ISABELLA BANK CORPORATION AND RELATED COMPANIES DEFERRED COMPENSATION PLAN

Exhibit 10.2 ISABELLA BANK CORPORATION
AND RELATED COMPANIES
DEFERRED COMPENSATION PLAN
FOR DIRECTORS July 1, 2008

TABLE OF CONTENTS

ISABELLA BANK CORPORATION
AND RELATED COMPANIES
DEFERRED COMPENSATION PLAN
FOR DIRECTORS      Isabella Bank Corporation (AIsabella@) has established a nonqualified plan of deferred compensation benefits for participating Directors effective January 1, 2006, pursuant to Section 409A of the Internal Revenue Code. The Plan is intended to postpone taxation of such deferred compensation benefits until those benefits are paid to the Directors as provided in the Plan. The Plan has been restated and the provisions of the restated Plan shall be effective on and after July 1, 2008, unless otherwise provided herein.      Section 1. Purpose.      The Plan is intended to provide participating Directors with the opportunity to have the payment and the related taxation of compensation postponed as set forth in the Plan, in order to reward the individuals who contribute to the success of the Company.      Section 2. Definitions.      The following words and phrases shall, when used in this Plan, have the following respective meanings unless their context clearly indicates otherwise:      2.01 Administrator or Plan Administrator means Isabella which may, from time to time in its sole discretion, appoint a person or persons to assist in the administration of the Plan.      2.02 Beneficiary means the person(s) or entity designated by Participant to receive any undistributed deferred compensation benefits which become payable in the event of Participant’s death.      2.03 Board of Directors means Company’s governing body according to law and Company’s governing documents.      2.04 Change of Control means a sale which results in a change in the ownership of Company, a change in the effective control of Company, or a change in the ownership of a substantial portion of Company=s assets. The change shall not be deemed a AChange of Control@ for purposes of this Plan unless the change (whether made in a single transaction or in successive multiple transactions) effectively transfers the controlling interest of the Company to an unrelated third party(ies) (as defined under the attribution rules of Code Sections 318 and 414) and said change results in the unrelated third party(ies) owning more than fifty percent (50%) of the fair market value or the total voting power of the stock of the Company. In addition to the foregoing, the Change of Control must satisfy the provisions of Q & A-11 through 14 of IRS Notice 2005-1 and IRS Reg. 1.409A-3(i)(5) and subsequent guidance.      2.05 Claimant means a Participant or a Beneficiary who files a claim for benefits under Section 16 below.

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     2.06 Code means the Internal Revenue Code of 1986, as amended.      2.07 Committee or Administrative Committee means the committee described in Section 15.      2.08 Company means Isabella Bank Corporation and Isabella Bank or their respective successor or successors, and any other entity whose Board of Directors authorizes participation in this Plan where Isabella by its Board of Directors has approved such participation.      2.09 Deferred Compensation Account means the bookkeeping account maintained on behalf of Participant to record Company contributions made pursuant to Section 4.01.      2.10 Director means any elected or appointed member of the Board of Directors of the Company, without regard to said member’s status as an employee of the Company. This Section 2.10 shall be effective January 1, 2006.      2.11 Disability means the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable or physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.      2.12 Disability Retirement Date means the date of Participant=s separation from service as a Director of the Company on account of Participant=s Disability.      2.13 Distribution Event means a distributable event as set forth in Section 6 below.      2.14 Effective Date means July 1, 2008, the date on which the provisions of this restated Plan became effective.      2.15 Final Valuation Date means the Valuation Date immediately following the date of the Distribution Event.      2.16 Normal Retirement Age means Participant=s attainment of age 70.      2.17 Normal Retirement Date means the date Participant attains Normal Retirement Age, without regard to Participant=s continued service as a Director of the Company.      2.18 Participant means any Director of the Company who (1) is receiving a Director=s salary, retainer or board fees, and (2) has elected to participate in the Plan by providing written notice of said participation to the Company, in the form prescribed by the Company.      2.19 Payment Date means the first day of the first month after the Valuation Date that immediately follows the earliest Distribution Event; provided, however, in the case of a

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distribution to a Participant who is a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) on account of the Participant’s Severance From Service, Payment Date means the first day of the seventh month after the Valuation Date that immediately follows the Distribution Event.      2.20 Plan means the Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors, as amended from time to time.      2.21 Plan Year means the consecutive 12-month period beginning on January 1 and ending on December 31.      2.22 Retirement means with respect to a Participant, separation from service with all participating Companies for any reason other than death or Disability on or after the attainment of Normal Retirement Age.      2.23 Severance From Service means the date on which the Participant has severed from service with the Company and all participating Companies for any reason other than Retirement, death or Disability. Whether a person has severed from service with the Company for purposes of this Plan is based on whether the facts and circumstances indicate that the Company and the Participant reasonably anticipate that either: (i) the Participant will perform no further services after the specified severance date; or (ii) the level of bona fide services that the Participant would perform for the Company after the specified severance date was permanently decreased to not more than 20% of the average level of bona fide services performed over the consecutive 36-month period that immediately precedes the specified severance date or, if the Participant has been providing services to the Company for less than 36 months, then over the full period during which the Participant provided services to the Company.      2.24 Similar Arrangement means an agreement, method, program or other arrangement sponsored by the Company with respect to which deferrals are treated as having been deferred under a single plan under IRS Reg. 1.409A-1(c)(2).      2.25 Stock Account means the bookkeeping account maintained on behalf of Participant to record Company contributions made pursuant to Section 4.02.      2.26 Unforeseeable Financial Emergency means an unforeseeable emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant, the Participant=s spouse, or a dependent (as defined in Code Section 152(a)) of the Participant, (ii) a loss of the Participant=s property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee, in accordance with applicable law.      2.27 Valuation Dates means March 1, June 1, September 1 and December 1.

