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Capital Ratios and Shreholders' Equity | 12 Months Ended
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Dec. 31, 2024
Equity [Abstract] |
Equity | Capital Ratios and Shareholders' Equity The Corporation (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the FRB and the FDIC. Failure to meet minimum capital requirements can initiate mandatory and possibly additional discretionary actions by the FRB and the FDIC that, if undertaken, could have a material effect on our financial statements. Under regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that include quantitative measures of assets, liabilities, capital, and certain off-balance-sheet items, as calculated under regulatory accounting standards. Our capital amounts and classifications are also subject to qualitative judgments by the FRB and the FDIC about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the following table) of total capital, tier 1 capital, and common equity tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and tier 1 capital to average assets (as defined). As of December 31, 2024 and 2023, we met all capital adequacy requirements. 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. The common equity tier 1 capital ratio has a minimum requirement of 4.50%. The minimum standard for primary, or Tier 1 capital is 6.00% and the minimum standard for total capital is 8.00%. As of December 31, 2024 and 2023, the most recent notifications from the FRB and the FDIC categorized us as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain 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 Rules. Capital requirements to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under Basel III Capital Rules. There were no conditions or events since the notifications that we believe have changed our categories. The following tables set forth these requirements and our ratios as of December 31:
| 2024
| Actual |  | Minimum Capital Required Plus Capital Conservation Buffer |  | Minimum Capital Required To Be Considered Well Capitalized (1)
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
Common equity Tier 1 capital to risk weighted assets |  |  |  |  |  |
Isabella Bank | $ | 172,589 |  |  | 11.53 | % |  | $ | 104,783 |  |  | 7.00 | % |  | $ | 97,299 |  |  | 6.50 | %
Consolidated | 183,348 |  |  | 12.21 | % |  | 105,136 |  |  | 7.00 | % |  | N/A |  | N/A
Tier 1 capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 172,589 |  |  | 11.53 | % |  | 127,237 |  |  | 8.50 | % |  | 119,753 |  |  | 8.00 | %
Consolidated | 183,348 |  |  | 12.21 | % |  | 127,665 |  |  | 8.50 | % |  | N/A |  | N/A
Total capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 185,997 |  |  | 12.43 | % |  | 157,175 |  |  | 10.50 | % |  | 149,691 |  |  | 10.00 | %
Consolidated | 226,179 |  |  | 15.06 | % |  | 157,703 |  |  | 10.50 | % |  | N/A |  | N/A
Tier 1 capital to average assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 172,589 |  |  | 8.36 | % |  | 82,602 |  |  | 4.00 | % |  | 103,252 |  |  | 5.00 | %
Consolidated | 183,348 |  |  | 8.86 | % |  | 82,803 |  |  | 4.00 | % |  | N/A |  | N/A
| 2023
| Actual |  | Minimum Capital Required Plus Capital Conservation Buffer |  | Minimum Capital Required To Be Considered Well Capitalized (1)
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
Common equity Tier 1 capital to risk weighted assets |  |  |  |  |  |  |  |
Isabella Bank | $ | 178,316 |  |  | 12.48 | % |  | $ | 100,043 |  |  | 7.00 | % |  | $ | 92,897 |  |  | 6.50 | %
Consolidated | 180,014 |  |  | 12.54 | % |  | 100,449 |  |  | 7.00 | % |  | N/A |  | N/A
Tier 1 capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 178,316 |  |  | 12.48 | % |  | 121,481 |  |  | 8.50 | % |  | 114,335 |  |  | 8.00 | %
Consolidated | 180,014 |  |  | 12.54 | % |  | 121,973 |  |  | 8.50 | % |  | N/A |  | N/A
Total capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 191,739 |  |  | 13.42 | % |  | 150,065 |  |  | 10.50 | % |  | 142,919 |  |  | 10.00 | %
Consolidated | 222,772 |  |  | 15.52 | % |  | 150,673 |  |  | 10.50 | % |  | N/A |  | N/A
Tier 1 capital to average assets |  |  |  |  |  |  |  |  |  |  |
