What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-05 compared with 2023-03-07 · 468 added, 404 removed, 1332 unchanged (40% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of Citizens Community Bancorp, Inc.

and Subsidiary (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations , comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

and Subsidiary (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations , comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with auditing standards generally accepted in the United States of America, the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 7, 2023, expressed an unmodified opinion.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company adopted the provisions of FASB Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , as of January 1, 2023, using the modified retrospective approach with an adjustment at the beginning of the adoption period.

Our opinion is not modified with respect to this matter.

Critical Audit Matters

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Loan Losses

As discussed in Notes 1 and 3 to the Company’s consolidated financial statements, the Company has a gross loan portfolio of $1.4 billion and related allowance for loan losses of $17.9 million as of December 31, 2022.

The Company’s allowance for loan losses is a material and complex estimate requiring significant management’s judgment in the evaluation of the credit quality and the estimation of inherent losses within the loan portfolio.

The allowance for loan losses includes a general reserve which is determined based on the results of a quantitative and a qualitative analysis of all loans not measured for impairment at the reporting date.

The Company’s general reserves cover non-impaired loans and is based on historical loss rates and qualitative loss factors for each portfolio.

In calculating the allowance for loan losses, the Company considers relevant credit quality indicators for each loan segment, and estimates losses for each loan type based upon their nature and risk profile.

This process requires significant management judgment in the review of the loan portfolio and assignment of risk ratings based upon the characteristics of loans.

In addition, estimation of losses inherent within the portfolio requires significant management judgment, particularly where the Company has not incurred sufficient historical losses and has utilized industry data in forming its estimate.

Allowance for Credit Losses

The Company has a gross loan portfolio of $1.5 billion and related allowance for credit losses (ACL) of $22.9 million as of December 31, 2023.

As discussed in Notes 1 and 3 to the Company’s consolidated financial statements, the ACL represents management’s estimate of expected credit losses over the contractual life of the loan portfolio.

The ACL is estimated using relevant available information relating to past events, current economic conditions, and reasonable and supportable forecasts, as well as qualitative adjustments applied on a portfolio segment basis.

the qualitative adjustments are used to bring the ACL to the level management believes is appropriate based on factors that are otherwise unaccounted for in the quantitative process.

Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Obtaining an understanding of the Company’s process for determining the allowance for loan losses, which includes management’s determination of and changes to qualitative adjustments as of the balance sheet date.

• Evaluating the design and testing the operating effectiveness of controls relating to the development and approval of the allowance for loan loss methodology, controls around the reliability and accuracy of the information used in the calculation and management’s review and approval of the allowance for loan losses.

• Evaluating the reasonableness of assumptions and reasonableness, accuracy and completeness of data used by management in forming the loss factors by performing retrospective review of historic loan loss experience and analyzing historical data used in developing the assumptions.

• Evaluating the appropriateness of inputs and factors that the Company used in forming the qualitative loss factors and assessing whether such inputs and factors were relevant, reliable, and reasonable for the purpose used.

• Testing the mathematical accuracy and computation of the allowance for loan losses.

• Evaluated the period to period consistency with which qualitative loss factors are determined and applied.

Evaluate the qualitative adjustments year over year for directional consistency and testing the reasonableness, including the qualitative adjustments attributed to the estimated impact of the COVID-19 pandemic on the Company’s loan portfolio.

• Obtaining an understanding of the Company’s process for establishing the ACL, including the models selected by management to estimate quantitative components of the ACL and qualitative adjustments made to the ACL.

This includes the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the balance sheet date.

• Evaluating the design and testing the operating effectiveness of controls relating to the development and approval of the ACL methodology, management’s identification and determination of the significant assumptions used in the Probability of Default (PD) and Loss Given Default (LGD) models, controls related to the reliability and accuracy of the data used in the models, analysis of the ACL results and the management’s review and approval of the ACL.

• Evaluating the appropriateness of the model methodology used to incorporate a reasonable and supportable forecast period and reversion to historical loss rates by inspecting the model documentation and by comparing it to relevant industry practices.

• Determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices.

• Testing the completeness and accuracy of internal loan level data used as the basis for the calculation.

• Evaluating the reasonableness of forecasted economic scenarios.

• Evaluating the identification and measurement of the qualitative adjustments, including the basis for concluding an adjustment was warranted and compared the adjustments utilized by management to both internal portfolio metrics and external macroeconomic data to support the adjustments and evaluated the trends in such adjustments.

We evaluated information that corroborates or contradicts management’s reasonable and supportable forecast as well as identification and measurement of qualitative factors.

/s/ Eide Bailly, LLP

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Other interest bearing deposits — 249

Securities available for sale "AFS" 165,991 203,068

Securities held to maturity "HTM" 96,379 71,141

Available for sale ("AFS") securities, at amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023

155,743 165,991

Held to maturity ("HTM") securities, at amortized cost, net of allowance for credit losses of $ 0 at December 31, 2023

91,229 96,379

Equity investments 3,284 1,794

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Loans receivable 1,460,792 1,411,784

Allowance for loan losses ( 17,939 ) ( 16,913 )

Allowance for credit losses ( 22,908 ) ( 17,939 )

Loans receivable, net 1,437,884 1,393,845

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Retained earnings 71,117 65,400

Accumulated other comprehensive (loss) income ( 17,656 ) 161

Accumulated other comprehensive loss ( 17,328 ) ( 17,656 )

Total stockholders’ equity 173,334 167,088

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Total interest expense 35,899 13,028

Net interest income before provision for loan losses 56,369 53,667

Provision for loan losses 1,475 —

Net interest income after provision for loan losses 54,894 53,667

Net interest income before provision for credit losses 48,349 56,369

Provision for credit losses ( 475 ) 1,475

Net interest income after provision for credit losses 48,824 54,894

Non-interest income:

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Professional services 1,524 1,707

Gain on repossessed assets, net ( 395 ) ( 199 )

Losses (gains) on repossessed assets, net 62 ( 395 )

New market tax credit depletion — 650

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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Net income attributable to common stockholders $ 13,059 $ 17,761

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Securities available for sale

Net unrealized losses arising during period, net of tax ( 17,817 ) ( 909 )

Net unrealized gains (losses) arising during period, net of tax 337 ( 17,817 )

Reclassification adjustment for net gains included in net income, net of tax ( 9 ) —

Other comprehensive loss, net of tax ( 17,817 ) ( 1,329 )

Comprehensive (loss) income $ ( 56 ) $ 19,937

Other comprehensive income (loss), net of tax 328 ( 17,817 )

Comprehensive income (loss) $ 13,387 $ ( 56 )

See accompanying notes to audited consolidated financial statements.

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Net income — — — 17,761 — 17,761

Other comprehensive income, net of tax — — — — ( 1,329 ) ( 1,329 )

Other comprehensive loss, net of tax — — — — ( 17,817 ) ( 17,817 )

Forfeiture of unvested shares ( 2,626 ) — — — — —

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Restricted common stock awarded under the equity incentive plan 45,222 — — — — —

Restricted common stock issued upon achievement of the 2019 performance criteria 11,834 — — — — —

Common stock options exercised 7,900 — 71 — — 71

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Common stock repurchased ( 41,646 ) ( 1 ) ( 420 ) — — ( 421 )

Stock option expense — — 3 — — 3

Amortization of restricted stock — — 722 — — 722

Cumulative change in accounting principle for adoption of ASU2016-13 — — — ( 4,432 ) — ( 4,432 )

Cumulative change in accounting principle for adoption of ASU2023-02 — — — 130 — 130

Cash dividends ($ 0.29 per share)

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Adjustments to reconcile net income to net cash provided by operating activities:

Premium amortization, net of discount accretion on investment securities 41 103

Investment securities net (discount accretion) premium amortization ( 64 ) 41

Depreciation expense 2,371 2,357

Provision for loan losses 1,475 —

Net valuation gain on equity securities ( 541 ) ( 651 )

Provision for credit losses ( 475 ) 1,475

Net realized gain on equity securities ( 447 ) ( 541 )

Net realized gain on debt securities ( 12 ) —

Deferred tax asset valuation allowance, net of accretion 1,792 —

Increase in mortgage servicing rights resulting from transfers of financial assets ( 218 ) ( 323 )

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Net stock based compensation expense — 3

Loss on sale of office properties and equipment — 31

Loss on closure of branch facilities 380 736

Decrease deferred income taxes 506 930

Decrease in deferred income taxes 202 506

Increase in cash surrender value of life insurance ( 693 ) ( 642 )

Net gain from disposals of foreclosed and repossessed assets ( 395 ) ( 199 )

Net gain (loss) from disposals of foreclosed and repossessed assets 62 ( 395 )

