Isabella Bank Corporation is a registered financial services holding company
that was incorporated in September 1988 under Michigan law. The Corporations
sole subsidiary, Isabella Bank, has 29 banking offices located throughout Clare,
Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. The area
includes significant agricultural production, manufacturing, retail, gaming
and tourism, and five colleges and universities.
Isabella Bank Corporation refers solely to the parent holding company, and
Isabella Bank or the “Bank” refer to Isabella Bank Corporation’s
subsidiary, Isabella Bank.
Our reportable segments are based on legal entities that account for at least
10% of net operating results. Retail banking operations represent approximately
90% or greater of total assets and operating results. As such, we have only
one reportable segment.
We are a community bank with a focus on providing high quality, personalized
service at a fair price. We offer a broad array of banking services to businesses,
institutions, and individuals. We compete with other commercial banks, savings
and loan associations, mortgage brokers, finance companies, credit unions, and
retail brokerage firms.
Lending activities include loans for commercial and agricultural operating
and real estate purposes, residential real estate loans, and consumer loans.
We limit lending activities primarily to local markets and have not purchased
any loans from the secondary market. We do not make loans to fund leveraged
buyouts, have no foreign corporate or government loans, and have limited holdings
of corporate debt securities. Our general lending philosophy is to limit concentrations
to individuals and business segments.
Deposit services offered include checking accounts, savings accounts, certificates
of deposit, direct deposits, cash management services, mobile and internet banking,
electronic bill pay services, and automated teller machines. We also offer full
service trust and brokerage services.
The Bank is supervised and regulated by DIFS and the FRB. The agencies and
federal and state laws extensively regulate various aspects of the banking business
including, among other things, permissible types and amounts of loans, investments
and other activities, capital adequacy, branching, interest rates on loans and
deposits, and the safety and soundness of banking practices.
Our deposits are insured up to applicable limits by the DIF of the FDIC and
are subject to deposit insurance assessments to maintain the DIF. The FDIC utilizes
a risk-based assessment system that assesses insurance premiums based upon a
risk matrix that takes into account assets and capital levels and supervisory
ratings.
Banking laws and regulations restrict transactions by insured banks owned by
a bank holding company, including loans to and certain purchases from the parent
holding company, non-bank and bank subsidiaries of the parent holding company,
principal shareholders, officers, directors and their affiliates, and investments
by the subsidiary bank in the shares or securities of the parent holding company
(or any of the other non-bank or bank affiliates), or acceptance of such shares
or securities as collateral security for loans to any borrower.
The Bank is subject to legal limitations on the frequency and amount of dividends
that can be paid to Isabella Bank Corporation. For example, a Michigan state
chartered bank may not declare a cash dividend or a dividend in kind except
out of net profits then on hand after deducting all losses and bad debts, and
then only if it will have a surplus amounting to not less than 20% of its capital
after the payment of the dividend. Moreover, a Michigan state chartered bank
may not declare or pay any cash dividend or dividend in kind until the cumulative
dividends on its preferred stock, if any, have been paid in full. Further, if
the surplus of a Michigan state chartered bank is at any time less than the
amount of its capital, before the declaration of a cash dividend or dividend
in kind, it must transfer to surplus not less than 10% of its net profits for
the preceding six months (in the case of quarterly or semi-annual dividends)
or the preceding two consecutive six month periods (in the case of annual dividends).
The payment of dividends by Isabella Bank Corporation and the Bank is also affected
by various regulatory requirements and policies, such as the requirement to
keep adequate capital in compliance with regulatory guidelines. Federal laws
impose further restrictions on the payment of dividends by insured banks that
fail to meet specified capital levels. The FDIC may prevent an insured bank
from paying dividends if the bank is in default of payment of any assessment
due to the FDIC. In addition, payment of dividends by a bank may be prevented
by the applicable federal regulatory authority if such payment is determined,
by reason of the financial condition of such bank, to be an unsafe and unsound
banking practice. The FRB and the FDIC have issued policy statements providing
that bank holding companies and insured banks should generally pay dividends
only out of current operating earnings.
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