Company: ISBA
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0000842517-25-000210
Chunk: 43

Company: ISABELLA BANK CORP
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 1
Chunk 43
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 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 service coverage, however, the credit is well collateralized, and payments are current.6. SUBSTANDARD – ClassifiedCredit is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. There is a distinct possibility we will implement collection procedures if the loan deficiencies are not corrected. Any commercial loan placed in nonaccrual status will be rated “7” or worse. In addition, the following characteristics may apply:•Sustained losses have severely eroded the equity and cash flow.•Deteriorating liquidity.•Serious management problems or internal fraud.•Original repayment terms liberalized.•Likelihood of bankruptcy.•Inability to access other funding sources.•Reliance on secondary source of repayment.•Litigation filed against borrower.•Interest non-accrual may be warranted.•Collateral provides little or no value.•Requires excessive