What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-03 · 196 added, 188 removed, 1401 unchanged (22% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

June 30, 2023 (unaudited) and December 31, 2022

September 30, 2023 (unaudited) and December 31, 2022

(derived from audited financial statements)

(in thousands, except share and per share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 32,532 $ 35,363

Other interest bearing deposits — 249

Available for sale ("AFS") securities, at fair value (amortized cost of $ 187,172 , net of allowance for credit losses of $ 0 at June 30, 2023)

Available for sale ("AFS") securities, at fair value (amortized cost of $ 183,152 , net of allowance for credit losses of $ 0 at September 30, 2023)

153,414 165,991

Held to maturity ("HTM") securities, at amortized cost, net of allowance for credit losses of $ 0 at June 30, 2023

Held to maturity ("HTM") securities, at amortized cost, net of allowance for credit losses of $ 0 at September 30, 2023

92,336 96,379

31 unchanged sentences

Consolidated Statements of Operations (unaudited)

Three and Six Months Ended June 30, 2023 and 2022

Three and Nine Months Ended September 30, 2023 and 2022

(in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Interest and dividend income:

28 unchanged sentences

Professional services 342 382 1,153 1,152

Gain on repossessed assets, net ( 9 ) ( 2 ) ( 38 ) ( 9 )

(Losses) gains on repossessed assets, net 100 ( 8 ) 62 ( 17 )

New market tax credit depletion — 163 — 488

11 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

Three and Six months ended June 30, 2023 and 2022

Three and Nine months ended September 30, 2023 and 2022

(in thousands)

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Net income attributable to common stockholders $ 2,498 $ 3,993 $ 9,366 $ 13,065

4 unchanged sentences

Other comprehensive loss, net of tax ( 2,862 ) ( 4,980 ) ( 4,083 ) ( 17,418 )

Comprehensive income (loss) $ 920 $ ( 949 ) $ 5,647 $ ( 3,366 )

Comprehensive (loss) income $ ( 364 ) $ ( 987 ) $ 5,283 $ ( 4,353 )

See accompanying condensed notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(in thousands, except shares and per share data)

21 unchanged sentences

Balance at June 30, 2023 10,470,175 105 119,404 64,926 ( 18,877 ) 165,558

Net income — — — 2,498 — 2,498

Other comprehensive loss, net of tax — — — — ( 2,862 ) ( 2,862 )

Forfeiture of unvested shares ( 2,084 ) — — — — —

Amortization of restricted stock — — 208 — — 208

Balance, September 30, 2023 10,468,091 $ 105 $ 119,612 $ 67,424 $ ( 21,739 ) $ 165,402

See accompanying condensed notes to unaudited consolidated financial statements.

45 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 2023 and 2022

Nine Months Ended September 30, 2023 and 2022

(in thousands)

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

Cash flows from operating activities:

6 unchanged sentences

Net realized gain on debt securities ( 12 ) —

Deferred tax asset valuation allowance 1,828 —

Increase in mortgage servicing rights resulting from transfers of financial assets ( 138 ) ( 275 )

3 unchanged sentences

Net stock based compensation expense — 3

Loss on sale of office properties and equipment — 271

Decrease in deferred income taxes 226 252

Increase in cash surrender value of life insurance ( 513 ) ( 472 )

Net gain from disposals of foreclosed and repossessed assets ( 38 ) ( 9 )

Net loss (gain) from disposals of foreclosed and repossessed assets 62 ( 17 )

Gain on sale of loans held for sale, net ( 1,501 ) ( 1,330 )

13 unchanged sentences

Proceeds from principal payments and maturities of held to maturity securities 4,031 8,838

Equity investment capital distribution 132 —

Purchase of equity investments ( 600 ) ( 300 )

Net (purchases) sales of other investments ( 513 ) 406

Net sales (purchases) of other investments 725 ( 602 )

Proceeds from sales of foreclosed and repossessed assets 307 56

20 unchanged sentences

Net cash provided by financing activities 12,256 47,902

Net increase (decrease) in cash and cash equivalents 7,606 ( 15,948 )

Net decrease in cash and cash equivalents ( 2,831 ) ( 18,280 )

Cash and cash equivalents at beginning of period 35,363 47,691

7 unchanged sentences

Transfers from loans receivable to other real estate owned ("OREO") $ 144 $ 92

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

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, 2023, 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, 2023, 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, 2022, filed with the SEC on March 7, 2023;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 4, 2023;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, filed with the SEC on May 4, 2023 and August 3, 2023, respectively;

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

17 unchanged sentences

First, the Company assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost.

