ISABELLA BANK CORP 10-Q

Item 1. Financial Statements. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (dollars in thousands) June 30, 2026 December 31, 2025 ASSETS Cash and cash equivalents $ 41,774 $ 26,041 Marketable securities AFS (amortized cost of $ 450,111 and $ 507,689 , respectively) 439,289 497,791 Mortgage loans HFS 410 423 Loans held for investment 1,589,672 1,536,364 Allowance for credit losses ( 14,479 ) ( 13,727 ) Loans, net 1,575,193 1,522,637 FHLB stock, at cost 5,600 5,600 Premises and equipment 28,894 29,000 Cash surrender value of BOLI 46,603 46,133 Goodwill and other intangible assets 48,282 48,282 Other assets 33,596 33,541 Total assets $ 2,219,641 $ 2,209,448 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Noninterest bearing demand deposits $ 414,018 $ 426,342 Interest bearing demand deposits 252,149 266,187 Money market deposits 453,478 436,631 Savings 300,867 280,429 Certificates of deposit 389,401 410,065 Total deposits 1,809,913 1,819,654 Short-term borrowings 116,012 68,000 FHLB advances — 45,000 Subordinated debt, net of unamortized issuance costs 29,559 29,514 Other liabilities 15,453 15,884 Total liabilities 1,970,937 1,978,052 Shareholders’ equity Common stock — no par value, 15,000,000 shares authorized: issued and outstanding 7,628,809 shares at June 30, 2026 and 7,322,207 shares at December 31, 2025 135,079 123,204 Shares to be issued for deferred compensation obligations 2,532 2,366 Retained earnings 119,844 113,849 Accumulated other comprehensive loss ( 8,751 ) ( 8,023 ) Total shareholders’ equity 248,704 231,396 Total liabilities and shareholders’ equity $ 2,219,641 $ 2,209,448 See notes to interim condensed consolidated financial statements (unaudited). 4 Table of Contents INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended June 30 Six Months Ended June 30 (dollars in thousands, except per share amounts) 2026 2025 2026 2025 Interest income Loans, including fees $ 22,607 $ 19,832 $ 44,071 $ 39,180 AFS securities Taxable 2,902 2,513 5,391 4,616 Nontaxable 470 519 969 1,059 FHLB stock 64 125 139 285 Federal funds sold and other 173 253 775 735 Total interest income 26,216 23,242 51,345 45,875 Interest expense Deposits 6,778 7,391 13,890 14,854 Short-term borrowings 1,007 324 1,743 665 FHLB advances 43 132 176 170 Subordinated debt 304 266 570 532 Total interest expense 8,132 8,113 16,379 16,221 Net interest income 18,084 15,129 34,966 29,654 Provision for (reversal of) credit losses 895 ( 1,099 ) 1,499 ( 1,206 ) Net interest income after provision for credit losses 17,189 16,228 33,467 30,860 Noninterest income Service charges and fees 2,440 1,936 4,717 3,810 Wealth management fees 1,216 1,084 2,324 2,063 Increase in the cash surrender value of BOLI 434 300 882 672 Net gain on sale of mortgage loans 15 47 48 77 Other 270 319 765 592 Total noninterest income 4,375 3,686 8,736 7,214 Noninterest expenses Compensation and benefits 8,147 7,496 16,075 14,879 Occupancy and equipment 2,890 2,650 5,730 5,250 Other professional services 807 863 1,822 1,574 ATM and debit card fees 629 555 1,187 1,041 Marketing 514 469 1,020 928 FDIC insurance premiums 288 267 594 570 Merger-related expenses 505 — 505 — Other 1,606 1,445 3,115 2,802 Total noninterest expenses 15,386 13,745 30,048 27,044 Income before income tax expense 6,178 6,169 12,155 11,030 Income tax expense 1,137 1,138 2,122 2,050 Net income $ 5,041 $ 5,031 $ 10,033 $ 8,980 Earnings per common share Basic $ 0.69 $ 0.68 $ 1.37 $ 1.21 Diluted 0.69 0.68 1.37 1.21 Cash dividends per common share 0.28 0.28 0.56 0.56 See notes to interim condensed consolidated financial statements (unaudited). 5 Table of Contents INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended June 30 Six Months Ended June 30 (dollars in thousands) 2026 2025 2026 2025 Net income $ 5,041 $ 5,031 $ 10,033 $ 8,980 Unrealized gains (losses) on AFS securities ( 200 ) 3,879 ( 924 ) 8,893 Tax effect (1) 51 ( 827 ) 196 ( 1,925 ) Unrealized gains (losses) on AFS securities, net of tax ( 149 ) 3,052 ( 728 ) 6,968 Comprehensive income $ 4,892 $ 8,083 $ 9,305 $ 15,948 (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 Table of Contents INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) Common Stock (dollars in thousands, except per share amounts) Common Shares Outstanding Amount Common Shares to be Issued for Deferred Compensation Obligations Retained Earnings Accumulated Other Comprehensive Income (Loss) Totals Beginning balance at March 31, 2025 7,408,010 $ 125,547 $ 2,508 $ 104,940 $ ( 17,439 ) $ 215,556 Comprehensive income (loss) — — — 5,031 3,052 8,083 Issuance of common stock 11,498 340 — — — 340 Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 211 ( 211 ) — — — Share-based payment awards under the Directors Plan — — 34 — — 34 Share-based compensation expense recognized in earnings under the RSP — 14 — — — 14 Common stock repurchased ( 57,824 ) ( 1,505 ) — — — ( 1,505 ) Cash dividends paid ($ 0.28 per common share) — — — ( 2,022 ) — ( 2,022 ) Ending balance at June 30, 2025 7,361,684 $ 124,607 $ 2,331 $ 107,949 $ ( 14,387 ) $ 220,500 Beginning balance at March 31, 2026 7,333,319 $ 123,251 $ 2,522 $ 116,790 $ ( 8,602 ) $ 233,961 Comprehensive income (loss) — — — 5,041 ( 149 ) 4,892 Issuance of common stock 300,594 12,015 — — — 12,015 Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 24 ( 24 ) — — — Share-based payment awards under the Directors Plan — — 34 — — 34 Share-based compensation expense recognized in earnings under the RSP — 13 — — — 13 Common stock repurchased ( 5,104 ) ( 224 ) — — — ( 224 ) Cash dividends paid ($ 0.28 per common share) — — — ( 1,987 ) — ( 1,987 ) Ending balance at June 30, 2026 7,628,809 $ 135,079 $ 2,532 $ 119,844 $ ( 8,751 ) $ 248,704 7 Table of Contents Common Stock (dollars in thousands, except per share amounts) Common Shares Outstanding Amount Common Shares to be Issued for Deferred Compensation Obligations Retained Earnings Accumulated Other Comprehensive Income (Loss) Totals Beginning balance at December 31, 2024 7,424,893 $ 126,224 $ 2,383 $ 103,024 $ ( 21,355 ) $ 210,276 Comprehensive income (loss) — — — 8,980 6,968 15,948 Issuance of common stock 28,830 759 — — — 759 Common stock issued for deferred compensation under the RSP 11,367 — — — — — Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 253 ( 253 ) — — — Share-based payment awards under the Directors Plan — — 201 — — 201 Share-based compensation expense recognized in earnings under the RSP — 21 — — — 21 