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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2026

or

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

For the transition period from                      to                     

Commission File Number: 0-18415

Isabella Bank Corporation

(Exact name of registrant as specified in its charter)

Michigan

38-2830092

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

401 N. Main St

Mt. Pleasant

MI

48858

(Address of principal executive offices)

(Zip code)

(989) 772-9471

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common stock, no par value per share			ISBA			The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐  Yes   ☒  No

The number of common shares outstanding of the registrant’s Common Stock (no par value) was 7,628,873 as of August 6, 2026.

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Table of Contents

ISABELLA BANK CORPORATION

QUARTERLY REPORT ON FORM 10-Q

Table of Contents

PART I – FINANCIAL INFORMATION

4

Item 1.

Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

42

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

57

Item 4.

Controls and Procedures

57

PART II – OTHER INFORMATION

58

Item 1.

Legal Proceedings

58

Item 1A.

Risk Factors

58

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

58

Item 3.

Defaults Upon Senior Securities

58

Item 4.

Mine Safety Disclosures

58

Item 5.

Other Information

58

Item 6.

Exhibits

59

SIGNATURES

60

2

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Table of Contents

Glossary of Acronyms and Abbreviations

The acronyms and abbreviations identified below may be used throughout this Quarterly Report on Form 10-Q for the three and six-month periods ended June 30, 2026 (this “Form 10-Q”) or in our other SEC filings. You may find it helpful to refer back to this page while reading this report.

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

3

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Table of Contents

PART I – FINANCIAL INFORMATION

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

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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

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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).

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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

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			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).

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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).

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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

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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.

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Pending Accounting Standards

ASU No. 2024-03: “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”

In November 2024, ASU No. 2024-03 was issued to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling general and administrative expense, and research and development). The new authoritative guidance is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, as clarified in ASU No. 2025-01 issued in January 2025. The new authoritative guidance under ASU No. 2024-03 is not expected to have a significant impact on our operations or financial statement disclosures.

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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.

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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.

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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

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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

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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					$	—

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			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					$	—

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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

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			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

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			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			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—

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			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			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—

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			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

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			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			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—

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			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

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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

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			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.

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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

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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

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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

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			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.

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Note 4 – Borrowed Funds

Short-term borrowings

Short-term borrowings include securities sold under repurchase agreements without stated maturity dates, federal funds purchased, and FRB Discount Window advances, which all generally mature within one to three days from the transaction date.

A summary of short-term borrowed funds without stated maturity dates was as follows for the periods indicated:

			Three Months Ended 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

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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

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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

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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.

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State banking regulations place certain restrictions on dividends paid by banks to their shareholders. Dividends paid by the Corporation’s bank subsidiary would be prohibited if the effect thereof would cause the bank subsidiary’s capital to be reduced below applicable minimum capital requirements.

The following table summarizes the changes in AOCI by component for the periods indicated:

			Three Months Ended 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

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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.

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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.

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The following tables list the quantitative information about loans measured at fair value on a nonrecurring basis as of the dates indicated:

(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.

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The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis were as follows as of the dates indicated:

			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.

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Financial Instruments Recorded at Fair Value

The table below presents the recorded amount of assets and liabilities measured at fair value on the dates indicated:

			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.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following is management's discussion and analysis of our financial condition and results of operations for the unaudited periods covered by this Form 10-Q. This analysis should be read in conjunction with our 2025 Annual Report on Form 10-K and with the unaudited interim condensed consolidated financial statements and notes, beginning on page 4 of this Form 10-Q. Unless we state otherwise or the context otherwise requires, references in this Form 10-Q to “we,” “our,” “us,” and “the Corporation” refer to Isabella Bank Corporation, a Michigan corporation and registered financial holding company, our wholly-owned banking subsidiary, Isabella Bank, and our other consolidated subsidiaries. References to “the Bank” refer to Isabella Bank.

General

Isabella Bank Corporation is a registered financial holding company that was incorporated in September 1988 under Michigan law. The Corporation's wholly owned subsidiary, Isabella Bank, has 31 offices located throughout Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. The area includes significant agricultural production, manufacturing, retail, gaming and tourism, and several colleges and universities.

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.

On June 11, 2026, the Corporation, 401 Merger Sub, Inc., a Michigan corporation and a wholly owned subsidiary of the Corporation, and Grand River, entered into an Agreement and Plan of Merger. 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, and immediately following the Merger, Grand River will merge with and into the Corporation, with the Corporation as the surviving entity. 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. 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 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, each voting and non-voting share of common stock of Grand River 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, 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, rounded to the nearest cent, or (ii) the number of shares of common stock of the Corporation, no par value, multiplied by the Exchange Ratio.

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 thousandth.

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.

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Forward-Looking Statements

This Form 10-Q contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “likely,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” and “annualized,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

•uncertainty or perceived instability in the banking industry as a whole;

•increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior;

•the persistent inflationary pressures in the United States and its impact on market interest rates, the labor market, the economy as a whole, and credit quality;

•elevated asset prices;

•our ability to effectively execute our expansion strategy and manage our growth, including identifying and consummating suitable acquisitions;

•risks relating to the proposed Merger including, without limitation: the timing of consummation of the proposed transaction between the Corporation and Grand River; the risk that any condition to closing of the proposed Merger may not be satisfied or waived; the risk that the Merger may not be completed at all; the diversion of management time on issues related to the proposed Merger; the expected impact of the proposed Merger and on the combined entities’ operations, financial condition, and financial results; the businesses of Corporation and Grand River may not be combined successfully, or such combination may take longer to accomplish than expected; the cost savings from the proposed Merger may not be fully realized or may take longer to realize than expected; operating costs, customer loss and business disruption following the proposed Merger, including adverse effects on relationships with employees, may be greater than expected; the risk of deposit and customer attrition; increased competitive pressures on solicitations of customers by competitors; regulatory approvals of the proposed Merger may not be obtained, or adverse conditions may be imposed in connection with regulatory approvals of the proposed Merger; and the risk that the Grand River shareholders may not approve the proposed Merger;

•risks associated with concentrations of our business in market areas, loans secured by real estate, and public funds deposits as a percentage of total deposits;

•adverse changes in customer spending, borrowing, and savings habits;

•risks associated with our commercial loan portfolio and agricultural loan portfolio;

•risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area;

•damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts;

•our ability to keep pace with technological change or difficulties we may experience when implementing new technologies;

•cybersecurity risk, including cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of a cyber-attack;

•costs and effects of litigation, investigations or similar matters to which we may be subject;

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•natural disasters, severe weather, acts of god, military conflicts (including the conflicts in the Middle East, the possible expansion of such conflicts and potential geopolitical and economic consequences), acts of terrorism, domestic civil unrest, geopolitical instability, public health outbreaks (such as coronavirus), other international or domestic calamities, and other events beyond our control, including as a result of in the policies of the current U.S. presidential administration or Congress;

•the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts and the resulting impact on the Corporation and its customers;

•compliance with governmental and regulatory requirements, including the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (“EGRRCPA”), and others relating to banking, consumer protection, securities and tax matters;

•changes in accounting principles and standards;

•changes in the laws, rules, regulations, interpretations or policies that apply to the Corporation’s business and operations, and any additional regulations, or repeals that may be forthcoming as a result thereof, which could cause the Corporation to incur additional costs and adversely affect the Corporation’s business environment, operations and financial results; and

•our ability to navigate the uncertain impacts of current and future governmental monetary and fiscal policies, including the current and future policies of the Board of Governors of the Federal Reserve System (“Federal Reserve”) and as a result of initiatives of the Trump administration.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Form 10-Q and the risk factors set forth in our 2025 Annual Report on Form 10-K. Because of these risks and other uncertainties, our actual future results, performance or achievements, or industry results, may be materially different from the results indicated by the forward-looking statements in this Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. Accordingly, you should not rely on any forward-looking statements, which represent our beliefs, assumptions, and estimates only as of the dates on which such forward-looking statements were made. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to GAAP and the prevailing practices in the financial services industry. However, we also evaluate our performance by reference to certain additional financial measures discussed in this Form 10-Q that we identify as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios, or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

Management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. However, there may be limits in the usefulness of these measures to investors. The way we calculate the non-GAAP financial measures that we discuss in this Form 10-Q may differ from that of other companies reporting measures with similar names. Investors should understand how such other banking organizations calculate their financial measures similar to, or with names like, the non-GAAP financial measures we have discussed in this Form 10-Q when comparing such non-GAAP financial measures.

As a result, the non-GAAP financial measures that we discuss in this Form 10-Q should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this report may differ from that of other companies reporting measures with similar names.

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Available Information

The Corporation maintains an Internet website at ir.isabellabank.com. The Corporation makes available, free of charge, on its website (under ir.isabellabank.com/sec-filings/default) the Corporation’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Exchange Act as soon as reasonably practicable after the Corporation files such material with, or furnishes it to, the SEC. The Corporation also makes available, free of charge, through its website (under ir.isabellabank.com/governance/governance-documents) links to the Corporation’s Code of Conduct and Business Ethics and the charters for its board committees. In addition, the SEC maintains an Internet site (at www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Corporation routinely posts important information for investors on its website (under ir.isabellabank.com and, more specifically, under the News tab at ir.isabellabank.com/news). The Corporation intends to use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Corporation’s website, in addition to following the Corporation’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Corporation’s website is not incorporated by reference into, and is not a part of, this Form 10-Q.

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Executive Summary

Financial Condition (June 30, 2026 to December 31, 2025 comparison)

Total assets increased $10.2 million, or 0.5%, to $2.2 billion as of June 30, 2026. This increase was primarily due to an increase of $53.3 million in loans and an increase of $15.7 million in cash and cash equivalents. These increases were offset by a $58.5 million decline in AFS securities.

The AFS securities portfolio decreased $58.5 million, or 11.8%, to $439.3 million as of June 30, 2026. The decrease was a result of maturities and principal paydowns of $121.8 million, offset by $64.4 million in purchases. Net unrealized losses on AFS securities were $10.8 million as of June 30, 2026, compared to $9.9 million at December 31, 2025. Net unrealized losses as a percentage of the amortized cost of AFS securities were consistent compared to December 31, 2025, at 2%.

Loans increased $53.3 million, or 3.5%, to $1.6 billion as of June 30, 2026, primarily by growth in the commercial real estate and residential real estate portfolios of $33.5 million and $22.1 million, respectively. Most residential originations were adjustable rate products, which are retained on the balance sheet rather than sold in the secondary market. The consumer loan portfolio continues to decrease amid declining demand, competition, and our adherence to credit quality standards.

The ACL increased $752,000, or 5.5%, to $14.5 million as of June 30, 2026. The increase is due to loan growth and an increase in loss rates driven by loans charged off during the year. Nonaccrual loans were $7.8 million as of June 30, 2026 compared to $4.6 million at December 31, 2025. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.06% at June 30, 2026, compared to 0.44% at year-end 2025.

Total deposits decreased $9.7 million, or 0.5%, to $1.8 billion as of June 30, 2026. The decline was a result of a $20.7 million decline in certificates of deposit, a $14.0 million decline in interest bearing demand deposits, and a $12.3 million decline in noninterest bearing demand deposits. These declines were offset by a $20.4 million increase in savings deposits and a $16.8 million increase in money market accounts.

Total equity was $248.7 million, or $32.60 per share, at June 30, 2026 compared to $231.4 million, or $31.60 per share, as of December 31, 2025. The increase in total equity is primarily due to the issuance of 303,371 shares as part of the previously announced at-the-market stock offering, increasing total equity by $11.7 million, net of estimated expenses. Tangible book value per share (non-GAAP) was $26.27 as of June 30, 2026, compared to $25.01 as of December 31, 2025. Net unrealized losses in the AFS securities portfolio reduced tangible book value per share (non-GAAP) by $1.14 and $1.09 for the respective periods.

As of June 30, 2026, we had $754.8 million of unencumbered sources of liquidity and strong consolidated capital ratios; the Tier 1 Leverage Ratio was 9.59%, Tier 1 risk-based capital was 12.34%, and Total risk-based capital was 14.63%.

Comparison of Operating Results for the three and six months ended June 30, 2026, and 2025, unless otherwise noted

Net income for the three months ended June 30, 2026 was $5.0 million, or $0.69 per diluted share, compared with $5.0 million, or $0.68 per diluted share, for the three months ended June 30, 2025. Net income for the six months ended June 30, 2026 was $10.0 million, or $1.37 per diluted share, compared with $9.0 million, or $1.21 per diluted share, for the six months ended June 30, 2025.

