ISABELLA BANK CORP
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
ISBA$40.64+0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0000842517-26-000099
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0000842517-26-000180
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 116 current paragraphs.
74 unchanged; 21 reworded; 16 added; 6 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Recent Developments
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
•elevated asset prices;
Current report
•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;
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
(3)Includes FTE adjustments of $130,000, $138,000, and $178,000, respectively.
Current report
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.
Removed paragraphs (6)
Previous report
(Dollars in thousands except per share amounts and ratios, unless otherwise noted)
Previous report
Reclassifications
Previous report
Certain amounts reported in the interim 2025 consolidated financial statements have been reclassified to conform with the 2026 presentation. The most significant of these changes related to amounts that were previously reported as commercial and industrial loans being reclassified as commercial real estate loans.
Previous report
Total assets increased $42,508 to $2,251,956 as of March 31, 2026. This increase was primarily due to an increase of $23,103 in interest bearing cash and a $22,577 increase in loans.
Previous report
Net income in first quarter 2026 was $4,992, or $0.68 per diluted share, compared with $3,949, or $0.53 per diluted share, in first quarter 2025.
Previous report
Noninterest expenses for the three-month period ended March 31, 2026 increased $1,363 in comparison to the same period in 2025. Compensation and benefit expenses increased $545, reflecting annual merit increases, incentives, and higher medical insurance claims compared to first quarter 2025. Other professional services increased $304 as a result of costs related to profitability initiatives and product implementation costs.
Reworded paragraphs (21)
Previous wording
•the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas, and its impact on market interest rates, the labor market, the economy as a whole, and credit quality;
Current wording
•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;
Previous wording
The Corporation maintains an Internet web site at ir.isabellabank.com. The Corporation makes available, free of charge, on its web site (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 web site (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.
Current wording
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.
Previous wording
The Corporation routinely posts important information for investors on its web site (under ir.isabellabank.com and, more specifically, under the News tab at ir.isabellabank.com/news). The Corporation intends to use its web site 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 web site, in addition to following the Corporation’s press releases, SEC filings, public conference calls, presentations and webcasts.
Current wording
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.
Previous wording
The information contained on, or that may be accessed through, the Corporation’s web site is not incorporated by reference into, and is not a part of, this Form 10-Q.
Current wording
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.
Previous wording
The AFS securities portfolio decreased $5,047 to $492,744 as of March 31, 2026. The decrease was a result of maturities and principal paydowns of $53,053, offset by $48,918 in purchases. Net unrealized losses on AFS securities were $10,622 as of March 31, 2026, compared to $9,898 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%.
Current wording
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%.
Previous wording
Loans increased $22,577 to $1,558,941 as of March 31, 2026. Adjusted loans (non-GAAP), which exclude advances to mortgage brokers, increased $27,170, primarily by growth in the commercial real estate and residential real estate portfolios of $20,885 and $10,453, respectively. Most residential originations were adjustable rate products, which are put 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. Advances to mortgage brokers decreased $4,593 during the quarter due to lower participation demand from our counterparty.
Current wording
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.
Previous wording
The ACL increased $287 to $14,014 as of March 31, 2026. The increase is due to loan growth and an increase in loss rates driven by loans charged off during the quarter. Nonaccrual loans were $4,418 as of March 31, 2026 compared to $4,578 at December 31, 2025. Past due and accruing accounts between 30 to 89 days as a percentage of total loans was 0.37% at March 31, 2026, compared to 0.44% at year-end 2025. We believe that our credit quality remains strong.
Current wording
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.
Previous wording
Total deposits increased $40,191 to $1,859,845 as of March 31, 2026. The growth was primarily a result of new customer relationships and included a $40,913 increase in money market accounts and a $20,303 increase in savings deposits. The growth was offset by a $15,126 decline in noninterest bearing deposits and a $3,666 decline in certificates of deposit.
Current wording
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.
Previous wording
Total equity was $233,961, or $31.90 per share, at March 31, 2026 compared to $231,396, or $31.60 per share, as of December 31, 2025. Our tangible book value per share (non-GAAP) was $25.32 as of March 31, 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 $1.17 and $1.09 for the respective periods. Share repurchases totaled 8,062 during the first three months of 2026 for a value of $402 at an average repurchase price of $49.86 per share.
Current wording
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.
Previous wording
We continue to have robust liquidity levels and capital. As of March 31, 2026, we had $817,775 of unencumbered sources of liquidity and strong consolidated capital ratios; the Tier 1 Leverage Ratio was 8.89%, Tier 1 risk-based capital was 11.71%, and Total risk-based capital was 14.01%.