If it is determined that the Company intends or will be required to sell the security, it is written down to its fair value through income.

If it is determined that the Company intends or will be required to sell the security, it is written down to its fair value as net gains or losses on investment securities in our consolidated statement of operations.

For agency mortgage-backed and asset-backed securities that do not meet the criteria in step one, there are no expected credit losses as they are guaranteed by the U.S.

7 unchanged sentences

Farmer Mac equity securities are carried at their fair market value, which is readily determinable.

Changes in fair value are recognized as net gains (losses) on investment securities in the consolidated statement of operations.

Changes in fair value are recognized as net gains or losses on investment securities in our consolidated statement of operations.

Also included in equity investments are the Company’s investments in a Volker Rule-compliant Small Business Investment Company ("SBIC") and an investment fund.

4 unchanged sentences

SBICs and investment funds report their investments at estimated fair value.

We record the unrealized gains and losses resulting from changes in the fair value of these investments as gains or losses on equity securities in our consolidated statements of operations.

We record the unrealized gains and losses resulting from changes in the fair value of these investments as gains or losses on investment securities in our consolidated statements of operations.

The carrying value of these investments is equal to the capital account as provided by the investee and adjusted as necessary.

3 unchanged sentences

As no ready market exists for these stocks, and they have no quoted market value, these investments are carried at cost and periodically evaluated for impairment based on the ultimate recovery of par value.

Cash dividends are reported as other income in the consolidated statement of operations.

Cash dividends are reported as other income in our consolidated statement of operations.

Also included in other investments is stock of our correspondent bank, Bankers’ Bank, without readily determinable fair value.

2 unchanged sentences

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

Other investments totaling $ 16,347 at June 30, 2023 consisted of $ 8,153 of FHLB stock, $ 5,686 of

Federal Reserve Bank stock and $ 2,508 of Bankers’ Bank stock.

Other investments totaling $ 15,109 at September 30, 2023 consisted of $ 6,909 of FHLB stock,

$ 5,692 of Federal Reserve Bank stock and $ 2,508 of Bankers’ Bank stock.

Other investments totaling $ 15,834 at December 31, 2022 consisted of $ 7,652 of FHLB stock and $ 5,674 of Federal Reserve Bank stock and $ 2,508 of Bankers’ Bank stock.

18 unchanged sentences

Commercial/agricultural real estate, commercial and industrial and agricultural operating loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Credit Losses – Loans The allowance for credit losses (“ACL”) is a valuation allowance for current expected credit losses in the Company’s loan portfolio.

Allowance for Credit Losses – Loans The allowance for credit losses (“ACL”) on loans is a valuation allowance for current expected credit losses in the Company’s loan portfolio.

Prior to January 1, 2023, the valuation allowance was established for probable and inherent credit losses.

50 unchanged sentences

assessed for impairment at least annually;

carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value.

MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.

and carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value.

MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded as “mortgage servicing rights expense” in non-interest expense in the consolidated statement of operations.

The valuation of MSRs and related amortization, included in mortgage servicing rights expense in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for:

7 unchanged sentences

On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amounts of the intangible assets may be impaired.

Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit

below its carrying amount.

Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more

frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

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, 2023, which is related to its banking activities.

The Company has one reporting unit as of September 30, 2023, 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.

8 unchanged sentences

Costs incurred after acquisition are expensed and are included in non-interest expense, other in the consolidated statements of operations.

Bank Owned Life Insurance (BOLI)— The Bank invests in bank-owned life insurance (BOLI) as a source of funding for employee benefit expenses.

BOLI involves the purchasing of life insurance by the Bank on a select group of employees.

The Bank is the owner and beneficiary of the policies.

Income from the increase in cash surrender value of the policies as well as the receipt of death benefits is included in non-interest income on the consolidated statements of operations.

New Markets Tax Credits - As a part of its commitment to the communities it serves, in the first quarter of 2022, the Company made an investment in an LLC that is sponsoring a community development project that has been awarded a New Markets Tax Credit (NMTC) through the U.S.

6 unchanged sentences

Prior to the adoption of ASU 2023-02 the investment was accounted for using the equity method of accounting and was amortized through non-interest expense

As of June 30, 2023, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 3,189 .

As of September 30, 2023, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 3,044 .