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     Section 3. Enrollment/Establishment of Accounts.      3.01 Enrollment. As a condition to participation, each Director who is eligible to participate in the Plan effective as of the first day of a Plan Year shall complete, execute and return to the Committee an election form and a Beneficiary designation form, prior to the first day of such Plan Year, or such other earlier deadline as may be established by the Committee in its sole discretion. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.      3.02 Initial Participation. A Director who first becomes eligible to participate in this Plan after the first day of a Plan Year may become a Participant by submitting a completed enrollment form to the Committee within thirty (30) days after the date the Director first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Committee, in its sole discretion, in order to participate for that Plan Year. Such person=s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to this Section 3.02 and such person shall not be permitted to defer under this Plan any portion of his Director’s salary, retainer or fees that are paid with respect to services performed prior to his participation commencement date, except to the extent permissible under Code Section 409A and related Treasury guidance or Regulations.      3.03 Annual Enrollment. Each eligible Director who elects to participate in the Plan after the initial participation date described in Section 3.02 above, shall commence said participation on the January 1 as of which the Committee determines, in its sole discretion, that the Director has met all enrollment requirements set forth in Section 3.01 of this Plan, including returning all required documents to the Committee within the specified time period. Notwithstanding the foregoing, the Committee shall process the Participant=s deferral election as soon as administratively practicable after such deferral election is submitted to and accepted by the Committee.      If a Director fails to meet all requirements contained in this Section 3 within the period required, the Director shall not be eligible to participate in the Plan during the Plan Year for which the election is made.      3.04 Accounts. Company agrees to create a Deferred Compensation Account and a Stock Account as described in Section 4 below to be maintained on the books of Company in the name of each Participant.      Section 4. Allocations to Account.      4.01 Participant Contributions. Each Participant may defer all or any portion (subject to a minimum required deferral percentage of at least 25%) of his Director=s salary, retainer and fees that are earned for the year from any participating Company commencing after the date of said election as he may specify in written notice to the Company. Such amounts so deferred shall be paid only as provided in the Plan. Participant may change the amount of, or suspend, future deferrals with respect to the Director=s salary, fees and retainers earned for years

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commencing after the date of change or suspension as he may specify by written notice to the Company; provided such change is made prior to January 1 of the calendar year in which the amount to be deferred is earned.      4.02 Contribution to Deferred Compensation and Stock Accounts. For each Participant electing to participate in this Plan, the Company for which the Participant has made a deferral election shall maintain a Deferred Compensation Account and a Stock Account. Each Participant shall be furnished with a quarterly statement of his Accounts.           The deferred salary, retainers and fees of each Participant shall be credited as a dollar amount to the Participant=s Deferred Compensation Account on the date the amount would otherwise be paid to the Participant, and effective on and after July 1, 2008, shall be converted into actual Isabella common stock on each Valuation Date by (1) dividing the Deferred Compensation Account balance of each Participant by the total amount credited to all Deferred Compensation Accounts under the Plan as of the Valuation Date and then (2) multiplying this amount by the total number of shares of Isabella common stock purchased under the Plan as of said Valuation Date. The number of shares of stock for full shares so determined shall be credited to each Participant=s Stock Account, and the aggregate fair market value of the stock on said Valuation Date shall be charged to the Participant=s Deferred Compensation Account. Any credit balance remaining in the Participant=s Deferred Compensation Account after such charge shall remain in the Deferred Compensation Account until the next Valuation Date to be converted into additional shares of Isabella stock.           Additional credits will be made to each Participant=s Deferred Compensation Account in dollar amounts equal to the cash dividends (or the fair market value of dividends paid in property) the Participant would have received from time to time had he been the owner on the record dates with respect to the stock, said credit to be based on the number of shares of Isabella common stock credited to his Stock Account on said dates. In the case of a stock dividend or stock split, additional credits will be made to each Participant=s Stock Account based on the number of full shares of Isabella common stock the Participant would have received had he been the owner on the record dates with respect to the number of shares of Isabella common stock credited to his Stock Account on said dates.      Section 5. Vesting.      Subject to satisfying the distribution events set forth in Section 6 below, Participant’s interest in his Deferred Compensation Account and his Stock Account shall be 100% vested and nonforfeitable at all times.      Section 6. Commencement of Distribution.      6.01 Distribution Dates. The manner and form in which distributions will be made from the Plan shall be determined in accordance with Section 7 below. No amount standing from time to time to the credit of the Participant in his Deferred Compensation Account or his Stock Account shall be assignable or alienable by Participant, nor may any such payment be used

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as collateral or in any other fashion by Participant prior to payment by the Company. Subject to Section 6.03 below, no amount standing from time to time to the credit of Participant in his Deferred Compensation Account or his Stock Account shall be payable to Participant (or to Participant=s Beneficiary) until the earliest of the following distribution dates:

          6.02 Time of Distribution.

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the Participant=s attainment of age 75), so long as the election of the delayed distribution date:

     6.03 Accelerating the Time of Payment. Notwithstanding the distribution dates set forth in Section 6.01 above, an early distribution of Isabella common stock may be made as soon as administratively possible after the occurrence of any of the following events in accordance with IRS Reg. 1.409A-3(j)(4) and subsequent guidance:

In the case of an accelerated payment due to subsection 6.03(a) above, a payment under the Plan may be made to an individual other than the Participant to the extent necessary to fulfill the terms of a domestic relations order that is issued by a court of competent jurisdiction. The Plan’s rules regarding changes in the time and form of payment do not apply to changes in the time and form of payment that are required by such a domestic relations order, so long as the payment that is made pursuant to the domestic relations order will be