XML 31 R18.htm IDEA: XBRL DOCUMENT v3.25.4
Capital Ratios and Shareholders' Equity
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
Capital Ratios and Shareholders' 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, 2025 and 2024, 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. As of December 31, 2025 and 2024, 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 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 Basel III capital guidelines. 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, both on a bank-only and on a consolidated basis, as of December 31:
2025
 ActualMinimum Capital
Required Plus Capital Conservation Buffer
Minimum Capital
Required To Be Considered
Well Capitalized (1)
 AmountRatioAmountRatioAmountRatio
Common equity Tier 1 capital to risk weighted assets
Isabella Bank$182,116 11.20 %$113,783 7.00 %$105,656 6.50 %
Consolidated191,137 11.73 %114,114 7.00 %N/AN/A
Tier 1 capital to risk weighted assets
Isabella Bank182,116 11.20 %138,165 8.50 %130,038 8.00 %
Consolidated191,137 11.73 %138,568 8.50 %N/AN/A
Total capital to risk weighted assets
Isabella Bank196,336 12.08 %170,675 10.50 %162,547 10.00 %
Consolidated234,871 14.41 %171,172 10.50 %N/AN/A
Tier 1 capital to average assets
Isabella Bank182,116 8.45 %86,170 4.00 %107,713 5.00 %
Consolidated191,137 8.84 %86,476 4.00 %N/AN/A
2024
 ActualMinimum Capital
Required Plus Capital Conservation Buffer
Minimum Capital
Required To Be Considered
Well Capitalized (1)
 AmountRatioAmountRatioAmountRatio
Common equity Tier 1 capital to risk weighted assets
Isabella Bank$172,589 11.53 %$104,783 7.00 %$97,299 6.50 %
Consolidated183,348 12.21 %105,136 7.00 %N/AN/A
Tier 1 capital to risk weighted assets
Isabella Bank172,589 11.53 %127,237 8.50 %119,753 8.00 %
Consolidated183,348 12.21 %127,665 8.50 %N/AN/A
Total capital to risk weighted assets
Isabella Bank185,997 12.43 %157,175 10.50 %149,691 10.00 %
Consolidated226,179 15.06 %157,703 10.50 %N/AN/A
Tier 1 capital to average assets
Isabella Bank172,589 8.36 %82,602 4.00 %103,252 5.00 %
Consolidated183,348 8.86 %82,803 4.00 %N/AN/A
(1) “Well-capitalized” minimum Common Equity Tier 1 to Risk-Weighted and Leverage Ratio are not formally defined under applicable regulations for bank holding companies.
Total capital includes Tier 1 capital and Tier 2 capital. Tier 2 capital includes a permissible portion of the allowances for credit losses and subordinated debt, net of unamortized issuance costs. There are no significant regulatory constraints placed on our capital. At December 31, 2025, the Bank exceeded all minimum Basel III risk-based capital requirements with the capital conservation buffer.
The following table provides a roll-forward of the changes in AOCI by component for the years ended December 31, 2023, 2024, and 2025 (net of tax):
Unrealized
Gains
(Losses) on
AFS
Securities		Change in Unrecognized Pension Cost on Defined
Benefit
Pension Plan		Total
Balance, December 31, 2022$(35,828)$(1,366)$(37,194)
OCI before reclassifications13,365 752 14,117 
Amounts reclassified from AOCI(67)95 28 
Subtotal13,298 847 14,145 
Tax effect(2,669)(178)(2,847)
OCI, net of tax10,629 669 11,298 
Balance, December 31, 2023(25,199)(697)(25,896)
OCI before reclassifications5,339 462 5,801 
Amounts reclassified from AOCI— (82)(82)
Subtotal5,339 380 5,719 
Tax effect(1,098)(80)(1,178)
OCI, net of tax4,241 300 4,541 
Balance, December 31, 2024(20,958)(397)(21,355)
OCI before reclassifications16,589 545 17,134 
Amounts reclassified from AOCI— (91)(91)
Subtotal16,589 454 17,043 
Tax effect(3,616)(95)(3,711)
OCI, net of tax12,973 359 13,332 
Balance, December 31, 2025$(7,985)$(38)$(8,023)
Included in OCI are changes in unrealized gains and losses related to certain auction rate money market preferred stocks. These investments, for federal income tax purposes, have no deferred federal income taxes related to unrealized gains or losses given the nature of the investments.
A summary of the components of unrealized gains on AFS securities included in OCI follows for the years ended December 31:
 202520242023
Auction Rate Money Market PreferredAll Other AFS SecuritiesTotalAuction Rate Money Market PreferredAll Other AFS SecuritiesTotalAuction Rate Money Market PreferredAll Other AFS SecuritiesTotal
Unrealized gains (losses) arising during the period$(631)$17,220 $16,589 $113 $5,226 $5,339 $589 $12,776 $13,365 
Reclassification adjustment for net (gains) losses included in net income— — — — — — — (67)(67)
Net unrealized gains (losses)(631)17,220 16,589 113 5,226 5,339 589 12,709 13,298 
Tax effect— (3,616)(3,616)— (1,098)(1,098)— (2,669)(2,669)
Unrealized gains (losses), net of tax$(631)$13,604 $12,973 $113 $4,128 $4,241 $589 $10,040 $10,629 
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 componentsAmount
Reclassified from
AOCI		Affected Line Item in the
Consolidated
Statements of Income
202520242023
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
$(91)$(82)$95 Other noninterest expenses
(19)(17)20 Income tax expense
$(72)$(65)$75 Net income