Prior to the adoption of ASU 2023-02, the carrying value of the investment as of December 31, 2022 was $ 3,350 .

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, 2023, there were no known instances of noncompliance associated with the investment.

As of September 30, 2023, there were no known instances of noncompliance associated with the investment.

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

11 unchanged sentences

Debt issuance costs with a Company call option that originated prior to 2020 and senior note debt issuance costs, are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations.

Debt issuance costs that originated in 2020 and thereafter, are amortized through the first Company call option date of the corresponding debt, as a

component of interest expense on other borrowed funds in the consolidated statements of operations.

Debt issuance costs that originated in 2020 and thereafter, are amortized through the first Company call option date of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations.

Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheets, in the period of the share issuance.

9 unchanged sentences

Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

The Company’s effective tax rates were 50.5 % and 34.3 % for the three and nine months ended September 30, 2023, and 24.3 % for both the three and nine months ended September 30, 2022.

The Wisconsin state budget, signed July 5, 2023, effective January 1, 2023, made originated loans in Wisconsin for business purposes up to $5,000 non-taxable.

This change lowers the Company’s income tax rates for the three and nine-month periods ended September 30, 2023.

The current period income tax expense was lower due to the retroactive, i.e.

nine-month effect of this change by $ 553 .

This reduction of income tax expense was offset by a one-time tax expense of $ 1,828 in the current period, as the impact of the resulting lower incremental tax rate decreased the estimated future realization of an existing deferred tax asset resulting in a valuation allowance.

Revenue Recognition - The Company’s primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method.

10 unchanged sentences

Interchange income - The Company earns interchange fees when cardholder debit card transaction are processed through card association networks.

The interchange rates are generally set by the card association based upon purchase volumes and other factors.

The interchange rates are generally set by the card association based upon purchase

volumes and other factors.

Interchange fees represent a percentage of the underlying transaction value.

27 unchanged sentences

In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration.

In November, 2019, the FASB issued ASU 2019-10, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13 becoming effective in the first quarter of 2023 for the Company.

In November, 2019, the FASB issued ASU 2019-10, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13

becoming effective in the first quarter of 2023 for the Company.

Earlier adoption was permitted;

7 unchanged sentences

The Company also recorded an increase to the ACL of $ 4,706 .

This increase was made up

of two components, $ 4,576 for non-purchased credit deteriorated (“PCD”) loans and $ 130 for PCD loans.

This increase was made up of two components, $ 4,576 for non-purchased credit deteriorated (“PCD”) loans and $ 130 for PCD loans.

An ACL on unfunded commitments of $ 1,537 was also established.

29 unchanged sentences

The transition adjustment resulted in an increase to retained earnings of $ 130 .

Amortization of the investment will now be recognized in the period of and proportional to recognition of the related tax credit and included in provision for income taxes in the consolidated statements of operations.

Amortization of the investment will now be recognized in the period of and

proportional to recognition of the related tax credit and included in provision for income taxes in the consolidated statements of operations.

Prior to adoption of this amendment, the amortization was included in other non-interest expense as a separate line item.

1 unchanged sentence

Proportional amortization better matches the cost of the investment with the benefits received, and including the amortization of the investment in provision for income taxes better reflects the benefit the Company receives from the transaction.

For the three and six months ended June 30, 2023, adopting ASU 2023-02 increased net income $ 33 and $ 65 , respectively.

For the three and nine months ended September 30, 2023, adopting ASU 2023-02 increased net income $ 33 and $ 98 , respectively.

Recently Issued, But Not Yet Effective Accounting Pronouncements

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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, respectively, were as follows:

Available for sale securities Amortized

Losses Estimated

June 30, 2023

September 30, 2023

government agency obligations $ 17,452 $ 89 $ 223 $ 17,318

11 unchanged sentences

Losses Estimated

June 30, 2023

September 30, 2023

Obligations of states and political subdivisions $ 600 $ — $ 48 $ 552

5 unchanged sentences

Total held to maturity securities $ 96,379 $ 7 $ 19,607 $ 76,779

At June 30, 2023, the Bank has pledged mortgage-backed securities with a carrying value of $ 29,984 as collateral against a borrowing line of credit with the Federal Reserve Bank.

As of June 30, 2023, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of June 30, 2023, the Bank has pledged U.S.

At September 30, 2023, the Bank has pledged mortgage-backed securities with a carrying value of $ 29,542 as collateral against a borrowing line of credit with the Federal Reserve Bank.