Gain on sale of loans held for sale, net ( 1,692 ) ( 1,474 )

New market tax credit depletion 650 —

Proceeds from sale of loans held for sale 46,907 46,862

Origination of loans held for sale ( 50,988 ) ( 38,718 )

New market tax credit depletion expense — 650

Net change in:

Loans held for sale 8,144 1,804

Accrued interest receivable and other assets 54 79

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Purchase of available for sale securities ( 11,007 ) ( 13,315 )

Purchase of held to maturity securities ( 35,342 ) ( 39,784 )

Proceeds from sales of available for sale securities — 38,239

Proceeds from principal payments of available for sale securities 16,594 25,815

Proceeds from sales of available for sale securities 5,105 —

Purchase of held to maturity securities — ( 35,342 )

Proceeds from principal payments and maturities of held to maturity securities 5,134 10,065

Proceeds from calls of held to maturity securities — 3,500

Purchase of equity investments ( 300 ) ( 960 )

Equity investment capital distribution 132 136

Net (purchases) sales of other investments ( 290 ) 126

Purchase of equity investments ( 1,350 ) ( 300 )

Net sales (purchases) of other investments 284 ( 290 )

Proceeds from sales of foreclosed and repossessed assets 307 1,797

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Cash flows from financing activities:

Net change in Federal Home Loan Bank short-term advances ( 68,000 ) 112,000

Federal Home Loan Bank advances 25,000 —

Amortization of fair value adjustments for acquired Federal Home Loan Bank advances — 3

Federal Home Loan Bank advances called ( 55,000 ) —

Federal Home Loan Bank advance call payments ( 15,000 ) ( 55,000 )

Federal Home Loan Bank advance termination payments — ( 15,015 )

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Net increase in deposits 94,361 37,185

Restricted common stock awarded under the equity incentive plan 1 —

Repurchase shares of common stock ( 421 ) ( 1,764 )

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Net cash provided by financing activities 22,856 77,571

Net decrease in cash and cash equivalents ( 12,328 ) ( 71,749 )

Net increase (decrease) in cash and cash equivalents 1,775 ( 12,328 )

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

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These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future.

Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, mortgage servicing rights, foreclosed and repossessed assets, valuation of intangible assets arising from acquisitions, useful lives for depreciation and amortization, valuation of goodwill and long-lived assets, stock based compensation, deferred tax assets, uncertain income tax positions and contingencies.

Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for credit losses, mortgage servicing rights, foreclosed and repossessed assets, valuation of intangible assets arising from acquisitions, useful lives for depreciation and amortization, valuation of goodwill and long-lived assets, stock based compensation, deferred tax assets, uncertain income tax positions and contingencies.

Management does not anticipate any material changes to estimates made herein in the near term.

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Other Interest Bearing Deposits— Other interest bearing deposits are certificate of deposit investments made by the Bank with other financial institutions that are carried at cost.

The weighted average months to maturity of the interest bearing deposits is 3.00 months.

Balances over $ 250 in those institutions are not insured by the FDIC and therefore pose a potential risk in the event the institution were to fail.

As of December 31, 2022 and December 31, 2021, there were no certificate of deposit accounts with a balance greater than $ 250 .

As of December 31, 2023, there were no other interest bearing deposit investments.

As of December 31, 2022, the weighted average months to maturity of the interest bearing deposits was 3.00 months.

Balances over $ 250 in other financial institutions are not insured by the FDIC and therefore pose a potential risk in the event the institution were to fail.

As of December 31, 2023 and December 31, 2022, there were no certificate of deposit investment accounts with a balance greater than $ 250 .

Investment Securities;

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Available for sale securities are stated at fair value, with unrealized holding gains and losses being reported in other comprehensive income (loss), net of tax.

Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise.

Realized gains or losses on sales of available for sale securities are calculated with the specific identification method and are included in the consolidated statements of operations under net gains on investment securities.

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Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

As part of such monitoring, the credit quality of individual securities and their issuer is assessed.

Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to:

the Company’s intent and ability to sell the debt security prior to recovery, that it is more likely than not that the Company will not sell the security prior to recovery, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities.

Adjustments to market value of available for sale securities that are considered temporary are recorded in other comprehensive income or loss as separate components of stockholders’ equity, net of tax.

If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists.

If there is a credit loss, it will be recorded in the Company’s consolidated statement of operations.

Non-credit components of the unrealized losses on available for sale securities will continue to be recognized in other comprehensive income (loss), net of tax.

Allowance for Credit Losses - Available for Sale Securities - The Company measures the allowance for credit losses on available for sale debt securities by evaluating securities in an unrealized loss position using a two-step process.

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 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.

government, are highly rated by major rating agencies, and have a long history of no credit losses.

For other debt securities that do not meet the criteria in step one, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and the allowance for credit losses on available for sale investments is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Allowance for Credit Losses - Held to Maturity Securities - The Company measures expected credit losses on held to maturity debt securities on a collective basis by major security type.

For agency mortgage-backed securities there are no expected credit losses as they are guaranteed by the U.S.

government, are highly rated by major rating agencies, and have a long history of no credit losses.

For other securities, the estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

The Company has elected to not measure an ACL on accrued interest on available for sale and held to maturity securities, as it would write off accrued interest in a timely manner if the related security was determined to be impaired.

The Company has no available for sale securities or held to maturity securities which it deems to be impaired at December 31, 2023.

Equity investments - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities.

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These investments seek returns by investing in various small businesses and do not have redemption rights.

Distributions from the investments will be received as the underlying investments, which generally have a life of 10 years, are liquidated.

Distributions from the investments will be received as the underlying investments, which generally have a life of 10 years, are liquidated or earlier distributions are made.

We elected the practical expedient available in Topic 820, Fair Value Measurements, which permits the use of net asset value ("NAV") per share or equivalent to value investments in entities that are or are similar to investment companies.

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

Loans receivable – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, accretable yield on acquired

loans, and non-accretable discount on purchased credit impaired (PCI) loans.

Interest income is accrued on the unpaid principal balance of these loans.

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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 Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio.

Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely.

Subsequent recoveries, if any, are credited to the ALL.

Management estimates the required ALL balance taking into account the following factors:

past loan loss experience;

the nature, volume and composition of our 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.

Loan losses are charged against the ACL when management believes that the collectability of a loan balance is unlikely.

Subsequent recoveries, if any, are credited to the ACL.

In determining the allowance, the company estimates credit losses over the loan’s entire contractual term, adjusted for expected prepayments when appropriate.

The allowance estimate considers relevant available information from internal and external sources relating to historical loss experience;

known and inherent risks in our portfolio;

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current economic conditions;

reasonable and supportable forecasts for future conditions;

and other relevant factors determined by management.

The ALL consists of specific and general components.

The specific component relates to loans that are individually classified as impaired.

The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors.

The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected.

Impaired loans consist of all TDRs, as well as individual loans not considered a TDR, that are either (1) rated substandard or worse, (2) on nonaccrual status or (3) PCI loans which are impaired at the time of acquisition.

Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

All TDRs are individually evaluated for impairment.

See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR.

For TDR’s or substandard loans deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) its outstanding principal balance;

To ensure that the ACL is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

The entire ACL balance is available for any loan that, in management’s judgment, should be charged off.

The determination of the ACL requires significant judgement to estimate credit losses.

The ACL on loans is measured collectively on a pooled basis when similar risk characteristics exist, and on an individual basis when management determines that the loan does not share similar risk characteristics with other loans.

The ACL on loans collectively evaluated is measured using the loss rate model.

The Company categorizes its loan portfolio into four segments based on similar risk characteristics.

Loans within each segment are pooled based on individual loan characteristics.

Aggregated risk drivers are then calculated at a pool level.

Risk drivers are identified attributes that have proven to be predictive of loan loss rates and vary based on loan

segment and type.

A loss rate is calculated and applied to the pool utilizing a model that combines the pool’s risk drivers, historical loss experience, and reasonable and supportable future economic forecasts to project lifetime losses.

The loss rate is then combined with the loans balance and contractual maturity, adjusted for expected prepayments, to determine expected future losses.

Future and supportable economic forecasts are based on national economic conditions and their reversion to the mean is implicit in the model and generally occurs over a period of two years.

Qualitative adjustments are made to the allowance calculated on collectively evaluated loans to incorporate factors not included in the model.

Qualitative factors include but are not limited to:

lending policies and procedures, the experience and ability of lending and other staff, the volume and severity of problem credits, quality of the loan review system, and other external factors.

Loans that exhibit different risk characteristics from the pool are individually evaluated for impairment.

Loans can be identified for individual evaluation for a variety of reasons including delinquency, nonaccrual status, risk rating and loan modification.

