What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-08 · 285 added, 217 removed, 1267 unchanged (28% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2024 (unaudited) and December 31, 2023

June 30, 2024 (unaudited) and December 31, 2023

(derived from audited financial statements)

(in thousands, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 36,886 $ 37,138

Other interest bearing deposits — —

Available for sale ("AFS") securities, at fair value (amortized cost of $ 176,564 , net of allowance for credit losses of $ 0 at March 31, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

Available for sale ("AFS") securities, at fair value (amortized cost of $ 170,494 , net of allowance for credit losses of $ 0 at June 30, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

146,438 155,743

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 70,270 , net of allowance for credit losses of $ 0 at March 31, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 69,027 , net of allowance for credit losses of $ 0 at June 30, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

88,605 91,229

31 unchanged sentences

Consolidated Statements of Operations (unaudited)

Three Months Ended March 31, 2024 and 2023

Three and Six Months Ended June 30, 2024 and 2023

(in thousands, except per share data)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Interest and dividend income:

8 unchanged sentences

Net interest income before provision for credit losses 11,576 11,686 23,481 24,481

Provision for credit losses ( 800 ) 50

(Negative) provision for credit losses ( 1,525 ) 450 ( 2,325 ) 500

Net interest income after provision for credit losses 13,101 11,236 25,806 23,981

5 unchanged sentences

Loan fees and service charges 309 88 539 168

Net gains on investment and equity securities 167 56

Net realized gains on debt securities — 12 — 12

Net losses (gains) on equity securities ( 658 ) ( 2 ) ( 491 ) 54

Bank Owned Life Insurance (BOLI) death benefit 184 — 184 —

Other 257 333 510 586

9 unchanged sentences

Professional services 347 306 913 811

Losses (gains) on repossessed assets, net — ( 29 )

Gains on repossessed assets, net ( 18 ) ( 9 ) ( 18 ) ( 38 )

Other 756 715 1,824 1,440

10 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

Three months ended March 31, 2024 and 2023

Three and Six months ended June 30, 2024 and 2023

(in thousands)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income attributable to common stockholders $ 3,675 $ 3,206 $ 7,763 $ 6,868

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Securities available for sale

Net unrealized (losses) gains arising during period, net of tax ( 702 ) 1,065

Other comprehensive (loss) income, net of tax ( 702 ) 1,065

Net unrealized gains (losses) arising during period, net of tax 503 ( 2,277 ) ( 199 ) ( 1,212 )

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

Reclassification for net loss on exchanged security, included in net income, net of tax 130 — 130 —

Other comprehensive income (loss), net of tax 633 ( 2,286 ) ( 69 ) ( 1,221 )

Comprehensive income $ 4,308 $ 920 $ 7,694 $ 5,647

2 unchanged sentences

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

(in thousands, except shares and per share data)

3 unchanged sentences

Net income — — — 4,088 — 4,088

Other comprehensive income, net of tax — — — — ( 702 ) ( 702 )

Other comprehensive loss, net of tax — — — — ( 702 ) ( 702 )

Surrender of restricted shares of common stock ( 9,471 ) — ( 113 ) — — ( 113 )

6 unchanged sentences

Balance at March 31, 2024 10,406,880 104 118,916 71,831 ( 18,030 ) 172,821

Net income — — — 3,675 — 3,675

Other comprehensive income, net of tax — — — — 633 633

Surrender of restricted shares of common stock ( 539 ) — ( 6 ) — — ( 6 )

Common stock repurchased ( 109,000 ) ( 1 ) ( 1,230 ) ( 5 ) — ( 1,236 )

Amortization of restricted stock — — 158 — — 158

Balance at June 30, 2024 10,297,341 $ 103 $ 117,838 $ 75,501 $ ( 17,397 ) $ 176,045

See accompanying condensed notes to unaudited consolidated financial statements.

