Company: ISBA
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000842517-25-000099
Chunk: 78

Company: ISABELLA BANK CORP
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 78
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 following table sets forth our ratios as of:March 312025December 312024September 302024June 302024March 312024Common equity tier 1 capital12.58 %12.21 %12.08 %12.37 %12.36 %Tier 1 capital12.58 %12.21 %12.08 %12.37 %12.36 %Total capital15.50 %15.06 %14.90 %15.29 %15.31 %Tier 1 leverage8.96 %8.86 %8.77 %8.83 %8.80 %

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 $427,091, or 20.31% of assets, as of March 31, 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 loan payoffs and deposit growth, and an increase in unencumbered AFS securities.  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.

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 March 31, 2025, we had available lines of credit of $377,824.

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