Accruing loans that exhibit different risk characteristics from their pool may also be within scope.

On these loans, an allowance may be established so that the loan is reported, net, at the lower of (a) its amortized cost;

(b) the present value of the loan’s estimated future cash flows using the loan’s existing rate;

or (c) at the fair value of any loan collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan.

For TDRs less than 90+ days past due, and certain substandard loans that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans.

Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for ALL purposes, and accordingly, are not separately identified for ALL disclosures.

Acquired Loans— Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value with no carryover of related allowance for credit losses.

Any allowance for loan loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be received).

Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

Management considers a number of factors in evaluating the acquisition-date fair value including:

the remaining life of the acquired loans, delinquency status, estimated

prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans.

As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

Loans acquired with deteriorated credit quality are accounted for in accordance with Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected.

At acquisition, the Company considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality.

These factors include, but are not limited to:

loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring.

Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow.

The accretable discount is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method).

If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used.

The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference.

The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect.

Over the life of the loan, management continues to estimate cash flows expected to be collected.

Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses.

Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable discount to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life.

Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool.

For all acquired loans, the outstanding loan balances less any related accretable discount and/or non-accretable difference is referred to as the loans’ carrying amount.

or (c) at the fair value of any loan collateral, less estimated disposal costs, if the loan is collateral dependent.

Collateral dependency is determined using the practical expedient when:

1) the borrower is experiencing financial difficulty;

and 2) repayment is expected to be provided substantially through the sale or operation of the collateral.

The Company has elected to not measure an ACL on accrued interest as it writes off accrued interest in a timely manner.

Allowance for Credit Losses - Unfunded Commitments – The ACL on unfunded commitments is a liability for credit losses on commitments to originate or fund loans, and standby letters of credit.

It is included in “Other liabilities” on the consolidated balance sheets.

Expected credit losses are estimated over the contractual period in which the Company is exposed to credit risk via a commitment that cannot be unconditionally canceled, adjusted for projected prepayments when appropriate.

In addition, the estimate of the liability considers the likelihood that funding will occur.

The ACL on unfunded commitments is adjusted through provision for credit losses on consolidated statements of operations.

Because the business processes and risks associated with unfunded commitments are essentially the same as loans, the Company uses the same process to estimate the liability.

Loans Held for Sale — Loans held for sale are those loans the Company has the intent to sell in the foreseeable future.

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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:

changes in the

mix of loans, interest rates, prepayment speeds, and default rates.

changes in the mix of loans, interest rates, prepayment speeds, and default rates.

Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs.

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As such, the Company is not the primary beneficiary of the VIE and the LLC has not been consolidated.

The investment is accounted for using the equity method of accounting and is amortized through non-interest

expense as the related tax credits are utilized.

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

With the adoption of ASU 2023-02 on January 1, 2023, discussed in Recent Accounting Pronouncements – Adopted below, the investment is accounted for using the proportional amortization method, which requires amortizing the investment in the period of and in proportion to the recognition of the related tax credit.

Amortization of the investment is included in provision for income taxes and the utilization of the tax credit is recorded as a reduction of the provision for income taxes.

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.

Amortization expense for the 12-month periods ended December 31, 2023 and December 31, 2022 was $ 452 and $ 650 , respectively.

As of December 31, 2023, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 2,898 .

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.

Prior to the adoption of ASU 2023-02, the carrying amount 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 December 31, 2023, there were no known instances of noncompliance associated with the investment.

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Advertising, Marketing and Public Relations Expense— The Company expenses all advertising, marketing and public relations costs as they are incurred.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

See Note 14, “Income Taxes” for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary.

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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 31.0 % and 24.7 % for the twelve months ended December 31, 2023 and December 31, 2022, respectively.

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 rate for the twelve-month period ended December 31, 2023 before related valuation allowance.

Income tax expense was lower due to the retroactive, effect of this change.

This reduction of income tax expense was offset by a one-time tax expense of $ 1,828 in the period ended September 30, 2023, 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.

The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts.

The company accounts for revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Topic 606 provides that revenue from contracts with customers be recognized when performance

obligations under the terms of a contract are satisfied.

The Company accounts for revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Topic 606 provides that revenue from contracts with customers be recognized when performance obligations under the terms of a contract are satisfied.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing service.

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The period from the time the borrower locks in the interest rate, to the time the Company funds the loan and sells the loan to a third party varies, and could be up to 90 days.

The fair value of each instrument will rise and fall in response to changes in market interest rates, subsequent to the dates the interest rate locks and forward sale agreements are entered into.

In the event that interest rates rise after the Company enters into an interest rate lock, the fair value of the loan commitment will

The fair value of each instrument will rise and fall in response to

changes in market interest rates, subsequent to the dates the interest rate locks and forward sale agreements are entered into.

In the event that interest rates rise after the Company enters into an interest rate lock, the fair value of the loan commitment will decline.

However, the fair value of the forward loan sale agreement related to such loan commitment should increase by substantially the same amount, effectively eliminating the Company’s interest rate and price risks.

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Recent Accounting Pronouncements—Adopted

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting-- The ASU provides optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g.

ASU 2020-04 and ASU 2021-01, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting-- These ASUs provide optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contacts, hedging relationships and other transactions affected by reference rate (e.g.

LIBOR) reforms.

ASU 2020-04 is effective for the Company immediately and through December 31, 2024.

ASU 2020-04 and ASU 2021-01 was effective immediately upon issuance and will remain in effect through December 31, 2024.

The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting variable rate loans.

Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments-- The ASU changes accounting for credit losses on loans receivable and debt securities from an incurred loss methodology to an expected credit loss methodology.

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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 is permitted;

Earlier adoption was permitted;

however, the Company elected not to adopt the ASU early.

The Company has selected a loss estimation methodology, utilizing a third-party model, and is refining the remaining facets of its CECL model, as well as finalizing internal controls.

Company will record the effect of implementing this ASU through a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU is effective, which will be January 1, 2023.

Management estimates the adoption of the new standard will result in an increase in the Allowance for Credit Losses (“ACL”) in the range of 25 - 30 %.

Approximately 30 % of the increase is due to the impact of the new guidance on the Company’s acquired loan portfolio.

Approximately 40 % of the increase is the result of the new requirement to estimate losses over the full remaining expected life of the loans.

This especially affected the Company’s Commercial/Agricultural real estate and Residential mortgage portfolio segments, which have longer maturities.

Approximately 30 % of this increase is due to the requirement to record an allowance on non-cancelable off-balance sheet commitments.

Post-tax retained earnings adjustment will reduce stockholders’ equity by approximately 0.2 %.

At adoption, the Company will not record an allowance with respect to HTM securities as the portfolio consists almost entirely of agency-backed securities that inherently have minimal nonpayment risk.

The Company formed a cross-functional team to implement ASU 2016-13.

Key objectives of the team included selecting a loss estimation methodology, establishing processes and controls, data validation, creation of supporting analytics, documentation of policies and procedures, and developing disclosures.

As previously disclosed, the Company is utilizing a third-party model to assist in loss estimation including pooling loans with similar risk characteristics and modeling methodologies.

The Company adopted ASU 2016-13 using the modified retrospective approach effective January 1, 2023.

Results for the periods beginning on and after January 1, 2023 are presented under ASU 2016-13 while prior period amounts are reported in accordance with previously applicable accounting standards.

The company recorded a reduction to retained earnings of $ 4,432 upon the adoption of ASU 2016-13, primarily due to the requirement to estimate credit losses over the life of the loan and the duration of the Company’s portfolio.

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.

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

The Company elected not to record an allowance on HTM securities as the

portfolio consists almost entirely of agency-backed securities that inherently have minimal nonpayment risk.

The transition adjustment included corresponding increases in deferred tax assets.

The Company adopted ASU 2016-13 using the prospective transition approach for financial assets considered PCD.

These assets were previously classified as purchase credit impaired ("PCI") and accounted for under ASC 310-30 prior to January 1, 2023.

In accordance with the standard, the Company did not reassess whether the PCI assets met the criteria of PCD assets as of the adoption date.

The amortized cost of the PCD assets were adjusted to reflect the addition of $ 130 to the allowance for credit losses.

This adjustment is included in the discussion of the transition adjustment above.

The remaining noncredit discount, based on the adjusted amortized cost, will be accreted into interest income at the effective interest rate over the remaining life of the assets.

The following table illustrates the impact of ASU 2016-13 adoption in thousands.

