Executive Summary

Strong quarter with EPS of $0.64, up 33% YoY and 14% QoQ, supported by continued net interest margin (NIM) expansion to 3.40% and disciplined cost control; management called it “one of the most profitable quarters” in the company’s history .
Clear beats vs S&P Global consensus: EPS $0.64 vs $0.593*; revenue $30.97M* vs $26.35M*; drivers were higher asset yields as loans reprice and continued improvement in cost of funds amid core deposit growth *.
Asset quality remained strong (NCOs ~0.00%; NPLs still low at 0.19% of loans) despite a modest uptick in NPL dollars; capital strengthened (Tier 1 leverage 8.74%) .
Dividend raised 2.8% to $0.2275, marking the 31st consecutive annual increase; management to roll out a new three‑year strategic plan to guide next phase of profitable growth .
Near‑term stock catalysts: sustained NIM expansion, operating efficiency gains, and dividend growth; watch NPL normalization and CRE (office) exposure even as metrics remain conservative .
Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Margin expansion and core profitability: NIM rose to 3.40% (YoY +69 bps; QoQ +18 bps) and efficiency ratio improved to 63.11% (YoY ~490 bps better) .
- Deposit and loan growth with lower funding costs: deposits +2.5% YoY to $2.75B; loans +4.9% YoY to $2.66B; cost of interest‑bearing liabilities down vs last year (2.83% in Q3, 2.84% for 9M, −32 bps YoY) .
- Management execution and tone: CEO highlighted “one of the most profitable quarters” and ongoing momentum from leveraging recent investments and diversified model .
What Went Wrong
- NPLs increased modestly (to $5.2M; 0.19% of loans) vs $3.7M in Q2 and $2.9M in Q3’24, though still historically low; allowance coverage remains robust (ACL/NPL ~533%) .
- Noninterest expense rose sequentially (to $19.7M from $19.3M) on targeted growth investments (e.g., technology, personnel, marketing), partly offset by operating leverage improvements .
- CRE concentration remains elevated by design (51% of total loans); office is ~10.5% of CRE (~5.4% of total), which investors will continue to monitor in current market conditions .

Financial Results

Headline metrics and margins (oldest → newest)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Diluted EPS ($)	$0.48	$0.51	$0.56	$0.64
Net Interest Income – before provision ($M)	$21.59	$23.91	$25.71	$26.90
Noninterest Income ($M)	$3.96	$4.16	$3.94	$4.36
Net Interest Margin (%)	2.71%	3.03%	3.22%	3.40%
Efficiency Ratio (%)	67.98%	66.79%	64.93%	63.11%

Q3 2025 vs Consensus

Metric	Actual	Consensus	Surprise
EPS ($)	$0.64	$0.593*	+$0.047*
Revenue ($M)	$30.97*	$26.35*	+$4.62M*
Values retrieved from S&P Global.

Balance sheet and asset quality (period‑end)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Deposits ($B)	$2.685	$2.700	$2.710	$2.752
Loans, net ($B)	$2.513	$2.556	$2.600	$2.633
NPLs ($M)	$2.90	$4.49	$3.75	$5.16
NPLs/Total Loans (%)	0.11%	0.17%	0.14%	0.19%
Net Charge‑offs / Avg Loans (QTD)	0.00%	0.01%	0.00%	0.00%
Tier 1 Leverage Ratio (%)	8.04%	8.44%	8.50%	8.74%

CRE portfolio mix (Q3 2025)

CRE Category	Balance ($000s)	% of CRE	% of Total Loans
Industrial	277,274	20.5%	10.4%
Multi‑family	238,311	17.6%	9.0%
Retail	207,301	15.3%	7.8%
Hotels	173,411	12.8%	6.5%
Office	142,111	10.5%	5.4%
Total CRE	1,355,166	100.0%	51.0%

KPIs (quarterly)

KPI	Q3 2024	Q1 2025	Q2 2025	Q3 2025
ROA (%)	0.78%	0.85%	0.92%	1.05%
ROE (%)	7.93%	8.31%	8.88%	9.83%
Cost of Interest‑bearing Liabilities (%)	3.21%	2.76%	2.83%	2.83%
Net Interest Spread (%)	2.06%	2.43%	2.62%	2.79%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal financial guidance	FY/Q4 2025	None provided	None provided; management reiterated confidence in continued profitable growth and will develop a new 3‑year strategic plan .	Maintained (no numeric guidance)
Profitability outlook (qualitative)	2H 2025	None	Expect continued loan growth, stable asset quality, and further NIM expansion to support higher profitability in back half of 2025 .	Qualitative positive
Quarterly dividend	Q3 2025	$0.22125	$0.2275 (+2.8% YoY)	Raised

Note: Company highlights non‑GAAP metrics (efficiency ratio, tangible equity/TVPS); see definitions and reconciliations in the release .

Earnings Call Themes & Trends

No Q3’25 earnings call transcript was available as of this writing; themes below reflect management commentary from quarterly materials.

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Net interest margin trajectory	NIM grew 43 bps YoY to 3.03% in Q1; continued to 3.22% in Q2 on higher asset yields and improved cost of funds .	NIM reached 3.40% (YoY +69 bps); spread 2.79% .	Positive, accelerating
Deposit strategy / cost of funds	Focus on core deposit growth; cost of interest‑bearing liabilities 2.76% in Q1, 2.83% in Q2 .	2.83% in Q3; 9M cost improved 32 bps YoY to 2.84% .	Improving/stable
Asset quality	NPLs 0.17% in Q1; 0.14% in Q2; NCOs ~0.00% .	NPLs 0.19% (still low), NCOs ~0.00% .	Stable to modest uptick
CRE/Office exposure	Office ~5.4% of total loans with ~63% WA LTV (Q1) .	Office ~5.4% of total; continued portfolio diversification .	Closely monitored, stable mix
Market expansion	Product enhancements and talent adds (Q1/Q2) .	Opened second full‑service Michigan office (Troy); promoted Northern Indiana Market President .	Expansion continues
Capital returns	Dividend track record maintained (Q1/Q2) .	Dividend increased 2.8% YoY to $0.2275 .	Positive

Management Commentary

“Strong financial performance and sustained operating momentum during the 2025 third quarter produced one of the most profitable quarters in our 128‑year history.” — Lars B. Eller, President & CEO .
“We remain focused on growing core deposits… while we continue to actively manage our cost of funds… cost of interest‑bearing liabilities improved 32 basis points to 2.84% for the nine months ended September 30, 2025.” .
“Net charge‑offs to average loans have remained below 0.03% for 18 consecutive quarters, underscoring the strength… of our credit culture.” .
“This fall, we will begin developing a new three‑year strategic plan that will define our growth priorities and guide our next phase of success.” .

Q&A Highlights

No Q3 2025 earnings call transcript was available; no Q&A to report.

Estimates Context

Consensus (S&P Global) vs actuals — last three quarters

Metric	Q1 2025	Q2 2025	Q3 2025
EPS Consensus Mean ($)	0.423*	0.503*	0.593*
EPS Actual ($)	0.51	0.56	0.64
Revenue Consensus Mean ($)	22,854,330*	24,243,000*	26,350,000*
Revenue Actual ($)	27,574,000*	28,943,000*	30,973,000*
# of EPS Estimates	3*	3*	3*
# of Revenue Estimates	3*	3*	3*
Values retrieved from S&P Global.

Implications: Three consecutive beats on EPS and revenue suggest estimates likely move higher near‑term, particularly on NIM resilience and operating leverage; watch for any modest upward adjustments to FY run‑rate profitability assumptions given Q3 strength *.
Values retrieved from S&P Global.

Key Takeaways for Investors

Earnings momentum: NIM expansion and operating efficiency improved again, pushing EPS to $0.64 and ROA/ROE to 1.05%/9.83% — evidence of durable core profitability .
Balance sheet growth at disciplined costs: Loans +4.9% YoY; deposits +2.5% YoY; cost of interest‑bearing liabilities held at 2.83% in Q3 (2.84% for 9M, −32 bps YoY) .
Asset quality intact: NCOs ~0.00% and NPLs remain low (0.19% of loans), though slightly higher sequentially; coverage robust (ACL/NPL ~533%) .
Capital and capital returns: Tier 1 leverage at 8.74%; dividend increased 2.8%, marking 31st consecutive annual hike — supportive for total return investors .
Risk monitor: Elevated CRE concentration (51% of loans) with office ~5.4% of total; metrics remain conservative but sector remains a focus area for banks broadly .
Near‑term setup: With repeated estimate beats and continued NIM traction, estimate revisions and dividend growth are positive catalysts; maintain vigilance on NPL normalization and macro rate path *.
Values retrieved from S&P Global.

Note on sources and availability:

Q3 2025 earnings press release and 8‑K 2.02: full financials and management commentary -.
Prior quarters (Q1 and Q2 2025) press releases and 8‑Ks: full details for trend analysis - - -.
Dividend increase press release (Q3): details of payout change .
No Q3 2025 earnings call transcript was available as of this report.

Non‑GAAP note: Efficiency ratio and tangible book value per share are non‑GAAP; see company definitions and reconciliations in the release .

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