What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-07 compared with 2022-08-04 · 178 added, 169 removed, 1344 unchanged (21% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

June 30, 2022 (unaudited) and December 31, 2021

September 30, 2022 (unaudited) and December 31, 2021

(derived from audited financial statements)

(in thousands, except share and per share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 29,411 $ 47,691

34 unchanged sentences

Consolidated Statements of Operations (unaudited)

Three and Six Months Ended June 30, 2022 and 2021

Three and Nine Months Ended September 30, 2022 and 2021

(in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Interest and dividend income:

42 unchanged sentences

Consolidated Statements of Comprehensive (Loss) Income (unaudited)

Three and Six months ended June 30, 2022 and 2021

Three and Nine months ended September 30, 2022 and 2021

(in thousands)

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income attributable to common stockholders $ 3,993 $ 4,997 $ 13,065 $ 15,209

8 unchanged sentences

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(in thousands, except shares and per share data)

21 unchanged sentences

Balance at June 30, 2022 10,530,415 105 119,987 56,928 ( 12,277 ) 164,743

Net income — — — 3,993 — 3,993

Other comprehensive loss, net of tax — — — — ( 4,980 ) ( 4,980 )

Forfeiture of unvested shares ( 1,260 ) — — — — —

Surrender of restricted shares of common stock ( 120 ) — ( 2 ) — — ( 2 )

Restricted common stock awarded under the equity incentive plan 2,136 — — — — —

Common stock repurchased ( 52,961 ) — ( 603 ) ( 88 ) — ( 691 )

Stock option expense — — 1 — — 1

Amortization of restricted stock — — 255 — — 255

Balance, September 30, 2022 10,478,210 $ 105 $ 119,638 $ 60,833 $ ( 17,257 ) $ 163,319

See accompanying condensed notes to unaudited consolidated financial statements.

26 unchanged sentences

Net income — — — 4,997 — 4,997

Other comprehensive income, net of tax — — — — ( 828 ) ( 828 )

Other comprehensive loss, net of tax — — — — ( 828 ) ( 828 )

Surrender of restricted shares of common stock ( 222 ) — ( 3 ) — — ( 3 )

5 unchanged sentences

Net income — — — 6,057 — 6,057

Other comprehensive income, net of tax — — — — ( 1,071 ) ( 1,071 )

Other comprehensive loss, net of tax — — — — ( 1,071 ) ( 1,071 )

Surrender of restricted shares of common stock ( 143 ) — ( 2 ) — — ( 2 )

6 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 2022 and 2021

Nine Months Ended September 30, 2022 and 2021

(in thousands)

Six Months Ended

June 30, 2022 June 30, 2021

Nine Months Ended

September 30, 2022 September 30, 2021

Cash flows from operating activities:

27 unchanged sentences

Proceeds from principal payments of available for sale securities 21,799 24,189

Proceeds from sales of available for sale securities — 9,118

Purchase of held to maturity securities ( 35,342 ) ( 34,114 )

1 unchanged sentence

Purchase of equity investments ( 300 ) —

Net sales of other investments 406 121

Net (purchases) sales of other investments ( 602 ) 122

Proceeds from sales of foreclosed and repossessed assets 56 507

Net (increase) decrease in loans ( 36,445 ) 55,742

Net increase in loans ( 65,476 ) ( 11,374 )

Net capital expenditures ( 2,446 ) ( 2,368 )

17 unchanged sentences

Net cash provided by financing activities 47,902 90,833

Net (decrease) increase in cash and cash equivalents ( 15,948 ) 9,000

Net decrease in cash and cash equivalents ( 18,280 ) ( 17,099 )

Cash and cash equivalents at beginning of period 47,691 119,440

7 unchanged sentences

Transfers from loans receivable to other real estate owned ("OREO") $ 92 $ 45

Transfers from office properties and equipment to foreclosed and repossessed assets $ 130 $ 79

See accompanying condensed notes to unaudited consolidated financial statements.

14 unchanged sentences

Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the June 30, 2022, balance sheet date and through the date the financial statements were available to be issued for items that should potentially be recognized or disclosed in these consolidated financial statements.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the September 30, 2022, balance sheet date and through the date the financial statements were available to be issued for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited.

10 unchanged sentences

those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 2, 2022;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 4, 2022;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended March 31, 2022 and June 30, 2022, filed with the SEC on May 4, 2022 and August 4, 2022, respectively;

the matters described in “Risk Factors” in Item 1A of this Form 10-Q;

40 unchanged sentences

Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

Other investments totaling $ 14,899 at June 30, 2022 consisted of $ 7,010 of FHLB stock, $ 5,661 of Federal Reserve Bank stock and $ 2,228 of Bankers’ Bank stock.