Net interest income was $18.1 million for the three months ended June 30, 2026 and $15.1 million for the three months ended June 30, 2025, representing 3.54% and 3.14% of earning assets, or NIM on an FTE basis (non-GAAP), respectively. The book yield from securities was 2.82% and 2.38% for the three months ended June 30, 2026 and 2025, respectively. The yield on loans increased to 5.86% for the three months ended June 30, 2026 from 5.71% for the three months ended June 30, 2025. The increase in loan yields was primarily due to higher rates on new loans and variable rate commercial loans that continue to reprice. The cost of interest-bearing liabilities for the three months ended June 30, 2026 decreased to 2.09% from 2.24% for the three months ended June 30, 2025 primarily due to lower rates on money market and certificate of deposit products.

Net interest income was $35.0 million for the six months ended June 30, 2026 and $29.7 million for the six months ended June 30, 2025, representing 3.43% and 3.10% of earning assets, or NIM on an FTE basis (non-GAAP), respectively. The book yield from securities was 2.67% and 2.31% for the six months ended June 30, 2026 and 2025, respectively. The yield on loans increased to 5.82% for the six months ended June 30, 2026 from 5.72% for the six months ended June 30, 2025. The increase in loan yields was primarily due to higher rates on new loans and variable rate commercial loans that continue to reprice. The cost of interest-bearing liabilities for the six months ended June 30, 2026 decreased to 2.12% from 2.25% for the six months ended June 30, 2025 primarily due to lower rates on money market and certificate of deposit products.

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The provision for credit losses was $895,000 for the three months ended June 30, 2026, driven by a $465,000 increase in the ACL on loans and net charge offs totaling $384,000. The provision for credit losses for the three months ended June 30, 2025 was a credit of $1.1 million, which reflects $1.4 million in net recoveries, offset by a $242,000 increase in the ACL on loans and an increase in the reserve for unfunded commitments. Recoveries of $1.6 million during second quarter 2025 were related to overdrawn deposit accounts from a single customer that were charged off during the third quarter of 2024.

The provision for credit losses was $1.5 million for the six months ended June 30, 2026, as compared to a credit of $1.2 million for the six months ended June 30, 2025. Net charge offs for the six months ended June 30, 2026 totaled $637,000, while there were net recoveries of $1.5 million for the six months ended June 30, 2025.

Noninterest income for the three months ended June 30, 2026 and 2025 was $4.4 million and $3.7 million, respectively. Service charges and fees increased $504,000 as a result of internal initiatives designed to align our fees with the market. Earnings on BOLI policies increased $134,000 compared to second quarter 2025 due to additional investments in a separate account BOLI in 2025. Wealth management fees grew $132,000 due to growth in assets under management since second quarter 2025.

Noninterest income for the six months ended June 30, 2026 and 2025 was $8.7 million and $7.2 million, respectively. Service charges and fees increased $907,000 as a result of internal initiatives designed to align our fees with the market. Wealth management fees grew $261,000 due to growth in assets under management. Earnings on BOLI policies increased $210,000 due to additional investments in a separate account BOLI in 2025. Other noninterest income in 2026 includes a $137,000 gain related to a death benefit from a BOLI policy.

Noninterest expenses for the three months ended June 30, 2026 and 2025 were $15.4 million and $13.7 million, respectively. Compensation and benefit expenses increased $651,000, reflecting annual merit increases, incentives, and higher medical insurance claims. Occupancy and equipment increased $240,000 and merger-related expenses of $505,000 were included in noninterest expenses in second quarter 2026.

Noninterest expenses for the six months ended June 30, 2026 and 2025 were $30.0 million and $27.0 million, respectively. Compensation and benefit expenses increased $1.2 million for the same reasons as the quarterly comparison. Occupancy and equipment expenses increased $480,000 and merger-related expenses during second quarter 2026 totaled $505,000.

Income tax expense for both of the three months ended June 30, 2026 and 2025 was $1.1 million, while the ETR was 18% for both periods. Income tax expense for both of the six months ended June 30, 2026 and 2025 was $2.1 million, while the ETR was 17% for the six months ended June 30, 2026 and 19% for the six months ended June 30, 2025. The ETR in the first six months of 2025 included a one-time tax expense totaling $166,000 due to the taxes owed from the lifetime earnings on BOLI policies that were surrendered during first quarter 2025. Excluding the one-time charge, the ETR was 17% for the first six months of 2025.

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Selected Financial Data (Unaudited)

The following table outlines our results of operations and provides certain performance measures as of the dates and for the periods indicated:

			Three Months Ended																														Six Months Ended
(dollars in thousands, except per share amounts)			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025						June 30, 2026						June 30, 2025
PER SHARE
Basic earnings			$	0.69					$	0.68					$	0.64					$	0.71					$	0.68					$	1.37					$	1.21
Diluted earnings			0.69						0.68						0.64						0.71						0.68						1.37						1.21
Dividends			0.28						0.28						0.28						0.28						0.28						0.56						0.56
Book value (1)			32.60						31.90						31.60						30.94						29.95						32.60						29.95
Tangible book value (1) (2)			26.27						25.32						25.01						24.37						23.39						26.27						23.39
Market price (1)			39.50						45.67						50.00						35.25						30.15						39.50						30.15
PERFORMANCE RATIOS
Return on average total assets			0.91		%				0.91		%				0.85		%				0.94		%				0.96		%				0.91		%				0.87		%
Return on average shareholders’ equity			8.50		%				8.58		%				8.04		%				9.28		%				9.19		%				8.54		%				8.35		%
Return on average tangible shareholders’ equity (2)			10.66		%				10.79		%				10.16		%				11.83		%				11.78		%				10.72		%				10.74		%
Net interest margin yield (FTE)			3.54		%				3.33		%				3.28		%				3.15		%				3.14		%				3.43		%				3.10		%
Efficiency ratio (2)			67.84		%				68.50		%				65.02		%				67.62		%				72.14		%				68.16		%				72.26		%
Loan to deposit ratio (1)			87.83		%				83.82		%				84.43		%				74.36		%				75.57		%				87.83		%				75.57		%
Shareholders’ equity to total assets (1)			11.20		%				10.39		%				10.47		%				10.06		%				10.23		%				11.20		%				10.23		%
Tangible shareholders’ equity to tangible assets (1) (2)			9.23		%				8.43		%				8.47		%				8.10		%				8.17		%				9.23		%				8.17		%
FINANCIAL DATA
Total assets (1)			$	2,219,641					$	2,251,956					$	2,209,448					$	2,259,654					$	2,156,168					$	2,219,641					$	2,156,168
AFS securities (1)			439,289						492,744						497,791						511,970						500,560						439,289						500,560
Loans (1)			1,589,672						1,558,941						1,536,364						1,431,905						1,397,513						1,589,672						1,397,513
ACL (1)			14,479						14,014						13,727						13,149						12,977						14,479						12,977
Deposits (1)			1,809,913						1,859,845						1,819,654						1,925,602						1,849,376						1,809,913						1,849,376
Borrowed funds (1)			145,571						143,067						142,514						91,514						72,677						145,571						72,677
Shareholders' equity (1)			248,704						233,961						231,396						227,420						220,500						248,704						220,500
Wealth assets under management (1)			750,840						701,510						707,118						679,724						678,959						750,840						678,959
Net income			5,041						4,992						4,690						5,240						5,031						10,033						8,980
Interest income			26,216						25,129						25,278						24,882						23,242						51,345						45,875
Interest expense			8,132						8,247						8,550						8,720						8,113						16,379						16,221
Net interest income			18,084						16,882						16,728						16,162						15,129						34,966						29,654
Provision for (reversal of) credit losses			895						604						434						209						(1,099)						1,499						(1,206)
Noninterest income			4,375						4,361						4,444						4,308						3,686						8,736						7,214
Noninterest expenses			15,386						14,662						13,921						13,985						13,745						30,048						27,044

(1) At end of period.

(2) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q.

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Average Balances, Interest Rates, and Net Interest Income

The following schedules present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities as of the dates and for the periods indicated. These schedules also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. FRB restricted equity holdings are included in other interest earning assets.

			Three Months Ended
			June 30, 2026																		March 31, 2026																		June 30, 2025
(dollars in thousands)			Average Balance						Tax Equivalent Interest						Average Yield / Rate						Average Balance						Tax Equivalent Interest						Average Yield / Rate						Average Balance						Tax Equivalent Interest						Average Yield / Rate
INTEREST EARNING ASSETS
Loans (1)			$	1,544,323					$	22,607					5.86		%				$	1,501,654					$	21,464					5.78		%				$	1,388,684					$	19,832					5.71		%
AFS securities (2)
Taxable			432,520						2,902						2.69		%				430,376						2,489						2.35		%				461,483						2,513						2.18		%
Nontaxable (3)			63,607						600						3.78		%				67,878						637						3.81		%				72,869						697						3.84		%
FHLB stock			5,600						64						4.55		%				5,600						75						5.36		%				5,600						125						8.94		%
Federal funds sold			2						—						3.67		%				7						—						3.54		%				6						—						3.83		%
Other (4)			18,079						173						3.81		%				64,190						602						3.75		%				20,487						253						4.92		%
Total interest earning assets (3)			2,064,131						26,346						5.12		%				2,069,705						25,267						4.94		%				1,949,129						23,420						4.81		%
NONEARNING ASSETS
Allowance for credit losses			(14,078)																		(13,680)																		(13,369)
Cash and demand deposits due from banks			22,544																		23,113																		22,026
Premises and equipment			29,086																		29,110																		28,306
Other assets			116,913																		116,639																		106,595
Total assets			$	2,218,596																	$	2,224,887																	$	2,092,687
INTEREST BEARING LIABILITIES
Interest bearing demand deposits			$	257,088					205						0.32		%				$	266,101					294						0.45		%				$	236,076					220						0.37		%
Money market deposits			452,737						2,625						2.33		%				464,438						2,719						2.37		%				449,110						2,857						2.55		%
Savings			302,375						503						0.67		%				291,413						488						0.68		%				286,434						544						0.76		%
Certificates of deposit			396,481						3,445						3.49		%				407,483						3,611						3.59		%				395,450						3,770						3.82		%
Short-term borrowings			115,713						1,007						3.49		%				86,885						736						3.44		%				41,661						324						3.11		%
FHLB advances			4,396						43						3.86		%				13,444						133						3.96		%				11,539						132						4.53		%
Subordinated debt, net of unamortized issuance costs			29,545						304						4.11		%				29,522						266						3.61		%				29,455						266						3.61		%
Total interest bearing liabilities			1,558,335						8,132						2.09		%				1,559,286						8,247						2.14		%				1,449,725						8,113						2.24		%
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS’ EQUITY
Demand deposits			404,805																		411,011																		409,262
Other liabilities			17,462																		18,653																		14,158
Shareholders’ equity			237,994																		235,937																		219,542
Total liabilities and shareholders’ equity			$	2,218,596																	$	2,224,887																	$	2,092,687
Net interest income (FTE) (5)									$	18,214																	$	17,020																	$	15,307
Net yield on interest earning assets (FTE) (5)															3.54		%																3.33		%																3.14		%

(1) Includes loans HFS and nonaccrual loans.

(2) Average balances for AFS securities are based on amortized cost.

(3) Includes FTE adjustments of $130,000, $138,000, and $178,000, respectively.

(4) Includes average interest bearing deposits with other banks, net of FRB daily cash letter.

(5) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q.