5 unchanged sentences

Shares Amount

Balance, January 1, 2023 10,425,119 $ 104 $ 119,240 $ 65,400 $ ( 17,656 ) $ 167,088

Balance, December 31, 2022 10,425,119 $ 104 $ 119,240 $ 65,400 $ ( 17,656 ) $ 167,088

Net income — — — 3,662 — 3,662

30 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31, 2024 and 2023

Six Months Ended June 30, 2024 and 2023

(in thousands)

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

Cash flows from operating activities:

1 unchanged sentence

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

Investment securities net discount accretion ( 19 ) ( 30 )

Net accretion on debt securities ( 39 ) ( 34 )

Depreciation expense 1,113 1,203

(Negative provision) provision for credit losses ( 2,325 ) 500

Net realized gain on equity securities ( 167 ) ( 56 )

Net loss (gain) on equity securities 491 ( 54 )

Net realized gain on sale of debt securities — ( 12 )

Increase in mortgage servicing rights resulting from transfers of financial assets ( 130 ) ( 52 )

2 unchanged sentences

Amortization of restricted stock 316 382

Loss on sale of office properties and equipment ( 13 ) —

Decrease in deferred income taxes 355 129

Increase in cash surrender value of life insurance ( 560 ) ( 336 )

Net loss (gain) from disposals of foreclosed and repossessed assets — ( 29 )

Net gain from disposals of foreclosed and repossessed assets ( 18 ) ( 38 )

Gain on sale of loans held for sale, net ( 1,246 ) ( 1,202 )

1 unchanged sentence

Originations of loans held for sale ( 21,697 ) ( 24,384 )

Proceeds from insurance claim on foreclosed and repossessed assets 27 —

Net change in:

4 unchanged sentences

Cash flows from investing activities:

Proceeds from Bank Owned Life Insurance (BOLI) death benefit 499 —

Net decrease in other interest bearing deposits — 249

Purchase of available for sale securities — ( 11,007 )

Proceeds from principal payments of available for sale securities 7,045 9,128

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

Proceeds from principal payments and maturities of held to maturity securities 2,618 2,571

3 unchanged sentences

Proceeds from sales of foreclosed and repossessed assets 201 254

Proceeds from insurance claim on foreclosed and repossessed assets 27 —

Net decrease (increase) in loans 32,726 ( 13,199 )

4 unchanged sentences

Change in short term Federal Home Loan Bank advances, net ( 27,500 ) 15,000

Federal Home Loan Bank advance repayment due to FHLB call ( 10,000 ) —

Federal Home Loan Bank advance long-term maturities ( 10,530 ) ( 35,000 )

2 unchanged sentences

Net increase in deposits 448 39,962

Common stock restricted shares — 1

Restricted common stock awarded under the equity incentive plan — 1

Repurchase shares of common stock ( 1,834 ) ( 117 )

Surrender of restricted shares of common stock ( 119 ) ( 129 )

Common stock options exercised — 28

Cash dividends paid ( 3,346 ) ( 3,040 )

26 unchanged sentences

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

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of March 31, 2024, through the date on which the consolidated financial statements were available to be issued on May 8, 2024, for items that should potentially be recognized or disclosed in these consolidated financial statements.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of June 30, 2024, through the date on which the consolidated financial statements were available to be issued on August 6, 2024, for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited.

10 unchanged sentences

those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 8, 2024;

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

5 unchanged sentences

Available for Sale and Held to Maturity – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet.

are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity.

Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity.

Held to maturity securities are stated at amortized cost.

13 unchanged sentences

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 that the amortized cost basis.

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

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.

3 unchanged sentences

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 have a credit loss.

The Company has no available for sale securities or held to maturity securities which it deems to have a credit loss at March 31, 2024.

The Company has no available for sale securities or held to maturity securities which it deems to have a credit loss at June 30, 2024.

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

1 unchanged sentence

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

Included in equity investments are preferred shares of a community development financial institution, which are carried at their fair market value.

As no ready market exists for this investment, the Company utilizes significant unobservable inputs (Level 3 inputs) to determine fair value.We record the unrealized gains and losses resulting from changes in the fair value of this investment as net gains or losses on investment securities in our consolidated statements of operations.

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

15 unchanged sentences

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

Other investments totaling $ 13,022 at March 31, 2024 consisted of $ 4,595 of FHLB stock, $ 5,703 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

Other investments totaling $ 13,878 at June 30, 2024 consisted of $ 5,447 of FHLB stock, $ 5,707 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

Other investments totaling $ 15,725 at December 31, 2023 consisted of $ 7,302 of FHLB stock and $ 5,699 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

37 unchanged sentences

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.