Isabella Bank | 178,316 |  |  | 8.71 | % |  | 81,935 |  |  | 4.00 | % |  | 102,419 |  |  | 5.00 | %
Consolidated | 180,014 |  |  | 8.76 | % |  | 82,154 |  |  | 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 subordinated debt, net of unamortized issuance costs. There are no significant regulatory constraints placed on our capital. At December 31, 2024, the Bank exceeded all minimum capital requirements. The following table provides a roll-forward of the changes in AOCI by component for the years ended December 31, 2022, 2023, and 2024 (net of tax):
| Unrealized Gains (Losses) on AFS Securities |  | Change in Unrecognized Pension Cost on Defined Benefit Pension Plan |  | Total
Balance, December 31, 2021 | $ | 3,873 |  |  | $ | (2,014) |  |  | $ | 1,859 |
OCI before reclassifications | (50,015) |  |  | 762 |  |  | (49,253) |
Amounts reclassified from AOCI | — |  |  | 59 |  |  | 59 |
Subtotal | (50,015) |  |  | 821 |  |  | (49,194) |
Tax effect | 10,314 |  |  | (173) |  |  | 10,141 |
OCI, net of tax | (39,701) |  |  | 648 |  |  | (39,053) |
Balance, December 31, 2022 | (35,828) |  |  | (1,366) |  |  | (37,194) |
OCI before reclassifications | 13,365 |  |  | 752 |  |  | 14,117 |
Amounts reclassified from AOCI | (67) |  |  | 95 |  |  | 28 |
Subtotal | 13,298 |  |  | 847 |  |  | 14,145 |
Tax effect | (2,669) |  |  | (178) |  |  | (2,847) |
OCI, net of tax | 10,629 |  |  | 669 |  |  | 11,298 |
Balance, December 31, 2023 | (25,199) |  |  | (697) |  |  | (25,896) |
OCI before reclassifications | 5,339 |  |  | 462 |  |  | 5,801 |
Amounts reclassified from AOCI | — |  |  | (82) |  |  | (82) |
Subtotal | 5,339 |  |  | 380 |  |  | 5,719 |
Tax effect | (1,098) |  |  | (80) |  |  | (1,178) |
OCI, net of tax | 4,241 |  |  | 300 |  |  | 4,541 |
Balance, December 31, 2024 | $ | (20,958) |  |  | $ | (397) |  |  | $ | (21,355) |
Included in OCI are changes in unrealized gains and losses related to auction rate money market preferred stocks. Auction rate money market preferred stocks, 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 years ended December 31:
| 2024 |  | 2023 |  | 2022
| Auction Rate Money Market Preferred Stocks |  | All Other AFS Securities |  | Total |  | Auction Rate Money Market Preferred Stocks |  | All Other AFS Securities |  | Total |  | Auction Rate Money Market Preferred Stocks |  | All Other AFS Securities |  | Total
Unrealized gains (losses) arising during the period | $ | 113 |  |  | $ | 5,226 |  |  | $ | 5,339 |  |  | $ | 589 |  |  | $ | 12,776 |  |  | $ | 13,365 |  |  | $ | (900) |  |  | $ | (49,115) |  |  | $ | (50,015) |
Reclassification adjustment for net (gains) losses included in net income | — |  |  | — |  |  | — |  |  | — |  |  | (67) |  |  | (67) |  |  | — |  |  | — |  |  | — |
Net unrealized gains (losses) | 113 |  |  | 5,226 |  |  | 5,339 |  |  | 589 |  |  | 12,709 |  |  | 13,298 |  |  | (900) |  |  | (49,115) |  |  | (50,015) |
Tax effect | — |  |  | (1,098) |  |  | (1,098) |  |  | — |  |  | (2,669) |  |  | (2,669) |  |  | — |  |  | 10,314 |  |  | 10,314 |
Unrealized gains (losses), net of tax | $ | 113 |  |  | $ | 4,128 |  |  | $ | 4,241 |  |  | $ | 589 |  |  | $ | 10,040 |  |  | $ | 10,629 |  |  | $ | (900) |  |  | $ | (38,801) |  |  | $ | (39,701) |
The following table details reclassification adjustments and the related affected line items in our consolidated statements of income for the years ended December 31:
Details about AOCI components | Amount Reclassified from AOCI |  | Affected Line Item in the Consolidated Statements of Income
| 2024 |  | 2023 |  | 2022 |  |
Unrealized gains (losses) on AFS securities |  |  |  |  |  |  |
| $ | — |  |  | $ | 67 |  |  | $ | — |  |  | Other noninterest income
| — |  |  | 14 |  |  | — |  |  | Income tax expense
| $ | — |  |  | $ | 53 |  |  | $ | — |  |  | Net income
Change in unrecognized pension cost on defined benefit pension plan |  |  |  |  |  |  |
| $ | (82) |  |  | $ | 95 |  |  | $ | 59 |  |  | Other noninterest expenses
| (17) |  |  | 20 |  |  | 12 |  |  | Income tax expense
| $ | (65) |  |  | $ | 75 |  |  | $ | 47 |  |  | Net income

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