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			Six Months Ended
			June 30, 2026																		June 30, 2025
(dollars in thousands)			Average Balance						Tax Equivalent Interest						Average Yield/Rate						Average Balance						Tax Equivalent Interest						Average Yield/Rate
INTEREST EARNING ASSETS
Loans (1)			$	1,523,109					$	44,071					5.82		%				$	1,379,774					$	39,180					5.72		%
AFS securities (2)
Taxable			431,452						5,391						2.52		%				449,919						4,616						2.07		%
Nontaxable			65,731						1,237						3.80		%				74,551						1,421						3.84		%
FHLB stock			5,600						139						4.95		%				8,291						285						6.89		%
Federal funds sold			5						—						3.57		%				5						—						4.03		%
Other (4)			41,006						775						3.76		%				33,856						735						4.32		%
Total interest earning assets (3)			2,066,903						51,613						5.03		%				1,946,396						46,237						4.78		%
NONEARNING ASSETS
Allowance for credit losses			(13,881)																		(13,127)
Cash and demand deposits due from banks			22,825																		22,956
Premises and equipment			29,098																		28,134
Other assets			116,776																		104,770
Total assets			$	2,221,721																	$	2,089,129
INTEREST BEARING LIABILITIES
Interest bearing demand deposits			$	261,570					499						0.38		%				$	238,455					462						0.39		%
Money market deposits			458,556						5,344						2.35		%				454,855						5,786						2.56		%
Savings			296,925						991						0.67		%				286,399						1,082						0.76		%
Certificates of deposit			401,952						7,056						3.54		%				391,657						7,524						3.87		%
Short-term borrowings			101,378						1,743						3.47		%				42,607						665						3.15		%
FHLB advances			8,895						176						3.93		%				7,459						170						4.53		%
Subordinated debt, net of unamortized issuance costs			29,534						570						3.86		%				29,444						532						3.62		%
Total interest bearing liabilities			1,558,810						16,379						2.12		%				1,450,876						16,221						2.25		%
NONINTEREST BEARING LIABILITIES AND SHAREHOLDERS’ EQUITY
Demand deposits			407,890																		406,160
Other liabilities			18,051																		15,200
Shareholders’ equity			236,970																		216,893
Total liabilities and shareholders’ equity			$	2,221,721																	$	2,089,129
Net interest income (FTE) (5)									$	35,234																	$	30,016
Net yield on interest earning assets (FTE) (5)															3.43		%																3.10		%

(1) Includes loans HFS and nonaccrual loans.

(2) Average balances for AFS securities are based on amortized cost.

(3) Includes FTE adjustments of $268,000 and $362,000, respectively.

(4) Includes average interest bearing deposits with other banks, net of FRB daily cash letter.

(5) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q.

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Loans

The following table displays loan balances as of the dates indicated:

(dollars in thousands)			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
Commercial and industrial			$	231,590					$	225,369					$	220,450					$	218,132					$	207,719
Commercial real estate			673,271						660,643						639,758						626,642						614,383
Advances to mortgage brokers			75,159						72,083						76,676						5,056						3,005
Agricultural			97,462						96,969						102,109						97,794						96,842
Residential real estate			449,992						438,333						427,880						412,056						398,668
Consumer			62,198						65,544						69,491						72,225						76,896
Total			$	1,589,672					$	1,558,941					$	1,536,364					$	1,431,905					$	1,397,513

The following table presents the composition of our commercial real estate portfolio by industry as of the dates indicated:

			June 30, 2026												December 31, 2025
(dollars in thousands)			Balance						Percent of Total						Balance						Percent of Total
Investment and development			$	139,114					20.66		%				$	134,013					20.95		%
1-4 family residential investment			98,914						14.69		%				93,806						14.66		%
Hotels			96,869						14.39		%				90,571						14.16		%
Residential multifamily			88,573						13.16		%				71,695						11.21		%
Health care			60,387						8.97		%				59,573						9.31		%
Storage facilities			38,482						5.72		%				37,145						5.81		%
Retail trade			33,303						4.95		%				34,479						5.39		%
Manufacturing			18,011						2.68		%				18,281						2.86		%
Accommodation services			17,019						2.53		%				15,604						2.44		%
Construction			14,598						2.17		%				16,193						2.53		%
Wholesale trade			11,347						1.69		%				11,123						1.74		%
Educational services			10,282						1.53		%				10,582						1.65		%
Other			46,372						6.86		%				46,693						7.29		%
Total commercial real estate			$	673,271					100.00		%				$	639,758					100.00		%

Commercial real estate loans are subject to a varying degree of risk from changes in interest rates and economic conditions. To control these risks, we maintain strict underwriting standards, lending limits to a single borrower, loan to collateral value limits, and a defined market area. We also monitor and limit loan concentrations to specific industries. Our practices also include appropriate loan reviews, and monitoring of past due levels, concentrations, industry trends, and other qualitative factors.

Deposits

The following table displays deposit balances as of the dates indicated:

(dollars in thousands)			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
Noninterest bearing demand deposits			$	414,018					$	411,216					$	426,342					$	421,027					$	493,477
Interest bearing demand deposits			252,149						263,954						266,187						248,666						223,376
Money market deposits			453,478						477,544						436,631						558,212						446,845
Savings			300,867						300,732						280,429						292,899						289,746
Certificates of deposit			389,401						406,399						410,065						404,798						395,932
Total			$	1,809,913					$	1,859,845					$	1,819,654					$	1,925,602					$	1,849,376

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Asset Quality Analysis

The following table outlines our asset quality analysis as of the dates and for the periods indicated:

			Three Months Ended
(dollars in thousands)			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
NONPERFORMING ASSETS
Commercial and industrial			$	623					$	508					$	442					$	16					$	17
Commercial real estate			3,728						3,743						3,766						3,000						533
Agricultural			2,867						—						—						—						—
Residential real estate			572						167						370						427						614
Consumer			—						—						—						—						—
Total nonaccrual loans			7,790						4,418						4,578						3,443						1,164
Accruing loans past due 90 days or more			—						—						—						18						31
Total nonperforming loans			7,790						4,418						4,578						3,461						1,195
Foreclosed assets			620						573						938						1,018						667
Total nonperforming assets			$	8,410					$	4,991					$	5,516					$	4,479					$	1,862
Nonperforming loans to total loans			0.49		%				0.28		%				0.30		%				0.24		%				0.09		%
Nonperforming assets to total assets			0.38		%				0.22		%				0.25		%				0.20		%				0.09		%
Nonaccrual loans to total loans			0.49		%				0.28		%				0.30		%				0.24		%				0.08		%
ACL as a % of nonaccrual loans			185.87		%				317.20		%				299.85		%				381.91		%				N/M
ALLOWANCE FOR CREDIT LOSSES
Allowance at beginning of period			$	14,014					$	13,727					$	13,149					$	12,977					$	12,735
Charge-offs			563						350						155						175						390
Recoveries			179						97						121						101						1,822
Net loan charge-offs (recoveries)			384						253						34						74						(1,432)
Provision for (reversal of) credit losses - loans			849						540						612						246						(1,190)
Allowance at end of period			$	14,479					$	14,014					$	13,727					$	13,149					$	12,977
ACL to loans			0.91		%				0.90		%				0.89		%				0.92		%				0.93		%
Reserve for unfunded commitments			604						557						493						671						708
Provision for (reversal of) credit losses - unfunded commitments			46						64						(178)						(37)						91
Reserve to unfunded commitments			0.17		%				0.15		%				0.14		%				0.16		%				0.16		%
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial and industrial			$	34					$	(1)					$	8					$	(6)					$	68
Commercial real estate			223						133						(4)						(4)						(50)
Agricultural			97						—						(4)						—						—
Residential real estate			(61)						(14)						(53)						(16)						(16)
Consumer			91						135						87						100						(1,434)
Total			$	384					$	253					$	34					$	74					$	(1,432)
Net charge-offs / (recoveries) to average loans			0.02		%				0.02		%				0.00		%				0.01		%				(0.10		%)
DELINQUENT AND NONACCRUAL LOANS
Accruing loans 30-89 days past due			$	875					$	5,786					$	6,689					$	500					$	1,076
Accruing loans past due 90 days or more			—						—						—						18						31
Total accruing past due loans			875						5,786						6,689						518						1,107
Nonaccrual loans			7,790						4,418						4,578						3,443						1,164
Total past due and nonaccrual loans			$	8,665					$	10,204					$	11,267					$	3,961					$	2,271