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.

34 unchanged sentences

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.

16 unchanged sentences

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

The Company has one reporting unit as of March 31, 2024, which is related to its banking activities.

The Company has one reporting unit as of June 30, 2024, which is related to its banking activities.

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

18 unchanged sentences

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

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.

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 in 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

As of March 31, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 2,753 .

As of June 30, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 2,608 .

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 March 31, 2024, there were no known instances of noncompliance associated with the investment.

As of June 30, 2024, there were no known instances of noncompliance associated with the investment.

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

11 unchanged sentences

These variable costs are recognized when incurred and are also included in lease expense.

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 9,500 and $ 44,000 short-term and $ 30,000 and $ 35,530 long-term FHLB advances as of March 31, 2024 and December 31, 2023, respectively.

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 16,500 and $ 44,000 short-term and $ 15,000 and $ 35,530 long-term FHLB advances as of June 30, 2024 and December 31, 2023, respectively.

For cash flow purposes the short-term FHLB advances are disclosed net with original maturities of three months or less.

4 unchanged sentences

The Company accounts for forfeitures as they occur.

Forfeited restricted shares are canceled and returned to authorized and unissued shares.

While time based restricted shares are subject to forfeiture, time based restricted stock award participants may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares.

5 unchanged sentences

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 basis.

existing assets and liabilities and their respective tax basis.

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.

1 unchanged sentence

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

If based on the available evidence, it is more likely than not that all or a portion of the

Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established.

If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established.

Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets.

2 unchanged sentences

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

The Company’s effective tax rates were 21.3 % for the three months ended March 31, 2024, and 25.5 % for the three months ended March 31, 2023.

The Company’s effective tax rates were 22.1 % and 25.5 % for the three months ended June 30, 2024 and June 30, 2023, and 21.6 % and 25.5 % for the six months ended June 30, 2024 and June 30, 2023.

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 three-months ended March 31, 2024, and lowered the Company’s income tax rate for the twelve-month period ended December 31, 2023, before related valuation allowance.

This change lowered the Company’s income tax rates for the three and six-month periods ended June 30, 2024, and lowered the Company’s income tax rate for the twelve-month period ended December 31, 2023, before related valuation allowance.

Income tax expense in 2023, 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.

This reduction of income tax expense was offset by a one-time tax expense of $ 1,828 in the three and nine-month periods 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.

37 unchanged sentences

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.

At March 31, 2024, the Company had $ 2,437 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of March 31, 2024.

At June 30, 2024, the Company had $ 4,174 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of June 30, 2024.

Common Stock Repurchased -The Company is incorporated in Maryland.

Under Maryland Law, repurchased shares of the Company’s common stock must be returned.

Shares repurchased are canceled and returned to authorized and unissued shares and recorded as a reduction of each of the applicable captions within stockholders’ equity on the consolidated balance sheets and consolidated statement of changes in stockholders’ equity.

Other Comprehensive Income — Accumulated and other comprehensive income or loss is comprised of the unrealized and realized gains and losses on securities available for sale, net of tax, and is shown on the accompanying consolidated statements of comprehensive income.

13 unchanged sentences

Improvements to Reportable Segment Disclosures —This ASU, issued in November 2023, is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This update is effective for fiscal years beginning after December 15, 2023, and interim

periods with fiscal years beginning after December 15, 2024.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods with fiscal years beginning after December 15, 2024.

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

As all new 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.

1 unchanged sentence

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

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income as of March 31, 2024 and December 31, 2023, respectively, were as follows:

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income as of June 30, 2024 and December 31, 2023, respectively, were as follows:

Available for sale securities Amortized

Losses Estimated

March 31, 2024

June 30, 2024

government agency obligations $ 15,180 $ 72 $ 154 $ 15,098

9 unchanged sentences

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

The amortized cost and fair value of securities held to maturity and the corresponding amounts of gross unrecognized gains and losses as of March 31, 2024 and December 31, 2023, respectively, were as follows:

The amortized cost and fair value of securities held to maturity and the corresponding amounts of gross unrecognized gains and losses as of June 30, 2024 and December 31, 2023, respectively, were as follows:

Held to maturity securities Amortized

Losses Estimated

March 31, 2024

June 30, 2024

Obligations of states and political subdivisions $ 500 $ — $ 31 $ 469

5 unchanged sentences

Total held to maturity securities $ 91,229 $ 6 $ 17,973 $ 73,262

At March 31, 2024, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 28,865 as collateral to secure a line of credit with the Federal Reserve Bank.

