deposits is estimated based on historical experience. Certificates of deposit have penalties that discourage early withdrawals. 
 Gap analysis is also utilized as a method to measure interest rate sensitivity. Interest rate sensitivity is determined by the amount of earning assets and interest-bearing liabilities repricing within a specific time period, and their relative sensitivity to a change in interest rates. We strive to achieve reasonable stability in the net interest margin through periods of changing interest rates. 
 We do not believe there has been a material change in the nature or categories of our primary market risk exposure, or the particular markets that present the primary risk of loss. We do not know of or expect there to be any material change in the general nature of our primary market risk exposure in the near term, and we do not expect to make material changes to our market risk methods in the near term. We may change those methods in the future to adapt to changes in circumstances or to implement new techniques. 
 
 Contractual Obligations and Loan Commitments 
 We have various financial obligations, including contractual obligations and commitments related to deposits and borrowings, which may require future cash payments. We also have loan related commitments that may impact liquidity. The commitments include unused lines of credit, commercial and standby letters of credit, and commitments to grant loans. These commitments to grant loans include residential mortgage loans with the majority committed to be sold to the secondary market. Many of these commitments historically have expired without being drawn upon and do not necessarily represent our future cash requirements. 
 We are party to credit related financial instruments with off-balance-sheet risk. These financial instruments are entered into in the normal course of business to meet the financing needs of our customers. These financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The contractual or notional amounts of these instruments reflect the extent of involvement we have in a particular class of financial instrument. 
 Our exposure to credit-related loss in the event of nonperformance by the counterparties to the financial instruments for commitments to extend credit and standby letters of credit could be up to the contractual notional amount of those instruments. We use the same credit policies when analyzing the creditworthiness of counterparties as we do for extending loans to customers. No significant losses are anticipated as a result of these commitments. 
 
 
 
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 Reconciliation of Non-GAAP Financial Measures 
 The following tables provide a detailed analysis, and reconciliation for, our non-GAAP financial measures as of the dates and for the periods indicated: 
 Three Months Ended 
 March 31
2026 December 31
2025 September 30
2025 June 30
2025 March 31
2025 
 Loans $ 1,558,941 $ 1,536,364 $ 1,431,905 $ 1,397,513 $ 1,367,724 
 Advances to mortgage brokers 72,083 76,676 5,056 3,005 3,015 
 Adjusted loans $ 1,486,858 $ 1,459,688 $ 1,426,849 $ 1,394,508 $ 1,364,709 
 
 Total shareholders’ equity $ 233,961 $ 231,396 $ 227,420 $ 220,500 $ 215,556 
 Goodwill and other intangible assets 48,282 48,282 48,282 48,282 48,282 
 Tangible equity (A) 185,679 183,114 179,138 172,218 167,274 
 
 Common shares outstanding (1) 
 (B) 7,333,319 7,322,207 7,350,567 7,361,684 7,408,010 
 Tangible book value per share (A/B) $ 25.32 $ 25.01 $ 24.37 $ 23.39 $ 22.58 
 
 Noninterest expenses $ 14,662 $ 13,921 $ 13,985 $ 13,745 $ 13,299 
 Amortization of acquisition intangibles — — — — 1 
 Adjusted noninterest expense (C) $ 14,662 $ 13,921 $ 13,985 $ 13,745 $ 13,298 
 
 Net interest income $ 16,882 $ 16,728 $ 16,162 $ 15,129 $ 14,525 
 Tax equivalent adjustment for net interest margin 138 138 144 178 184 
 Net interest income (FTE) 17,020 16,866 16,306 15,307 14,709 
 Noninterest income 4,361 4,444 4,308 3,686 3,528 
 Tax equivalent adjustment for BOLI 94 102 98 63 78 
 Adjusted revenue (FTE) 21,475 21,412 20,712 19,056 18,315 
 
 Net gains (losses) on foreclosed assets 70 3 31 3 (55) 
 Adjusted revenue (D) $ 21,405 $ 21,409 $ 20,681 $ 19,053 $ 18,370 
 Efficiency ratio (C/D) 68.50 % 65.02 % 67.62 % 72.14 % 72.39 % 

 (1) Whole shares. 
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 Item 3. Quantitative and Qualitative Disclosures about Market Risk. 
 The information presented in the section captioned “Interest Rate Sensitivity and Market Risk” in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-Q is incorporated herein by reference. 
 
 Item 4. Controls and Procedures. 
 DISCLOSURE CONTROLS AND PROCEDURES 
 We carried out an evaluation, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of March 31, 2026, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of March 31, 2026, were effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. 
 CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING 
 During the most recent fiscal quarter, no change occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 
 
 
 
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 PART II – OTHER INFORMATION 
 
 Item 1. Legal Proceedings. 
 We are not involved in any material legal proceedings. We are involved in ordinary, routine litigation incidental to our business; however, no such routine proceedings are expected to result in any material adverse effect on operations, earnings, financial condition, or cash flows. 
 