Common stock repurchased ( 103,406 ) ( 2,650 ) — — — ( 2,650 ) Cash dividends paid ($ 0.56 per common share) — — — ( 4,055 ) — ( 4,055 ) Ending balance at June 30, 2025 7,361,684 $ 124,607 $ 2,331 $ 107,949 $ ( 14,387 ) $ 220,500 Beginning balance at December 31, 2025 7,322,207 $ 123,204 $ 2,366 $ 113,849 $ ( 8,023 ) $ 231,396 Comprehensive income (loss) — — — 10,033 ( 728 ) 9,305 Issuance of common stock 310,276 12,448 — — — 12,448 Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations — 24 ( 24 ) — — — Common stock issued for deferred compensation under the RSP 9,492 — — — — — Share-based payment awards under the Directors Plan — — 190 — — 190 Share-based compensation expense recognized in earnings under the RSP — 29 — — — 29 Common stock repurchased ( 13,166 ) ( 626 ) — — — ( 626 ) Cash dividends paid ($ 0.56 per common share) — — — ( 4,038 ) — ( 4,038 ) Ending balance at June 30, 2026 7,628,809 $ 135,079 $ 2,532 $ 119,844 $ ( 8,751 ) $ 248,704 See notes to interim condensed consolidated financial statements (unaudited). 8 Table of Contents INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30 (dollars in thousands) 2026 2025 Operating activities Net income $ 10,033 $ 8,980 Reconciliation of net income to net cash provided by operating activities Provision for (reversal of) credit losses 1,499 ( 1,206 ) Depreciation 1,141 1,072 Net amortization of AFS securities 181 543 Net gain on sale of mortgage loans ( 48 ) ( 77 ) Increase in the cash surrender value of BOLI, net of expenses ( 874 ) ( 667 ) Gains from redemption of BOLI policies ( 137 ) — Share-based payment awards 219 222 Origination of loans HFS ( 2,028 ) ( 3,018 ) Proceeds from loan sales 2,089 3,282 Net changes in: Other assets ( 212 ) 1,781 Other liabilities ( 381 ) 1,513 Net cash provided by operating activities 11,482 12,425 Investing activities Proceeds from maturities, calls and prepayments of AFS securities 121,763 47,819 Purchases of AFS securities ( 64,366 ) ( 51,000 ) Net change in loans HFI ( 54,153 ) 27,053 Purchases of premises and equipment ( 945 ) ( 1,584 ) Purchases of BOLI policies — ( 10,225 ) Proceeds from redemption of BOLI policies 541 — Proceeds from sale of FHLB stock — 7,162 Proceeds from sales of foreclosed assets 396 118 Low income housing tax credit investments ( 40 ) ( 3,767 ) Net cash provided by investing activities 3,196 15,576 Financing activities Net increase (decrease) in deposits ( 9,741 ) 102,316 Net increase (decrease) in short-term borrowings 48,012 ( 10,359 ) Net (decrease) in FHLB advances ( 45,000 ) ( 30,000 ) Cash dividends paid on common stock ( 4,038 ) ( 4,055 ) Proceeds from issuance of common stock 12,448 759 Common stock repurchased ( 626 ) ( 2,650 ) Net cash provided by financing activities 1,055 56,011 Increase (decrease) in cash and cash equivalents 15,733 84,012 Cash and cash equivalents at beginning of period 26,041 24,542 Cash and cash equivalents at end of period $ 41,774 $ 108,554 Supplemental cash flows information Interest paid $ 16,595 $ 16,335 Federal income taxes paid 3,810 400 Supplemental noncash information Transfers of loans to foreclosed assets 98 293 Transfers of foreclosed assets to premises and equipment 90 — See notes to interim condensed consolidated financial statements (unaudited). 9 Table of Contents NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 and six-month periods ended June 30, 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. Recent Developments On June 16, 2026, the Corporation and the Bank entered into an equity distribution agreement with Piper Sandler & Co., as sales agent, pursuant to which the Corporation may offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $ 30.0 million, including through “at-the-market” offerings and other permitted methods. The sales agent is entitled to a commission of up to 3.0 % of the gross sales price of the common stock sold in such offering. The Corporation is not obligated to sell any shares of its common stock pursuant to the equity distribution agreement, and may suspend or terminate sales thereunder at any time. Any shares sold will be issued pursuant to the Corporation’s effective shelf registration statement on Form S-3 and related prospectus supplement, and net proceeds, if any, are expected to be used for general corporate purposes, which may include, without limitation, contribution to the capital of the Bank to support its lending activities and growth. Please see Note 5 below for additional information about our at-the-market offering. On June 11, 2026, the Corporation, 401 Merger Sub, Inc., a Michigan corporation and a wholly owned subsidiary of the Corporation (“Merger Sub”), and Grand River Commerce, Inc. (“Grand River”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Grand River, with Grand River as the surviving entity (the “Merger”), and immediately following the Merger, Grand River will merge with and into the Corporation, with the Corporation as the surviving entity (the “Second Step Merger”). The Merger Agreement further provides that immediately following the Second Step Merger, Grand River Bank, a Michigan state-chartered member bank and wholly owned subsidiary of Grand River, will merge with and into the Bank, with the Bank as the surviving bank (the “Bank Merger” and, together with the Merger and the Second Step Merger, the “Transaction”). We expect to complete the Merger in the fourth quarter of 2026, subject to satisfaction of closing conditions, including receipt of customary required regulatory approvals and the approval of the Merger Agreement by the shareholders of Grand River. Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each voting and non-voting share of common stock of Grand River (“Grand River Common Stock”) issued and outstanding immediately prior to the Effective Time, other than certain shares held by Grand River or the Corporation or dissenting shares, will be converted into the right to receive, at the election of the holder thereof, and subject to adjustment and proration, as applicable, (i) an amount of cash equal to the quotient of (A) $ 18,262,391 (the “Aggregate Cash Consideration”), divided by (B) the product obtained by multiplying (x) the number of shares of Grand River Common Stock issued and outstanding as of the Effective Time by (y) 0.35 (the “Cash Conversion Number”), rounded to the nearest cent (the “Per Share Cash Consideration”), or (ii) the number of shares of common stock of the Corporation, no par value (“Isabella Common Stock”), multiplied by the Exchange Ratio (as defined below). The Exchange Ratio is defined in the Merger Agreement as a number, as adjusted, of shares of Isabella Common Stock equal to the quotient of (A) 839,003 shares of Isabella Common Stock, divided by (B) the difference of (1) the aggregate number of shares of Grand River Common Stock issued and outstanding immediately prior to the Effective Time, other than certain shares held by Grand River or the Corporation or dissenting shares, minus (2) the Cash Conversion Number, rounded to the nearest ten 10 Table of Contents thousandth (the “Per Share Stock Consideration”). The Per Share Cash Consideration and/or the Per Share Stock Consideration are sometimes referred to herein collectively as the “Merger Consideration.” Merger Consideration elections by Grand River shareholders will be subject to proration procedures whereby 65 % of the shares of Grand River Common Stock will be exchanged for the Per Share Stock Consideration and 35 % of the shares of Grand River common stock will be exchanged for the Per Share Cash Consideration. Based on the assumption of 9,136,529 shares of Grand River Common Stock issued and outstanding as of the Effective Time, the Per Share Cash Consideration to be paid is estimated to be approximately $ 5.71 and the Exchange Ratio is estimated to be approximately 0.1413 . At March 31, 2026, Grand River had approximately $ 511.7 million in total assets, $ 433.0 million in total loans and $ 438.9 million in total deposits. The pro forma company is projected to have approximately $ 2.7 billion in total assets. Identification and Classification of Merger-Related Expenses Merger-related expenses are costs incurred directly in connection with merger and acquisition activities and are expensed in the period in which the costs are incurred and services are received. The costs to issue equity securities associated with the Merger are netted against the value of the securities issued. Merger-related expenses are expected to include legal fees for negotiation and drafting of merger agreements, accounting and auditing fees related to due diligence and financial statement preparation, consulting fees for strategic advisory services specific to the merger, costs related to regulatory filings and compliance, expenses for integration planning and execution (including IT, systems integration, and contract terminations), severance and retention bonuses for employees affected by the Merger, and travel and accommodation expenses directly related to merger activities. Merger-related expenses of $ 505,000 recognized in second quarter 2026 primarily include consulting fees and legal fees. 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 June 30, 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 June 30, 2026 and the date our interim condensed consolidated financial statements were issued. 11 Table of Contents 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. 12 Table of Contents 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: June 30, 2026 December 31, 2025 (dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury $ 100,032 $ — $ 872 $ 99,160 $ 200,327 $ — $ 2,793 $ 197,534 States and political subdivisions 64,109 19 2,972 61,156 71,857 45 2,697 69,205 Auction rate money market preferred 3,200 — 781 2,419 3,200 — 787 2,413 Agency mortgage-backed securities 20,743 — 1,216 19,527 23,373 — 1,121 22,252 Agency collateralized mortgage obligations 27,541 — 1,740 25,801 30,312 — 1,518 28,794 Agency commercial mortgage-backed securities 228,036 267 3,188 225,115 172,170 1,149 1,647 171,672 Corporate 6,450 — 339 6,111 6,450 — 529 5,921 Total $ 450,111 $ 286 $ 11,108 $ 439,289 $ 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 $ 1.6 million and $ 1.7 million at June 30, 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. The amortized cost and fair value of AFS securities by contractual maturity as of June 30, 2026 are as follows: Maturing Securities with Variable Monthly Payments or Noncontractual Maturities (dollars in thousands) 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 $ 100,032 $ — $ — $ — $ — $ 100,032 States and political subdivisions 8,780 15,497 20,571 19,261 — 64,109 Auction rate money market preferred — — — — 3,200 3,200 Agency mortgage-backed securities — — — — 20,743 20,743 Agency collateralized mortgage obligations — — — — 27,541 27,541 Agency commercial mortgage-backed securities 6,871 148,499 72,666 — — 228,036 Corporate — 2,500 3,950 — — 6,450 Total amortized cost $ 115,683 $ 166,496 $ 97,187 $ 19,261 $ 51,484 $ 450,111 Fair value $ 114,739 $ 163,871 $ 95,248 $ 17,684 $ 47,747 $ 439,289 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. 13 Table of Contents The information in the following tables pertains to AFS securities with gross unrealized losses as of June 30, 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. June 30, 2026 Less Than Twelve Months Twelve Months or More (dollars in thousands) Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Total Unrealized Losses U.S. Treasury $ — $ — $ 872 $ 99,160 $ 872 States and political subdivisions 130 10,989 2,842 27,884 2,972 Auction rate money market preferred — — 781 2,419 781 Agency mortgage-backed securities — — 1,216 19,527 1,216 Agency collateralized mortgage obligations — — 1,740 25,801 1,740 Agency commercial mortgage-backed securities 1,232 110,180 1,956 82,866 3,188 Corporate — — 339 6,111 339 Total $ 1,362 $ 121,169 $ 9,746 $ 263,768 $ 11,108 Number of securities in an unrealized loss position: 36 140 176 December 31, 2025 Less Than Twelve Months Twelve Months or More (dollars in thousands) 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 — — 1,518 28,794 1,518 Agency commercial mortgage-backed securities 39 9,042 1,608 91,222 1,647 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 As of June 30, 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. 