As of September 30, 2023, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of September 30, 2023, the Bank has pledged U.S.

Government Agency securities with a carrying value of $ 531 and mortgage-backed securities with a carrying value of $ 1,900 as collateral against specific municipal deposits.

As of June 30, 2023, the Bank also has mortgage-backed securities with a carrying value of $ 223 pledged as collateral to the Federal Home Loan Bank of Des Moines.

As of September 30, 2023, the Bank also has mortgage-backed securities with a carrying value of $ 688 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2022, the Bank had pledged certain of its mortgage-backed securities with a carrying value of $ 5,421 as collateral to secure a line of credit with the Federal Reserve Bank.

3 unchanged sentences

As of December 31, 2022, the Bank also had mortgage-backed securities with a carrying value of $ 142 pledged as collateral to the Federal Home Loan Bank of Des Moines.

For the three and six month periods ended June 30, 2023 gross sales of available securities were $ 5,105 , gross gains on the sale of available for sale securities were $ 12 , and gross losses on the sale of available for sale securities were $ 0 .

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

The estimated fair value of securities at June 30, 2023 and December 31, 2022, by contractual maturity, is shown below.

For the three and nine month periods ended September 30, 2023 gross sales of available securities were $ 0 and $ 5,105 , respectively, gross gains on the sale of available for sale securities were $ 0 and $ 12 , respectively, and gross losses on the sale of available for sale securities were $ 0 for both periods.

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

The estimated fair value of securities at September 30, 2023 and December 31, 2022, 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, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Available for sale securities Amortized

9 unchanged sentences

Total available for sale securities $ 183,152 $ 153,414 $ 190,344 $ 165,991

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Held to maturity securities Amortized

8 unchanged sentences

Total held to maturity securities $ 92,336 $ 68,752 $ 96,379 $ 76,779

Securities with unrealized losses at June 30, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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, 2023

September 30, 2023

government agency obligations $ 3,961 $ — $ 3,615 $ 223 $ 7,576 $ 223

14 unchanged sentences

Value Unrealized

June 30, 2023

September 30, 2023

Obligations of states and political subdivisions $ — $ — $ 552 $ 48 $ 552 $ 48

5 unchanged sentences

Total $ 16,627 $ 2,416 $ 59,913 $ 17,191 $ 76,540 $ 19,607

At June 30, 2023 no ACL was established for available for sale or held to maturity securities.

At September 30, 2023 no ACL was established for available for sale or held to maturity securities.

Substantially all the held to maturity portfolio is made up of agency backed mortgage securities.

34 unchanged sentences

Interest on substantially all loans is credited to income based on the principal amount outstanding.

A summary of loans at June 30, 2023 follows:

June 30, 2023

A summary of loans at September 30, 2023 follows:

September 30, 2023

Amortized Cost % of Total

60 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 the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of June 30, 2023 and gross charge-offs for the six months ended June 30, 2023:

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of September 30, 2023 and gross charge-offs for the nine months ended September 30, 2023:

Amortized Cost Basis by Origination Year

117 unchanged sentences

The Company estimates the appropriate level of allowance for credit losses by evaluating loans collectively on a pooled basis when similar risk characteristics exist, and on an individual basis when management determines that a loan does not share similar risk characteristics with other loans.

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and six months ended June 30, 2023:

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and nine months ended September 30, 2023:

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

Three months ended June 30, 2023

Three months ended September 30, 2023

Allowance for Credit Losses - Loans:

2 unchanged sentences

Recoveries 206 10 — 2 — 218

Additions to ACL - Loans via provision for credit losses charged to operations 424 ( 406 ) 426 ( 8 ) — 436

(Reversals)/additions to ACL - Loans via provision for credit losses charged to operations ( 284 ) ( 279 ) 235 ( 24 ) — ( 352 )

ACL - Loans, at end of period $ 18,855 $ 1,189 $ 2,633 $ 296 $ — $ 22,973

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

Six months ended June 30, 2023

Nine months ended September 30, 2023

Allowance for Credit Losses - Loans:

3 unchanged sentences

Recoveries 236 41 40 24 — 341

Additions to ACL - Loans via provision for credit losses charged to operations 354 ( 560 ) 718 ( 19 ) — 493

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations 70 ( 839 ) 953 ( 43 ) — 141

ACL - Loans, at end of period $ 18,855 $ 1,189 $ 2,633 $ 296 $ — $ 22,973

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 1,544 at June 30, 2023 and $ 0 at December 31, 2022, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and six months ended June 30, 2023.

