Company: ISBA
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0000842517-25-000053
Chunk: 58

Company: ISABELLA BANK CORP
Filing Date: 2025-03-12
Form: 10-K
Item: Item 7
Chunk 58
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Table of Contents

The following tables summarize our interest rate sensitivity for 12 and 24 months as of December 31, 2024 and 2023.  The results displayed in the tables reflect the modeling of immediate shifts in the yield curve and a flat balance sheet and do not reflect actual or expected changes.December 31, 202412 Months24 MonthsImmediate basis point change assumption (short-term)-200-100100200-200-100100200Percent change in net interest income vs. constant rate(3.44)%(1.55)%1.45 %2.83 %(4.67)%(2.18)%1.22 %2.00 %

December 31, 202312 Months24 MonthsImmediate basis point change assumption (short-term)-200-100100200-200-100100200Percent change in net interest income vs. constant rate0.94 %0.49 %(0.54)%(1.07)%1.41 %0.97 %(0.61)%(1.37)%

Gap analysis, the secondary method to measure IRR, measures the cash flows and/or the earliest repricing of our interest bearing assets and liabilities.  This analysis is useful for measuring trends in the repricing characteristics of the balance sheet.  Significant assumptions are required in this process because of the embedded repricing options contained in assets and liabilities.  Residential real estate and consumer loans allow the borrower to repay the balance prior to maturity without penalty, while commercial and agricultural loans may have prepayment penalties.  The amount of prepayments is dependent upon many factors, including the interest rate of a given loan in comparison to the current offering rates, the level of home sales, and the overall availability of credit in the marketplace.  Generally, a decrease in interest rates will result in an increase in cash flows from these assets.  Savings and demand accounts may generally be withdrawn on request without prior notice.  The timing of cash flows from these deposits is estimated based on historical experience.  Certificates of deposit have penalties that discourage early withdrawals.

We do not believe there has been a material change in the nature or categories of our primary market risk exposure, or the particular markets that present the primary risk of loss. We do not know of or expect there to be any material change in the general nature of our primary market risk exposure in the near term, and we do not expect to make material changes to our market risk methods in the near term. We may