Other investments totaling $ 15,907 at September 30, 2022 consisted of $ 8,011 of FHLB stock, $ 5,667 of Federal Reserve Bank stock and $ 2,229 of Bankers’ Bank stock.

Other investments totaling $ 15,305 at December 31, 2021 consisted of $ 7,877 of FHLB stock and $ 5,200 of Federal Reserve Bank stock and $ 2,228 of Bankers’ Bank stock.

15 unchanged sentences

Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a six month payment history has been established.

Interest on accruing troubled debt restructured (“TDR”), less than 90 days delinquent, is recognized as income as it accrues, based on the revised terms of the loan over an established period of continued payment.

Interest on accruing troubled debt restructured (“TDR”) loans, less than 90 days delinquent, is recognized as income as it accrues, based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more.

72 unchanged sentences

A reporting unit is defined as any distinct, separately identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management.

The Company has one reporting unit as of June 30, 2022, which is related to its banking activities.

The Company has one reporting unit as of September 30, 2022, which is related to its banking activities.

The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit.

14 unchanged sentences

The utilization of the tax credit is recognized as a reduction in income tax expense.

As of June 30, 2022, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 3,731 .

As of September 30, 2022, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 3,528 .

The risk of loss with this investment is limited to its carrying value and is tied to its ability to operate in compliance with the rules and regulations necessary for the qualification of the tax credit generated by the investment.

As of June 30, 2022, there were no known instances of noncompliance associated with the investment.

As of September 30, 2022, there were no known instances of noncompliance associated with the investment.

Leases - We determine if an arrangement is a lease at inception.

46 unchanged sentences

Non-interest income outside of the scope of Revenue from Contracts with Customers, Topic 606 is recognized on the accrual basis of accounting as services are provided or as transactions occur.

Non-interest income outside of the scope of Topic 606 includes mortgage banking activities, loan fees and service charges, net gains (losses) on investment securities, settlement proceeds, and other, which is primarily made up of BOLI related income.

Non-interest income outside of the scope of Topic 606 includes mortgage banking activities, loan fees and service charges, net gains (losses) on investment securities, and other, which is primarily made up of BOLI related income.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period.

32 unchanged sentences

NOTE 2 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of June 30, 2022 and December 31, 2021, respectively, were as follows:

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2022 and December 31, 2021, respectively, were as follows:

Available for sale securities Amortized

Losses Estimated

June 30, 2022

September 30, 2022

government agency obligations $ 19,357 $ 210 $ 253 $ 19,314

12 unchanged sentences

Losses Estimated

June 30, 2022

September 30, 2022

Obligations of states and political subdivisions $ 600 $ — $ 54 $ 546

5 unchanged sentences

Total held to maturity securities $ 71,141 $ 104 $ 2,068 $ 69,177

At June 30, 2022, the Bank has pledged mortgage-backed securities with a carrying value of $ 5,646 as collateral against a borrowing line of credit with the Federal Reserve Bank.

However, as of June 30, 2022, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of June 30, 2022, the Bank has pledged U.S.

At September 30, 2022, the Bank has pledged mortgage-backed securities with a carrying value of $ 5,519 as collateral against a borrowing line of credit with the Federal Reserve Bank.

However, as of September 30, 2022, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of September 30, 2022, the Bank has pledged U.S.

Government Agency securities with a carrying value of $ 2,827 and mortgage-backed securities with a carrying value of $ 2,329 as collateral against specific municipal deposits.

As of June 30, 2022, the Bank also has mortgage-backed securities with a carrying value of $ 190 pledged as collateral to the Federal Home Loan Bank of Des Moines.

As of September 30, 2022, the Bank also has mortgage-backed securities with a carrying value of $ 166 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2021, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 863 as collateral to secure a line of credit with the Federal Reserve Bank.

3 unchanged sentences

As of December 31, 2021, the Bank also has mortgage-backed securities with a carrying value of $ 267 pledged as collateral to the Federal Home Loan Bank of Des Moines.

For the three and six month periods ended June 30, 2022 there were no sales of available for sale securities.

For the three and six month periods ended June 30, 2021, gross sales of available for sale securities were $ 1,965 .

Gross gains on the sale of available for sale securities for the three and six months periods ended June 30, 2021 were $ 36 .

There were no losses on the sale of available for sale securities for the three and six months ended June 30, 2021.

The estimated fair value of securities at June 30, 2022 and December 31, 2021, by contractual maturity, is shown below.

For the three and nine month periods ended September 30, 2022 there were no sales of available for sale securities.

For the three and nine month periods ended September 30, 2021, gross sales of available for sale securities were $ 7,153 and $ 9,118 , respectively.

Gross gains on the sale of available for sale securities for the three and nine months periods ended September 30, 2021 were $ 56 and $ 92 , respectively.