June 30, 2023 and Three Months Ended June 30, 2023 and Six Months Ended

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 1,571 at September 30, 2023 and $ 0 at December 31, 2022, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and nine months ended September 30, 2023.

September 30, 2023 and Three Months Ended September 30, 2023 and Nine Months Ended

ACL - Unfunded Commitments - beginning of period $ 1,544 $ —

4 unchanged sentences

The following table presents the components of the provision for credit losses.

June 30, 2023 and Three Months Ended June 30, 2023 and Six Months Ended

September 30, 2023 and Three Months Ended September 30, 2023 and Nine Months Ended

Provision for credit losses on:

12 unchanged sentences

Changes in the ALL by loan type for the periods presented below were as follows:

Three months ended June 30, 2022 Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Three months ended September 30, 2022 Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

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

19 unchanged sentences

collectively evaluated for impairment $ 1,108,405 $ 161,527 $ 102,653 $ 16,631 $ — $ 1,389,216

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, 2023 and December 31, 2022, respectively, was as follows:

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, 2023 and December 31, 2022, respectively, was as follows:

(Loan balances at amortized cost) 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, 2023

September 30, 2023

Commercial/Agricultural real estate:

31 unchanged sentences

Total $ 10,816 $ 595 $ 246 $ 11,657 $ 11,204 $ 22,861 $ 1,393,274 $ 1,416,135

Nonaccrual Loans - The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at June 30, 2023 with no allowance for credit losses and interest income that would have been recorded under the original terms of such nonaccrual loans:

June 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Interest Income Not Recorded for Nonaccrual loans

Nonaccrual Loans - The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at September 30, 2023 with no allowance for credit losses and interest income that would have been recorded under the original terms of such nonaccrual loans:

September 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Interest Income Not Recorded for Nonaccrual loans

Commercial/Agricultural real estate:

24 unchanged sentences

The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

The amount of interest income recognized by the Company for the three and six months ended June 30, 2023, due to nonaccrual loan payoffs was $ 75 and $ 85 , respectively.

The amount of interest income recognized by the Company for the three and nine months ended September 30, 2023, due to nonaccrual loan payoffs was $ 420 and $ 505 , respectively.

Collateral Dependent Loans - A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

For collateral dependent loans, expected credit losses are based on the fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

The following table presents the amortized cost basis of collateral dependent loans by portfolio segment and collateral type that were individually evaluated to determine expected credit losses and the related allowance for credit losses as of June 30, 2023.

Collateral Type

June 30, 2023 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

September 30, 2023 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

Commercial/Agricultural real estate:

13 unchanged sentences

Total $ 21,804 $ 4,410 $ 26,214 $ 25,828 $ 386 $ 93

There were no outstanding commitments to borrowers experiencing financial difficulty as of June 30, 2023.

There were unused lines of credit totaling $ 64 on loans with borrowers experiencing financial difficulties as of June 30, 2023.

There were no outstanding commitments to borrowers experiencing financial difficulty as of September 30, 2023.

There were unused lines of credit totaling $ 37 on loans with borrowers experiencing financial difficulties as of September 30, 2023.

At December 31, 2022, the Company individually evaluated loans for impairment with a recorded investment of $ 26,823 , consisting of (1) $ 7,000 PCI loans, with a carrying amount of $ 6,904 ;

4 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 December 31, 2022 and June 30, 2022 was as follows:

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

Twelve Months Ended

19 unchanged sentences

Total $ 26,823 $ 26,919 $ 826 $ 31,336 $ 1,418

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, 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

September 30, 2022

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

3 unchanged sentences

Total $ 29,714 $ 29,930 $ 699 $ 29,552 $ 329 $ 32,467 $ 879

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended June 30, 2023:

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2023:

Term Extension

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2023:

September 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,826 0.65 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2023:

Term Extension

Loan Class Financial Effect

Commercial and industrial A weighted average of 3 months was added to the term of the loans

Agricultural operating A weighted average of 3 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Residential mortgage Payments were deferred a weighted average of 6 months

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the six months ended June 30, 2023:

Commercial real estate A weighted average of 20 months was added to the term of the loans

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the nine months ended September 30, 2023:

Term Extension

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

September 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,826 0.65 %

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

2 unchanged sentences

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

September 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

Other consumer $ 20 0.31 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the six months ended June 30, 2023:

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2023:

Term Extension

1 unchanged sentence

Commercial real estate A weighted average of 20 months was added to the term of the loans

Commercial and industrial A weighted average of 3 months was added to the term of the loans

Agricultural operating A weighted average of 3 months was added to the term of the loans

5 unchanged sentences

The Company closely monitors the performance of loans that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

No loan modified during the three and six months ended June 30, 2023 has subsequently defaulted.

