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ISABELLA BANK Corp (ISBA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stable-to-improving core performance: diluted EPS was $0.54 (GAAP) and $0.52 core; net interest margin (FTE) expanded to 2.99% (from 2.98% in Q3 and 2.83% in Q4’23); noninterest income rose 13% YoY to $4.0M .
  • Credit quality remained solid: net charge-offs were $0.10M (0.01% of average loans), nonperforming loans/gross loans fell to 0.02% (from 0.04% in Q3 and 0.08% in Q4’23); ACL/loans at 0.91% .
  • Management pointed to 2025 tailwinds: repricing of low fixed-rate commercial loans, redeployment of >$70M of securities maturing in 2025, and initiatives to lift noninterest income mostly in 2H25 .
  • Dividend maintained at $0.28/share for Q1 2025 (4.55% annualized yield at $24.60 as of 2/26/25), signaling steady capital return while tangible book value was $21.82 at year-end .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expanded again to 2.99% in Q4 (2.98% in Q3; 2.83% in Q4’23), supported by higher loan yields (5.67% vs 5.20% in Q4’23) and stability in funding costs QoQ (2.38% vs 2.43% in Q3) .
    • Noninterest income grew 13% YoY to $4.0M, with stronger wealth fees (AUM +9% YoY in Q4) and other income benefits (security recovery, foreclosed asset gains) .
    • Asset quality strong: nonaccrual loans declined QoQ to $0.28M; nonperforming loans/gross loans fell to 0.02%; net charge-offs to average loans only 0.01% .
    • Quote: “Our financial performance is based on the strength of our core operations… net interest margin expanded again… and [we] continue to grow core loans while adhering to our disciplined credit culture.” — CEO Jerome Schwind .

  • What Went Wrong

    • Efficiency ratio elevated at 71.2% (improved QoQ but above the 60s target range for best-in-class community banks), reflecting higher compensation and medical claims YoY (+$1.2M) .
    • Tangible book value per share edged down to $21.82 from $22.14 in Q3 due to a higher AFS unrealized loss (5% of AFS vs 4% in Q3) as yields rose in Q4 .
    • Deposits decreased $34.8M QoQ (to $1.75B) on seasonal outflows from businesses/municipalities and funding of regional projects; deposit mix remains rate-sensitive (CDs +$4.0M QoQ) .

Financial Results

Quarterly trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Diluted EPS ($)$0.46 $0.44 $0.54
Core Diluted EPS ($)$0.46 $0.61 $0.52
Net Income ($MM)$3.48 $3.28 $4.00
Net Interest Income ($MM)$13.55 $14.49 $14.56
Noninterest Income ($MM)$3.61 $3.53 $3.97
NIM (FTE, %)2.85% 2.98% 2.99%
Efficiency Ratio (%)73.93% 72.30% 71.20%
Provision for Credit Losses ($MM)$0.17 $0.95 $0.38

Q4 vs prior quarter and prior year

MetricQ4 2023Q3 2024Q4 2024
Diluted EPS ($)$0.51 $0.44 $0.54
Net Income ($MM)$3.80 $3.28 $4.00
Net Interest Income ($MM)$13.61 $14.49 $14.56
Noninterest Income ($MM)$3.52 $3.53 $3.97
NIM (FTE, %)2.83% 2.98% 2.99%
Efficiency Ratio (%)68.41% 72.30% 71.20%
Provision for Credit Losses ($MM)$0.68 $0.95 $0.38

KPIs and balance sheet (end-of-period unless noted)

KPIQ2 2024Q3 2024Q4 2024
Loans ($B)$1.382B $1.424B $1.424B
Deposits ($B)$1.722B $1.782B $1.747B
Nonperforming Loans / Gross Loans (%)0.07% 0.04% 0.02%
ACL / Loans (%)0.95% 0.89% 0.91%
ROA (quarterly, %)0.68% 0.62% 0.76%
Efficiency Ratio (%)73.93% 72.30% 71.20%
Tangible BVPS ($)$20.60 $22.14 $21.82
Wealth AUM ($000s; avg)647,850 679,858 658,042

Notes:

  • Noninterest income in Q4 benefited from a $103k recovery on a previously written-down security and $74k net gains on foreclosed assets .
  • Funding costs stabilized QoQ (2.38% vs 2.43% in Q3) while loan yields increased to 5.67% (from 5.20% in Q4’23) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 2025$0.28 per share (run-rate from 2024) $0.28 per share declared; 4.55% annualized yield at $24.60 (2/26/25) Maintained
Noninterest income initiativesFY 2025 (2H)Not previously specified“Initiatives… will drive higher noninterest income, mostly in the second half of 2025.” Qualitative positive
Securities redeploymentFY 2025Not previously specified>$70M of securities expected to amortize/mature in 2025 for redeployment/paydowns Execution item (positive carry potential)
Loan repricing cadenceNext 4 years3–5 yr cadence disclosed in Q3Majority of below-market fixed-rate commercial loans will reprice to variable over next four years Clarified timeline

No formal numeric guidance was issued for revenue, margins, OpEx, OI&E, or tax rate in Q4 materials .