Gross losses on the sale of losses on the sale of available for sale securities for both the three and nine months ended September 30, 2021 were $ 14 .

The estimated fair value of securities at September 30, 2022 and December 31, 2021, by contractual maturity, is shown below.

Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Available for sale securities Amortized

9 unchanged sentences

Total available for sale securities $ 191,565 $ 167,764 $ 202,846 $ 203,068

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Held to maturity securities Amortized

7 unchanged sentences

Total held to maturity securities $ 97,610 $ 77,233 $ 71,141 $ 69,177

Securities with unrealized losses at June 30, 2022 and December 31, 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Securities with unrealized losses at September 30, 2022 and December 31, 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Less than 12 Months 12 Months or More Total

3 unchanged sentences

Value Unrealized

June 30, 2022

September 30, 2022

government agency obligations $ 4,368 $ 253 $ — $ — $ 4,368 $ 253

14 unchanged sentences

Value Unrealized

June 30, 2022

September 30, 2022

Obligations of states and political subdivisions $ — $ — $ 546 $ 54 $ 546 $ 54

66 unchanged sentences

This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future.

Below is a summary of originated and acquired loans by type and risk rating as of June 30, 2022:

Below is a summary of originated and acquired loans by type and risk rating as of September 30, 2022:

1 to 5 6 7 8 9 TOTAL

118 unchanged sentences

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Three months ended June 30, 2022

Three months ended September 30, 2022

Allowance for Loan Losses:

Beginning balance, April 1, 2022 $ 12,394 $ 2,104 $ 460 $ 160 $ 782 $ 15,900

Beginning balance, July 1, 2022 $ 12,702 $ 1,910 $ 472 $ 143 $ 826 $ 16,053

Charge-offs — — — ( 9 ) — ( 9 )

4 unchanged sentences

Other acquired loans:

Beginning balance, April 1, 2022 789 58 62 9 — 918

Beginning balance, July 1, 2022 664 51 48 9 — 772

Charge-offs ( 48 ) — — — — ( 48 )

3 unchanged sentences

Total allowance on acquired loans 665 49 29 9 ( 226 ) 526

Ending balance, June 30, 2022 $ 13,366 $ 1,961 $ 520 $ 152 $ 826 $ 16,825

Ending balance, September 30, 2022 $ 13,782 $ 1,974 $ 512 $ 132 $ 817 $ 17,217

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Six months ended June 30, 2022

Nine months ended September 30, 2022

Allowance for Loan Losses:

12 unchanged sentences

Total allowance on acquired loans 665 49 29 9 ( 226 ) 526

Ending balance, June 30, 2022 $ 13,366 $ 1,961 $ 520 $ 152 $ 826 $ 16,825

Allowance for Loan Losses at June 30, 2022:

Ending balance, September 30, 2022 $ 13,782 $ 1,974 $ 512 $ 132 $ 817 $ 17,217

Allowance for Loan Losses at September 30, 2022:

Amount of allowance for loan losses arising from loans individually evaluated for impairment $ 699 $ — $ — $ — $ — $ 699

Amount of allowance for loan losses arising from loans collectively evaluated for impairment $ 13,083 $ 1,974 $ 512 $ 132 $ 817 $ 16,518

Loans Receivable as of June 30, 2022:

Loans Receivable as of September 30, 2022:

Ending balance of originated loans $ 982,555 $ 145,197 $ 80,664 $ 18,250 $ — $ 1,226,666

7 unchanged sentences

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Three months ended June 30, 2021

Three months ended September 30, 2021

Allowance for Loan Losses:

Beginning balance, April 1, 2021 $ 11,109 $ 1,633 $ 941 $ 450 $ 895 $ 15,028

Beginning balance, July 1, 2021 $ 10,890 $ 2,182 $ 771 $ 362 $ 855 $ 15,060

Charge-offs — — — ( 12 ) — ( 12 )

4 unchanged sentences

Other acquired loans:

Beginning balance, April 1, 2021 1,301 94 388 49 — 1,832

Beginning balance, July 1, 2021 1,468 81 231 5 — 1,785

Charge-offs — — — ( 24 ) — ( 24 )

3 unchanged sentences

Total allowance on acquired loans 1,097 74 126 30 — 1,327

Ending balance, June 30, 2021 $ 12,358 $ 2,263 $ 1,002 $ 367 $ 855 $ 16,845

Ending balance, September 30, 2021 $ 12,995 $ 2,048 $ 712 $ 305 $ 772 $ 16,832

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Six months ended June 30, 2021

Nine months ended September 30, 2021

Allowance for Loan Losses:

12 unchanged sentences

Total allowance on acquired loans 1,097 74 126 30 — 1,327

Ending balance, June 30, 2021 $ 12,358 $ 2,263 $ 1,002 $ 367 $ 855 $ 16,845

Allowance for Loan Losses at June 30, 2021:

Ending balance, September 30, 2021 $ 12,995 $ 2,048 $ 712 $ 305 $ 772 $ 16,832

Allowance for Loan Losses at September 30, 2021:

Amount of allowance for loan losses arising from loans individually evaluated for impairment $ 1,033 $ 271 $ 59 $ — $ — $ 1,363

Amount of allowance for loan losses arising from loans collectively evaluated for impairment $ 11,962 $ 1,777 $ 653 $ 305 $ 772 $ 15,469

Loans Receivable as of June 30, 2021

Loans Receivable as of September 30, 2021

Ending balance of originated loans $ 792,115 $ 147,272 $ 72,907 $ 27,103 $ — $ 1,039,397

21 unchanged sentences

Commercial/Agricultural Real Estate Loans C&I/Agricultural Operating Residential Mortgage Consumer Installment Totals

June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Performing loans

8 unchanged sentences

(1) Nonperforming loans are either 90+ days past due or nonaccrual.

As of June 30, 2022 the Company had $ 257,478 in unused commitments, compared to $ 270,985 in unused commitments as of December 31, 2021.

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of June 30, 2022 and December 31, 2021, respectively, was as follows:

As of September 30, 2022 the Company had $ 262,022 in unused commitments, compared to $ 270,985 in unused commitments as of December 31, 2021.

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2022 and December 31, 2021, respectively, was as follows:

30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Greater Than 89 Days Past Due and Accruing Total

Past Due and Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total

June 30, 2022

September 30, 2022

Commercial/Agricultural real estate:

30 unchanged sentences

Total $ 3,341 $ 560 $ 160 $ 4,061 $ 11,665 $ 15,726 $ 1,301,319 $ 1,317,045

At June 30, 2022, the Company individually evaluated loans for impairment with a recorded investment of $ 29,386 , consisting of (1) $ 8,485 purchased credit impaired (“PCI”) loans, with a carrying amount of $ 8,075 ;

At September 30, 2022, the Company individually evaluated loans for impairment with a recorded investment of $ 29,714 , consisting of (1) $ 7,271 purchased credit impaired (“PCI”) loans, with a carrying amount of $ 7,055 ;

(2) $ 8,526 TDR loans, net of TDR PCI loans;

7 unchanged sentences

Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis.

A summary of the Company’s loans individually evaluated for impairment as of June 30, 2022, December 31, 2021 and June 30, 2021 was as follows:

Three Months Ended Six Months Ended

A summary of the Company’s loans individually evaluated for impairment as of September 30, 2022, December 31, 2021 and September 30, 2021 was as follows:

Three Months Ended Nine Months Ended

Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized

June 30, 2022

September 30, 2022

With No Related Allowance Recorded:

10 unchanged sentences

Total $ 6,660 $ 6,660 $ 699 $ 6,333 $ 81 $ 6,316 $ 107

June 30, 2022 Totals:

September 30, 2022 Totals:

Commercial/Agricultural real estate $ 18,662 $ 18,698 $ 699 $ 18,878 $ 186 $ 20,394 $ 505

24 unchanged sentences

Total $ 31,740 $ 32,393 $ 1,009 $ 37,028 $ 1,674

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized

June 30, 2021

September 30, 2021

With No Related Allowance Recorded:

10 unchanged sentences

Total $ 9,338 $ 9,338 $ 1,363 $ 7,146 $ 43 $ 6,746 $ 161

June 30, 2021 Totals:

September 30, 2021

Commercial/Agricultural real estate $ 22,333 $ 22,744 $ 1,033 $ 23,176 $ 172 $ 24,524 $ 725

8 unchanged sentences

If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status.

There were four delinquent accruing TDR loans greater than 60 days past due, with a recorded investment of $ 463 at June 30, 2022, compared to one such loan with a recorded investment of $ 4 at December 31, 2021.

Following is a summary of TDR loans by accrual status as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

There were three delinquent accruing TDR loans greater than 60 days past due, with a recorded investment of $ 250 at September 30, 2022, compared to one such loan with a recorded investment of $ 4 at December 31, 2021.

Following is a summary of TDR loans by accrual status as of September 30, 2022 and December 31, 2021.

September 30, 2022 December 31, 2021

Troubled debt restructure loans:

2 unchanged sentences

Total $ 9,336 $ 12,523

There was one loan commitment for $ 38 meeting our TDR criteria as of June 30, 2022 and no loan commitments meeting our TDR criteria as of December 31, 2021.

There were unused lines of credit totaling $ 77 and $ 10 meeting our TDR criteria as of June 30, 2022 and December 31, 2021, respectively.