The following table shows the performance of such loans that have been modified during the six months ended June 30, 2023.

No loan modified during the three and nine months ended September 30, 2023 has subsequently defaulted.

The following table shows the performance of such loans that have been modified during the nine months ended September 30, 2023.

Current 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due

Commercial real estate $ 4,826 $ — $ — $ —

Commercial and industrial 8 — — —

Agricultural operating 179

16 unchanged sentences

There were unused lines of credit totaling $ 484 meeting our TDR criteria as of December 31, 2022.

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:

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 $ —

There were no loans modified in a TDR during the previous twelve months which subsequently defaulted during the three and six months ended June 30, 2022.

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

NOTE 4 – MORTGAGE SERVICING RIGHTS

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, 2023 and December 31, 2022 were $ 503,022 and $ 523,736 , respectively, and consisted of one to four family residential real estate loans.

The unpaid balances of these loans as of September 30, 2023 and December 31, 2022 were $ 499,482 and $ 523,736 , 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 $ 4,753 and $ 2,649 at June 30, 2023 and December 31, 2022, respectively.

Mortgage servicing rights activity for the six month periods ended June 30, 2023 and June 30, 2022 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, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 6,526 and $ 2,649 at September 30, 2023 and December 31, 2022, respectively.

Mortgage servicing rights activity for the three and nine month periods ended September 30, 2023 and September 30, 2022 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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

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 $ 325 and $ 352 for the three months ended June 30, 2023 and June 30, 2022, respectively.

Servicing fees totaled $ 655 and $ 703 for the six months ended June 30, 2023 and June 30, 2022, respectively.

Servicing fees totaled $ 321 and $ 346 for the three months ended September 30, 2023 and September 30, 2022, respectively.

Servicing fees totaled $ 976 and $ 1,049 for the nine months ended September 30, 2023 and September 30, 2022, respectively.

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

3 unchanged sentences

Central to the valuation model is the discount rate.

Fair value at June 30, 2023, was determined using discount rates ranging from 9.5 % to 12.5 %.

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

Fair value at September 30, 2023, was determined using discount rates ranging from 10.125 % to 13.125 %.

Fair value at September 30, 2022, 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.

3 unchanged sentences

Some of the leases include an option to extend, the longest of which is for two 5 year terms.

As of June 30, 2023, we have no lease commitments that have not yet commenced.

As of September 30, 2023, 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, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

The components of total lease cost were as follows:

9 unchanged sentences

Operating leases $ 225 $ 215

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Supplemental balance sheet information related to leases was as follows:

13 unchanged sentences

NOTE 6 – DEPOSITS

The following is a summary of deposits by type at June 30, 2023 and December 31, 2022, respectively:

June 30, 2023 December 31, 2022

The following is a summary of deposits by type at September 30, 2023 and December 31, 2022, respectively:

September 30, 2023 December 31, 2022

Non-interest bearing demand deposits $ 275,790 $ 284,722

4 unchanged sentences

Total deposits $ 1,473,235 $ 1,424,720

At June 30, 2023, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2023, which is the six months ended:

At September 30, 2023, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2023, which is the three months ended:

December 31, 2023 $ 80,547

5 unchanged sentences

Total $ 364,092

Certificate accounts of $250 or more were $ 132,647 and $ 66,827 at June 30, 2023 and December 31, 2022, respectively.

Brokered deposits were $ 97,330 at June 30, 2023 and consisted of $ 94,096 of brokered certificate accounts and $ 3,234 of brokered money market accounts.

Certificate accounts of $250 or more were $ 128,414 and $ 66,827 at September 30, 2023 and December 31, 2022, respectively.

Brokered deposits were $ 85,173 at September 30, 2023 and consisted of $ 84,163 of brokered certificate accounts and $ 1,010 of brokered money market accounts.

Brokered Deposits were $ 39,841 at December 31, 2022 and consisted of $ 39,839 of brokered certificate accounts and $ 2 of brokered money market accounts.