As of March 31, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of March 31, 2024, the Bank has pledged certain of its U.S.

At June 30, 2024, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 28,454 as collateral to secure a line of credit with the Federal Reserve Bank.

As of June 30, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of June 30, 2024, the Bank has pledged certain of its U.S.

Government Agency securities with a carrying value of $ 383 and mortgage-backed securities with a carrying value of $ 1,802 as collateral against specific municipal deposits.

As of March 31, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 151 and U.S.

As of June 30, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 125 and U.S.

Government Agencies with a carrying value of $ 449 pledged as collateral to the Federal Home Loan Bank of Des Moines.

5 unchanged sentences

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

For the three month periods ended March 31, 2024, and March 31, 2023, there were no sales of available for sale securities.

The estimated fair value of securities at March 31, 2024 and December 31, 2023, 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.

March 31, 2024 December 31, 2023

For the three and six month periods ended June 30, 2024, there were no sales of available for sale securities.

In June 2024, senior debt of a community development financial institution, classified as available-for-sale securities with a carrying value of $ 2,082 , was exchanged for preferred equity of the financial institution’s operating subsidiary.

The exchange resulted in $ 168 of unrealized losses on available-for-sale securities, previously included in other comprehensive income, being recognized on the June 30, 2024, consolidated statement of operations as loss on investment securities.

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

The estimated fair value of securities at June 30, 2024 and December 31, 2023, by contractual maturity, is shown below.

June 30, 2024 December 31, 2023

Available for sale securities Amortized

9 unchanged sentences

Total available for sale securities $ 170,494 $ 146,438 $ 179,744 $ 155,743

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Held to maturity securities Amortized

8 unchanged sentences

Total held to maturity securities $ 88,605 $ 69,027 $ 91,229 $ 73,262

Securities with unrealized losses at March 31, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Securities with unrealized losses at June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Less than 12 Months 12 Months or More Total

3 unchanged sentences

Value Unrealized

March 31, 2024

June 30, 2024

government agency obligations $ 3,429 $ 4 $ 3,491 $ 150 $ 6,920 $ 154

9 unchanged sentences

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

At March 31, 2024 no ACL was established for available for sale or held to maturity securities.

At June 30, 2024 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.

1 unchanged sentence

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

At March 31, 2024, there were no past due held to maturity securities.Accordingly, the Company does not expect to incur credit losses on these securities.

At June 30, 2024, there were no past due held to maturity securities.

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.

1 unchanged sentence

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

The composition of our available for sale portfolios by credit rating as of the dates indicated below was as follows:

March 31, 2024 December 31, 2023

Available for sale securities Amortized

Value Amortized

government agency $ 97,305 $ 78,026 $ 98,977 $ 81,351

AAA 12,386 12,256 9,695 9,508

AA 19,709 19,613 23,913 23,709

A 8,200 7,465 8,200 7,292

BBB 38,964 34,312 38,959 33,883

Non-rated — — — —

Total available for sale securities $ 176,564 $ 151,672 $ 179,744 $ 155,743

The composition of our held to maturity portfolio by credit rating as of the dates indicated was as follows:

March 31, 2024 December 31, 2023

Held to maturity securities Amortized

Value Amortized

government agency $ 89,442 $ 69,804 $ 90,629 $ 72,697

A 500 466 600 565

Total $ 89,942 $ 70,270 $ 91,229 $ 73,262

All of our available for sale and held to maturity investment securities are investment grade securities.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

27 unchanged sentences

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

A summary of loans at March 31, 2024, and December 31, 2023, follows:

March 31, 2024

A summary of loans at June 30, 2024, and December 31, 2023, follows:

June 30, 2024

December 31, 2023

38 unchanged sentences

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

As of March 31, 2024, and December 31, 2023, 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.

Residential and consumer loans are typically not rated until they are past due 90 days at month-end which is why thy are classified as pass graded 1-5 and once past due or have a history of delinquencies, get assigned a grade 7.