14 Table of Contents 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: June 30, 2026 December 31, 2025 (dollars in thousands) Balance Percent of Total Balance Percent of Total Commercial and industrial Secured $ 198,156 12.47 % $ 189,071 12.31 % Unsecured 33,434 2.10 % 31,379 2.04 % Total commercial and industrial 231,590 14.57 % 220,450 14.35 % Commercial real estate Commercial mortgage owner occupied 242,550 15.26 % 229,906 14.96 % Commercial mortgage non-owner occupied 223,980 14.09 % 223,984 14.58 % Commercial mortgage 1-4 family investor 106,150 6.68 % 101,400 6.60 % Commercial mortgage multifamily 100,591 6.31 % 84,468 5.50 % Total commercial real estate 673,271 42.34 % 639,758 41.64 % Advances to mortgage brokers 75,159 4.73 % 76,676 4.99 % Agricultural Agricultural mortgage 67,620 4.25 % 69,769 4.54 % Agricultural other 29,842 1.88 % 32,340 2.11 % Total agricultural 97,462 6.13 % 102,109 6.65 % Residential real estate Senior lien 388,931 24.47 % 372,287 24.23 % Junior lien 11,697 0.74 % 10,970 0.71 % Home equity lines of credit 49,364 3.11 % 44,623 2.91 % Total residential real estate 449,992 28.32 % 427,880 27.85 % Consumer Secured - direct 26,755 1.68 % 28,648 1.86 % Secured - indirect 32,001 2.01 % 37,456 2.44 % Unsecured 3,442 0.22 % 3,387 0.22 % Total consumer 62,198 3.91 % 69,491 4.52 % Total $ 1,589,672 100.00 % $ 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. 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 $ 6.0 million and $ 6.7 million at June 30, 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 $ 2.9 million and $ 3.0 million as of June 30, 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 15 Table of Contents credit exposure to any one borrower to $ 18.0 million. Borrowers with direct credit needs of more than $ 18.0 million 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 $ 1.5 million 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. 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. There have been no material changes to these policies in 2026. The following table summarizes nonaccrual loan data by class of loans as of the dates indicated: June 30, 2026 December 31, 2025 (dollars in thousands) Total Nonaccrual Loans Nonaccrual Loans with No ACL Total Nonaccrual Loans Nonaccrual Loans with No ACL Commercial and industrial Secured $ 623 $ 200 $ 442 $ — Commercial real estate Commercial mortgage owner occupied 726 — 766 — Commercial mortgage 1-4 family investor 3,002 3,002 3,000 3,000 Agricultural Agricultural mortgage 919 919 — — Agricultural other 1,948 1,948 — — Residential real estate Senior lien 572 572 370 370 Total $ 7,790 $ 6,641 $ 4,578 $ 3,370 16 Table of Contents The following tables summarize the past due and current loans for the entire loan portfolio as of the dates indicated: June 30, 2026 Past Due: Accruing Loans 90 or More Days Past Due (dollars in thousands) 30-59 Days 60-89 Days 90 Days or More Current Total Commercial and industrial Secured $ 51 $ — $ — $ 198,105 $ 198,156 $ — Unsecured 25 — — 33,409 33,434 — Total commercial and industrial 76 — — 231,514 231,590 — Commercial real estate Commercial mortgage owner occupied — — — 242,550 242,550 — Commercial mortgage non-owner occupied 136 — — 223,844 223,980 — Commercial mortgage 1-4 family investor — — 3,002 103,148 106,150 — Commercial mortgage multifamily — — — 100,591 100,591 — Total commercial real estate 136 — 3,002 670,133 673,271 — Advances to mortgage brokers — — — 75,159 75,159 — Agricultural Agricultural mortgage 855 — — 66,765 67,620 — Agricultural other 1,100 776 — 27,966 29,842 — Total agricultural 1,955 776 — 94,731 97,462 — Residential real estate Senior lien 14 433 312 388,172 388,931 — Junior lien — — — 11,697 11,697 — Home equity lines of credit 88 — — 49,276 49,364 — Total residential real estate 102 433 312 449,145 449,992 — Consumer Secured - direct 27 — — 26,728 26,755 — Secured - indirect 45 25 — 31,931 32,001 — Unsecured 32 — — 3,410 3,442 — Total consumer 104 25 — 62,069 62,198 — Total $ 2,373 $ 1,234 $ 3,314 $ 1,582,751 $ 1,589,672 $ — 17 Table of Contents December 31, 2025 Past Due: Accruing Loans 90 or More Days Past Due (dollars in thousands) 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 $ — 18 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. There have been no material changes to the risk rating definitions in 2026. The following tables display commercial and agricultural loans by credit risk ratings and year of origination as of the dates indicated: June 30, 2026 (dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Commercial and industrial: Secured Risk ratings 1-3 $ 4,709 $ 530 $ 9,263 $ 9,104 $ 1,310 $ 4,649 $ 42,167 $ — $ 71,732 Risk rating 4 17,063 16,363 14,750 9,295 3,765 4,193 33,901 — 99,330 Risk rating 5 700 1,108 2,148 142 14,996 27 4,132 — 23,253 Risk rating 6 126 — 64 19 — 4 3,005 — 3,218 Risk rating 7 150 — 423 — — — 50 — 623 Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 22,748 $ 18,001 $ 26,648 $ 18,560 $ 20,071 $ 8,873 $ 83,255 $ — $ 198,156 2026 year-to-date gross charge-offs $ — $ 24 $ — $ — $ — $ — $ 1 $ — $ 25 Commercial and industrial: Unsecured Risk ratings 1-3 $ 432 $ 798 $ — $ 1,743 $ 341 $ — $ 2,860 $ — $ 6,174 Risk rating 4 3,808 8,862 704 594 463 200 10,668 — 25,299 Risk rating 5 — 7 8 59 — 450 1,335 — 1,859 Risk rating 6 — 18 74 — — 10 — — 102 Risk rating 7 — — — — — — — — — Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 4,240 $ 9,685 $ 786 $ 2,396 $ 804 $ 660 $ 14,863 $ — $ 33,434 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ 23 $ — $ 23 Commercial real estate: Owner occupied Risk ratings 1-3 $ 1,200 $ 5,353 $ 3,647 $ 8,330 $ 1,336 $ 32,123 $ 1,172 $ — $ 53,161 Risk rating 4 13,877 39,154 30,959 18,922 26,217 46,808 3,458 — 179,395 Risk rating 5 — 1,814 1,040 530 976 3,141 387 — 7,888 Risk rating 6 — — 1,312 — — 69 — — 1,381 Risk rating 7 — — 725 — — — — — 725 Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 15,077 $ 46,321 $ 37,683 $ 27,782 $ 28,529 $ 82,141 $ 5,017 $ — $ 242,550 2026 year-to-date gross charge-offs $ — $ — $ — $ 154 $ — $ — $ — $ — $ 154 19 Table of Contents June 30, 2026 (dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Commercial real estate: Non-owner occupied Risk ratings 1-3 $ 6,115 $ 4,185 $ 253 $ 712 $ 5,768 $ 4,836 $ 138 $ — $ 22,007 Risk rating 4 13,868 24,717 7,072 20,335 43,396 53,933 1,223 — 164,544 Risk rating 5 5,795 247 9,816 8,671 9,994 2,365 500 — 37,388 Risk rating 6 — — — — — 41 — — 41 Risk rating 7 — — — — — — — — — Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 25,778 $ 29,149 $ 17,141 $ 29,718 $ 59,158 $ 61,175 $ 1,861 $ — $ 223,980 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: 1-4 family investor Risk ratings 1-3 $ 314 $ 735 $ 708 $ 221 $ 2,533 $ 2,183 $ 5,272 $ — $ 11,966 Risk rating 4 9,075 15,249 8,425 5,762 7,010 36,462 7,321 — 89,304 Risk rating 5 117 114 — 341 210 213 469 — 1,464 Risk rating 6 — — — 233 — 38 142 — 413 Risk rating 7 — 44 — 2,959 — — — — 3,003 Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 9,506 $ 16,142 $ 9,133 $ 9,516 $ 