At June 30, 2023, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2023, which is the six months ended:

At September 30, 2023, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2023, which is the three months ended:

December 31, 2023 $ 25,706

5 unchanged sentences

NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at June 30, 2023 and December 31, 2022 is as follows:

June 30, 2023

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2023 and December 31, 2022 is as follows:

September 30, 2023

December 31, 2022

12 unchanged sentences

Totals $ 181,937 $ 214,939

(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 $ 1,040,484 and $ 984,878 at June 30, 2023 and December 31, 2022, respectively.

At June 30, 2023, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 294,400 compared to $ 256,773 as of December 31, 2022.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 217,530 and $ 157,530 , during the six months ended June 30, 2023 and the twelve months ended December 31, 2022, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of June 30, 2023 and December 31, 2022 were 4.58 % and 4.09 %, respectively.

(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 $ 1,065,913 and $ 984,878 at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2023, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 314,521 compared to $ 256,773 as of December 31, 2022.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 217,530 and $ 157,530 , during the nine months ended September 30, 2023 and the twelve months ended December 31, 2022, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of September 30, 2023 and December 31, 2022 were 4.58 % and 4.09 %, respectively.

(4) FHLB term notes totaling $ 15,000 , with 2028 maturity dates, are callable once by the FHLB in December of 2023.

3 unchanged sentences

(b) A $ 5,000 line of credit, maturing August 1, 2024, that remains undrawn upon.

This line was renewed effective August 1, 2023 and will mature August 1, 2024.

(6) Subordinated notes resulted from the following:

10 unchanged sentences

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.

The letters of credit balances were $ 197,500 and $ 191,650 at June 30, 2023 and December 31, 2022, respectively.

The letters of credit balances were $ 469,530 and $ 191,650 at September 30, 2023 and December 31, 2022, respectively.

Federal Reserve Borrowings

At June 30, 223 and December 31, 2022, the Bank had the ability to borrow $ 23,859 and $ 4,118 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 29,984 and $ 5,421 as of June 30, 2023 and December 31, 2022, respectively.

There were no Federal Reserve borrowings outstanding as of June 30, 2023 and December 31, 2022.

At September 30, 2023 and December 31, 2022, the Bank had the ability to borrow $ 22,059 and $ 4,118 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 23,210 and $ 5,421 as of September 30, 2023 and December 31, 2022, respectively.

There were no Federal Reserve borrowings outstanding as of September 30, 2023 and December 31, 2022.

In March of 2023, the Bank was approved to obtain funding from the Federal Reserve’s new Bank Term Funding Program (“BTFP”).

As of June 30, 2023, the Bank has not borrowed from this facility and has not pledged any collateral to this facility.

As of September 30, 2023, the Bank has not borrowed from this facility and has not pledged any collateral to this facility.

Federal Funds Purchased Lines of Credit

As of June 30, 2023, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

As of September 30, 2023, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

As of December 31, 2022, the Bank maintained three unsecured federal funds purchased lines of credit with its banking partners which totaled $ 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 June 30, 2023 or December 31, 2022.

There were no borrowings outstanding on these lines of credit as of September 30, 2023 or December 31, 2022.

NOTE 8 - CAPITAL MATTERS

7 unchanged sentences

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

At June 30, 2023, 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, 2023, and December 31, 2022, respectively, are presented below:

At September 30, 2023, 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, 2023, and December 31, 2022, respectively, are presented below:

Actual For Capital Adequacy

3 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

As of June 30, 2023

As of September 30, 2023

Total capital (to risk weighted assets) $ 229,007 14.6 % $ 125,736 > = 8.0 % $ 157,170 > = 10.0 %

7 unchanged sentences

Tier 1 leverage ratio (to adjusted total assets) 203,422 11.5 % 70,610 > = 4.0 % 88,262 > = 5.0 %

The Company’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2023 and December 31, 2022, respectively, are presented below:

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2023 and December 31, 2022, respectively, are presented below:

Actual For Capital Adequacy

Amount Ratio Amount Ratio

As of June 30, 2023

As of September 30, 2023

Total capital (to risk weighted assets) $ 226,800 14.4 % $ 125,736 > = 8.0 %

11 unchanged sentences

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 June 30, 2023, 290,187 restricted shares had been granted under this plan.

As of September 30, 2023, 290,187 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.

2 unchanged sentences

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

As of June 30, 2023, no stock options had been granted under this plan.

As of September 30, 2023, 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, 2023, there are no awarded unvested restricted shares and 54,000 awarded unexercised options remaining from the plan.