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Capital

Capital consists solely of common stock, retained earnings, and accumulated other comprehensive income (loss). We are authorized to raise capital through the issuance of securities from our shelf registration statement on Form S-3 (the “Registration Statement,” dividend reinvestment, employee and director stock purchases, and shareholder stock purchases. Under the Registration Statement, we established an at-the-market common stock offering program permitting the sale of common stock up to an aggregate gross sales price of $30 million. The at-the-market offering provides us with additional flexibility to access the capital markets efficiently and is intended 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. Pursuant to these authorizations, including our at-the-market offering, we issued 310,276 shares, or $12.4 million of common stock, during the first six months of 2026, as compared to 28,830 shares, or $759,000 of common stock, during the same period in 2025.

We also offer the Directors Plan in which participants purchase stock units through deferred fees, in lieu of cash payments. Pursuant to this plan, we increased shareholders’ equity by $190,000 and $201,000 during the six-month periods ended June 30, 2026 and 2025, respectively. We also grant restricted stock awards pursuant to the RSP. Pursuant to this plan, we increased shareholders’ equity by $29,000 during the first six months of 2026, as compared to $21,000 during the same period in 2025.

We have publicly announced a common stock repurchase program. Pursuant to this repurchase program, we repurchased 13,166 shares or $626,000 of common stock during the first six months of 2026 and 103,406 shares or $2.7 million of common stock during the first six months of 2025. As of June 30, 2026, we were authorized to repurchase up to an additional 448,106 shares of common stock under the repurchase program.

The FRB has established minimum risk-based capital guidelines. Pursuant to these guidelines, a framework has been established that assigns risk weights to each category of on and off-balance-sheet items to arrive at risk adjusted total assets. Regulatory capital is divided by the risk adjusted assets with the resulting ratio compared to the minimum standard to determine whether a corporation has adequate capital. As of June 30, 2026, we and the Bank were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since June 30, 2026 that would materially adversely change such capital classifications. From time to time, we may need to raise additional capital to support our and the Bank’s further growth and to maintain our “well capitalized” status.

The following table sets forth our consolidated capital ratios as of the dates indicated:

			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
Common equity tier 1 capital			12.34		%				11.71		%				11.73		%				12.37		%				12.46		%
Tier 1 capital			12.34		%				11.71		%				11.73		%				12.37		%				12.46		%
Total capital			14.63		%				14.01		%				14.41		%				15.20		%				15.34		%
Tier 1 leverage			9.59		%				8.89		%				8.84		%				8.71		%				9.04		%

Liquidity

Liquidity is monitored regularly by our ALCO, which consists of members of senior management. The committee reviews projected cash flows, key ratios, and liquidity available from both primary and secondary sources.

Our primary sources of liquidity are retail deposits, cash and cash equivalents, and unencumbered AFS securities. Cash, cash equivalents and unencumbered AFS securities totaled $237.9 million, or 10.72% of assets, as of June 30, 2026, compared to $337.0 million, or 15.25%, as of December 31, 2025. The decrease in the amount and percentage of primary liquidity is primarily due to a decrease in AFS securities, offset by an increase in cash and cash equivalents. Liquidity is important for financial institutions because of their need to meet loan funding commitments, depositor withdrawal requests, and various other commitments including expansion of operations, investment opportunities, and payment of cash dividends. Based on these same factors, daily liquidity could vary significantly.

Our secondary sources include the ability to borrow from the FHLB, from the FRB, and through various correspondent banks in the form of federal funds purchased and lines of credit. These funding methods typically carry a higher interest rate than traditional market deposit accounts. Some borrowed funds, including FHLB advances, FRB Discount Window advances, and repurchase agreements, require us to pledge assets, typically in the form of AFS securities or loans, as collateral. As of June 30, 2026, we had available lines of credit of $403.0 million.

We monitor our daily liquidity position to meet our cash flow needs. We also forecast anticipated funding needs for changes in interest rates and economic conditions, the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits, and regulatory capital requirements. Our liquidity stress testing is designed with consideration of these and other factors that could pose undue risk to liquidity.

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Our liquidity position remained strong as of June 30, 2026, which is illustrated in the following table:

(dollars in thousands)			June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025
Total cash and cash equivalents			$	41,774					$	50,105					$	26,041					$	161,301					$	108,554
Brokered CD capacity			130,000						130,000						130,000						130,000						120,000
Available lines of credit
Federal funds lines with correspondent banks			93,000						93,000						93,000						93,000						93,000
FHLB borrowings			276,278						270,159						218,088						257,288						249,890
FRB Discount Window			28,730						29,511						29,428						29,267						29,084
Other lines of credit			5,000						5,000						5,000						5,000						5,000
Total available lines of credit			403,008						397,670						345,516						384,555						376,974
Unencumbered lendable value of FRB collateral, estimated (1)			180,000						240,000						280,000						300,000						320,000
Total cash and liquidity			$	754,782					$	817,775					$	781,557					$	975,856					$	925,528
Uninsured deposits			$	673,868					$	727,884					$	695,537					$	726,514					$	726,240
Coverage ratio of uninsured deposits with total cash and liquidity			112		%				112		%				112		%				134		%				127		%

(1) Includes estimated unencumbered lendable value of FHLB collateral of $120.0 million as of June 30, 2026.

