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ISABELLA BANK CORP (ISBA)·Q3 2025 Earnings Summary

Executive Summary

  • ISBA delivered a clean beat on Q3 2025: diluted EPS of $0.71 vs S&P Global consensus of $0.63; revenue of $20.261M vs $19.800M consensus, driven by NIM expansion, higher noninterest income, and disciplined expense control . EPS +61% y/y and +4% q/q; NIM ticked up to 3.15% . Revenue/EPS consensus data from S&P Global.*
  • Net interest income rose 11.6% y/y to $16.162M as earning assets repriced faster than funding costs; noninterest income increased to $4.308M on fee initiatives and BOLI earnings .
  • Credit stayed solid: NPLs/loans rose to 0.24% (one CRE loan to nonaccrual), still low; provision normalized to $0.209M vs a credit last quarter, reflecting growth and reserve build .
  • Deposits grew 4% q/q (+$76M), aided by a large, short‑term not‑for‑profit deposit expected to leave by year‑end; core loans +2% q/q (+$32M), led by CRE and residential mortgages .
  • Near‑term stock catalyst: beat on EPS and revenue, visible NIM momentum, improving efficiency ratio, and tangible book value per share (TBV) accretion; management reiterated expectation for continued NIM expansion as loans reprice and funding costs stabilize . Consensus target price stands at $38.50.*

What Went Well and What Went Wrong

What Went Well

  • “Earning assets continued to reprice with low and stable funding costs, generating NIM growth,” with NIM at 3.15% vs 2.96% y/y; net interest income +11.6% y/y .
  • Noninterest income up to $4.308M (+22% y/y), driven by fee‑income initiatives (+$219K service charges), BOLI earnings (+$216K), and a $163K BOLI redemption gain; wealth fees also grew .
  • Efficiency improved materially to 67.51% (from 72.30% y/y), while ROA held ~0.94% and TBV/share increased to $24.37 (from $22.14 y/y) on OCI improvement and earnings .

What Went Wrong

  • Nonaccrual loans increased to $3.443M due to downgrading a single CRE loan; NPLs/loans rose to 0.24% from 0.09% in Q2 (still low in absolute terms) .
  • Q3 provision for credit losses normalized to $0.209M vs a $(1.099)M credit in Q2, reflecting reserve build as core loans grow and modest net charge‑offs ($74K) .
  • Some deposit growth is short‑term: a large not‑for‑profit deposit is expected to be withdrawn by year‑end, creating a potential funding mix headwind if not replaced .

Financial Results

P&L and Key Ratios (GAAP)

MetricQ3 2024Q2 2025Q3 2025
Net Interest Income ($M)$14.488 $15.129 $16.162
Noninterest Income ($M)$3.528 $3.686 $4.308
Provision for Credit Losses ($M)$0.946 $(1.099) $0.209
Net Income ($M)$3.281 $5.031 $5.240
Diluted EPS ($)$0.44 $0.68 $0.71
Net Interest Margin (FTE) (%)2.96% 3.14% 3.15%
Efficiency Ratio (%)72.30% 70.53% 67.51%
ROA (%)0.62% 0.96% 0.94%

Results vs. S&P Global Consensus (Q3 2025)

MetricConsensusActualSurprise
Diluted EPS ($)0.63*0.71*+0.08 (beat)*
Revenue ($M)19.800*20.261*+0.461 (beat)*
# of EPS / Revenue Estimates1 / 1*——

Values retrieved from S&P Global.*

Balance Sheet & Credit KPIs

MetricQ3 2024Q2 2025Q3 2025
Total Loans ($B)$1.424 $1.398 $1.432
Core Loans ($B)$1.348 $1.395 $1.427
Total Deposits ($B)$1.782 $1.849 $1.926
NPLs / Loans (%)0.04% 0.09% 0.24%
ACL / Gross Loans (%)0.89% 0.93% 0.92%
Gross Loan / Deposit Ratio (%)79.93% 75.57% 74.36%
Book Value / Share ($)28.63 29.95 30.94
Tangible BV / Share ($)22.14 23.39 24.37
CET1 (%)12.08% 12.46% 12.37%

Loan Portfolio Mix (Quarter‑End)

Category ($M)Mar 31 2025Jun 30 2025Sep 30 2025
Commercial & Industrial205.172 207.719 218.132
Commercial Real Estate596.282 614.383 626.642
Advances to Mortgage Brokers3.015 3.005 5.056
Agricultural94.359 96.842 97.794
Residential Real Estate387.348 398.668 412.056
Consumer81.548 76.896 72.225
Gross Loans1,367.724 1,397.513 1,431.905