9,753 $ 38,896 $ 13,204 $ — $ 106,150 2026 year-to-date gross charge-offs $ — $ 134 $ 74 $ 23 $ — $ — $ — $ — $ 231 Commercial real estate: Multifamily Risk ratings 1-3 $ 8,930 $ — $ 869 $ — $ 1,555 $ 1,771 $ 188 $ — $ 13,313 Risk rating 4 8,349 20,880 5,950 922 18,315 28,483 220 — 83,119 Risk rating 5 — — 475 902 — 2,782 — — 4,159 Risk rating 6 — — — — — — — — — Risk rating 7 — — — — — — — — — Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 17,279 $ 20,880 $ 7,294 $ 1,824 $ 19,870 $ 33,036 $ 408 $ — $ 100,591 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Advances to mortgage brokers Risk ratings 1-3 $ 75,159 $ — $ — $ — $ — $ — $ — $ — $ 75,159 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Agricultural mortgage Risk ratings 1-3 $ 316 $ 2,566 $ 876 $ 539 $ 3,206 $ 5,208 $ 29 $ — $ 12,740 Risk rating 4 2,649 4,166 2,685 3,626 10,032 16,187 596 — 39,941 Risk rating 5 6,229 1,364 264 161 535 1,416 745 — 10,714 Risk rating 6 2,500 — — — — 806 — — 3,306 Risk rating 7 — — — — 855 64 — — 919 Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 11,694 $ 8,096 $ 3,825 $ 4,326 $ 14,628 $ 23,681 $ 1,370 $ — $ 67,620 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ 44 $ — $ — $ — $ 44 20 Table of Contents June 30, 2026 (dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Agricultural other Risk ratings 1-3 $ 323 $ 800 $ 316 $ 345 $ 562 $ 424 $ 4,309 $ — $ 7,079 Risk rating 4 1,387 1,363 600 614 419 330 9,943 — 14,656 Risk rating 5 14 668 20 107 20 904 2,989 — 4,722 Risk rating 6 1,350 — — — — — 87 — 1,437 Risk rating 7 — 1,876 — 72 — — — — 1,948 Risk rating 8 — — — — — — — — — Risk rating 9 — — — — — — — — — Total $ 3,074 $ 4,707 $ 936 $ 1,138 $ 1,001 $ 1,658 $ 17,328 $ — $ 29,842 2026 year-to-date gross charge-offs $ — $ 58 $ — $ — $ — $ — $ — $ — $ 58 December 31, 2025 (dollars in thousands) 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 $ — $ — $ 22 $ — $ — $ — $ — $ — $ 22 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 $ — $ 50 $ — $ — $ — $ — $ — $ — $ 50 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 $ — $ — $ — $ — $ — $ — $ — $ — $ — 21 Table of Contents December 31, 2025 (dollars in thousands) 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 $ — $ — $ — $ — $ — $ — $ — $ — $ — 22 Table of Contents December 31, 2025 (dollars in thousands) 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: June 30, 2026 (dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Residential real estate: Senior lien Current $ 35,742 $ 67,672 $ 50,477 $ 32,889 $ 39,266 $ 150,137 $ — $ 11,729 $ 387,912 Past due 30-89 days — — — — 249 198 — — 447 Past due 90 or more days — — — — — — — — — Nonaccrual — — 85 — 178 309 — — 572 Total $ 35,742 $ 67,672 $ 50,562 $ 32,889 $ 39,693 $ 150,644 $ — $ 11,729 $ 388,931 2026 year-to-date gross charge-offs $ — $ — $ 1 $ — $ — $ — $ — $ — $ 1 Residential real estate: Junior lien Current $ 1,835 $ 4,359 $ 2,937 $ 1,863 $ 432 $ 271 $ — $ — $ 11,697 Past due 30-89 days — — — — — — — — — Past due 90 or more days — — — — — — — — — Nonaccrual — — — — — — — — — Total $ 1,835 $ 4,359 $ 2,937 $ 1,863 $ 432 $ 271 $ — $ — $ 11,697 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Residential real estate: Home equity lines of credit Current $ — $ — $ — $ — $ — $ — $ 49,276 $ — $ 49,276 Past due 30-89 days — — — — — — 88 — 88 Past due 90 or more days — — — — — — — — — Nonaccrual — — — — — — — — — Total $ — $ — $ — $ — $ — $ — $ 49,364 $ — $ 49,364 2026 year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer: Secured - direct Current $ 5,002 $ 5,769 $ 4,936 $ 4,134 $ 3,137 $ 3,750 $ — $ — $ 26,728 Past due 30-89 days — — 20 — 7 — — — 27 Past due 90 or more days — — — — — — — — — Nonaccrual — — — — — — — — — Total $ 5,002 $ 5,769 $ 4,956 $ 4,134 $ 3,144 $ 3,750 $ — $ — $ 26,755 2026 year-to-date gross charge-offs $ — $ — $ 24 $ 66 $ 14 $ 3 $ — $ — $ 107 23 Table of Contents June 30, 2026 (dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Total Consumer: Secured - indirect Current $ 2,398 $ 3,321 $ 3,787 $ 11,348 $ 3,930 $ 7,147 $ — $ — $ 31,931 Past due 30-89 days — — 25 15 28 2 — — 70 Past due 90 or more days — — — — — — — — — Nonaccrual — — — — — — — — — Total $ 2,398 $ 3,321 $ 3,812 $ 11,363 $ 3,958 $ 7,149 $ — $ — $ 32,001 2026 year-to-date gross charge-offs $ — $ — $ — $ 50 $ — $ 24 $ — $ — $ 74 Consumer: Unsecured Current $ 965 $ 1,115 $ 377 $ 56 $ 23 $ 1 $ 873 $ — $ 3,410 Past due 30-89 days — 11 — — — — 21 — 32 Past due 90 or more days — — — — — — — — — Nonaccrual — — — — — — — — — Total $ 965 $ 1,126 $ 377 $ 56 $ 23 $ 1 $ 894 $ — $ 3,442 2026 year-to-date gross charge-offs $ 154 $ 33 $ 2 $ 3 $ — $ 1 $ 3 $ — $ 196 December 31, 2025 (dollars in thousands) 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 $ — $ — $ — $ — $ — $ — $ — $ — $ — 24 Table of Contents December 31, 2025 (dollars in thousands) 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 $ — $ 4 $ 33 $ 36 $ 9 $ 53 $ — $ — $ 135 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 $ 328 $ 1 $ 10 $ 1 $ 1 $ — $ — $ — $ 341 25 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 June 30, 2026 Interest Rate Reduction Other-Than-Insignificant Payment Delay Term Extension Interest Rate Reduction and Term Extension Other-Than-Insignificant Payment Delay and Term Extension (dollars in thousands) 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 Amortized Cost Basis % of Total Class of Financial Receivable Commercial and industrial Secured $ — 0.00 % $ 151 0.08 % $ 151 0.08 % $ 50 0.03 % $ 423 0.21 % Commercial real estate Commercial mortgage owner occupied 366 0.15 % 725 0.30 % — 0.00 % — 0.00 % — 0.00 % Commercial mortgage non-owner occupied — 0.00 % — 0.00 % 5,795 2.59 % — 0.00 % — 0.00 % Agricultural Agricultural mortgage 229 0.34 % — 0.00 % — 0.00 % — 0.00 % — 0.00 % Agricultural other — 0.00 % — 0.00 % 1,350 4.52 % — 0.00 % — 0.00 % Residential real estate Senior lien — 0.00 % 85 0.02 % — 0.00 % — 0.00 % — 0.00 % Total $ 595 $ 961 $ 7,296 $ 50 $ 423 26 Table of Contents Six Months Ended June 30, 2026 Interest Rate Reduction Other-Than-Insignificant Payment Delay Term Extension Interest Rate Reduction and Term Extension Other-Than-Insignificant Payment Delay and Term Extension (dollars in thousands) 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 Amortized Cost Basis % of Total Class of Financial Receivable Commercial and industrial Secured $ — 0.00 % $ 151 0.08 % $ 161 0.08 % $ 50 0.03 % $ 423 0.21 % Commercial real estate Commercial mortgage