Pre-ASU 2016-13 Adoption

December 31, 2022 Impact of

ASU 2016-13 Adoption As Reported under ASU 2016-13

January 1, 2023

Allowance for credit losses:

Commercial/Agricultural Real Estate $ 14,085 $ 4,510 $ 18,595

C&I/Agricultural operating 2,318 ( 331 ) 1,987

Residential Mortgage 599 1,119 1,718

Consumer Installment 129 216 345

Unallocated 808 ( 808 ) —

Total allowance for credit losses on loans 17,939 4,706 22,645

Allowance for credit losses on unfunded commitments — 1,537 1,537

Total allowance for credit losses $ 17,939 $ 6,243 $ 24,182

ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures - The ASU addresses and amends areas identified by the FASB as part of its post-implementation review of the accounting standard that introduced the current expected credit losses model.

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In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

As the Company has not yet adopted the amendments in ASU 2016-13, ASU 2022-02 becomes effective in the first quarter of 2023.

Adoption of this amendment is not expected to have a material impact on the Company’s consolidated financial statements;

however, it will result in new disclosures.

The Company expects to adopt the guidance for our fiscal year beginning January 1, 2023.

The company adopted ASU 2022-02 in conjunction with ASU 2016-13 on January 1, 2023 using the prospective approach.

ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method - This ASU expands the use of the proportional amortization method in accounting for tax credit investments to all tax credit investments that meet certain criteria.

The Company has determined that its New Markets Tax Credit investment qualifies for use of the proportional amortization method under this ASU and has elected to early adopt the update as of January 1, 2023 using the modified retrospective approach.

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.

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

The Company chose to adopt ASU 2023-02 because it felt that the proportional amortization method more accurately reflects the economic substance of its tax credit investment.

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 twelve months ended December 31, 2023, adopting ASU 2023-02 increased net income $ 120 .

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 2023-06, Disclosure Improvements – Codification Amendments in Response to SEC’s Disclosure Update and Simplification Initiative – This ASU, issued in October 2023, provides for changes to clarify or improve consistency of disclosure and presentation requirements on a variety of topics.

This ASU has various effective dates, coinciding with the SEC’s removal of each specific change from Regs X-S and S-K, with early adoption permitted.

The Company is currently

evaluating the applicability of these new disclosure requirements.

As all requirements are disclosure-related only, adoption will have no material impact on the Company’s financial condition or results of operations.

ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures – This ASU, issued in December 2023, is effective for fiscal years beginning after December 15, 2024 and interim periods therein, with early adoption permitted.

This ASU requires expanded income tax-related note disclosures.

The Company is currently evaluating the impact of these new disclosure requirements.

As all requirements are disclosure-related only, adoption will have no material impact on the Company’s financial condition or results of operations.

NOTE 2 – INVESTMENT SECURITIES

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government agency obligations $ 16,655 $ 77 $ 156 $ 16,576

Obligations of states and political subdivisions — — — —

Mortgage-backed securities 91,091 — 17,611 73,480

Corporate debt securities 47,158 6 5,990 41,174

Corporate asset-backed securities 29,877 — 1,060 28,817

Asset-backed securities 24,840 12 339 24,513

Total available for sale securities $ 179,744 $ 95 $ 24,096 $ 155,743

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government agency obligations $ 18,373 $ 173 $ 233 $ 18,313

Obligations of states and political subdivisions 140 — — 140

Mortgage-backed securities 97,458 — 18,848 78,610

Corporate debt securities 44,636 — 4,385 40,251

Corporate asset-backed securities 33,902 133 127 33,908

Asset-backed securities 29,877 — 1,060 28,817

Total available for sale securities $ 190,344 $ 173 $ 24,526 $ 165,991

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Government Agency securities with a carrying value of $ 516 and mortgage-backed securities with a carrying value of $ 1,928 as collateral against specific municipal deposits.

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

As of December 31, 2023, the Bank also has mortgage-backed securities with a carrying value of $ 179 and U.S.

Government Agencies with a carrying value of $ 415 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2022, the Bank has 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.

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

For the twelve months ended December 31, 2022, there were no sales of available for sale securities.

For the twelve months ended December 31, 2021, gross sales of available for sale securities were $ 38,239 , gross gains on sale of available for sale securities were $ 646 , and gross losses on sale of available for sale securities were $ 73 .

For the twelve-month period ending December 31, 2023, and December 31, 2022, gross sales of available for sale securities were $ 5,105 and $ 0 respectively.

Gross gains on sale of available for sale securities for the twelve-month period ending December 31, 2023 and December 31, 2022, were $ 12 and $ 0 respectively.

Gross losses on sale of available for sale securities for the twelve-month period ended December 31, 2023 and December 31, 2022 were both $ 0 .

The estimated fair value of available for sale securities at December 31, 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 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 securities due to the call feature.

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Cost Estimated

Due in one year or less $ 100 $ 100 $ — $ —

Due after one year through five years 500 465 450 415

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Corporate debt securities 3,350 76 35,916 5,914 39,266 5,990

Corporate asset-backed securities 7,955 221 20,862 839 28,817 1,060

Asset-backed securities 3,348 22 20,008 317 23,356 339

Total $ 10,474 $ 103 $ 133,027 $ 23,993 $ 143,501 $ 24,096

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Corporate debt securities 21,547 1,688 18,704 2,697 40,251 4,385

Corporate asset-backed securities 19,296 127 — — 19,296 127

Asset-backed securities 7,955 221 20,862 839 28,817 1,060

Total $ 42,325 $ 2,943 $ 109,611 $ 21,583 $ 151,936 $ 24,526

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

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

As part of such monitoring, the credit quality of individual securities and their issuer is assessed.

Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to:

Adjustments to market value of available for sale securities that are considered temporary are recorded as separate components of shareholders’ equity, net of tax.

If there is a credit loss, it will be recorded in the Company’s consolidated statement of operations.

Non-credit components of the unrealized losses on available for sale securities will continue to be recognized in other comprehensive income (loss), net of tax.

Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary.

Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur.

NOTE 3 – LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

At December 31, 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.

These securities are guaranteed by the U.S.

government, are highly rated by major rating agencies, and have a long history of no credit losses.

Accordingly, the Company does not expect to incur credit losses on these securities.

Unrealized losses on available-for-sale investment securities have not been recognized into income because the issuers’ bonds are agency backed securities or other securities that all principal and interest is expected to be received on a timely basis.

Furthermore, the Company does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates.

The issuers continue to make timely principal and interest payments on their bonds.

NOTE 3 – LOANS, ALLOWANCE FOR CREDIT LOSSES AND IMPAIRED LOANS

Portfolio Segments:

Commercial real estate loans, including multi-family, agricultural, and construction and land development loans, are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business.

Commercial and agricultural real estate loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business.

Management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed.

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Loan-to-value ratios on loans secured by farmland generally do not exceed 75 %.

Commercial and industrial (“C&I”) loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.

Commercial and industrial (“C&I”) loans are primarily underwritten based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.

These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate.

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Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields.

SBA PPP loan balances are 100% guaranteed under the Small Business Association’s Paycheck Protection Program and may be forgiven in full, depending on use of funds and eligibility.

These SBA-backed loans helped businesses keep their workforce employed during the COVID-19 crisis.

Eligible borrowers, who qualify for full loan forgiveness during the eight to twenty four week period following loan disbursement, can apply for forgiveness, once all proceeds for which the borrower requested forgiveness has been used.

Borrowers can apply for forgiveness any time up to the maturity date of the loan.

All of the SBA PPP originated loan balances were forgiven and repaid at June 30, 2022.

Residential mortgage loans are collateralized by primary and secondary positions on real estate and are underwritten primarily based on borrower’s documented income, credit scores, and collateral values.

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This shortage is a result of the greater likelihood of damage, loss and depreciation for consumer based collateral.

Loans by classes within portfolio segments were as follows:

December 31, 2022 December 31, 2021

Originated Loans:

Loans are stated at the principal amount outstanding net of unearned net deferred fees and costs and loans in process, unearned discounts on acquired loans, and allowance for credit losses (“ACL”).

Unearned net deferred fees and costs includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method.

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

A summary of loans at December 31, 2023 follows:

December 31, 2023

Amortized Cost % of Total

Commercial/Agricultural real estate:

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Other consumer 6,187 0.4 %

Total originated loans before SBA PPP loans $ 1,272,943 $ 1,109,739

SBA PPP loans — 8,755

Total originated loans $ 1,272,943 $ 1,118,494

Acquired Loans:

Commercial/Agricultural real estate:

Commercial real estate $ 85,155 $ 120,070

Agricultural real estate 18,477 26,123

Multi-family real estate 3,307 4,299

Construction and land development 811 907

C&I/Agricultural operating:

Commercial and industrial 8,898 14,230

Agricultural operating 5,682 5,386

Residential mortgage:

Residential mortgage 20,606 27,135

Consumer installment:

Other Consumer 256 401

Total acquired loans $ 143,192 $ 198,551

Total loans receivable $ 1,460,792 100 %

Less Allowance for credit losses ( 22,908 )

Net loans receivable $ 1,437,884

Loans are stated at the unpaid principal balance outstanding at December 31, 2022.

