JPMorgan Chase for central Michigan.

A community-focused Bank of America for specific counties in Michigan.

Like a local, smaller Wells Fargo, serving financial needs in Michigan communities.

```html

• Deposit Accounts: Offers a range of accounts including checking, savings, certificates of deposit, and money market accounts.
• Loan Products: Provides various loans such as commercial, agricultural, and residential real estate loans, along with consumer loans.
• Cash Management Services: Assists businesses in managing their financial transactions and cash flow efficiently.
• Digital Banking Services: Enables convenient banking through mobile and internet platforms, including electronic bill payment.
• Trust and Investment Services: Offers wealth management, investment guidance, and trust administration for individuals and institutions.
• Estate Planning Services: Helps clients develop strategies for the future management and distribution of their assets.
• Insurance Products: Provides group life, health, accident, disability, and other employee benefit insurance programs.
• Safe Deposit Box Rental: Offers secure physical storage for valuable documents and possessions.
• Automated Teller Machines (ATMs): Provides widespread access for cash withdrawals and basic banking operations.

```

Major Customers of Isabella Bank (ISBA)

Isabella Bank serves a diversified customer base across its operating counties, providing a range of banking and financial services. Based on the description, the company primarily serves the following categories of customers:

• Individual and Family Customers: This category includes individuals and their families who utilize personal banking services such as checking accounts, savings accounts, certificates of deposit, money market accounts, direct deposits, residential real estate loans, and consumer loans (both secured and unsecured). They also benefit from services like mobile and internet banking, electronic bill pay, automated teller machines, trust and investment services, estate planning, and safe deposit box rentals.
• Business and Commercial Customers: This segment encompasses businesses, including agricultural operations, that require commercial and agricultural real estate loans, cash management services, and business-focused deposit products. The bank supports these entities with their operational and investment financing needs.
• Institutional and Employee Benefit Clients: This category includes institutions and other businesses that access Isabella Bank's offerings for specific financial needs, particularly through its group life, health, accident, disability, and other insurance products, as well as various employee benefit programs designed for their staff.

null

Jerome E. Schwind President and Chief Executive Officer

Jerome E. Schwind assumed the role of President and Chief Executive Officer of Isabella Bank Corporation and CEO of Isabella Bank on January 5, 2024. He has over 30 years of banking experience, having joined Isabella Bank in 1999 and serving in various capacities, including President of the Bank, Vice President of the Corporation, Executive Vice President, and Chief Operations Officer. Prior to joining Isabella Bank, he spent nearly a decade with other banking institutions. Mr. Schwind holds a B.S. from Ferris State University and an MBA from Lake Superior State University. He chairs the Middle Michigan Development Corporation and is on advisory boards for Ferris State University and the Michigan Bankers Association Perry School of Banking.

Gerald "Jerry" Ritzert Chief Financial Officer

Gerald "Jerry" Ritzert, CPA, was appointed Chief Financial Officer of Isabella Bank Corporation, effective January 5, 2026. He brings over 30 years of experience in accounting and finance, including significant leadership roles within the banking industry. His expertise encompasses asset-liability management, capital planning, investment portfolio optimization, and strategic financial reporting. Mr. Ritzert previously served as Senior Vice President Controller and Vice President of Finance at regional and community banks on the East Coast, and also held a Controller position for an international manufacturing company. He holds a Bachelor of Science in Business Administration – Accounting from Robert Morris College.

Neil M. McDonnell President of Isabella Bank

Neil M. McDonnell was appointed President of Isabella Bank effective January 5, 2024. He has over 30 years of banking experience, having joined Isabella Bank in 2018 as Chief Financial Officer. His background includes executive roles at large international banks, local community banks, and de novo banks in the eastern U.S., where he served as CFO, controller, treasurer, compliance and risk officer, and director of finance.

The key risks to Isabella Bank (ISBA) are primarily concentrated in areas common to the banking sector, particularly for regional institutions, including credit quality, interest rate sensitivity, and the increasing landscape of regulatory and operational demands.