owner occupied 367 0.15 % 2,625 1.08 % — 0.00 % — 0.00 % — 0.00 % Commercial mortgage non-owner occupied — 0.00 % — 0.00 % 5,795 2.59 % — 0.00 % — 0.00 % Agricultural Agricultural mortgage 229 0.34 % — 0.00 % — 0.00 % — 0.00 % — 0.00 % Agricultural other — 0.00 % — 0.00 % 1,350 4.52 % — 0.00 % 1,100 3.69 % Residential real estate Senior lien — 0.00 % 85 0.02 % — 0.00 % — 0.00 % — 0.00 % Total $ 596 $ 2,861 $ 7,306 $ 50 $ 1,523 Three Months Ended June 30, 2025 Interest Rate Reduction Term Extension Other-Than-Insignificant Payment Delay and Term Extension (dollars in thousands) 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 $ 20 0.01 % $ 2,600 1.12 % $ 602 0.26 % Total $ 20 $ 2,600 $ 602 Six Months Ended June 30, 2025 Interest Rate Reduction Term Extension Other-Than-Insignificant Payment Delay and Term Extension (dollars in thousands) 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 $ 20 0.01 % $ 3,114 1.34 % $ 602 0.26 % Commercial real estate Commercial mortgage owner occupied — 0.00 % 1,511 0.85 % — 0.00 % Total $ 20 $ 4,625 $ 602 We do not modify any loans by forgiving principal or accrued interest. We had committed to advance $ 3,000 and $ 221,000 in additional funds to be disbursed in connection with modified loans as of June 30, 2026 and December 31, 2025, respectively, as displayed in the tables above. 27 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 June 30 2026 2025 (dollars in thousands) Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Commercial and industrial Secured 2.50 % 7 months 5.16 10.00 % 10 months 0.50 Commercial real estate Commercial mortgage owner occupied 1.30 % 7 months N/A N/A N/A N/A Commercial mortgage non-owner occupied N/A N/A 5.00 N/A N/A N/A Agricultural Agricultural mortgage 0.75 % N/A N/A N/A N/A N/A Agricultural other N/A N/A 0.67 N/A N/A N/A Residential real estate Senior lien N/A 3 months N/A N/A N/A N/A Six Months Ended June 30 2026 2025 (dollars in thousands) Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Weighted-Average Interest Rate Reduction Payment Delay Term Weighted-Average Term Extension (Years) Commercial and industrial Secured 2.50 % 7 months 5.13 10.00 % 10 months 1.04 Commercial real estate Commercial mortgage owner occupied 2.10 % 7 months N/A N/A N/A 15.00 Commercial mortgage non-owner occupied N/A N/A 5.00 N/A N/A N/A Agricultural Agricultural mortgage 0.75 % N/A N/A N/A N/A N/A Agricultural other N/A 6 months 0.53 N/A N/A N/A Residential real estate Senior lien N/A 3 months N/A N/A N/A N/A 28 Table of Contents 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: June 30, 2026 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Commercial and industrial Secured $ 864 $ — $ — $ — $ 864 Commercial real estate Commercial mortgage owner occupied 2,992 — — — 2,992 Commercial mortgage non-owner occupied 5,795 — — — 5,795 Agricultural Agricultural mortgage 563 855 — — 1,418 Agricultural other 1,350 1,100 776 — 3,226 Residential real estate Senior lien — — — 85 85 Total $ 11,564 $ 1,955 $ 776 $ 85 $ 14,380 June 30, 2025 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Commercial and industrial Secured $ 3,637 $ 99 $ — $ — $ 3,736 Commercial real estate Commercial mortgage owner occupied 2,852 — — — 2,852 Agricultural Agricultural mortgage 276 — — — 276 Agricultural other 132 — — — 132 Total $ 6,897 $ 99 $ — $ — $ 6,996 The following table summarizes the amortized cost basis of loans that defaulted in the three and six-month periods ended June 30, 2026 and were modified within 12 months prior to the default date. There were no loans that defaulted in the three and six-month period ended June 30, 2025 and were modified within 12 months prior to the default date. Modified loans, including those that have defaulted, are already included in the allowance for credit losses through the various methodologies used to estimate the allowance. As such, no modification to the allowance is recorded specifically due to a modified loan subsequently defaulting. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 (dollars in thousands) Other-Than-Insignificant Payment Delay Term Extension Other-Than-Insignificant Payment Delay and Term Extension Other-Than-Insignificant Payment Delay Term Extension Other-Than-Insignificant Payment Delay and Term Extension Commercial and industrial Secured $ — $ — $ — $ — $ — $ 423 Agricultural Agricultural mortgage 855 — — 855 — — Agricultural other — 776 1,100 — 776 1,100 Residential real estate Senior lien — — — 85 — — Total $ 855 $ 776 $ 1,100 $ 940 $ 776 $ 1,523 29 Table of Contents 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. There have been no material changes to the ACL methodology in 2026. 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 June 30, 2026 (dollars in thousands) Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total March 31, 2026 $ 1,146 $ 6,222 $ 300 $ 5,148 $ 1,198 $ 14,014 Charge-offs ( 45 ) ( 231 ) ( 102 ) — ( 185 ) ( 563 ) Recoveries 11 8 5 61 94 179 Provision for (reversal of) credit losses 70 664 67 20 28 849 June 30, 2026 $ 1,182 $ 6,663 $ 270 $ 5,229 $ 1,135 $ 14,479 Six Months Ended June 30, 2026 (dollars in thousands) 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 ( 48 ) ( 385 ) ( 102 ) ( 1 ) ( 377 ) ( 913 ) Recoveries 15 29 5 76 151 276 Provision for (reversal of) credit losses 79 1,070 40 95 105 1,389 June 30, 2026 $ 1,182 $ 6,663 $ 270 $ 5,229 $ 1,135 $ 14,479 30 Table of Contents Three Months Ended June 30, 2025 (dollars in thousands) Commercial and Industrial Commercial Real Estate Agricultural Residential Real Estate Consumer Total March 31, 2025 $ 1,239 $ 5,174 $ 266 $ 4,600 $ 1,456 $ 12,735 Charge-offs ( 72 ) — — — ( 318 ) ( 390 ) Recoveries 4 50 — 16 1,752 1,822 Provision for (reversal of) credit losses 147 53 50 57 ( 1,497 ) ( 1,190 ) June 30, 2025 $ 1,318 $ 5,277 $ 316 $ 4,673 $ 1,393 $ 12,977 Six Months Ended June 30, 2025 (dollars in thousands) 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 ( 72 ) — — ( 1 ) ( 489 ) ( 562 ) Recoveries 84 52 — 30 1,880 2,046 Provision for (reversal of) credit losses ( 10 ) 54 29 123 ( 1,598 ) ( 1,402 ) June 30, 2025 $ 1,318 $ 5,277 $ 316 $ 4,673 $ 1,393 $ 12,977 The following table illustrates the components of the ACL as of the dates indicated: (dollars in thousands) June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 ACL Individually evaluated $ 199 $ 227 $ 259 $ — $ — Collectively evaluated 14,280 13,787 13,468 13,149 12,977 Total $ 14,479 $ 14,014 $ 13,727 $ 13,149 $ 12,977 ACL to loans Individually evaluated 0.01 % 0.01 % 0.02 % 0.00 % 0.00 % Collectively evaluated 0.90 % 0.89 % 0.87 % 0.92 % 0.93 % Total 0.91 % 0.90 % 0.89 % 0.92 % 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: June 30, 2026 December 31, 2025 (dollars in thousands) Loan Balance Specific Allocation Loan Balance Specific Allocation Commercial and industrial $ 573 $ 74 $ 442 $ 95 Commercial real estate 3,684 125 3,766 164 Agricultural 2,731 — — — Residential real estate 572 — 370 — Consumer — — — — Total $ 7,560 $ 199 $ 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 June 30, 2026 include $ 7.6 million in collateral dependent loans secured by commercial real estate, agricultural real estate and equipment, commercial equipment, and residential real estate of $ 3.7 million, $ 2.7 million, $ 573,000 , and $ 572,000 , respectively. 