December 31, 2022

Loan Principal Balance % of Total

Commercial/Agricultural real estate:

12 unchanged sentences

Other consumer 7,150 0.5 %

Total loans before SBA PPP loans $ 1,416,135 $ 1,308,290

SBA PPP loans — 8,755

Gross Loans $ 1,416,135 100.3 %

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Unamortized discount on acquired loans ( 1,766 ) ( 0.1 ) %

Allowance for loan losses ( 17,939 ) ( 16,913 )

Loans receivable, net $ 1,393,845 $ 1,294,050

Total loans receivable $ 1,411,784 100.0 %

Less Allowance for loan losses ( 17,939 )

Net loans $ 1,393,845

Credit Quality/Risk Ratings:

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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 breakdown of loans by risk rating as of December 31, 2022:

1 to 5 6 7 8 9 TOTAL

Originated Loans:

Commercial/Agricultural real estate:

Commercial real estate $ 628,999 $ 5,771 $ 6,046 $ — $ — $ 640,816

Agricultural real estate 67,248 549 1,634 — — 69,431

Multi-family real estate 205,601 — — — — 205,601

Construction and land development 101,681 — — — — 101,681

C&I/Agricultural operating:

Commercial and industrial 120,882 5,526 707 — — 127,115

Agricultural operating 20,896 324 1,904 — — 23,124

Residential mortgage:

Residential mortgage 82,236 — 2,547 — — 84,783

Purchased HELOC loans 3,262 — — — — 3,262

Consumer installment:

Originated indirect paper 10,190 — 46 — — 10,236

Other Consumer 6,878 — 16 — — 6,894

Total originated loans before SBA PPP loans 1,247,873 12,170 12,900 — — 1,272,943

SBA PPP loans — — — — — —

Total originated loans $ 1,247,873 $ 12,170 $ 12,900 $ — $ — $ 1,272,943

Acquired Loans:

Commercial/Agricultural real estate:

Commercial real estate $ 83,659 $ — $ 1,496 $ — $ — $ 85,155

Agricultural real estate 16,967 — 1,510 — — 18,477

Multi-family real estate 3,307 — — — — 3,307

Construction and land development 704 — 107 — — 811

C&I/Agricultural operating:

Commercial and industrial 8,866 — 32 — — 8,898

Agricultural operating 5,522 — 160 — — 5,682

Residential mortgage:

Residential mortgage 19,494 — 1,112 — — 20,606

Consumer installment:

Other Consumer 254 — 2 — — 256

Total acquired loans $ 138,773 $ — $ 4,419 $ — $ — $ 143,192

As of December 31, 2023 and December 31, 2022, there were no loans classified as doubtful with a risk rating of 8 and no loans classified as loss with a risk rating of 9.

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of December 31, 2023 and gross charge-offs for the twelve months ended December 31, 2023:

Amortized Cost Basis by Origination Year

2023 2022 2021 2020 2019 Prior Revolving Revolving to Term Total

Commercial/Agricultural real estate:

Commercial real estate

Risk rating 1 to 5 $ 73,564 $ 133,583 $ 236,774 $ 90,881 $ 71,104 $ 107,999 $ 10,204 $ — $ 724,109

Risk rating 6 309 — 9,510 — — — — — 9,819

Risk rating 7 25 696 3,213 4,548 183 5,854 — — 14,519

Total $ 73,898 $ 134,279 $ 249,497 $ 95,429 $ 71,287 $ 113,853 $ 10,204 $ — $ 748,447

Current period gross charge-offs $ — $ — $ 10 $ — $ — $ 4 $ — $ — $ 14

Agricultural real estate

Risk rating 1 to 5 $ 16,335 $ 19,026 $ 11,582 $ 7,719 $ 5,463 $ 15,418 $ 1,009 $ — $ 76,552

Risk rating 6 — 171 5,409 — 152 482 — — 6,214

Risk rating 7 — 360 — — 31 — — — 391

Total $ 16,335 $ 19,557 $ 16,991 $ 7,719 $ 5,646 $ 15,900 $ 1,009 $ — $ 83,157

Current period gross charge-offs $ — $ — $ — $ 32 $ — $ — $ — $ — $ 32

Multi-family real estate

Risk rating 1 to 5 $ 5,016 $ 50,617 $ 95,686 $ 45,685 $ 8,591 $ 22,364 $ 45 $ — $ 228,004

Risk rating 6 — — — — — — — — —

Risk rating 7 — — — — — — — — —

Total $ 5,016 $ 50,617 $ 95,686 $ 45,685 $ 8,591 $ 22,364 $ 45 $ — $ 228,004

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Construction and land development

C&I/Agricultural operating:

Risk rating 1 to 5 $ 42,639 $ 37,783 $ 18,912 $ 8,014 $ 119 $ 1,124 $ 1,314 $ — $ 109,905

Risk rating 6 — — — — — 110 — — 110

Risk rating 7 — — — — — 54 149 — 203

Total $ 42,639 $ 37,783 $ 18,912 $ 8,014 $ 119 $ 1,288 $ 1,463 $ — $ 110,218

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Commercial/Agricultural operating:

Commercial and industrial

Risk rating 1 to 5 $ 16,758 $ 31,915 $ 28,059 $ 11,406 $ 4,746 $ 2,023 $ 24,059 $ — $ 118,966

Risk rating 6 — — — — 5 — 2,200 — 2,205

Risk rating 7 — — — — — 2 — 17 19

Total $ 16,758 $ 31,915 $ 28,059 $ 11,406 $ 4,751 $ 2,025 $ 26,259 $ 17 $ 121,190

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Agricultural operating

Risk rating 1 to 5 $ 4,734 $ 3,908 $ 856 $ 746 $ 295 $ 2,144 $ 11,831 $ — $ 24,514

Risk rating 6 — — — — — — — — —

Risk rating 7 — 476 704 — — 1 — — 1,181

Total $ 4,734 $ 4,384 $ 1,560 $ 746 $ 295 $ 2,145 $ 11,831 $ — $ 25,695

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Continued Amortized Cost Basis by Origination Year

2023 2022 2021 2020 2019 Prior Revolving Revolving to Term Total

Residential mortgage:

Residential mortgage

Risk rating 1 to 5 $ 28,808 $ 33,660 $ 8,743 $ 2,610 $ 2,292 $ 33,744 $ 15,544 $ — $ 125,401

Risk rating 6 — — — — — — — — —

Risk rating 7 — 141 — — 14 2,875 — 48 3,078

Total $ 28,808 $ 33,801 $ 8,743 $ 2,610 $ 2,306 $ 36,619 $ 15,544 $ 48 $ 128,479

Current period gross charge-offs $ — $ — $ 10 $ — $ — $ 68 $ — $ — $ 78

Purchased HELOC loans

Risk rating 1 to 5 $ — $ — $ — $ — $ — $ — $ 2,880 $ — $ 2,880

Risk rating 6 — — — — — — — — —

Risk rating 7 — — — — — — — — —

Total $ — $ — $ — $ — $ — $ — $ 2,880 $ — $ 2,880

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Consumer installment:

Originated indirect paper

Risk rating 1 to 5 $ — $ — $ — $ — $ — $ 6,491 $ — $ — $ 6,491

Risk rating 6 — — — — — — — — —

Risk rating 7 — — — — — 44 — — 44

Total $ — $ — $ — $ — $ — $ 6,535 $ — $ — $ 6,535

Current period gross charge-offs $ — $ — $ — $ — $ — $ 13 $ — $ — $ 13

Other consumer

Gross loans before SBA PPP loans $ 1,386,646 $ 12,170 $ 17,319 $ — $ — $ 1,416,135

SBA PPP loans — — — — — —

Gross loans $ 1,386,646 $ 12,170 $ 17,319 $ — $ — 1,416,135

Unearned net deferred fees and costs and loans in process ( 2,585 )

Unamortized discount on acquired loans ( 1,766 )

Allowance for loan losses ( 17,939 )

Loans receivable, net $ 1,393,845

Below is a breakdown of loans by risk rating as of December 31, 2021:

Risk rating 1 to 5 $ 2,104 $ 1,525 $ 763 $ 559 $ 402 $ 274 $ 530 $ 1 $ 6,158

Risk rating 6 — — — — — — — — —

Risk rating 7 9 2 — — 16 1 1 — 29

Total $ 2,113 $ 1,527 $ 763 $ 559 $ 418 $ 275 $ 531 $ 1 $ 6,187

Current period gross charge-offs $ — $ 2 $ 1 $ 11 $ 3 $ 6 $ — $ — $ 23

Total loans receivable $ 190,301 $ 313,863 $ 420,211 $ 172,168 $ 93,413 $ 201,004 $ 69,766 $ 66 $ 1,460,792

Total current period gross charge-offs $ — $ 2 $ 21 $ 43 $ 3 $ 91 $ — $ — $ 160

Below is a summary of the unpaid principal balance of loans summarized by class and credit quality risk rating as of December 31, 2022:

1 to 5 6 7 TOTAL

Originated Loans:

Commercial/Agricultural real estate:

12 unchanged sentences

Other Consumer 7,132 — 18 7,150

Total originated loans before SBA PPP loans 1,092,879 3,045 13,815 — — 1,109,739

SBA PPP loans 8,755 — — — — 8,755

Total originated loans $ 1,101,634 $ 3,045 $ 13,815 $ — $ — $ 1,118,494

Acquired Loans:

Commercial/Agricultural real estate:

Commercial real estate $ 116,839 $ 1,314 $ 1,917 $ — $ — $ 120,070

Agricultural real estate 21,051 — 5,072 — — 26,123

Multi-family real estate 4,299 — — — — 4,299

Construction and land development 735 172 — — — 907

C&I/Agricultural operating:

Commercial and industrial 13,931 5 294 — — 14,230

Agricultural operating 4,936 — 450 — — 5,386

Residential mortgage:

Residential mortgage 25,869 — 1,266 — — 27,135

Consumer installment:

Other Consumer 398 — 3 — — 401

Total acquired loans $ 188,058 $ 1,491 $ 9,002 $ — $ — $ 198,551

Commercial/Agricultural real estate:

Commercial real estate $ 689,563 $ 1,981 $ 6,921 $ — $ — $ 698,465

Agricultural real estate 71,885 1,267 5,343 — — 78,495

Multi-family real estate 178,059 290 — — — 178,349

Construction and land development 75,881 172 3,467 — — 79,520

C&I/Agricultural operating:

Commercial and industrial 121,729 62 376 — — 122,167

Agricultural operating 28,871 764 1,953 — — 31,588

Residential mortgage:

Residential mortgage 86,623 — 4,367 — — 90,990

Purchased HELOC loans 3,706 — 165 — — 3,871

Consumer installment:

Originated indirect paper 15,818 — 153 — — 15,971

Other Consumer 8,802 — 72 — — 8,874

Gross loans before SBA PPP loans $ 1,280,937 $ 4,536 $ 22,817 $ — $ — $ 1,308,290

SBA PPP loans 8,755 — — — — 8,755

Gross loans $ 1,386,646 $ 12,170 $ 17,319 $ 1,416,135

13 unchanged sentences

Available and unused lines of credit $ 603 $ —

Allowance for Loan Losses —The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio.

Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL;

some are quantitative, while others require qualitative judgment.

The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change.

To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods.

Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

As an integral part of their examination process, various regulatory agencies also review the Bank’s ALL.

Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.

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

Allowance for Credit Losses - Loans- On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial instruments and transitioned to the Current Expected Credit Loss (“CECL”) model to estimate losses based on the lifetime of the loan.

Under the new methodology, the ACL is comprised of collectively evaluated and individually evaluated components.

The allowance for credit losses (“ACL”) represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining life of the assets.

The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses.

In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure.

The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, the borrowers who might be facing financial difficulty.

Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and modifications, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates.

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 twelve months ended December 31, 2023:

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

Twelve months ended December 31, 2023

Allowance for Loan Losses:

Beginning balance, January 1, 2022 $ 12,354 $ 1,959 $ 518 $ 225 $ 774 $ 15,830

Charge-offs ( 157 ) ( 310 ) ( 35 ) ( 45 ) — ( 547 )

Recoveries 74 35 2 50 — 161

Provision 1,280 571 89 ( 109 ) 34 1,865

Total Allowance on originated loans 13,551 2,255 574 121 808 17,309

Other acquired loans:

Beginning balance, January 1, 2022 856 69 130 28 — 1,083

Allowance for Credit Losses - Loans:

ACL - Loans, at beginning of period $ 14,085 $ 2,318 $ 599 $ 129 $ 808 $ 17,939

Cumulative effect of ASU 2016-13 adoption 4,510 ( 331 ) 1,119 216 ( 808 ) 4,706

Charge-offs ( 46 ) — ( 78 ) ( 36 ) — ( 160 )

Recoveries 489 47 42 33 — 611

Provision ( 302 ) 29 ( 99 ) ( 18 ) — ( 390 )

Total allowance on other acquired loans 534 63 25 8 — 630

Total allowance on acquired loans 534 63 25 8 — 630

Ending Balance, December 31, 2022 $ 14,085 $ 2,318 $ 599 $ 129 $ 808 $ 17,939

Allowance for Loan Losses at December 31, 2022:

Amount of allowance for loan losses arising from loans individually evaluated for impairment $ 519 $ 249 $ 48 $ 10 $ — $ 826

Amount of allowance for loan losses arising from loans collectively evaluated for impairment $ 13,566 $ 2,069 $ 551 $ 119 $ 808 $ 17,113

Loans Receivable as of December 31, 2022:

Ending balance of originated loans $ 1,017,529 $ 150,239 $ 88,045 $ 17,130 $ — $ 1,272,943

Ending balance of purchased credit-impaired loans 5,748 362 890 — — 7,000

Ending balance of other acquired loans 102,002 14,218 19,716 256 — 136,192

Ending balance of loans $ 1,125,279 $ 164,819 $ 108,651 $ 17,386 $ — $ 1,416,135

Ending balance:

individually evaluated for impairment $ 16,874 $ 3,292 $ 5,998 $ 755 $ — $ 26,919

Ending balance:

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

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations ( 254 ) ( 929 ) 1,062 ( 67 ) — ( 188 )

ACL - Loans, at end of period $ 18,784 $ 1,105 $ 2,744 $ 275 $ — $ 22,908

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 1,250 at December 31, 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 twelve months ended December 31, 2023 and December 31, 2022.

December 31, 2023 and Twelve Months Ended December 31, 2022 and Twelve Months Ended

ACL - Unfunded Commitments - beginning of period $ — $ —

Cumulative effect of ASU 2016-13 adoption 1,537 —

Reversals to ACL - Unfunded Commitments via provision for credit losses charged to operations ( 287 ) —

ACL - Unfunded Commitments - End of period $ 1,250 $ —

Provision for credit losses - The provision for credit losses is determined by the Company as the amount to be added to the ACL loss accounts for various types of financial instruments (including loans and off-balance sheet credit exposures) after net charge-offs have been deducted to bring the ACL to a level that, in managements judgement, is necessary to absorb expected credit losses over the lives of the respective financial instruments.

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

December 31, 2023 and Twelve Months Ended

Provision for credit losses on:

Loans $ ( 188 )

Unfunded Commitments ( 287 )

Total provision for credit losses $ ( 475 )

Allowance for Loan Losses - Prior to the adoption of ASU 2016-13, the Allowance for Loan Losses (“ALL”) represented management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio.

Estimating the amount of the ALL required the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may have been susceptible to significant change.

There were many factors affecting the ALL;

some were quantitative, while others required qualitative judgment.

The process for determining the ALL (which management believed adequately considered potential factors which resulted in probable credit losses), included subjective elements and, therefore, may have been susceptible to significant change.

To the extent actual outcomes differed from management estimates, additional provision for loan losses could have been required that could have adversely affected the Company’s earnings or financial position in future periods.

Allocations of the ALL may have been made for specific loans but the entire ALL was available for any loan that, in management’s judgment, should have been charged-off or for which an actual loss was realized.

As an integral part of their examination process, various regulatory agencies also reviewed the Bank’s ALL.

Such agencies may have required that changes in the ALL be recognized when such regulators’ credit evaluations differed from those of our management based on information available to the regulators at the time of their examinations.