Current wording
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%.
Previous wording
Comparison of Operating Results for the three months ended March 31, 2026, and 2025, unless otherwise noted
Current wording
Comparison of Operating Results for the three and six months ended June 30, 2026, and 2025, unless otherwise noted
Previous wording
Net interest income was $16,882 in first quarter 2026 and $14,525 in first quarter 2025, representing 3.33% and 3.06% of earning assets, or NIM on an FTE basis, respectively. The book yield from securities was 2.52% and 2.20% during the first quarters of 2026 and 2025, respectively. Our yield on loans expanded to 5.78% in first quarter 2026 from 5.71% in first quarter 2025. The increase in loan yields was primarily due to higher rates on new loans and variable rate commercial loans that continue to reprice. Our cost of interest-bearing liabilities in first quarter 2026 decreased to 2.14% from 2.26% in first quarter 2025 due to lower rates on money market and certificate of deposit products.
Current wording
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.
Previous wording
The provision for credit losses was $604 in first quarter 2026, driven by a $287 increase in the ACL on loans, net charge offs totaling $253, and an increase in the reserve for unfunded commitments. The provision for credit losses in first quarter 2025 was a credit of $107 due to the change in ACL on loans and $52 in net recoveries, offset by an increase in the reserve for unfunded commitments.
Current wording
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.
Previous wording
Noninterest income for the three months ended March 31, 2026 and 2025 was $4,361 and $3,528, respectively. Service charges and fees increased $398 as a result of internal initiatives designed to align our fees with the market. Wealth management fees grew $129 due to growth in assets under management since first quarter 2025. Earnings on BOLI policies increased $76 compared to first quarter 2025 due to additional investments in a separate account BOLI in 2025. Other noninterest income in 2026 includes a $131 gain related to a death benefit from a BOLI policy.
Current wording
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.
Previous wording
Income tax expense for the three months ended March 31, 2026 and 2025 was $985 and $912, respectively, while the ETR for the same periods was 16% and 19%, respectively. The ETR in the first three months of 2025 included a one-time tax expense totaling $166 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 15% for the first three months of 2025.
Current wording
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.
Previous wording
(3)Includes FTE adjustments of $138, $138, and $184, respectively.
Current wording
(3)Includes FTE adjustments of $268,000 and $362,000, respectively.
Previous wording
Capital consists solely of common stock, retained earnings, and accumulated other comprehensive income (loss). We are authorized to raise capital through dividend reinvestment, employee and director stock purchases, and shareholder stock purchases. Pursuant to these authorizations, we issued 9,682 shares or $433 of common stock during the first three months of 2026, as compared to 17,332 shares or $419 of common stock during the same period in 2025. We 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 $156 and $167 during the three-month periods ended March 31, 2026 and 2025, respectively. We also grant restricted stock awards pursuant to the RSP. Pursuant to this plan, we increased shareholders’ equity by $16 during the first three months of 2026, as compared to $7 during the same period in 2025.
Current wording
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.
Previous wording
We have publicly announced a common stock repurchase program. Pursuant to this repurchase program, we repurchased 8,062 shares or $402 of common stock during the first three months of 2026 and 45,582 shares or $1,145 of common stock during the first three months of 2025. As of March 31, 2026, we were authorized to repurchase up to an additional 453,210 shares of common stock under the repurchase program.
Current wording
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.
Previous wording
Our primary sources of liquidity are retail deposits, cash and cash equivalents, and unencumbered AFS securities. Cash, cash equivalents and unencumbered AFS securities totaled $303,441, or 13.47% of assets, as of March 31, 2026, compared to $337,011, 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.
Current wording
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.
Previous wording
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 March 31, 2026, we had available lines of credit of $397,670.
Current wording
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.
Previous wording
(1) Includes estimated unencumbered lendable value of FHLB collateral of $170,000 as of March 31, 2026.
Current wording
(1) Includes estimated unencumbered lendable value of FHLB collateral of $120.0 million as of June 30, 2026.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
(1) Includes loans HFS and nonaccrual loans.
Current report — wording carried from elsewhere
(2)Average balances for AFS securities are based on amortized cost.
Current report — wording carried from elsewhere
(4)Includes average interest bearing deposits with other banks, net of FRB daily cash letter.
Current report — wording carried from elsewhere
(5) Non-GAAP financial measure; refer to the "Reconciliation of Non-GAAP Financial Measures" section of this Form 10-Q.