31 Table of Contents 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 June 30 2026 2025 (dollars in thousands) 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 $ 116,012 $ 115,347 3.46 % $ 43,208 $ 40,802 3.14 % Federal funds purchased — 1 4.58 % — — 0.00 % FRB Discount Window — 275 3.75 % — 859 4.50 % Six Months Ended June 30 2026 2025 (dollars in thousands) 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 $ 116,012 $ 101,127 3.44 % $ 47,310 $ 42,150 3.18 % Federal funds purchased — 1 4.67 % — 11 5.43 % FRB Discount Window 3,700 250 3.14 % — 446 4.50 % 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 $ 143.6 million and $ 87.8 million as of June 30, 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: June 30, 2026 December 31, 2025 (dollars in thousands) Amount Rate Amount Rate Securities sold under agreements to repurchase without stated maturity dates $ 116,012 3.49 % $ 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: (dollars in thousands) June 30, 2026 December 31, 2025 Pledged to secure borrowed funds $ 447,298 $ 424,163 Pledged to secure repurchase agreements 143,628 87,752 Pledged for public deposits and for other purposes necessary or required by law 70,029 69,337 Total $ 660,955 $ 581,252 32 Table of Contents AFS securities pledged to repurchase agreements consisted of the following as of the dates indicated: (dollars in thousands) June 30, 2026 December 31, 2025 U.S. Treasury $ 19,712 $ 78,992 Agency mortgage-backed securities 6,198 6,928 Agency collateralized mortgage obligations 117,718 1,832 Total $ 143,628 $ 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 June 30, 2026, we had the ability to borrow up to an additional $ 403.0 million without pledging additional collateral. 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: June 30, 2026 December 31, 2025 (dollars in thousands) Amount Rate Amount Rate Fixed rate due 2026 $ — 0.00 % $ 45,000 3.92 % Subordinated notes We have $ 30 million in aggregate principal amount of 3.25 % Fixed-to-Floating Rate Subordinated Notes due 2031 (the "Notes"). The Notes initially had 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. As of June 15, 2026, the Notes are redeemable by us at any time at our option, in whole or in part. 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: June 30, 2026 December 31, 2025 (dollars in thousands) Amount Rate Amount Rate Fixed rate at 3.25 % to floating, due 2031 $ 30,000 6.23 % $ 30,000 3.25 % Unamortized issuance costs ( 441 ) ( 486 ) Total subordinated debt, net $ 29,559 $ 29,514 33 Table of Contents 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. Pursuant to the Corporation’s at-the-market offering, we issued and sold 303,371 shares of common stock during the six months ended June 30, 2026, increasing equity by $ 11.7 million as of June 30, 2026. Earnings per common share have been computed based on the following for the periods indicated: Three Months Ended June 30 Six Months Ended June 30 (dollars in thousands, except per share amounts) 2026 2025 2026 2025 Average number of common shares outstanding for basic calculation 7,330,929 7,383,338 7,324,794 7,400,370 Dilutive effect of stock compensation, awards, and options 6,449 14,771 7,284 13,604 Average number of common shares outstanding used to calculate diluted earnings per common share 7,337,378 7,398,109 7,332,078 7,413,974 Net income $ 5,041 $ 5,031 $ 10,033 $ 8,980 Earnings per common share Basic $ 0.69 $ 0.68 $ 1.37 $ 1.21 Diluted 0.69 0.68 1.37 1.21 34 Table of Contents Note 6 – Capital Ratios and Shareholders' Equity As of June 30, 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: June 30, 2026 Actual Minimum Capital Required Plus Capital Conservation Buffer Minimum Capital Required To Be Considered Well Capitalized (1) (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity Tier 1 capital to risk weighted assets Isabella Bank $ 194,064 11.49 % $ 118,197 7.00 % $ 109,754 6.50 % Consolidated 209,173 12.34 % 118,619 7.00 % N/A N/A Tier 1 capital to risk weighted assets Isabella Bank 194,064 11.49 % 143,525 8.50 % 135,082 8.00 % Consolidated 209,173 12.34 % 144,037 8.50 % N/A N/A Total capital to risk weighted assets Isabella Bank 209,147 12.39 % 177,295 10.50 % 168,853 10.00 % Consolidated 247,903 14.63 % 177,928 10.50 % N/A N/A Tier 1 capital to average assets Isabella Bank 194,064 8.93 % 86,910 4.00 % 108,638 5.00 % Consolidated 209,173 9.59 % 87,235 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) (dollars in thousands) 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 June 30, 2026, the Bank exceeded all minimum Basel III risk-based capital requirements with the capital conservation buffer. 