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginNear‑term (2025)“NIM expected to continue to expand as loans reprice and funding costs stabilize” (Q2 commentary) Reiterated: NIM expected to continue to expand on repricing with stable funding costs Maintained
Deposits (specific large client)By year‑end 2025Large not‑for‑profit deposit expected to be withdrawn by year‑end Reiterated expectation of withdrawal by year‑end Maintained
Fee‑income initiatives2025Revenue enhancements expected to launch by end of Q3 (from Q1) Initiatives launched in Q3 to strengthen noninterest revenue Executed (from planned)
DividendQ3 2025$0.28 per share in prior quarters Declared $0.28 per share, payable Sept 30, 2025 Maintained
Share Repurchases2025Program active; 57,824 shares repurchased in Q2 at ~$26.03 19,096 shares repurchased in Q3 at ~ $32.00 avg price Continued execution

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript was filed; themes reflect management’s press release commentary.

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
NIM trajectoryNIM up to 3.06% (Q1); 3.14% (Q2); management expected further expansion as assets reprice and funding costs stabilize NIM 3.15%; expectation reiterated for continued expansion Improving, sustained
Deposits & funding costsDeposit growth with short‑term not‑for‑profit funds; funding costs easing (Q2) Deposits +$76M; reiterated that large deposit likely to leave by YE; funding costs 2.25% Stable costs, mix risk
Loan growthQ1/Q2: pipeline robust; growth led by commercial and residential; C&I/CRE growth q/q Core loans +$32M (+2%); growth in CRE and residential; consumer declining Balanced growth
Fee income & BOLIQ1: fee enhancements planned; BOLI restructure underway Fee initiatives launched; BOLI income higher; one‑time $163K BOLI gain Execution underway
Credit qualityRecoveries drove provision credits (Q1/Q2); very low NPLs NPLs rose on one CRE loan; overall credit still “strong”; ACL/loans ~0.92% Still strong, watch CRE
Capital & shareholder returnsTBV rising; repurchases ongoing; Nasdaq uplisting in May TBV/share $24.37; Q3 repurchases; uplisting supports liquidity Accretive, ongoing

Management Commentary

  • “Our strong third quarter results were driven by continued expansion in core loans and deposits… Earning assets continued to reprice with low and stable funding costs, generating NIM growth.” – Jerome Schwind, CEO .
  • “We launched initiatives to strengthen noninterest revenue through fee‑based income during the quarter, which coupled with noninterest expense control, have contributed to our overall financial performance.” .
  • “Our stock trading volume and price remain robust since uplisting our shares to the Nasdaq Capital Market earlier this year… Our financial results and stock performance position us well for growth and to continue to deliver long‑term value to our shareholders.” .

Q&A Highlights

  • No Q3 2025 earnings call transcript was available; no Q&A disclosures were filed. Management’s qualitative outlook on NIM, deposit dynamics, and fee initiatives is drawn from the press release .

Estimates Context

  • ISBA beat on both EPS and revenue in Q3 2025: $0.71 vs $0.63 EPS; $20.261M vs $19.800M revenue; both based on one covering estimate for each metric.*
  • Consensus target price stood at $38.50; qualitative recommendation text was not available.*
  • Given the beat and improving NIM/efficiency, Street EPS and NIM assumptions may drift modestly higher, though analysts will likely haircut funding mix given the expected year‑end outflow of a large not‑for‑profit deposit .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • NIM momentum is intact: 3.15% in Q3 with management reiterating further expansion as loans reprice and funding costs remain stable—key lever for 2026 EPS compounding .
  • Revenue diversification is improving: fee initiatives and BOLI restructuring lifted noninterest income; continued execution here can de‑risk the NII dependence .
  • Asset quality remains favorable despite a single CRE downgrade; loss content appears contained with modest net charge‑offs and ACL at ~0.92% of loans .
  • Deposit growth was strong but partly short‑term; monitor funding sustainability into Q4/Q1 as the large not‑for‑profit deposit is expected to exit .
  • Operating leverage is improving: efficiency ratio down to 67.5% and TBV/share up to $24.37; continued buybacks at accretive prices support per‑share value creation .
  • Tactical: The clean beat and NIM trajectory are near‑term positive catalysts; any Q4 funding mix normalization or incremental CRE headlines could introduce volatility .
  • Medium‑term: Visibility on NIM and fee income trajectory, along with disciplined credit, positions ISBA for steady ROA/ROE improvement and multiple support.

Additional Relevant Press Releases (Q3 2025)

  • Dividend: Declared $0.28 per share payable September 30, 2025 (annualized yield ~3.29% at $34.00 on Aug 27, 2025) .

Appendix: Source Documents Read

  • Q3 2025 8‑K 2.02 earnings press release (full document and schedules) .
  • Q2 2025 8‑K 2.02 earnings press release (for trend) .
  • Q1 2025 8‑K 2.02 earnings press release (for trend) .
  • Q3 2025 dividend announcement 8‑K and press release .