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

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

26 unchanged sentences

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

Loans receivable by loan type as of the end of the periods shown below were as follows:

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

Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

Loans receivable by loan type as of December 31, 2022, were as follows:

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

Performing loans

8 unchanged sentences

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

An aging analysis of the Company’s commercial/agricultural real estate and non-real estate, consumer real estate and non-real estate and purchased third party loans as of December 31, 2022 and 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 Accruing Nonaccrual Loans Total Past Due Accruing and Nonaccrual Loans Current Total Loans

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 December 31, 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

December 31, 2023

6 unchanged sentences

Commercial and industrial 248 — — 248 — 248 120,942 121,190

SBA PPP loans — — — — — — — —

Agricultural operating — — — — 1,180 1,180 24,515 25,695

6 unchanged sentences

Total $ 1,345 $ 658 $ 389 $ 2,392 $ 13,184 $ 15,576 $ 1,445,216 $ 1,460,792

(Loan balances at unpaid principal balance) 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

December 31, 2022

6 unchanged sentences

Commercial and industrial — 26 — 26 552 578 135,435 136,013

SBA PPP loans — — — — — — 8,755 8,755

Agricultural operating 826 — — 826 890 1,716 27,090 28,806

6 unchanged sentences

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

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 ;

(2) $ 7,018 TDR loans, net of TDR PCI loans;

and (3) $ 12,901 of substandard non-TDR loans, non-PCI loans.

The $ 26,823 total of loans individually evaluated for impairment includes $ 5,171 of performing TDR loans.

At December 31, 2021, the Company individually evaluated loans for impairment with a recorded investment of $ 31,740 , consisting of (1) $ 11,205 PCI loans, with a carrying amount of $ 10,552 ;

(2) $ 9,860 TDR loans, net of TDR PCI loans;

and (3) $ 11,328 of substandard non-TDR loans, non-PCI loans.

The $ 31,740 total of loans individually evaluated for impairment includes $ 7,984 of performing TDR loans.

A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement.

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 loans evaluated for impairment as of December 31, 2022 was as follows:

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

December 31, 2022

With No Related Allowance Recorded:

Nonaccrual Loans - The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at December 31, 2023 with no allowance for credit losses and interest income that would have been recorded under the original terms of such nonaccrual loans:

December 31, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Interest Income Not Recorded for Nonaccrual loans

Commercial/Agricultural real estate:

Commercial real estate $ 10,359 $ 10,347 $ 497

Agricultural real estate 391 391 46

Multi-family real estate — — —

Construction and land development 54 54 1

C&I/Agricultural operating:

Commercial and industrial — — —

Agricultural operating 1,180 1,180 120

Residential mortgage:

Consumer installment 745 745 — 307 5

Total $ 19,076 $ 19,172 $ — $ 24,735 $ 1,030

With An Allowance Recorded:

Commercial/Agricultural real estate $ 7,108 $ 7,108 $ 519 $ 6,028 $ 273

C&I/Agricultural operating 538 538 249 273 48

Residential mortgage 1,167 934 68

Purchased HELOC loans — — —

Consumer installment:

Originated indirect paper 15 15 1

Other consumer 18 18 1

Total $ 13,184 $ 12,939 $ 734

December 31, 2022 Totals

The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is past due according to the following schedules:

• Commercial/agricultural real estate loans, past due 90 days or more;

• Commercial and industrial/agricultural operating loans past due 90 days or more;

• Closed ended consumer installment loans past due 120 days or more;

• Residential mortgage and open ended consumer installment loans past due 180 days or more.

The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal.

Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income.

Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured.

Interest on loans determined to be modified is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms.

Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal.

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 twelve months ended December 31, 2023, due to nonaccrual loan payoffs was $ 505 .

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 December 31, 2023.

Collateral Type

December 31, 2023 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

Commercial/Agricultural real estate:

Commercial real estate $ 15,086 $ — $ 15,086 $ 11,350 $ 3,736 $ 703

Agricultural real estate 6,605 — 6,605 6,605 — —

Multi-family real estate — — — — — —

Construction and land development 313 — 313 313 — —

C&I/Agricultural operating:

Commercial and industrial — 2,219 2,219 2,219 — —

Agricultural operating — 1,181 1,181 1,181 — —

Residential mortgage:

Residential mortgage 3,145 — 3,145 2,591 554 88

Purchased HELOC loans — — — — — —

Consumer installment:

Originated indirect paper — 44 44 44 — —

Other consumer — 29 29 29 — —

Total $ 25,149 $ 3,473 $ 28,622 $ 24,332 $ 4,290 $ 791

At December 31, 2022, the Company had six residential real estate loans, secured by residential real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $ 258 .

At December 31, 2022, the Company had three commercial real estate loans, secured by commercial and agricultural real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $ 6,294 .

A summary of loans evaluated for impairment as of December 31, 2021 was as follows:

There were no outstanding commitments to borrowers experiencing financial difficulty as of December 31, 2023.

There were unused lines of credit totaling $ 618 on loans with borrowers experiencing financial difficulties as of December 31, 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 ;

(2) $ 7,018 TDR loans, net of TDR PCI loans;

and (3) $ 12,901 of substandard non-TDR, non-PCI loans.

The $ 26,823 recorded investment of loans individually evaluated for impairment includes $ 5,171 of performing TDR loans.

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

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

18 unchanged sentences

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

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the twelve months ended December 31, 2023:

Term Extension

Loan Class Amortized Cost Basis at

December 31, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,694 0.63 %

Commercial and industrial $ 2,200 1.82 %

Residential mortgage $ 35 0.03 %

Other consumer $ 1 0.02 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

December 31, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.05 %

Other consumer $ 19 0.31 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023:

Term Extension

Loan Class Financial Effect

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

Residential mortgage A weighted average of 16 months was added to the term of the loans

Other consumer A weighted average of 12 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

Other consumer Payments were deferred a weighted average of 3 months

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.

The following table shows the performance of such loans that have been modified during the twelve months ended December 31, 2023.

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

Commercial real estate $ 4,694 $ — $ — $ —

Commercial and industrial 2,200 — — —

Residential mortgage 35 — 69 —

Other consumer 20 — — —

Total $ 6,949 $ — $ 69 $ —

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty, and the Bank grants a concession to that borrower that the Bank would not otherwise consider, except for the borrower’s financial difficulties.

3 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 was one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $ 15 at December 31, 2022, compared to one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $ 4 at December 31, 2021.

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

December 31 December 31

There was one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $ 15 at December 31, 2022.

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

Troubled debt restructure loans:

2 unchanged sentences

Total $ 7,788

There was one TDR commitment totaling $ 26 meeting our TDR criteria as of December 31, 2022 and there were no TDR commitments meeting our TDR criteria as of December 31, 2021.

There were unused lines of credit totaling $ 484 and $ 10 meeting our TDR criteria as of December 31, 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 years ended December 31, 2022 and December 31, 2021:

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

Twelve months ended December 31, 2022

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

C&I/Agricultural operating 5 1,424 — 736 — 2,160 2,160 —

Residential mortgage 11 116 147 507 — 770 770 —

Consumer installment — — — — — — — —

Totals 23 $ 2,781 $ 147 $ 3,207 $ — $ 6,135 $ 6,135 $ —

There was one TDR commitment totaling $ 26 meeting our TDR criteria as of December 31, 2022.

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 year ended December 31, 2022:

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

5 unchanged sentences

Totals 23 $ 2,781 $ 147 $ 3,207 $ — $ 6,135 $ 6,135 $ —

A summary of loans by loan class modified in a troubled debt restructuring as of December 31, 2022 and December 31, 2021:

December 31, 2022 December 31, 2021

Modifications Recorded

Investment Number of

Modifications Recorded

A summary of loans by loan class modified in a troubled debt restructuring as of December 31, 2022 are below:

December 31, 2022

Number of Modifications Recorded Investment

Troubled debt restructurings:

4 unchanged sentences

Total loans 67 $ 7,788

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the years ended December 31, 2022 and December 31, 2021, as well as the recorded investment in these restructured loans as of December 31, 2022 and December 31, 2021:

December 31, 2022 December 31, 2021

Modifications Recorded

Investment Number of

Modifications Recorded

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the year ended December 31, 2022, as well as the recorded investment in these restructured loans as of December 31, 2022:

December 31, 2022

Number of Modifications Recorded Investment

Troubled debt restructurings:

6 unchanged sentences

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

December 31, 2022 December 31, 2021

December 31, 2022

Accountable for under ASC 310-30 (PCI loans)

7 unchanged sentences

Carrying amount $ 141,426

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

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

In addition, the table below includes $ 1,165 of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount.

5 unchanged sentences

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

December 31, 2022 December 31, 2021

December 31, 2022

Balance at beginning of period $ 653

33 unchanged sentences

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.

At December 31, 2022, the estimated future aggregate amortization expense for the mortgage servicing rights is as follows.

The estimated amortization expense is based on existing mortgage servicing asset balances.

The timing of amortization expense actually recognized in future periods may differ significantly based on actual prepayment speeds, mortgage interest rates and other factors.

At December 31, 2023, the estimated future aggregate amortization expense for the mortgage servicing rights is as follows:

At December 31, 2023, the estimated future aggregate amortization expense for the mortgage servicing rights is as follows.