 Item 1A. Risk Factors. 
 In evaluating an investment in any of our securities, investors should consider carefully, among other things, information under the heading “Forward-Looking Statements” in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-Q and the risk factors previously disclosed under the heading “Risk Factors” in Part I, Item 1A of our 2025 Annual Report on Form 10-K. Management believes there have been no material changes in the risk factors disclosed by the Corporation in Part I, Item 1A, “Risk Factors,” of the 2025 Annual Report on Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. 
 
 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities. 
 (A) None 
 (B) None 
 (C) Repurchases of Common Stock 
 We have adopted and publicly announced a common stock repurchase plan. The plan was last amended on April 30, 2025, to allow for the repurchase of an additional 500,000 shares of common stock after that date. These authorizations do not have expiration dates. As common shares are repurchased under this plan, they are retired with the status of authorized, but unissued, shares. 
 The following table provides information for the three-month period ended March 31, 2026, with respect to our common stock repurchase plan: 
 Common Shares Repurchased Total Number of Common Shares Purchased as Part of Publicly Announced Plan or Program Maximum Number of Common Shares That May Yet Be Purchased Under the Plans or Programs 
 Number Average Price
Per Common Share 
 December 31, 2025 461,272 
 January 1 - 31 3,834 $ 49.82 3,834 457,438 
 February 1 - 28 2,747 51.69 2,747 454,691 
 March 1 - 31 1,481 46.59 1,481 453,210 
 March 31, 2026 8,062 $ 49.86 8,062 453,210 

 
 Item 3. Defaults Upon Senior Securities. 
 Not applicable. 
 
 Item 4. Mine Safety Disclosures. 
 Not applicable. 
 
 Item 5. Other Information. 
 Securities Trading Plans of Executive Officers 
 During the fiscal quarter ended March 31, 2026, none of the Corporation’s directors or officers adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408 of Regulation S-K. 
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 Item 6. Exhibits. 
 (a) Exhibits 
 
 Exhibit Number Exhibits 
 
 3.1 Amended Articles of Incorporation (1) 
 
 3.2 Amendment to the Articles of Incorporation (2) 
 
 3.3 Amendment to the Articles of Incorporation (3) 
 
 3.4 
 Amendment to the Articles of Incorporation (4) 
 
 3.5 
 Amendment to the Articles of Incorporation (5) 
 
 3.6 
 Second Amended and Restated Bylaws, as amended on September 24, 2025 (6) 
 
 31.1 
 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Principal Executive Officer 
 
 31.2 
 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Principal Financial Officer 
 
 32 
 Section 1350 Certification of Principal Executive Officer and Principal Financial Officer 
 
 101.1* 101.INS (Inline XBRL Instance Document) 
 101.SCH (Inline XBRL Taxonomy Extension Schema Document) 
 101.CAL (Inline XBRL Calculation Linkbase Document) 
 101.LAB (Inline XBRL Taxonomy Label Linkbase Document) 
 101.DEF (Inline XBRL Taxonomy Linkbase Document) 
 101.PRE (Inline XBRL Taxonomy Presentation Linkbase Document) 
 104 Cover Page Interactive Data File 

 
 
 * In accordance with Rule 406T of Regulations S-T, the XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 
 
 (1) Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 12, 1991, and incorporated herein by reference 
 (2) Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 26, 1994, and incorporated herein by reference. 
 (3) Previously filed as an Exhibit to Isabella Bank Corporation Form 10-K, filed March 22, 2000, and incorporated herein by reference. 
 (4) Previously filed as an Exhibit to Isabella Bank Corporation Form 10-K, filed March 27, 2001, and incorporated herein by reference. 
 (5) Previously filed as an Exhibit to Isabella Bank Corporation Form 8-K, filed May 16, 2008, and incorporated herein by reference. 
 (6) Previously filed as an Exhibit to Isabella Bank Corporation Form 8-K, filed September 30, 2025, and incorporated herein by reference. 

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 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 thereunto duly authorized. 
 
 Isabella Bank Corporation 
 
 Date: May 6, 2026 /s/ Jerome E. Schwind 
 Jerome E. Schwind 
 President and Chief Executive Officer 
 (Principal Executive Officer) 
 
 Date: May 6, 2026 /s/ Gerald J. Ritzert 
 Gerald J. Ritzert 
 Chief Financial Officer 
 (Principal Financial Officer) 

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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
ISABELLA BANK CORP 10-Q