Fair Value

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. AFS securities, cash flow hedge derivative instruments and certain liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as mortgage loans AFS, collateral dependent loans, goodwill, foreclosed assets, OMSR, and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write downs of individual assets.

For further information regarding fair value measurements see “Note 8 – Fair Value” of our interim condensed consolidated financial statements included with this Form 10-Q.

Interest Rate Sensitivity and Market Risk

As a financial institution, our primary market risks are interest rate risk and liquidity risk. IRR is the exposure of our net interest income to changes in interest rates. IRR results from the difference in the maturity or repricing frequency of a financial institution's interest earning assets and its interest-bearing liabilities. Managing IRR is the fundamental method by which financial institutions earn income and create shareholder value. Excessive exposure to IRR could pose a significant risk to our earnings and capital.

The FRB has adopted a policy requiring banks to effectively manage the various risks that can have a material impact on safety and soundness. The risks include credit, interest rate, liquidity, operational, and reputational. We have policies, procedures, and internal controls for measuring and managing these risks. Specifically, our ALCO policy and procedures include defining acceptable types and terms of investments and funding sources, liquidity requirements, limits on investments in long-term assets, limiting the mismatch in repricing opportunities of assets and liabilities, and the frequency of measuring and reporting to our Board of Directors.

The primary technique to measure IRR is simulation analysis. Simulation analysis forecasts the effects on the balance sheet structure and net interest income under a variety of scenarios that incorporate changes in interest rates, the shape of yield curves, interest rate relationships, loan prepayments, and funding sources. These forecasts are compared against net interest income projected in a stable interest rate environment. While many assets and liabilities reprice either at maturity or in accordance with their contractual terms, several balance sheet components demonstrate characteristics that require an evaluation to more accurately reflect their repricing behavior. Key assumptions in the simulation analysis include prepayments on loans, probable calls of investment securities, changes in market conditions, loan volumes and loan pricing, deposit sensitivity, and customer preferences. These assumptions are inherently uncertain as they are subject to fluctuation and revision in a dynamic rate environment. As a result, the simulation analysis cannot precisely forecast the impact of rising and falling interest rates on net interest income. Actual results will differ from simulated results due to many other factors, including changes in balance

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sheet components, interest rate changes, changes in market conditions, and management strategies. We regularly monitor our projected net interest income sensitivity to ensure that it remains within established limits.

Gap analysis, the secondary method to measure IRR, measures the cash flows and/or the earliest repricing of our interest-bearing assets and liabilities. This analysis is useful for measuring trends in the repricing characteristics of the balance sheet. Significant assumptions are required in this process because of the embedded repricing options contained in assets and liabilities. Residential real estate and consumer loans allow the borrower to repay the balance prior to maturity without penalty, while commercial and agricultural loans may have prepayment penalties. The amount of prepayments is dependent upon many factors, including the interest rate of a given loan in comparison to the current offering rates, the level of home sales, and the overall availability of credit in the marketplace. Generally, a decrease in interest rates will result in an increase in cash flows from these assets. Savings and demand accounts may generally be withdrawn on request without prior notice. The timing of cash flows from these deposits is estimated based on historical experience. Certificates of deposit have penalties that discourage early withdrawals.

Gap analysis is also utilized as a method to measure interest rate sensitivity. Interest rate sensitivity is determined by the amount of earning assets and interest-bearing liabilities repricing within a specific time period, and their relative sensitivity to a change in interest rates. We strive to achieve reasonable stability in the net interest margin through periods of changing interest rates.

We do not believe there has been a material change in the nature or categories of our primary market risk exposure, or the particular markets that present the primary risk of loss. We do not know of or expect there to be any material change in the general nature of our primary market risk exposure in the near term, and we do not expect to make material changes to our market risk methods in the near term. We may change those methods in the future to adapt to changes in circumstances or to implement new techniques.

Contractual Obligations and Loan Commitments

We have various financial obligations, including contractual obligations and commitments related to deposits and borrowings, which may require future cash payments. We also have loan related commitments that may impact liquidity. The commitments include unused lines of credit, commercial and standby letters of credit, and commitments to grant loans. These commitments to grant loans include residential mortgage loans with the majority committed to be sold to the secondary market. Many of these commitments historically have expired without being drawn upon and do not necessarily represent our future cash requirements.

We are party to credit related financial instruments with off-balance-sheet risk. These financial instruments are entered into in the normal course of business to meet the financing needs of our customers. These financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The contractual or notional amounts of these instruments reflect the extent of involvement we have in a particular class of financial instrument.

Our exposure to credit-related loss in the event of nonperformance by the counterparties to the financial instruments for commitments to extend credit and standby letters of credit could be up to the contractual notional amount of those instruments. We use the same credit policies when analyzing the creditworthiness of counterparties as we do for extending loans to customers. No significant losses are anticipated as a result of these commitments.

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Reconciliation of Non-GAAP Financial Measures

The following tables provide a detailed analysis, and reconciliation for, our non-GAAP financial measures as of the dates and for the periods indicated:

						Three Months Ended																														Six Months Ended
(dollars in thousands, except per share amounts)						June 30, 2026						March 31, 2026						December 31, 2025						September 30, 2025						June 30, 2025						June 30, 2026						June 30, 2025
Loans						$	1,589,672					$	1,558,941					$	1,536,364					$	1,431,905					$	1,397,513					$	1,589,672					$	1,397,513
Advances to mortgage brokers						75,159						72,083						76,676						5,056						3,005						75,159						3,005
Adjusted loans						$	1,514,513					$	1,486,858					$	1,459,688					$	1,426,849					$	1,394,508					$	1,514,513					$	1,394,508
Total shareholders’ equity						$	248,704					$	233,961					$	231,396					$	227,420					$	220,500					$	248,704					$	220,500
Goodwill and other intangible assets						48,282						48,282						48,282						48,282						48,282						48,282						48,282
Tangible equity			(A)			200,422						185,679						183,114						179,138						172,218						200,422						172,218
Common shares outstanding (1)			(B)			7,628,809						7,333,319						7,322,207						7,350,567						7,361,684						7,628,809						7,361,684
Tangible book value per share			(A/B)			$	26.27					$	25.32					$	25.01					$	24.37					$	23.39					$	26.27					$	23.39
Noninterest expenses						$	15,386					$	14,662					$	13,921					$	13,985					$	13,745					$	30,048					$	27,044
Amortization of acquisition intangibles						—						—						—						—						—						—						1
Adjusted noninterest expense			(C)			$	15,386					$	14,662					$	13,921					$	13,985					$	13,745					$	30,048					$	27,043
Net interest income						$	18,084					$	16,882					$	16,728					$	16,162					$	15,129					$	34,966					$	29,654
Tax equivalent adjustment for net interest margin						130						138						138						144						178						268						362
Net interest income (FTE)						18,214						17,020						16,866						16,306						15,307						35,234						30,016
Noninterest income						4,375						4,361						4,444						4,308						3,686						8,736						7,214
Tax equivalent adjustment for BOLI						91						94						102						98						63						185						141
Adjusted revenue (FTE)						22,680						21,475						21,412						20,712						19,056						44,155						37,371
Net gains (losses) on foreclosed assets						—						70						3						31						3						70						(52)
Adjusted revenue			(D)			$	22,680					$	21,405					$	21,409					$	20,681					$	19,053					$	44,085					$	37,423
Efficiency ratio			(C/D)			67.84		%				68.50		%				65.02		%				67.62		%				72.14		%				68.16		%				72.26		%

(1) Whole shares.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The information presented in the section captioned “Interest Rate Sensitivity and Market Risk” in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-Q is incorporated herein by reference.

Item 4. Controls and Procedures.

DISCLOSURE CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of June 30, 2026, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of June 30, 2026, were effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the most recent fiscal quarter, no change occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are not involved in any material legal proceedings. We are involved in ordinary, routine litigation incidental to our business; however, no such routine proceedings are expected to result in any material adverse effect on operations, earnings, financial condition, or cash flows.

Item 1A. Risk Factors.

In evaluating an investment in any of our securities, investors should consider carefully, among other things, information under the heading “Forward-Looking Statements” in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-Q and the risk factors previously disclosed under the heading “Risk Factors” in Part I, Item 1A of our 2025 Annual Report on Form 10-K. Management believes there have been no material changes in the risk factors disclosed by the Corporation in Part I, Item 1A, “Risk Factors,” of the 2025 Annual Report on Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

(A)None

(B)None

(C)Repurchases of Common Stock

We have adopted and publicly announced a common stock repurchase plan. The plan was last amended on April 30, 2025, to allow for the repurchase of an additional 500,000 shares of common stock after that date. These authorizations do not have expiration dates. As common shares are repurchased under this plan, they are retired with the status of authorized, but unissued, shares.

The following table provides information for the three-month period ended June 30, 2026, with respect to our common stock repurchase plan:

			Common Shares Repurchased												Total Number of Common Shares Purchased as Part of Publicly Announced Plan or Program						Maximum Number of Common Shares That May Yet Be Purchased Under the Plans or Programs
			Number						Average Price Per Common Share
March 31, 2026																					453,210
April 1 - 30			1,810						$	48.07					1,810						451,400
May 1 - 31			1,423						41.46						1,423						449,977
June 1 - 30			1,871						41.15						1,871						448,106
June 30, 2026			5,104						$	43.69					5,104						448,106

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Securities Trading Plans of Executive Officers

During the fiscal quarter ended June 30, 2026, none of the Corporation’s directors or officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408 of Regulation S-K.

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Item 6. Exhibits.

(a) Exhibits

Exhibit Number						Exhibits
1.1						Equity Distribution Agreement, dated June 16, 2026, by and among Isabella Bank Corporation, Isabella Bank and Piper Sandler & Co. (1)
2.1						Agreement and Plan of Merger, dated as of June 11, 2026, by and among Isabella Bank Corporation, Grand River Commerce, Inc. and 401 Merger Sub, Inc. (2)
3.1						Amended Articles of Incorporation (3)
3.2						Amendment to the Articles of Incorporation (4)
3.3						Amendment to the Articles of Incorporation (5)
3.4						Amendment to the Articles of Incorporation (6)
3.5						Amendment to the Articles of Incorporation (7)
3.6						Second Amended and Restated Bylaws, as amended on September 24, 2025 (8)
10.1						Form of Grand River Voting Agreement, dated as of June 11, 2026, by and among Isabella Bank Corporation and directors and officers of Grand River Commerce, Inc. (9)
31.1						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Principal Executive Officer
31.2						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Principal Financial Officer
32						Section 1350 Certification of Principal Executive Officer and Principal Financial Officer
101.1*						101.INS (Inline XBRL Instance Document)
						101.SCH (Inline XBRL Taxonomy Extension Schema Document)
						101.CAL (Inline XBRL Calculation Linkbase Document)
						101.LAB (Inline XBRL Taxonomy Label Linkbase Document)
						101.DEF (Inline XBRL Taxonomy Linkbase Document)
						101.PRE (Inline XBRL Taxonomy Presentation Linkbase Document)
104						Cover Page Interactive Data File

*						In accordance with Rule 406T of Regulations S-T, the XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
(1)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 8-K, filed June 16, 2026, and incorporated herein by reference.
(2)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 8-K, filed June 15, 2026, and incorporated herein by reference.
(3)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 12, 1991, and incorporated herein by reference
(4)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 26, 1994, and incorporated herein by reference.
(5)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 22, 2000, and incorporated herein by reference.
(6)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 10-K, filed March 27, 2001, and incorporated herein by reference.
(7)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 8-K, filed May 16, 2008, and incorporated herein by reference.
(8)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 8-K, filed September 30, 2025, and incorporated herein by reference.
(9)						Previously filed as an Exhibit to the Isabella Bank Corporation Form 8-K, filed June 15, 2026, and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Isabella Bank Corporation

Date:

August 10, 2026

/s/ Jerome E. Schwind

Jerome E. Schwind

President and Chief Executive Officer

(Principal Executive Officer)

Date:

August 10, 2026

/s/ Gerald J. Ritzert

Gerald J. Ritzert

Chief Financial Officer

(Principal Financial Officer)

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