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available in our document set; thematic comparisons below use company press releases and 8-Ks.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Net interest margin trajectoryQ2: NIM inflected higher; 2.83% with asset yield lift; Q3: NIM 2.98% incl. 6 bps recovery benefit NIM 2.99%; expansion excluding Q3 recoveries; stable funding costs Improving
Loan repricing dynamicsQ2: Loan yield 5.49% (up YoY) Loan yield 5.67%; majority of below-market fixed-rate commercial loans to reprice over next 4 years Positive setup
Securities book and AOCIQ2: Unrealized losses ~6% of AFS; maturities over 6–30 months AFS unrealized loss 5% (up from 4% in Q3 as rates rose); >$70M maturing in 2025 Near-term headwind; medium-term tailwind
Deposits and mixQ2: Total deposits -2.6% QoQ; CDs up amid rate environment Q4: Deposits -$34.8M QoQ on seasonal/business outflows; CDs +$4.0M QoQ Seasonal noise; CD attraction persists
Credit qualityQ2–Q3: Nonaccruals and NPL ratios low; Q3 impacted by a single overdraft event (noninterest expense/provision) NPL/gross loans 0.02%; net charge-offs 0.01% of avg loans; ACL/loans 0.91% Strong/stable
Noninterest incomeQ2–Q3: Steady to improving wealth fees with higher AUM 13% YoY growth; plans for higher noninterest income in 2H25 Improving, more upside 2H25

Management Commentary

  • Strategy and momentum: “Our financial performance is based on the strength of our core operations and maintaining our earnings momentum… net interest margin expanded again… [and we] continue to grow core loans while adhering to our disciplined credit culture.” — CEO Jerome Schwind .
  • 2025 focus: “We enter 2025 looking forward to continued repricing of low fixed rate loans to variable rates, and the redeployment of more than $70 million of securities that will amortize and mature during the year… initiatives that will drive higher noninterest income, mostly in the second half of 2025.” — CEO Jerome Schwind .
  • Culture and service: Recognition as “Best Bank” across multiple counties supports customer franchise strength (Sept 2024–Jan 2025 awards) .

Q&A Highlights

  • No Q4 2024 earnings call transcript was found in our source set; therefore, Q&A themes, guidance clarifications, and tone shifts cannot be summarized.

Estimates Context

  • We attempted to retrieve Wall Street consensus (S&P Global Capital IQ) for Q4 2024 EPS and revenue but were unable to access data due to a daily request limit; as a result, comparisons to consensus are unavailable at this time [GetEstimates errors].
  • Given improving NIM, solid credit, and planned 2025 redeployment/fee initiatives, estimate revisions may tilt modestly upward for NII/NIM trajectory and 2H25 noninterest income, subject to rate path and deposit betas .

Key Takeaways for Investors

  • Core profitability is grinding higher: NIM expanded to 2.99% and efficiency ratio improved to 71.2%, with room for additional operating leverage as noninterest initiatives ramp in 2H25 .
  • Credit quality remains a differentiator: very low NPLs (0.02%) and minimal net charge-offs (0.01%), supporting capital preservation and dividend continuity .
  • 2025 catalysts: securities redeployment (> $70M), commercial loan repricing cadence, and fee initiatives should support NII and fee income resilience even if rates drift lower .
  • AOCI sensitivity persists near-term: Q4’s higher unrealized losses (5% of AFS) pressured TBVPS; duration roll-down through 2025 should be a tailwind as cash flows are reallocated to higher-yielding assets or used to pay down borrowings .
  • Deposit dynamics are seasonal but manageable: Q4 outflows were expected; continued CD growth indicates competitive positioning in rate-sensitive categories .
  • Dividend stability: Q1 2025 dividend maintained at $0.28; payout appears sustainable given earnings and risk profile, though TBVPS is still tied to AFS valuation swings .
  • Monitoring items: trajectory of deposit betas, operating expense discipline (medical claims normalization), and execution on 2H25 fee initiatives .

Appendix: Additional Detail

Asset quality snapshot (period-end)

MetricQ2 2024Q3 2024Q4 2024
Nonaccrual Loans ($000)994 547 282
NPL / Gross Loans (%)0.07% 0.04% 0.02%
Nonperforming Assets / Total Assets (%)0.08% 0.06% 0.04%
Net Charge-offs ($000)393 1,359 102
ACL ($000)13,095 12,635 12,895

Operating components (quarterly)

ComponentQ2 2024Q3 2024Q4 2024
Interest Income ($MM)$22.09 $23.34 $23.17
Interest Expense ($MM)$8.54 $8.85 $8.61
Net Interest Income ($MM)$13.55 $14.49 $14.56
Noninterest Income ($MM)$3.61 $3.53 $3.97
Noninterest Expense ($MM)$12.90 $13.23 $13.33

Dividend and capital

  • Q1 2025 dividend declared: $0.28 per share; 4.55% annualized yield at $24.60 (2/26/25 close) .
  • Tangible BVPS: $21.82 (Q4), down from $22.14 (Q3) on higher AFS unrealized losses in Q4; TBVPS reduced by $2.82 due to AFS valuation at 12/31/24 .

Sources

  • Q4 2024 press release and 8-K (Item 2.02; financial schedules) .
  • Q3 2024 press release and 8-K (trend comparison) .
  • Q2 2024 press release (trend comparison) .
  • Q1 2025 dividend press release .

Estimates

  • Consensus estimates (S&P Global Capital IQ) were unavailable due to a daily request limit; comparisons to consensus could not be provided at this time.