Company: ISBA
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0000842517-25-000053
Chunk: 105

Company: ISABELLA BANK CORP
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 105
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 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 attention of the loan officer.•Borrower is uncooperative with loan officer.7. VULNERABLE – ClassifiedCredit is considered “Substandard” and warrants placing in nonaccrual status.  Risk of loss is being evaluated and exit strategy options are under review.  Other characteristics that may apply:•Insufficient cash flow to service debt.•Minimal or no payments being received.•Limited options available to avoid the collection process.•Transition status, expect action will take place to collect loan without immediate progress being made.

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8. DOUBTFUL – WorkoutCredit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending.  The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable.  Other characteristics that may apply:•Normal operations are severely diminished or have ceased.•Seriously impaired cash flow.•Original repayment terms materially altered.•Secondary source of repayment is inadequate.•Survivability as a “going concern” is impossible.•Collection process has begun.•Bankruptcy petition has been filed.•Judgments have been filed.•Portion of the loan balance has been charged-off.9. LOSS – Charge-offCredit is considered uncollectible and of such little value that their continuance as bankable assets is not warranted.  This classification is for charged-off loans but does not mean that the asset has absolutely no recovery or salvage value.  These loans are further characterized by:•Liquidation or reorganization under bankruptcy, with poor prospects of collection.•Fraudulently overstated assets and/or