1. Credit Risk: Isabella Bank faces exposure to credit risk, which is the potential for losses arising from a borrower's failure to repay a loan or meet contractual obligations. The bank's loan portfolio includes commercial, agricultural, and residential real estate loans, as well as consumer loans. The company's 2025 10-K report details loan portfolio segments by asset class and internal credit ratings, indicating that certain loan classifications, such as "Vulnerable," "Doubtful," and "Loss," may suggest increasing credit risk in specific areas. This risk is particularly pronounced in commercial real estate (CRE) lending, which has shown pockets of vulnerability in the broader regional banking system with rising delinquency rates.
2. Interest Rate Risk and Liquidity Pressures: As a financial institution, Isabella Bank is sensitive to fluctuations in interest rates. The bank's 10-K specifically identifies interest rate and liquidity pressures as risk factors. Rapid changes in interest rates, such as those experienced between 2021 and 2023, can significantly impact the value of fixed-rate securities held by banks. Furthermore, reliance on short-term funding sources, including Federal Funds, repurchase agreements, and Federal Reserve advances, exposes the bank to interest rate volatility and potential liquidity risks.
3. Regulatory Compliance and Operational/Cybersecurity Risks: Isabella Bank operates under extensive supervision from various regulatory bodies, including the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Michigan Department of Insurance and Financial Services (DIFS). This subjects the bank to numerous regulatory and compliance burdens, such as Basel III capital rules, Community Reinvestment Act (CRA) obligations, and anti-money laundering requirements. Additionally, the rise of digital banking and increased reliance on technology expose Isabella Bank to significant operational and cybersecurity threats, including cyber-attacks and fraud, which can lead to financial losses, reputational damage, and complex legal issues. The company actively enhances its online banking security features and engages in community outreach to educate customers on fraud prevention.

The clear emerging threats for Isabella Bank are:

• The rise of fintech companies and neobanks that offer digital-first banking services, often with lower fees and superior online user experiences, directly challenging traditional banks' deposit products, loan offerings, and digital service adoption.
• The increasing entry of major technology companies (Big Tech) into financial services, leveraging their vast user bases and technological capabilities to offer payment solutions, lending, and other financial products, potentially disrupting traditional banking relationships.

Isabella Bank (symbol: ISBA) primarily operates in several Mid-Michigan counties, including Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw. While granular market sizing for all specific banking products and services (such as commercial, agricultural, and residential real estate loans, as well as consumer loans, trust, investment, and insurance products) at the individual county level is not publicly available, the addressable market for deposit products can be estimated based on total deposits within these operating regions. The total deposit market sizes for the primary geographic regions where Isabella Bank operates are as follows, with data from 2024: * **Clare County, Michigan:** The total deposits in the market for Clare County were approximately $403.8 million. * **Gratiot County, Michigan:** The total deposits in the market for Gratiot County were approximately $722.286 million. * **Isabella County, Michigan:** The total deposits in the market for Isabella County were approximately $1.316 billion. * **Mecosta County, Michigan:** The total deposits in the market for Mecosta County were approximately $674.601 million. * **Midland County, Michigan:** The total deposits in the market for Midland County were approximately $1.141 billion. * **Montcalm County, Michigan:** The total deposits in the market for Montcalm County were approximately $722.286 million. The above market sizes are for the specific Mid-Michigan counties mentioned and represent the total deposits held by all financial institutions in those respective markets, providing an addressable market for Isabella Bank's deposit products. Comprehensive, quantifiable market sizes for individual loan types (commercial, agricultural, residential, consumer) or other services like wealth management, trust, and insurance at this detailed county level are not readily available in public data.

Isabella Bank (ISBA) is expected to drive future revenue growth over the next 2-3 years through several key strategies:

1. Loan Portfolio Expansion: Isabella Bank anticipates continued growth in its loan portfolio, particularly in commercial real estate (CRE), commercial and industrial (C&I), and adjustable-rate residential loan originations. This expansion has been a significant contributor to increased profitability and net interest income.

2. Net Interest Margin (NIM) Expansion: The company is focused on improving its net interest margin, which represents the difference between interest income generated and interest paid on deposits. Management expects further expansion of NIM as loans continue to reprice and excess cash is reinvested into higher-yielding assets.

3. Growth in Fee-Based Income: Isabella Bank aims to increase its non-interest income through various fee-generating services. This includes continued growth in wealth management services, which have seen an increase in assets under management and a corresponding boost in wealth fees, as well as revenue from service charges and Bank Owned Life Insurance (BOLI).

Share Repurchases

• In 2025, Isabella Bank repurchased 156,957 shares at an average price of approximately $30.00, totaling $4,709,000.
• As of May 1, 2025, the Board of Directors approved an increase to the share repurchase program by an additional 500,000 shares, making the total authorization available 538,448 shares, with no expiration date.

Share Issuance

• Isabella Bank has active restricted stock plans, with awards reported for 2023, 2024, and 2025, which could potentially dilute existing shareholders.

Outbound Investments

• In 2025, total assets increased due to a $112.8 million increase in loans, an $11.3 million increase in the value of bank-owned life insurance (BOLI) policies, and an $8.8 million increase in available-for-sale (AFS) securities.
• During 2025, the increase in AFS securities was primarily driven by purchases totaling $67.3 million, partially offset by amortizations and maturities of $75.2 million.
• Isabella Bank increased BOLI separate account investments and pursued a strategy to reinvest proceeds from short-duration Treasuries into loans and securities. The BOLI assets increased by $11.3 million, with $10.2 million from new policy purchases and approximately $13 million of existing general account policies being redeployed into separate account policies in 2025.