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and six months ended June 30, 2022:

There was one loan commitment for $ 38 meeting our TDR criteria as of September 30, 2022 and no loan commitments meeting our TDR criteria as of December 31, 2021.

There were unused lines of credit totaling $ 83 and $ 10 meeting our TDR criteria as of September 30, 2022 and December 31, 2021, respectively.

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and nine months ended September 30, 2022:

Number of Contracts Maturity Extension Modified Payment Modified Under- writing Other Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserve

Three months ended June 30, 2022

Three months ended September 30, 2022

Commercial/Agricultural real estate 2 $ — $ — $ 1,539 $ — $ 1,539 $ 1,539 $ —

4 unchanged sentences

Six months ended June 30, 2022

Nine months ended September 30, 2022

Commercial/Agricultural real estate 7 $ 1,241 $ — $ 1,964 $ — $ 3,205 $ 3,205 $ —

3 unchanged sentences

Totals 21 $ 2,735 $ 147 $ 3,207 $ — $ 6,089 $ 6,089 $ —

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and six months ended June 30, 2021:

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and nine months ended September 30, 2021:

Three months ended June 30, 2021

Three months ended September 30, 2021

Commercial/Agricultural real estate — $ — $ — $ — $ — $ — $ — $ —

4 unchanged sentences

Six months ended June 30, 2021

Nine months ended September 30, 2021

Commercial/Agricultural real estate 3 $ 39 $ 81 $ — $ — $ 120 $ 120 $ —

3 unchanged sentences

Totals 12 $ 297 $ 81 $ 460 $ — $ 838 $ 838 $ —

A summary of loans by loan segment modified in a troubled debt restructuring as of June 30, 2022 and June 30, 2021, was as follows:

June 30, 2022 June 30, 2021

Modifications Recorded

Investment Number of

Modifications Recorded

Troubled debt restructurings:

Commercial/Agricultural real estate 18 $ 4,226 25 $ 8,298

C&I/Agricultural operating 6 1,238 10 4,469

Residential mortgage 42 3,230 48 3,774

Consumer installment 4 18 8 56

Total troubled debt restructurings 70 $ 8,712 91 $ 16,597

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the three and six months ended June 30, 2022 and June 30, 2021, as well as the recorded investment in these restructured loans as of June 30, 2022 and June 30, 2021:

Three Months Ended

June 30, 2022 June 30, 2021

A summary of loans by loan segment modified in a troubled debt restructuring as of September 30, 2022 and September 30, 2021, was as follows:

September 30, 2022 September 30, 2021

Modifications Recorded

7 unchanged sentences

Total troubled debt restructurings 68 $ 9,336 83 $ 15,689

Six Months Ended

June 30, 2022 June 30, 2021

There were no loans modified in a TDR during the previous twelve months which subsequently defaulted during the three months ended September 30, 2022 or 2021, respectively.

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the nine months ended September 30, 2022 and September 30, 2021, as well as the recorded investment in these restructured loans as of September 30, 2022 and September 30, 2021:

Nine Months Ended

September 30, 2022 September 30, 2021

Modifications Recorded

9 unchanged sentences

The outstanding balance and the carrying amount of acquired loans included in the consolidated balance sheet are as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accountable for under ASC 310-30 (Purchased Credit Impaired “PCI” loans)

8 unchanged sentences

The table below shows scheduled accretion by year for the accretable difference recognized due to fair value purchase accounting on recent whole bank acquisitions.

In addition, the Company has $ 1.35 million of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount.

In addition, the Company has $ 1,207 of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount.

The scheduled accretion on this balance is estimated to be approximately $ 100 per year;

1 unchanged sentence

Fiscal years ending December 31, Purchase Accounting Accretable Discount

2022 is the six month period from July 1, 2022 through December 31, 2022.

2022 is the three month period from October 1, 2022 through December 31, 2022.

The following table provides changes in non-accretable yield for all acquired loans from prior acquisitions with deteriorated credit quality:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Balance at beginning of period $ 653 $ 1,087

6 unchanged sentences

Mortgage servicing rights-- Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets.

The unpaid balances of these loans as of June 30, 2022 and December 31, 2021 were $ 544,734 and $ 556,086 , respectively, and consisted of one to four family residential real estate loans.

The unpaid balances of these loans as of September 30, 2022 and December 31, 2021 were $ 531,804 and $ 556,086 , respectively, and consisted of one to four family residential real estate loans.

These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and the Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 4,985 and $ 2,781 at June 30, 2022 and December 31, 2021, respectively.

Mortgage servicing rights activity for the three and six month periods ended June 30, 2022 and June 30, 2021 were as follows:

As of and for the Three Months Ended As of and for the Three Months Ended As of and for the Six Months Ended As of and for the Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 6,637 and $ 2,781 at September 30, 2022 and December 31, 2021, respectively.

