Company: ISBA
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000842517-25-000099
Chunk: 28

Company: ISABELLA BANK CORP
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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.  Net unamortized deferred loan costs were $3,317 and $3,330 at March 31, 2025 and December 31, 2024, respectively.Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $18,000. Borrowers with direct credit needs of more than $18,000 may be serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, 

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we may require the borrower to pledge accounts receivable, inventory, property, or equipment. Government agency guarantee may be required.  Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports.We offer adjustable-rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac.Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price.  Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees.Underwriting criteria for originated residential real estate loans generally include:•Evaluation of the borrower’s ability to make monthly payments.•Evaluation of the value of the property securing the loan.•Ensuring the payment of principal, interest, taxes, and hazard insurance generally does not exceed 28% of a borrower’s gross income.•Ensuring all debt servicing does not exceed 40% of income.•Verification of acceptable credit reports.•Verification of employment, income, and financial information.Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or