Company: ISBA
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0000842517-25-000053
Chunk: 104

Company: ISABELLA BANK CORP
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 104
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 FreeCredit has strong financial condition and solid earnings history, characterized by:•High liquidity, strong cash flow, low leverage.•Unquestioned ability to meet all obligations when due.•Experienced management, with management succession in place.•Secured by cash.2. HIGH QUALITY – Limited RiskCredit with sound financial condition and a positive trend in earnings supplemented by:•Favorable liquidity and leverage ratios.•Ability to meet all obligations when due.•Management with successful track record.•Steady and satisfactory earnings history.•If loan is secured, collateral is of high quality and readily marketable.•Access to alternative financing.•Well defined primary and secondary source of repayment.•If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident.3. HIGH SATISFACTORY – Reasonable RiskCredit with satisfactory financial condition and further characterized by:•Working capital adequate to support operations.•Cash flow sufficient to pay debts as scheduled.•Management experience and depth appear favorable.•Loan performing according to terms.•If loan is secured, collateral is acceptable and loan is fully protected.4. SATISFACTORY – Acceptable RiskCredit with bankable risks, although some signs of weaknesses are shown:•Would include most start-up businesses.•Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year.•Management’s abilities are apparent yet unproven.•Weakness in primary source of repayment with adequate secondary source of repayment.•Loan structure generally in accordance with policy.•If secured, loan collateral coverage is marginal.

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To be classified as less than satisfactory, only one of the following criteria must be met.5. SPECIAL MENTION – CriticizedCredit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard.  The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan:•Downward trend in sales, profit levels, and margins.•Impaired working capital position.•Cash flow is strained in order to meet debt repayment.•Loan delinquency (30-60 days) and overdrafts may occur.•Shrinking equity cushion.•Diminishing primary source of repayment and questionable secondary source.•Management abilities are questionable.•Weak industry conditions.•Litigation pending against the borrower.•Loan may need to be restructured to improve collateral position or reduce payments.•Collateral or guaranty offers limited protection.•Negative debt