Amortization Expense

88 unchanged sentences

2028 10,000 3.82 % 3.82 % 2028 — — % — %

2029 — — % — % 2029 42,500 1.00 % 1.13 %

2030 — — % — % 2030 12,500 0.52 % 0.86 %

Subtotal 142,530 111,530

Unamortized discount on acquired notes — ( 3 )

Federal Home Loan Bank advances, net $ 142,530 $ 111,527

Federal Home Loan Bank advances $ 79,530 $ 142,530

Other borrowings:

3 unchanged sentences

$ 50,000 $ 50,000

$ 50,000 $ 30,000

Unamortized debt issuance costs ( 618 ) ( 841 )

5 unchanged sentences

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2023 and December 31, 2022 were 4.16 % and 4.09 %, respectively.

(4) At December 31, 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.

(4) At December 31, 2023, one FHLB term note totaling $ 10,000 could be called once by the FHLB on June 15, 2024, and if not called, would mature in 2028.

At December 31, 2022, no FHLB term notes could be called by the FHLB.

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

(a) A term note, which was subsequently refinanced in March 2022, requiring quarterly interest-only payments through March 2025, and quarterly principal and interest payments thereafter.

(a) A term note, which was subsequently refinanced in March 2022 and modified in February of 2023, requiring quarterly interest-only payments through March 2027, and quarterly principal and interest payments thereafter.

Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 3.00 %.

2 unchanged sentences

(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.

In August 2022, they would have converted to a three-month LIBOR plus 4.90 % rate, and the interest rate would have reset quarterly thereafter if not called.

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.

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

Interest-only payments were due quarterly.

(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 .

11 unchanged sentences

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 .

The Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

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.

4 unchanged sentences

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

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

The Bank originated Small Business Administration’s Paycheck Protection Program (“SBA PPP”) loans and

complied with the requirements to pledge these loans to the FRB PPPLF program which provided 100% funding for SBA PPP

loans upon request.

This FRB PPPLF program expired on July 30, 2021.

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.

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

NOTE 10— CAPITAL MATTERS

77 unchanged sentences

NOTE 13 - STOCK-BASED COMPENSATION

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 December 31, 2022, there are no awarded unvested restricted shares and 58,000 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.

On March 27, 2018, the stockholders of Citizens Community Bancorp, Inc.

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.

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 December 31, 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.

This amount also includes 18,551 shares of performance based restricted stock granted in 2020 and issued in January 2023 upon achievement of the performance criteria and completion of the three year performance period beginning in January 2020 and ending December 31, 2022.

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.

1 unchanged sentence

As of December 31, 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 December 31, 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 $ 722 and $ 860 for the years ended December 31, 2023 and 2022, respectively.

12 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 net compensation cost recognized for stock-based employee compensation from this plan for the years ended December 31, 2022 and 2021 was $ 3 and $ 8 , respectively.

The compensation cost recognized for stock option-based employee compensation related to the 2008 plan for the year ended December 31, 2023 was $ 0 as all options have vested.

The compensation cost recognized for stock option-based employee compensation related to the 2008 plan for the year ended December 31, 2022 was $ 3 .

Common Stock Option Awards

28 unchanged sentences

State ( 105 ) 151

( 1,478 ) 506

Valuation allowance 1,822 —

Total $ 5,873 $ 5,820

7 unchanged sentences

Tax exempt interest ( 52 ) ( 0.3 ) % ( 59 ) ( 0.3 ) %

Valuation allowance 1,822 9.6 % — — %

Other 2 0.1 % 75 0.4 %

4 unchanged sentences

Deferred tax assets:

Allowance for loan losses $ 4,934 $ 4,587

Allowance for credit losses $ 6,104 $ 4,934

Deferred loan costs/fees 632 591

1 unchanged sentence

Economic performance accruals 769 871

Other real estate owned 230 188

Loan discounts 304 375

10 unchanged sentences

right of use asset ( 373 ) ( 467 )

Net unrealized gains on securities available for sale — ( 61 )

Deferred tax liabilities $ ( 5,445 ) $ ( 6,033 )

Valuation allowance ( 1,822 ) —

Net deferred tax assets $ 8,106 $ 8,445

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies”, above.

At December 31, 2022 and December 31, 2021, respectively, management determined that no valuation allowance was necessary.

As of December 31, 2023, management determined a valuation allowance of $ 1,822 was necessary due to changes in the realization of deferred tax assets due to a Wisconsin change in the non-taxation of loans under $5 million reducing the effective tax rate.

At December 31, 2022, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities.

4 unchanged sentences

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized, upon ultimate settlement with the relevant tax authority.

The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other non-interest expense.

The Company recognized no material expense on income tax related interest or penalties during any of the periods presented.

21 unchanged sentences

government agency obligations $ 16,576 $ — $ 16,576 $ —

Obligations of states and political subdivisions — — — —

Mortgage-backed securities 73,480 — 73,480 —

Corporate debt securities 41,174 — 41,174 —

Corporate asset-backed securities 28,817 — 28,817 —

Asset-backed securities 24,513 — 24,513 —

Total investment securities 155,743 — 155,743 —

7 unchanged sentences

government agency obligations $ 18,313 $ — $ 18,313 $ —

Obligations of states and political subdivisions 140 — 140 —

Mortgage-backed securities 78,610 — 78,610 —

Corporate debt securities 40,251 — 40,251 —

Corporate asset-backed securities 33,908 — 33,908 —

Asset-backed securities 28,817 — 28,817 —

Total Investment Securities 165,991 — 165,991 —

17 unchanged sentences

Foreclosed and repossessed assets, net $ 1,795 $ — $ — $ 1,795

Impaired loans with allocated allowances 6,920 — — 6,920

Collateral dependent loans with allocated allowances 3,499 — — 3,499

Mortgage servicing rights 3,865 — — 5,589

5 unchanged sentences

Total $ 12,453 $ — $ — $ 13,856

The fair value of impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans.

The fair value of collateral dependent loans and impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting collateral dependent loans and impaired loans.

The fair value of foreclosed and repossessed assets referenced above was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned.

5 unchanged sentences

Foreclosed and repossessed assets, net $ 1,795 Appraisal value Estimated costs to sell 10 % - 15 %

Impaired loans with allocated allowances $ 6,920 Appraisal value Estimated costs to sell 10 % - 15 %

Collateral dependent loans with allocated allowances $ 3,499 Appraisal value / Internal collateral valuations Estimated costs to sell 10 % - 15 %

Mortgage servicing rights $ 5,589 Discounted cash flows Discounted rates 9.375 % - 12.375 %

30 unchanged sentences

FHLB advances (Level II) 79,530 79,087 142,530 141,060

Other borrowings (Level I) 72,409 72,409 58,426 58,426

Other borrowings (Level II) 67,465 59,743 72,409 72,409

Accrued interest payable (Level I) 3,175 3,175 968 968

23 unchanged sentences

Unrealized losses on securities:

Net unrealized losses arising during the period $ ( 24,575 ) $ 6,758 $ ( 17,817 ) $ ( 1,261 ) $ 352 $ ( 909 )

Net unrealized gains (losses) arising during the period $ 364 $ ( 27 ) $ 337 $ ( 24,575 ) $ 6,758 $ ( 17,817 )

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

Other comprehensive loss $ ( 24,575 ) $ 6,758 $ ( 17,817 ) $ ( 1,834 ) $ 505 $ ( 1,329 )

Other comprehensive income (loss) $ 352 $ ( 24 ) $ 328 $ ( 24,575 ) $ 6,758 $ ( 17,817 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the years ended December 31, 2023 and December 31, 2022 were as follows:

5 unchanged sentences

Ending balance, December 31, 2022 $ ( 24,353 ) $ ( 17,656 )

Current year-to-date other comprehensive loss ( 24,575 ) ( 17,817 )

Current year-to-date other comprehensive income 352 328

Ending balance, December 31, 2023 $ ( 24,001 ) $ ( 17,328 )

58 unchanged sentences

Equity investment capital distribution 132 136

Dividend from bank subsidiary 12,000 6,000

Capital contribution to bank subsidiary — ( 15,000 )

Net cash used in investing activities ( 15,164 ) ( 360 )

Net cash provided by (used in) investing activities 11,382 ( 9,164 )

Cash flows from financing activities:

6 unchanged sentences

Common stock options exercised 28 71

Dividend from bank subsidiary 6,000 12,500

Cash dividends paid ( 3,040 ) ( 2,742 )

Net cash provided by financing activities 15,398 2,158

Net cash (used in) provided by financing activities ( 8,505 ) 9,398

Net decrease in cash and cash equivalents ( 1,046 ) ( 3,244 )

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-K

Item 8. Financial Statements and Supplementary Data