Mortgage servicing rights activity for the three and nine month periods ended September 30, 2022 and September 30, 2021 were as follows:

As of and for the Three Months Ended As of and for the Three Months Ended As of and for the Nine Months Ended As of and for the Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Mortgage servicing rights:

12 unchanged sentences

The current period change in valuation allowance, if applicable, is included in non-interest expense as mortgage servicing rights expense, net on the consolidated statement of operations.

Servicing fees totaled $ 352 and $ 352 for the three months ended June 30, 2022 and June 30, 2021, respectively.

Servicing fees totaled $ 703 and $ 704 for the six months ended June 30, 2022 and June 30, 2021, respectively.

Servicing fees totaled $ 346 and $ 354 for the three months ended September 30, 2022 and September 30, 2021, respectively.

Servicing fees totaled $ 1,049 and $ 1,058 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Servicing fees are included in loan servicing income on the consolidated statement of operations.

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Central to the valuation model is the discount rate.

Fair value at both June 30, 2022 and June 30, 2021, was determined using discount rates ranging from 9 % to 12 %.

Fair value at both September 30, 2022 and September 30, 2021, was determined using discount rates ranging from 9 % to 12 %.

Other assumptions utilized in the valuation model include, but are not limited to, prepayment speed, servicing costs, delinquencies, costs of advances, foreclosure costs, ancillary income, and income earned on float and escrow.

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Our leases have remaining lease terms ranging from approximately 1.08 to 5.75 years, some of which include options to extend the leases for up to 5 additional years.

As of June 30, 2022, we have no additional lease commitments that have not yet commenced.

As of September 30, 2022, we have no lease commitments that have not yet commenced.

The Company also leases a portion of some of its facilities and receives rental income from such lease agreements, all of which are considered operating leases.

Six Months Ended

June 30, 2022 June 30, 2021

Nine Months Ended

September 30, 2022 September 30, 2021

The components of total lease cost were as follows:

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Operating cash flows from operating leases $ 419 $ 415

June 30, 2022 December 31, 2021

Right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 215 $ 2

September 30, 2022 December 31, 2021

Supplemental balance sheet information related to leases was as follows:

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NOTE 6 – DEPOSITS

The following is a summary of deposits by type at June 30, 2022 and December 31, 2021, respectively:

June 30, 2022 December 31, 2021

The following is a summary of deposits by type at September 30, 2022 and December 31, 2021, respectively:

September 30, 2022 December 31, 2021

Non-interest bearing demand deposits $ 285,670 $ 276,631

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Total deposits $ 1,434,368 $ 1,387,535

At June 30, 2022, the scheduled maturities of time deposits were as follows for the year ended, except December 31, 2022 which is the six months ended:

At September 30, 2022, the scheduled maturities of time deposits were as follows for the year ended, except December 31, 2022 which is the three months ended:

December 31, 2022 $ 23,737

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Total $ 189,123

Time deposits of $250 or more were $ 17,641 and $ 22,381 at June 30, 2022 and December 31, 2021, respectively.

Brokered deposits were $ 6 at June 30, 2022 and $ 11 at December 31, 2021, respectively.

Time deposits of $250 or more were $ 24,257 and $ 22,381 at September 30, 2022 and December 31, 2021, respectively.

Brokered deposits were $ 19,868 at September 30, 2022 and $ 11 at December 31, 2021, respectively.

NOTE 7 – FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at June 30, 2022 and December 31, 2021 is as follows:

June 30, 2022 December 31, 2021

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2022 and December 31, 2021 is as follows:

September 30, 2022 December 31, 2021

Stated Maturity Amount Range of Stated Rates Amount Range of Stated Rates

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Totals $ 174,881 $ 169,953

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 920,774 and $ 861,900 at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 230,585 compared to $ 204,271 as of December 31, 2021.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 111,530 and $ 123,530 , during the six months ended June 30, 2022 and the twelve months ended December 31, 2021, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of June 30, 2022 and December 31, 2021 were 1.66 % and 2.45 %, respectively.

(4) At June 30, 2022, FHLB term notes totaling $ 27,500 can be called or replaced by the FHLB on a quarterly basis, and if not called, will mature at various dates in 2029.

At December 31, 2021, FHLB term notes totaling $ 55,000 could be called or replaced by the FHLB on a quarterly basis, and if not called, would mature at various dates in 2029 and 2030.

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 960,192 and $ 861,900 at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 277,959 compared to $ 204,271 as of December 31, 2021.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 134,530 and $ 123,530 , during the nine months ended September 30, 2022 and the twelve months ended December 31, 2021, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of September 30, 2022 and December 31, 2021 were 3.11 % and 2.45 %, respectively.