35 Table of Contents 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 June 30 2026 2025 (dollars in thousands) Unrealized Gains (Losses) on AFS Securities Defined Benefit Pension Plan Total Unrealized Gains (Losses) on AFS Securities Defined Benefit Pension Plan Total March 31 $ ( 8,564 ) $ ( 38 ) $ ( 8,602 ) $ ( 17,042 ) $ ( 397 ) $ ( 17,439 ) OCI before reclassifications ( 200 ) — ( 200 ) 3,879 — 3,879 Tax effect 51 — 51 ( 827 ) — ( 827 ) OCI, net of tax ( 149 ) — ( 149 ) 3,052 — 3,052 June 30 $ ( 8,713 ) $ ( 38 ) $ ( 8,751 ) $ ( 13,990 ) $ ( 397 ) $ ( 14,387 ) Six Months Ended June 30 2026 2025 (dollars in thousands) Unrealized Gains (Losses) on AFS Securities Defined Benefit Pension Plan Total Unrealized Gains (Losses) on AFS Securities Defined Benefit Pension Plan Total December 31 $ ( 7,985 ) $ ( 38 ) $ ( 8,023 ) $ ( 20,958 ) $ ( 397 ) $ ( 21,355 ) OCI before reclassifications ( 924 ) — ( 924 ) 8,893 — 8,893 Tax effect 196 — 196 ( 1,925 ) — ( 1,925 ) OCI, net of tax ( 728 ) — ( 728 ) 6,968 — 6,968 June 30 $ ( 8,713 ) $ ( 38 ) $ ( 8,751 ) $ ( 13,990 ) $ ( 397 ) $ ( 14,387 ) Included in OCI for the three and six-month periods ended June 30, 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 June 30 2026 2025 (dollars in thousands) 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 $ 39 $ ( 239 ) $ ( 200 ) $ ( 64 ) $ 3,943 $ 3,879 Tax effect — 51 51 — ( 827 ) ( 827 ) Unrealized gains (losses), net of tax $ 39 $ ( 188 ) $ ( 149 ) $ ( 64 ) $ 3,116 $ 3,052 Six Months Ended June 30 2026 2025 (dollars in thousands) 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 $ 6 $ ( 930 ) $ ( 924 ) $ ( 279 ) $ 9,172 $ 8,893 Tax effect — 196 196 — ( 1,925 ) ( 1,925 ) Unrealized gains (losses), net of tax $ 6 $ ( 734 ) $ ( 728 ) $ ( 279 ) $ 7,247 $ 6,968 36 Table of Contents Note 7 – Revenue Our revenue is comprised primarily of interest income, service charges and fees, gains on the sale of loans and AFS securities, earnings on corporate owned life insurance policies, and other noninterest income. Other noninterest income is typically service and performance driven in nature and comprised primarily of investment and trust advisory fees. We recognize revenue, excluding interest income, in accordance with ASC 606, Revenue From Contracts with Customers. Revenue is recognized when our performance obligation has been satisfied according to our contractual obligation. We record receivables when revenue is unpaid and collectability is reasonably assured. Accounts receivable balances primarily represent amounts due from customers for which revenue has been recognized. Accounts receivable balances are recorded in the consolidated balance sheets in other assets. For the three and six month periods ended June 30, 2026 and 2025, we satisfied our performance obligations pursuant to contracts with customers. As a result, we have not recorded any contract assets or liabilities. We estimate no returns or allowances for the three and six month periods ended June 30, 2026 and 2025. Our contracts with customers define our performance obligations with clearly established pricing which did not require us to allocate or disaggregate revenue by performance obligation. A summary of revenue recognized for each major category of contracts with customers, subject to ASC 606, is as follows for the periods indicated: Three Months Ended June 30 Six Months Ended June 30 (dollars in thousands) 2026 2025 2026 2025 Debit card income $ 1,198 $ 995 $ 2,306 $ 1,977 Trust service fees 1,019 913 1,885 1,726 Customer overdraft fees 600 532 1,161 1,076 Service charges and fees related to deposit accounts 348 176 706 341 ATM income 294 278 544 507 Investment advisory fees 197 171 439 337 Other 152 134 305 235 A significant portion of our revenue consists of interest income which is not subject to the requirements set forth in ASC 606. 37 Table of Contents Note 8 – 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. 38 Table of Contents The following tables list the quantitative information about loans measured at fair value on a nonrecurring basis as of the dates indicated: (dollars in thousands) June 30, 2026 Valuation Technique Fair Value Unobservable Input Actual Range Weighted Average Collateral Dependent Loans Discount applied to collateral: Discounted value $ 7,361 Real Estate 20 % - 25 % 20 % Equipment 30 % - 35 % 30 % Cash crop inventory 40 % 40 % Liquor license 75 % 75 % Furniture, fixtures & equipment 40 % 40 % (dollars in thousands) 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: (dollars in thousands) June 30, 2026 Valuation Technique Fair Value Unobservable Input Rate Discounted cash flow $ 2,239 Constant prepayment rate 7 % Discount rate 11 % (dollars in thousands) 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. 39 Table of Contents 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: June 30, 2026 (dollars in thousands) Carrying Value Estimated Fair Value Level 1 Level 2 Level 3 ASSETS Cash and cash equivalents $ 41,774 $ 41,774 $ 41,774 $ — $ — Mortgage loans HFS 410 420 — 420 — Loans, net 1,575,193 1,549,164 — — 1,549,164 FHLB stock (1) 5,600 N/A — — — Accrued interest receivable 7,618 7,618 7,618 — — Equity securities without readily determinable fair values (1) 3,086 N/A — — — LIABILITIES Deposits without stated maturities 1,420,512 1,420,512 1,420,512 — — Deposits with stated maturities 389,401 387,273 — 387,273 — Short-term borrowings 116,012 112,804 — 112,804 — FHLB advances — — — — — Subordinated debt, net of unamortized issuance costs 29,559 29,203 — 29,203 — Accrued interest payable 806 806 806 — — December 31, 2025 (dollars in thousands) 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 FHLB stock and 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. 40 Table of Contents 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: June 30, 2026 December 31, 2025 (dollars in thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Recurring items AFS securities U.S. Treasury $ 99,160 $ — $ 99,160 $ — $ 197,534 $ — $ 197,534 $ — States and political subdivisions 61,156 — 61,156 — 69,205 — 69,205 — Auction rate money market preferred 2,419 — 2,419 — 2,413 — 2,413 — Agency mortgage-backed securities 19,527 — 19,527 — 22,252 — 22,252 — Agency collateralized mortgage obligations 25,801 — 25,801 — 28,794 — 28,794 — Agency commercial mortgage-backed securities 225,115 — 225,115 — 171,672 — 171,672 — Corporate 6,111 — 6,111 — 5,921 — 5,921 — Total AFS securities 439,289 — 439,289 — 497,791 — 497,791 — Nonrecurring items Collateral dependent loans (net of ACL) 7,361 — — 7,361 4,319 — — 4,319 OMSR 2,239 — — 2,239 2,090 — — 2,090 Foreclosed assets 620 — — 620 938 — — 938 Total $ 449,509 $ — $ 439,289 $ 10,220 $ 505,138 $ — $ 497,791 $ 7,347 Percent of assets and liabilities measured at fair value 0.00 % 97.73 % 2.27 % 0.00 % 98.55 % 1.45 % We recorded an impairment related to OMSR of $ 2,000 through earnings for each of the three and six month periods ended June 30, 2025. No impairments related to OMSR were recorded for the three and six periods ended June 30, 2026. We recorded impairments related to foreclosed assets of $ 0 and $ 63,000 for the three and six month periods ended June 30, 2025. No impairments related to foreclosed assets were recorded for the three and six periods ended June 30, 2026. 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 June 30, 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. 41 Table of Contents