As of September 30, 2023, there are no awarded unvested restricted shares and 54,000 awarded unexercised options remaining from the plan.

Options granted to date under this plan vest pro rata over a five-year period from the grant date.

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

Net compensation expense related to restricted stock awards from these plans was $ 166 and $ 382 for the three and six months ended June 30, 2023, compared to $ 197 and $ 392 for the three and six months ended June 30, 2022.

Net compensation expense related to restricted stock awards from these plans was $ 208 and $ 590 for the three and nine months ended September 30, 2023, compared to $ 255 and $ 647 for the three and nine months ended September 30, 2022.

Restricted Common Stock Award

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Number of Shares Weighted

8 unchanged sentences

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 the 2008 plan for the three and six month periods ended June 30, 2023 was $ 0 as all options have vested.

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

The compensation cost recognized for stock option-based employee compensation related to the 2008 plan for the three and nine month periods ended September 30, 2023 was $ 0 as all options have vested.

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

Common Stock Option Awards

2 unchanged sentences

Term in Years Aggregate

June 30, 2023

September 30, 2023

Outstanding at beginning of year 58,000 $ 11.51

10 unchanged sentences

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

Six months ended June 30, 2023 Twelve months ended December 31, 2022

Nine months ended September 30, 2023 Twelve months ended December 31, 2022

Intrinsic value of options exercised $ 2 $ 38

14 unchanged sentences

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, 2023 and December 31, 2022:

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:

Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

June 30, 2023

September 30, 2023

Investment securities:

23 unchanged sentences

Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022:

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2023 and December 31, 2022:

Carrying Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

June 30, 2023

September 30, 2023

Foreclosed and repossessed assets, net $ 1,046 $ — $ — $ 1,046

13 unchanged sentences

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

June 30, 2023.

September 30, 2023.

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

June 30, 2023

September 30, 2023

Foreclosed and repossessed assets, net $ 1,046 Appraisal value Estimated costs to sell 10 % - 15 %

12 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Valuation Method Used Carrying

12 unchanged sentences

Loans held for sale - Residential mortgage (Level I) 904 914 — —

Loans held for sale - SBA (Level II) 871 945 — —

Loans held for sale - SBA /FSA (Level II) 1,833 1,833 — —

Mortgage servicing rights (Level III) 3,944 5,701 4,262 5,665

3 unchanged sentences

FHLB advances (Level II) 114,530 113,571 142,530 141,060

Other borrowings (Level I) 67,357 67,357 72,409 72,409

Other borrowings (Level II) 67,407 59,450 72,409 72,409

Accrued interest payable (Level I) 1,623 1,623 968 968

3 unchanged sentences

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, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

(Share count in thousands) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Net income attributable to common stockholders $ 2,498 $ 3,993 $ 9,366 $ 13,065

8 unchanged sentences

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, 2023 and 2022:

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, 2023 and 2022:

Three Months Ended

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Amount Tax Benefit

3 unchanged sentences

(Expense) Net-of-Tax

Unrealized gain (losses) on securities:

Unrealized (losses) gains on securities:

Net unrealized losses arising during the period $ ( 3,701 ) $ 839 $ ( 2,862 ) $ ( 6,868 ) $ 1,888 $ ( 4,980 )

Reclassification adjustment for gains included in net income ( 12 ) 3 ( 9 ) — — —

Other comprehensive loss $ ( 3,701 ) $ 839 $ ( 2,862 ) $ ( 6,868 ) $ 1,888 $ ( 4,980 )

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

Amount Tax Benefit

(Expense) Net-of-Tax

Amount Before-Tax

Amount Tax Benefit

(Expense) Net-of-Tax

3 unchanged sentences

Other comprehensive loss $ ( 5,385 ) $ 1,302 $ ( 4,083 ) $ ( 24,024 ) $ 6,606 $ ( 17,418 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2022 and the six months ended June 30, 2023 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, 2022 and the nine months ended September 30, 2023 were as follows:

Gains (Losses)

6 unchanged sentences

Current year-to-date other comprehensive loss ( 5,385 ) ( 4,083 )

Ending balance, June 30, 2023 $ ( 26,037 ) $ ( 18,877 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and six month periods ended June 30, 2023 and June 30, 2022 were as follows:

Ending balance, September 30, 2023 $ ( 29,738 ) $ ( 21,739 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2023 and September 30, 2022 were as follows:

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2023 Six months ended June 30, 2023 (1) Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended September 30, 2023 Nine months ended September 30, 2023 (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, 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

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