(4) At September 30, 2022, no FHLB term notes can be called by the FHLB.

At December 31, 2021, FHLB term notes totaling $ 55,000 could be called by the FHLB on a quarterly basis, and if not called, would mature at various dates in 2029 and 2030.

These notes were called by the FHLB in 2022.

(5) Senior notes, entered into by the Company in June 2019 consist of the following:

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(b) A $ 5,000 line of credit, maturing August 1, 2023, that remains undrawn upon.

The line was renewed on August 1, 2022, and will mature August 1, 2023.

(6) Subordinated notes resulted from the following:

(a) The Company’s private sale in August 2017, which bears a fixed interest rate of 6.75 % for five years .

In August 2022, they convert to a three-month LIBOR plus 4.90 % rate, and the interest rate will reset quarterly thereafter.

The note is callable by the Bank when, and anytime after, the floating rate is initially set.

Interest-only payments are due quarterly.

The Company sent the required redemption notice to the note holders in June 2022, and this subordinated note will be called and repaid in full on August 10, 2022.

(a) The Company’s private sale in August 2017, which bore a fixed interest rate of 6.75 % for five years .

In August 2022, they converted to a three-month LIBOR plus 4.90 % rate, and the interest rate will reset quarterly thereafter.

The note was callable by the Bank when, and anytime after, the floating rate is initially set.

Interest-only payments were due quarterly.

The Company sent the required redemption notice to the note holders in June 2022, and this subordinated note was called and repaid in full on August 10, 2022.

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bears a fixed interest rate of 6.00 % for five years .

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This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest bearing deposit balances.

These balances were $ 190,400 and $ 176,150 at June 30, 2022 and December 31, 2021, respectively.

These balances were $ 190,400 and $ 176,150 at September 30, 2022 and December 31, 2021, respectively.

Federal Funds Purchased Lines of Credit

The Bank maintains three unsecured federal funds purchased lines of credit with its banking partners which total $ 75,000 .

These lines bear interest at the lender bank’s announced daily federal funds rate, mature daily and are revocable at the discretion of the lending institution.

There were no borrowings outstanding on these lines of credit as of September 30, 2022 or December 31, 2021.

Federal Reserve Bank Paycheck Protection Program Liquidity Facility (“FRB PPPLF”) Program

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This FRB PPPLF program expired on July 30, 2021.

The Bank had no outstanding loan balances under this facility at June 30, 2022 and December 31, 2021.

There were no month-end borrowed amounts outstanding under this agreement during the six months ended June 30, 2022 and the twelve months ended December 31, 2021, respectively.

The Bank had no outstanding loan balances under this facility at December 31, 2021.

There were no month-end borrowed amounts outstanding under this agreement during the twelve months ended December 31, 2021, respectively.

In July 2021, the Bank pledged these SBA PPP loans to the FHLB.

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If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

At June 30, 2022, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2022 and December 31, 2021, respectively, are presented below:

At September 30, 2022, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2022 and December 31, 2021, respectively, are presented below:

Actual For Capital Adequacy

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Amount Ratio Amount Ratio Amount Ratio

As of June 30, 2022

As of September 30, 2022

Total capital (to risk weighted assets) $ 219,988 14.4 % $ 122,333 > = 8.0 % $ 152,916 > = 10.0 %

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Tier 1 leverage ratio (to adjusted total assets) 170,870 10.0 % 68,323 > = 4.0 % 85,403 > = 5.0 %

The Company’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2022 and December 31, 2021, respectively, are presented below:

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2022 and December 31, 2021, respectively, are presented below:

Actual For Capital Adequacy

Amount Ratio Amount Ratio

As of June 30, 2022

As of September 30, 2022

Total capital (to risk weighted assets) $ 213,594 14.0 % 122,333 > = 8.0 %

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approved the 2018 Equity Incentive Plan.

The aggregate number of shares of common stock reserved and available for issuance under the 2018 Equity Incentive Plan is 350,000 shares.

As of June 30, 2022, 218,894 restricted shares had been granted under this plan.

The aggregate number of shares of common stock initially reserved and available for issuance under the 2018 Equity Incentive Plan was 350,000 shares.

As of September 30, 2022, 221,030 restricted shares had been granted under this plan.

This amount includes 11,834 shares of performance based restricted stock granted in 2019 and issued in January 2022 upon achievement of the performance criteria and completion of the three year performance period beginning in January 2019 and ending December 31, 2021.

As of June 30, 2022, no stock options had been granted under this plan.

In addition, it includes 1,119 shares of performance based restricted stock granted in 2020 and 638 shares of performance based restricted stock granted in 2021 issued in August of 2022.

Both of these issuances were approved by the Compensation Committee in accordance with plan documents and were to a former employee.

As of September 30, 2022, no stock options had been granted under this plan.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years.

