Company: ISBA
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0000842517-25-000135
Chunk: 90

Company: ISABELLA BANK CORP
Filing Date: 2025-08-11
Form: 10-Q
Item: Part I, Item 1
Chunk 90
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 and will continue to follow the Basel III capital requirements as described in “Note 6 – Capital Ratios and Shareholders' Equity” of our interim condensed consolidated financial statements included with this Form 10-Q.

Liquidity

Liquidity is monitored regularly by our ALCO, which consists of members of senior management. The committee reviews projected cash flows, key ratios, and liquidity available from both primary and secondary sources.

Our primary sources of liquidity are retail deposits, cash and cash equivalents, and unencumbered AFS securities. Cash, cash equivalents and unencumbered AFS securities totaled $453,330, or 21.02% of assets, as of June 30, 2025, compared to $330,876, or 15.86%, as of December 31, 2024.  The increase in the amount and percentage of primary liquidity is a direct result of an increase in cash, driven by deposit growth.  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.

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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, 2025, we had available lines of credit of $376,974.

We monitor our daily liquidity position to meet our cash flow needs.  We also forecast anticipated funding needs for changes in interest rates and economic conditions, the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits, and regulatory capital requirements.  Our liquidity stress testing is designed with consideration of these and other factors that could pose undue risk to liquidity.

Our liquidity position remained strong at June 30, 2025, which is illustrated in the following table:June 302025March 312025December 312024September 302024June 302024Total cash and cash equivalents$108,554 $69,179 $24,542 $27,378 $23,559 Brokered CD