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of March 31, 2024, and gross charge-offs for the three months ended March 31, 2024:

As of June 30, 2024, and December 31, 2023, 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.

Residential and consumer loans are typically not rated until they are past due 90 days at month-end which is why they are classified as pass graded 1-5 and once past due or have a history of delinquencies, get assigned a grade 7.

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of June 30, 2024, and gross charge-offs for the six months ended June 30, 2024:

Amortized Cost Basis by Origination Year

139 unchanged sentences

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

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three months ended March 31, 2024:

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and six months ended June 30, 2024:

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

Three months ended March 31, 2024

Three months ended June 30, 2024

Allowance for Credit Losses - Loans:

4 unchanged sentences

ACL - Loans, at end of period $ 17,033 $ 1,117 $ 2,784 $ 244 $ 21,178

The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three months ended March 31, 2023:

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

Six months ended June 30, 2024

Allowance for Credit Losses - Loans:

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

Charge-offs — — — ( 17 ) ( 17 )

Recoveries 41 25 3 5 74

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations ( 1,792 ) ( 13 ) 37 ( 19 ) ( 1,787 )

ACL - Loans, at end of period $ 17,033 $ 1,117 $ 2,784 $ 244 $ 21,178

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

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

Three months ended March 31, 2023

Three months ended June 30, 2023

Allowance for Credit Losses - Loans:

ACL - Loans, at beginning of period $ 18,496 $ 1,848 $ 2,000 $ 335 $ — $ 22,679

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

Charge-offs ( 14 ) — ( 10 ) ( 16 ) — ( 40 )

2 unchanged sentences

ACL - Loans, at end of period $ 18,933 $ 1,458 $ 2,452 $ 321 $ — $ 23,164

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

Six months ended June 30, 2023

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 ) — ( 24 ) ( 27 ) — ( 97 )

Recoveries 30 31 40 22 — 123

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

ACL - Loans, at end of period $ 18,933 $ 1,458 $ 2,452 $ 321 $ — $ 23,164

The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the twelve months ended December 31, 2023:

8 unchanged sentences

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 $ 975 at March 31, 2024, and $ 1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three months ended March 31, 2024, and the twelve months ended December 31, 2023.

March 31, 2024 and Three Months Ended December 31, 2023 and Twelve Months Ended

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 712 at June 30, 2024, and $ 1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and six months ended June 30, 2024, and the twelve months ended December 31, 2023.

June 30, 2024 and Three Months Ended June 30, 2024 and Six Months Ended December 31, 2023 and Twelve Months Ended

ACL - Unfunded Commitments - beginning of period $ 975 $ 1,250 $ —

2 unchanged sentences

ACL - Unfunded Commitments - End of period $ 712 $ 712 $ 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.

March 31, 2024 and Three Months Ended March 31, 2023 and Three Months Ended

Provision for credit losses on:

Provision for credit losses - The provision for credit losses is determined by the Company as the amount to be added (reversed) 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 negative provision for credit losses.

June 30, 2024 and Three Months Ended June 30, 2024 and Six Months Ended

(Negative) provision for credit losses on:

Loans $ ( 1,262 ) $ ( 1,787 )

Unfunded Commitments ( 263 ) ( 538 )

Total provision for credit losses $ ( 800 ) $ 50

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 March 31, 2024, and December 31, 2023, respectively, was as follows:

Total (negative) provision for credit losses $ ( 1,525 ) $ ( 2,325 )

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of June 30, 2024, and December 31, 2023, respectively, was as follows:

(Loan balances at amortized cost) 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total

Past Due Current Total

March 31, 2024

June 30, 2024

Commercial/Agricultural real estate:

31 unchanged sentences

Total $ 1,405 $ 891 $ 8,228 $ 10,524 $ 1,450,268 $ 1,460,792

Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at March 31, 2024, December 31, 2023, and March 31, 2023, with no allowance for credit losses and interest income that would have been recorded under the original terms of such nonaccrual loans:

March 31, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Interest Income Not Recorded for Nonaccrual loans

Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at June 30, 2024, December 31, 2023, and June 30, 2023, with no allowance for credit losses:

June 30, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Commercial/Agricultural real estate:

6 unchanged sentences

Residential mortgage 1,028 810

Purchased HELOC loans 117 117

Consumer installment:

2 unchanged sentences

Total $ 8,352 $ 7,602

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

December 31, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Commercial/Agricultural real estate:

10 unchanged sentences

Total $ 13,184 $ 12,939

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

June 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Commercial/Agricultural real estate:

1 unchanged sentence

Agricultural real estate 1,712 1,712

Construction and land development 94 94

C&I/Agricultural operating:

18 unchanged sentences

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

The amount of interest income recognized by the Company for the three months ended March 31, 2024, and March 31, 2023, due to nonaccrual loan payoffs was $ 600 and $ 10 , respectively.

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

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

The following tables present 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 March 31, 2024, and December 31, 2023.

Collateral Type

March 31, 2024 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

June 30, 2024 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

Commercial/Agricultural real estate:

26 unchanged sentences

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

There were no outstanding commitments to borrowers experiencing financial difficulty as of March 31, 2024.

There were unused lines of credit totaling $ 459 on loans with borrowers experiencing financial difficulties as of March 31, 2024.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended March 31, 2024:

There were no outstanding commitments to borrowers experiencing financial difficulty as of June 30, 2024.

There were unused lines of credit totaling $ 662 on loans with borrowers experiencing financial difficulties as of June 30, 2024.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended June 30, 2024:

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Commercial and industrial $ 920 0.72 %

Residential mortgage $ 163 0.12 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2024:

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Commercial and industrial Payments were deferred a weighted average of 3 months

Residential mortgage Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications made to Borrowers Experiencing Financial Difficulty during the twelve months ended June 30, 2024:

Term Extension

Loan Class Amortized Cost Basis at

March 31, 2024 % of Total Class of Financing Receivables

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 4,434 0.61 %

Commercial and industrial $ 1,450 1.14 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

March 31, 2024 % of Total Class of Financing Receivables

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Commercial and industrial $ 920 0.72 %

Residential mortgage $ 245 0.18 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024:

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended June 30, 2024:

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 11 months was added to the term of the loans

1 unchanged sentence

Loan Class Financial Effect

Commercial and industrial Payments were deferred a weighted average of 3 months

Residential mortgage Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the twelve months ended March 31, 2024:

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

Term Extension

Loan Class Amortized Cost Basis at

March 31, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 4,564 0.61 %

June 30, 2023 % of Total Class of Financing Receivables

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

March 31, 2024 % of Total Class of Financing Receivables

June 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended March 31, 2024:

Term Extension

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

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

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

Other-Than-Insignificant Payment Delay

1 unchanged sentence

Residential Mortgage Payments were deferred a weighted average of 6 months

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

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

Term Extension

Loan Class Amortized Cost Basis at

March 31, 2023 % of Total Class of Financing Receivables

June 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 5,337 0.73 %

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

Residential mortgage $ 37 0.03 %

1 unchanged sentence

Loan Class Amortized Cost Basis at

March 31, 2023 % of Total Class of Financing Receivables

June 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

Other consumer $ 22 0.34 %

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

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

Loan Class Financial Effect

1 unchanged sentence

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

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

Residential mortgage A weighted average of 17 months was added to the term of the loans

1 unchanged sentence

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 March 31, 2024.

The following table shows the performance of such loans that have been modified during the twelve months ended June 30, 2024.

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

3 unchanged sentences

Total $ 6,818 $ — $ 82 $ 149

No loan modified during the three months ended March 31, 2023 has subsequently defaulted.

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

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

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

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

1 unchanged sentence

Commercial and industrial 8 — — —

Agricultural operating 179

Residential mortgage 106 — — —

3 unchanged sentences

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

The unpaid balances of these loans as of March 31, 2024 and December 31, 2023 were $ 489,740 and $ 495,531 , respectively, and consisted of one to four family residential real estate loans.

The unpaid balances of these loans as of June 30, 2024 and December 31, 2023 were $ 483,269 and $ 495,531 , respectively, and consisted of one to four family residential real estate loans.

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

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 5,008 and $ 2,665 at March 31, 2024 and December 31, 2023, respectively.

