Capital Ratios and Shareholders' Equity

9 Months Ended

Sep. 30, 2025

As of September 30, 2025 and December 31, 2024, the most recent notifications from the FRB and the FDIC categorized us as “well capitalized” under the FDIC's regulatory framework for prompt corrective action and the Basel III capital guidelines. To be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1, and Tier 1 leverage ratios as set forth in the following tables. The minimum requirements presented below include the minimum required capital levels based on the Basel III capital guidelines. Capital requirements to be considered “well capitalized” are based upon the FDIC's prompt corrective action regulations, as amended to reflect the changes under the Basel III capital guidelines. There were no conditions or events since the notifications that we believe have changed our categories. The following tables set forth these requirements and our ratios, both on a bank-only and on a consolidated basis, as of:


	September 30, 2025
	Actual				Minimum Capital Required Plus Capital Conservation Buffer				Minimum Capital Required To Be Considered Well Capitalized (1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity Tier 1 capital to risk weighted assets
Isabella Bank	$	187,258	12.26	%	$	106,874	7.00	%	$	99,240	6.50	%
Consolidated	189,547		12.37	%	107,266		7.00	%	N/A		N/A
Tier 1 capital to risk weighted assets
Isabella Bank	187,258		12.26	%	129,776		8.50	%	122,142		8.00	%
Consolidated	189,547		12.37	%	130,251		8.50	%	N/A		N/A
Total capital to risk weighted assets
Isabella Bank	201,078		13.17	%	160,311		10.50	%	152,677		10.00	%
Consolidated	232,859		15.20	%	160,898		10.50	%	N/A		N/A
Tier 1 capital to average assets
Isabella Bank	187,258		8.63	%	86,788		4.00	%	108,486		5.00	%
Consolidated	189,547		8.71	%	87,019		4.00	%	N/A		N/A


	December 31, 2024
	Actual				Minimum Capital Required Plus Capital Conservation Buffer				Minimum Capital Required To Be Considered Well Capitalized (1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity Tier 1 capital to risk weighted assets
Isabella Bank	$	172,589	11.53	%	$	104,783	7.00	%	$	97,299	6.50	%
Consolidated	183,348		12.21	%	105,136		7.00	%	N/A		N/A
Tier 1 capital to risk weighted assets
Isabella Bank	172,589		11.53	%	127,237		8.50	%	119,753		8.00	%
Consolidated	183,348		12.21	%	127,665		8.50	%	N/A		N/A
Total capital to risk weighted assets
Isabella Bank	185,997		12.43	%	157,175		10.50	%	149,691		10.00	%
Consolidated	226,179		15.06	%	157,703		10.50	%	N/A		N/A
Tier 1 capital to average assets
Isabella Bank	172,589		8.36	%	82,602		4.00	%	103,252		5.00	%
Consolidated	183,348		8.86	%	82,803		4.00	%	N/A		N/A

(1) "Well-capitalized" minimum common equity Tier 1 to risk-weighted and leverage ratio are not formally defined under applicable regulations for bank holding companies.

Total capital includes Tier 1 capital and Tier 2 capital. Tier 2 capital includes a permissible portion of the allowances for credit losses and subordinated debt, net of unamortized issuance costs. There are no significant regulatory constraints placed on our capital. At September 30, 2025, the Bank exceeded all minimum Basel III risk-based capital requirements with the capital conservation buffer.

State banking regulations place certain restrictions on dividends paid by banks to their shareholders. Dividends paid by the Corporation’s bank subsidiary would be prohibited if the effect thereof would cause the bank subsidiary’s capital to be reduced below applicable minimum capital requirements.

The following table summarizes the changes in AOCI by component for the:



	Three Months Ended September 30
	2025				2024
	Unrealized Gains (Losses) on AFS Securities		Defined Benefit Pension Plan		Total		Unrealized Gains (Losses) on AFS Securities		Defined Benefit Pension Plan		Total
Balance, July 1	$	(13,990)	$	(397)	$	(14,387)	$	(26,939)	$	(697)	$	(27,636)
OCI before reclassifications	5,030		—		5,030		13,081		—		13,081
Tax effect	(1,052)		—		(1,052)		(2,724)		—		(2,724)
OCI, net of tax	3,978		—		3,978		10,357		—		10,357
Balance, September 30	$	(10,012)	$	(397)	$	(10,409)	$	(16,582)	$	(697)	$	(17,279)


	Nine Months Ended September 30
	2025						2024
	Unrealized Gains (Losses) on AFS Securities		Defined Benefit Pension Plan		Total		Unrealized Gains (Losses) on AFS Securities		Defined Benefit Pension Plan		Total
Balance, December 31	$	(20,958)	$	(397)	$	(21,355)	$	(25,199)	$	(697)	$	(25,896)
OCI before reclassifications	13,923		—		13,923		10,858		—		10,858
Tax effect	(2,977)		—		(2,977)		(2,241)		—		(2,241)
OCI, net of tax	10,946		—		10,946		8,617		—		8,617
Balance, September 30	$	(10,012)	$	(397)	$	(10,409)	$	(16,582)	$	(697)	$	(17,279)

Included in OCI for the three and nine-month periods ended September 30, 2025 and 2024 are changes in unrealized gains and losses related to certain auction rate money market preferred stocks. These investments, for federal income tax purposes, have no deferred federal income taxes related to unrealized gains or losses given the nature of the investments.

A summary of the components of unrealized gains on AFS securities included in OCI follows for the:



	Three Months Ended September 30
	2025						2024
	Auction Rate Money Market Preferred		All Other AFS Securities		Total		Auction Rate Money Market Preferred		All Other AFS Securities		Total
Unrealized gains (losses) arising during the period	$	(64)	$	5,094	$	5,030	$	109	$	12,972	$	13,081
Tax effect	—		(1,052)		(1,052)		—		(2,724)		(2,724)
Unrealized gains (losses), net of tax	$	(64)	$	4,042	$	3,978	$	109	$	10,248	$	10,357


	Nine Months Ended September 30
	2025						2024
	Auction Rate Money Market Preferred		All Other AFS Securities		Total		Auction Rate Money Market Preferred		All Other AFS Securities		Total
Unrealized gains (losses) arising during the period	$	(279)	$	14,202	$	13,923	$	186	$	10,672	$	10,858
Tax effect	—		(2,977)		(2,977)		—		(2,241)		(2,241)
Unrealized gains (losses), net of tax	$	(279)	$	11,225	$	10,946	$	186	$	8,431	$	8,617

- Definition

The entire disclosure for equity.

+ References

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+ Details

ISABELLA BANK CORP 10-Q