Isabella Bank Corporation Announces Further Earnings Growth in Third Quarter

Net interest income: Net interest income for the third quarter 2022 improved by $2.5 million or 19% compared to the third quarter of 2021. For the first nine months of 2022, net interest income increased $5.0 million or 12.7% compared to the same period in 2021. While Paycheck Protection Program loan fees declined during the period, rising interest rates within the loan portfolio and growth in investment securities led to a $2.8 million increase in gross interest income during the nine-month period ended September 30, 2022, compared to the same period in 2021. The Corporation continued to benefit from a strategic reduction in higher-cost borrowings as interest expense on deposits and borrowings decreased $2.2 million, or 37.1%, for the nine-month period ended September 30, 2022, compared to the same period in 2021. The provision for loan loss for the first nine months of 2022 was $540,000 compared to a $599,000 provision reversal during the same period in 2021, when initial concerns over potential credit quality issues related to the onset of the pandemic did not materialize.

Noninterest income and expenses: Noninterest income increased $180,000 during the first nine months of this year, compared to the same period in 2021. A $1.1 million increase in service charges and fees including $605,000 of income related to mortgage servicing rights was offset by a $891,000 reduction in gain on sale of loans as residential mortgage originations declined in comparison to 2021. Noninterest expenses for the first nine months of 2022 increased $2.4 million, as a result of increased compensation and benefits cost, other losses, consulting, donations and community relations expenses.

Net yield on interest earning assets: The Corporation's fully taxable equivalent net yield on interest earning assets was 3.28% and 2.85% for the three months ended September 30, 2022 and 2021, an increase of 43 basis points. The net yield was 3.10% for the nine-month period ended September 30, 2022, compared to 2.87% for the same period in 2021. Considering the rate increases during the first nine months of 2022 and the anticipation of future rate increases in the remainder of the year, the Corporation expects continued improvement in the net yield on interest earning assets.

Assets: The Corporation had $2.06 billion in total assets and $2.8 billion of assets under management as of September 30, 2022. Managed assets included loans sold and serviced of $268.9 million and $464.1 million in investment and trust assets managed by Isabella Wealth.

Loans: Loans outstanding as of September 30, 2022 totaled $1.2 billion. Gross loans declined $64.9 million since December 31, 2021 due to a decrease in the amount of $70.5 million in advances to mortgage brokers, which is included within the commercial loan portfolio, however, is not considered a component of the Corporation's core lending business. Credit quality remained strong as evidenced by total past due and nonaccrual loans which were 0.32% of gross loans as of September 30, 2022.

Deposits: Total deposits were $1.8 billion as of September 30, 2022, an increase of $80.7 million, or 4.7%, since December 31, 2021.  Growth in accounts from new customers is the driving factor behind this increase.

Capital: The Bank is considered a "well-capitalized" institution, as its capital ratios exceeded the minimum designated requirements. As of September 30, 2022, the Bank's Tier 1 Leverage Ratio was 9.07%, Tier 1 Capital Ratio was 14.10% and Total Capital Ratio was 14.83%. The minimum requirements to be considered well capitalized are a Tier 1 Leverage Ratio of 5.0%, Tier 1 Capital Ratio of 8.0% and Total Capital Ratio of 10.0%.

Dividend: During the third quarter of 2022, the Corporation paid a $0.27 per common share cash dividend. Based on the Corporation's closing stock price of $21.40 as of September 30, 2022, the annualized cash dividend yield was 5.05%.

Isabella Bank Corporation (OTCQX: ISBA) is the parent holding company of Isabella Bank, a state chartered community bank headquartered in Mt. Pleasant, Michigan. Isabella Bank was established in 1903 and has been committed to serving the local banking needs of its customers and communities for 119 years. The Bank offers personal and commercial lending and deposit products, as well as investment, trust, and estate planning services through Isabella Wealth. The Bank has locations throughout seven Mid-Michigan counties: Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw.

For more information about Isabella Bank Corporation, visit the investors link at www.isabellabank.com. Isabella Bank Corporation common stock is quoted on the OTCQX tier of the OTC Markets Group, Inc.'s electronic quotation system (www.otcmarkets.com) under the symbol "ISBA." The Corporation's market maker is Boenning & Scattergood, Inc. (www.boenninginc.com) and its investor relations firm is Renmark Financial Communications, Inc. (www.renmarkfinancial.com).

This press release includes forward-looking statements. To the extent that the foregoing information refers to matters that may occur in the future, please be aware that such forward-looking statements may differ materially from the actual results. Additional information concerning some of the factors that could cause materially different results is included in the sections titled "Risk Factors" and "Forward Looking Statements" set forth in Isabella Bank Corporation's filings with the Securities and Exchange Commission, which are available from the Securities and Exchange Commission's Public Reference facilities and from its website at www.sec.gov.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
	September 30 2022		December 31 2021
ASSETS
Cash and cash equivalents
Cash and demand deposits due from banks	$           26,763		$           25,563
Fed Funds sold and interest bearing balances due from banks	72,149		79,767
Total cash and cash equivalents	98,912		105,330
Available-for-sale securities, at fair value	581,233		490,601
Mortgage loans available-for-sale	934		1,735
Loans
Commercial	730,504		807,439
Agricultural	96,850		93,955
Residential real estate	334,412		326,361
Consumer	74,385		73,282
Gross loans	1,236,151		1,301,037
Less allowance for loan and lease losses	9,677		9,103
Net loans	1,226,474		1,291,934
Premises and equipment	25,107		24,419
Corporate owned life insurance policies	32,764		32,472
Equity securities without readily determinable fair values	15,496		17,383
Goodwill and other intangible assets	48,290		48,302
Accrued interest receivable and other assets	34,767		19,982
TOTAL ASSETS	$      2,063,977		$      2,032,158
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest bearing	$         510,127		$         448,352
Interest bearing demand deposits	368,537		364,563
Certificates of deposit under $250 and other savings	842,081		818,841
Certificates of deposit over $250	70,288		78,583
Total deposits	1,791,033		1,710,339
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