Mortgage servicing rights activity for the three month periods ended March 31, 2024 and March 31, 2023 were as follows:

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

March 31, 2024 March 31, 2023

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 5,031 and $ 2,665 at June 30, 2024 and December 31, 2023, respectively.

Mortgage servicing rights activity for the three and six month periods ended June 30, 2024 and June 30, 2023, were as follows:

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

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Mortgage servicing rights:

12 unchanged sentences

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

Servicing fees totaled $ 311 and $ 330 for the three months ended March 31, 2024 and March 31, 2023, respectively.

Servicing fees totaled $ 310 and $ 325 for the three months ended June 30, 2024 and June 30, 2023, respectively.

Servicing fees totaled $ 621 and $ 655 for the six months ended June 30, 2024 and June 30, 2023, respectively.

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

3 unchanged sentences

Central to the valuation model is the discount rate.

Fair value at March 31, 2024, was determined using discount rates ranging from 9.75 % to 12.75 %.

Fair value at March 31, 2023, was determined using discount rates ranging from 9 % to 12 %.

Fair value at June 30, 2024, was determined using discount rates ranging from 9.9 % to 12.9 %.

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

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

3 unchanged sentences

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

As of March 31, 2024, we have no lease commitments that have not yet commenced.

As of June 30, 2024, we have no lease commitments that have not yet commenced.

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

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

The components of total lease cost were as follows:

7 unchanged sentences

Operating cash flows from operating leases $ 274 $ 273

March 31, 2024 December 31, 2023

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

Operating leases $ — $ 225

June 30, 2024 December 31, 2023

Supplemental balance sheet information related to leases was as follows:

13 unchanged sentences

Lease liability recognized $ 1,447

In June of 2024, we closed our St Peter, Minnesota branch.

We considered the branch closure a triggering event that required us to test the right of use asset for impairment.

It was determined that the right of use asset was impaired and a $ 168 impairment loss was recorded.

This impairment loss is included in other non-interest expense in the consolidated statements of operations.

NOTE 6 – DEPOSITS

The following is a summary of deposits by type at March 31, 2024 and December 31, 2023, respectively:

March 31, 2024 December 31, 2023

The following is a summary of deposits by type at June 30, 2024 and December 31, 2023, respectively:

June 30, 2024 December 31, 2023

Non-interest bearing demand deposits $ 255,703 $ 265,704

4 unchanged sentences

Total deposits $ 1,519,544 $ 1,519,092

At March 31, 2024, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2024, which is the nine months ended:

At June 30, 2024, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2024, which is the six months ended:

December 31, 2024 $ 257,990

5 unchanged sentences

Total $ 369,254

Certificate accounts of $250 or more were $ 89,678 and $ 103,802 at March 31, 2024 and December 31, 2023, respectively.

Brokered deposits were $ 83,936 at March 31, 2024 and consisted of $ 43,507 of brokered certificate accounts and $ 40,429 of brokered money market accounts.

Certificate accounts of $250 or more were $ 100,293 and $ 103,802 at June 30, 2024 and December 31, 2023, respectively.

Brokered deposits were $ 96,796 at June 30, 2024 and consisted of $ 54,123 of brokered certificate accounts and $ 42,673 of brokered money market accounts.

Brokered Deposits were $ 98,259 at December 31, 2023 and consisted of $ 58,209 of brokered certificate accounts and $ 40,050 of brokered money market accounts.

At March 31, 2024, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2024, which is the nine months ended:

At June 30, 2024, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2024, which is the six months ended:

December 31, 2024 $ 40,000

4 unchanged sentences

NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at March 31, 2024 and December 31, 2023, is as follows:

March 31, 2024

A summary of Federal Home Loan Bank advances and other borrowings at June 30, 2024 and December 31, 2023, is as follows:

June 30, 2024

December 31, 2023

11 unchanged sentences

Totals $ 92,998 $ 146,995

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,115,197 and $ 1,106,267 at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 397,182 compared to $ 370,569 as of December 31, 2023.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 64,000 and $ 217,530 , during the three months ended March 31, 2024 and the twelve months ended December 31, 2023, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of March 31, 2024 and December 31, 2023 were 2.73 % and 4.16 %, respectively.

(4) FHLB term notes totaling $ 10,000 , with 2028 maturity dates, are callable once by the FHLB in June of 2024.