Due to the plan’s expiration, no new awards can be granted under this plan.

As of June 30, 2022, there are 400 awarded unvested restricted shares and 63,400 awarded unexercised options remaining from the plan.

As of September 30, 2022, there are no awarded unvested restricted shares and 63,400 awarded unexercised options remaining from the plan.

Restricted shares granted under the 2008 Equity Incentive Plan were awarded at no cost to the employee and vest pro rata over a two to five-year period from the grant date.

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Unexercised incentive stock options expire within 10 years of the grant date.

Net compensation expense related to restricted stock awards from these plans was $ 197 and $ 392 for the three and six months ended June 30, 2022, compared to $ 222 and $ 393 for the three and six months ended June 30, 2021.

Net compensation expense related to restricted stock awards from these plans was $ 255 and $ 647 for the three and nine months ended September 30, 2022, compared to $ 221 and $ 614 for the three and nine months ended September 30, 2021.

Restricted Common Stock Award

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Number of Shares Weighted

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Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award.

The compensation cost recognized for stock option-based employee compensation related to these plans for the three and six month periods ended June 30, 2022 was $ 1 and $ 2 , respectively.

The compensation cost recognized for stock option-based employee compensation related to these plans for the three and six month periods ended June 30, 2021 was $ 2 and $ 5 , respectively.

The compensation cost recognized for stock option-based employee compensation related to these plans for the three and nine month periods ended September 30, 2022 was $ 1 and $ 3 , respectively.

The compensation cost recognized for stock option-based employee compensation related to these plans for the three and nine month periods ended September 30, 2021 was $ 2 and $ 7 , respectively.

Common Stock Option Awards

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Term in Years Aggregate

June 30, 2022

September 30, 2022

Outstanding at beginning of year 65,900 $ 11.20

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Information related to the 2008 Equity Incentive Plan for the respective periods follows:

Six months ended June 30, 2022 Twelve months ended December 31, 2021

Nine months ended September 30, 2022 Twelve months ended December 31, 2021

Intrinsic value of options exercised $ 19 $ 28

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Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021:

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

Value Quoted Prices in

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(Level 2) Significant

June 30, 2022

September 30, 2022

Investment securities:

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Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2022 and December 31, 2021:

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2022 and December 31, 2021:

Carrying Value Quoted Prices in

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(Level 2) Significant

June 30, 2022

September 30, 2022

Foreclosed and repossessed assets, net $ 1,584 $ — $ — $ 1,584

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recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at

June 30, 2022.

September 30, 2022.

Value Valuation Techniques (1) Significant Unobservable Inputs (2) Range

June 30, 2022

September 30, 2022

Foreclosed and repossessed assets, net $ 1,584 Appraisal value Estimated costs to sell 10 % - 15 %

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The carrying amount and estimated fair value of the Company’s financial instruments as of the dates indicated below were as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Valuation Method Used Carrying

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A reconciliation of the basic and diluted earnings per share is as follows:

Three Months Ended Six Months Ended

(Share count in thousands) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Three Months Ended Nine Months Ended

(Share count in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income attributable to common stockholders $ 3,993 $ 4,997 $ 13,065 $ 15,209

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NOTE 12 – OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021:

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021:

Three months ended

June 30, 2022 June 30, 2021

September 30, 2022 September 30, 2021

Amount Tax Benefit

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Other comprehensive (loss) income $ ( 6,868 ) $ 1,888 $ ( 4,980 ) $ ( 1,141 ) $ 313 $ ( 828 )

Six Months Ended

June 30, 2022 June 30, 2021

Nine Months Ended

September 30, 2022 September 30, 2021

Expense Net-of-Tax

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Other comprehensive (loss) income $ ( 24,024 ) $ 6,606 $ ( 17,418 ) $ ( 356 ) $ 98 $ ( 258 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2021 and the six months ended June 30, 2022 were as follows:

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2021 and the nine months ended September 30, 2022 were as follows:

Gains (Losses)

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Current year-to-date other comprehensive loss ( 24,024 ) ( 17,418 )

Ending balance, June 30, 2022 $ ( 16,934 ) $ ( 12,277 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and six month periods ended June 30, 2022 and June 30, 2021 were as follows:

Ending balance, September 30, 2022 $ ( 23,802 ) $ ( 17,257 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2022 and September 30, 2021 were as follows:

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2022 Six months ended June 30, 2022 (1) Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended September 30, 2022 Nine months ended September 30, 2022 (1) Affected Line Item on the Statement of Operations

Unrealized gains and losses

3 unchanged sentences

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2021 Six months ended June 30, 2021 (1) Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended September 30, 2021 Nine months ended September 30, 2021 (1) Affected Line Item on the Statement of Operations

Unrealized gains and losses

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements