SEC Comment Letter 0000000000-24-012123 to ISABELLA BANK CORP (ISBA)
ISABELLA BANK CORP
Date: Oct. 31, 2024 · CIK: 0000842517 · Accession: 0000000000-24-012123
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-18415
Letter
October 31, 2024 William M. Schaefer Chief Financial Officer Isabella Bank Corporation 401 North Main Street Mount Pleasant, MI 48858 Re:Isabella Bank Corporation Form 10-K for the Fiscal Year Ended December 31, 2023 Form 10-Q for the Fiscal Quarter Ended June 30, 2024 Form 8-K filed on October 24, 2024 File No. 000-18415 Dear William M. Schaefer: We have limited our review of your filing to the financial statements and related disclosures and have the following comments. Please respond to this letter within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to this letter, we may have additional comments. Form 10-K for the Fiscal Year Ended December 31, 2023 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Loans, page 28 We note that commercial real estate ("CRE") loans totaled $564.2 million and represented 41.8% of total loans as of December 31, 2023 and that the collateral for these loans are primarily in mid-Michigan counties. We also note your disclosure on page 53 disaggregating your CRE balance by owner and non-owner occupied, as well as 1-4 family investor and multifamily. Please revise your disclosures, in future filings, to further disaggregate the composition of your owner occupied and non- owner occupied CRE loan portfolio by key borrower type (e.g., by office, manufacturing, retail, multifamily, etc.) and to disclose other relevant characteristics (e.g., current weighted average and/or range of loan-to-value ratios, occupancy rates, etc.) material to an investor’s understanding of your CRE loan 1.
October 31, 2024 Page 2 portfolio. 2.In addition, we note the statement on page 14 that you continue to monitor events to assure you are “prepared for any changes that might affect the bank, including the ability to timely address economic uncertainty.” We also note the statement on page 31 that the frequency and complexity of your liquidity stress testing “has increased due to economic uncertainty and changes within the interest rate and economic environment.” Please further revise your disclosures, in future filings, to describe the specific details of the risk management policies, procedures or other actions undertaken by management in response to economic uncertainty and the current environment. Form 10-Q for the Fiscal Quarter Ended June 30, 2024 Interim Condensed Consolidated Statements of Changes in Shareholders' Equity, page 7 3.Please revise your disclosures, in future filings, to provide interim statements of shareholders' equity for the current and comparative year-to-date periods, with subtotals for each interim period. Refer to Rule 8-03(a)(5) of Regulation S-X. Form 8-K filed on October 24, 2024 Exhibit 99.1 Reconciliation of Non-GAAP Financial Measures, page I 4.We note your reconciliation of core net income, which excludes $1.6 million of Other expense, and the related non-GAAP measures (e.g., core diluted earnings per share, core return on average assets, core return on average shareholders' equity, core return on average tangible shareholders' equity) that are derived from core net income. Please address the following: •Explain the nature of this Other adjustment being excluded from core net income and clarify if it relates to the $1.6 million provision for credit losses charge relating to overdrawn deposit accounts from a single customer. •If this adjustment does relate to the exclusion of a portion of the provision for credit losses, provide us with your evaluation of whether this adjustment represents individually tailored recognition and measurement principles that are inconsistent with GAAP and therefore should be removed from presentation in future filings. Refer to Question 100.04 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations. In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Please contact Jee Yeon Ahn at 202-551-3673 or Robert Klein at 202-551-3847 with any questions.
October 31, 2024 Page 3 Sincerely, Division of Corporation Finance Office of Finance
Show Raw Text
October 31, 2024
William M. Schaefer
Chief Financial Officer
Isabella Bank Corporation
401 North Main Street
Mount Pleasant, MI 48858
Re:Isabella Bank Corporation
Form 10-K for the Fiscal Year Ended December 31, 2023
Form 10-Q for the Fiscal Quarter Ended June 30, 2024
Form 8-K filed on October 24, 2024
File No. 000-18415
Dear William M. Schaefer:
We have limited our review of your filing to the financial statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2023
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
Loans, page 28
We note that commercial real estate ("CRE") loans totaled $564.2 million and
represented 41.8% of total loans as of December 31, 2023 and that the collateral for
these loans are primarily in mid-Michigan counties. We also note your disclosure on
page 53 disaggregating your CRE balance by owner and non-owner occupied, as well
as 1-4 family investor and multifamily. Please revise your disclosures, in future
filings, to further disaggregate the composition of your owner occupied and non-
owner occupied CRE loan portfolio by key borrower type (e.g., by
office, manufacturing, retail, multifamily, etc.) and to disclose other relevant
characteristics (e.g., current weighted average and/or range of loan-to-value ratios,
occupancy rates, etc.) material to an investor’s understanding of your CRE loan 1.
October 31, 2024
Page 2
portfolio.
2.In addition, we note the statement on page 14 that you continue to monitor events to
assure you are “prepared for any changes that might affect the bank, including the
ability to timely address economic uncertainty.” We also note the statement on page
31 that the frequency and complexity of your liquidity stress testing “has increased
due to economic uncertainty and changes within the interest rate and economic
environment.” Please further revise your disclosures, in future filings, to describe the
specific details of the risk management policies, procedures or other actions
undertaken by management in response to economic uncertainty and the current
environment.
Form 10-Q for the Fiscal Quarter Ended June 30, 2024
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity, page 7
3.Please revise your disclosures, in future filings, to provide interim statements of
shareholders' equity for the current and comparative year-to-date periods, with
subtotals for each interim period. Refer to Rule 8-03(a)(5) of Regulation S-X.
Form 8-K filed on October 24, 2024
Exhibit 99.1
Reconciliation of Non-GAAP Financial Measures, page I
4.We note your reconciliation of core net income, which excludes $1.6 million of Other
expense, and the related non-GAAP measures (e.g., core diluted earnings per share,
core return on average assets, core return on average shareholders' equity, core return
on average tangible shareholders' equity) that are derived from core net income.
Please address the following:
•Explain the nature of this Other adjustment being excluded from core net income
and clarify if it relates to the $1.6 million provision for credit losses charge
relating to overdrawn deposit accounts from a single customer.
•If this adjustment does relate to the exclusion of a portion of the provision for
credit losses, provide us with your evaluation of whether this adjustment
represents individually tailored recognition and measurement principles that are
inconsistent with GAAP and therefore should be removed from presentation in
future filings. Refer to Question 100.04 of the Non-GAAP Financial Measures
Compliance and Disclosure Interpretations.
In closing, we remind you that the company and its management are responsible for
the accuracy and adequacy of their disclosures, notwithstanding any review, comments,
action or absence of action by the staff.
Please contact Jee Yeon Ahn at 202-551-3673 or Robert Klein at 202-551-3847 with
any questions.
October 31, 2024
Page 3
Sincerely,
Division of Corporation Finance
Office of Finance