Company: ISBA
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0000842517-25-000053
Chunk: 79

Company: ISABELLA BANK CORP
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 79
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 inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.The ACL consists of a general component and loans individually analyzed.  The general component covers loans not specifically analyzed and is based on historical loss experience, current conditions, and reasonable and supportable forecasts. The general component also includes uncertainties that we believe could affect our estimate of probable losses based on qualitative factors.Loans in nonaccrual status are individually analyzed on a loan-by-loan basis.  Loans evaluated individually are not included in the general, or pooled, component of the ACL.  For collateralized loans, the loan's specific allowance is measured by the fair value of the collateral approach.  The specific reserve is based on the fair value of the collateral, less costs to sell if foreclosure is probable, and an allowance is established when the collateral value is lower than the carrying value of the loan.  When the discounted cash flow method is used to measure the loan's specific allowance, the effective interest rate is used to discount expected cash flows to incorporate expected prepayments.  An allowance is established when the discounted cash flows are lower than the carrying value of the loan.  For large groups of smaller-balance, homogeneous loans, we may collectively evaluate these loans for measurement of an allowance.LOAN MODIFICATIONS: A loan modification includes terms outside of normal lending practices to a borrower experiencing financial difficulty.  Loans are considered to have been modified when, due to a borrower’s financial difficulties, certain concessions are made to the borrower that would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid 

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foreclosure or repossession of collateral.  We closely monitor the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.LOANS HELD FOR SALE: Mortgage loans held for sale on the secondary market are carried at the lower of cost or fair value as determined by aggregating outstanding commitments from investors or current investor yield requirements.  Net unrealized losses, if any, would be recognized as a component of other noninterest expenses.Mortgage loans held for sale are sold with the mortgage servicing rights retained by us.  Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold.ACCRUED INTEREST: Accrued interest receivable balances are presented within other assets on the consolidated balance sheet.  Acc