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,099,969 and $ 1,106,267 at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 416,063 compared to $ 370,569 as of December 31, 2023.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 81,000 and $ 217,530 , during the six months ended June 30, 2024 and the twelve months ended December 31, 2023, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of June 30, 2024 and December 31, 2023 were 3.54 % and 4.16 %, respectively.

(4) In June 2024, the FHLB called the $ 10,000 , 3.82 % advance maturing in 2028.

(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 and modified in February of 2023, requiring quarterly interest-only payments through March 2027, and quarterly principal and interest payments thereafter.

(a) A term note, which was subsequently refinanced in March 2022, modified in February of 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, 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 %.

12 unchanged sentences

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

The letters of credit balances were $ 442,500 and $ 452,280 at March 31, 2024 and December 31, 2023, respectively.

The letters of credit balances were $ 435,250 and $ 452,280 at June 30, 2024 and December 31, 2023, respectively.

Federal Reserve Borrowings

At March 31, 2024 and December 31, 2023, the Bank had the ability to borrow $ 21,618 and $ 22,417 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 28,865 and $ 29,191 as of March 31, 2024, and December 31, 2023, respectively.

There were no Federal Reserve borrowings outstanding as of March 31, 2024, and December 31, 2023.

At June 30, 2024 and December 31, 2023, the Bank had the ability to borrow $ 21,386 and $ 22,417 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 28,454 and $ 29,191 as of June 30, 2024, and December 31, 2023, respectively.

There were no Federal Reserve borrowings outstanding as of June 30, 2024, and December 31, 2023.

Federal Funds Purchased Lines of Credit

As of March 31, 2024, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

As of June 30, 2024, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

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

There were no borrowings outstanding on these lines of credit as of March 31, 2024 or December 31, 2023.

There were no borrowings outstanding on these lines of credit as of June 30, 2024 or December 31, 2023.

NOTE 8 - CAPITAL MATTERS

7 unchanged sentences

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

At March 31, 2024, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at March 31, 2024, and December 31, 2023, respectively, are presented below:

At June 30, 2024, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2024, and December 31, 2023, respectively, are presented below:

Actual For Capital Adequacy

3 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

As of March 31, 2024

As of June 30, 2024

Total capital (to risk weighted assets) $ 227,253 15.0 % $ 121,375 > = 8.0 % $ 151,719 > = 10.0 %

7 unchanged sentences

Tier 1 leverage ratio (to adjusted total assets) 208,726 11.5 % 72,479 > = 4.0 % 90,599 > = 5.0 %

The Company’s Tier 1 (leverage) and risk-based capital ratios at March 31, 2024 and December 31, 2023, respectively, are presented below:

The Company’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2024 and December 31, 2023, respectively, are presented below:

Actual For Capital Adequacy

Amount Ratio Amount Ratio

As of March 31, 2024

As of June 30, 2024

Total capital (to risk weighted assets) $ 231,523 15.2 % $ 121,522 > = 8.0 %

11 unchanged sentences

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

As of March 31, 2024, 315,947 restricted shares had been granted under this plan.

As of June 30, 2024, 315,947 restricted shares had been granted under this plan.

This amount includes 8,805 shares of performance based restricted stock granted in 2021 and issued in January 2024 upon achievement of the performance criteria and completion of the three-year performance period beginning in January 2021 and ending December 31, 2023.

The 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.

As of March 31, 2024, no stock options had been granted under this plan.

As of June 30, 2024, 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 March 31, 2024, there are no awarded unvested restricted shares, and 54,000 awarded unexercised vested options remaining from the plan.

As of June 30, 2024, there are no awarded unvested restricted shares, and 54,000 awarded unexercised vested options remaining from the plan.

Options granted under this plan vested pro rata over a five-year period from the grant date and were fully vested as of October 2022.

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

Net compensation expense related to restricted stock awards from these plans was $ 158 for the three months ended March 31, 2024, compared to $ 216 for the three months ended March 31, 2023.

Net compensation expense related to restricted stock awards from these plans was $ 158 and $ 316 for the three and six months ended June 30, 2024, compared to $ 216 and $ 382 for the three and six months ended June 30, 2023.

Restricted Common Stock Award

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Number of Shares Weighted

6 unchanged sentences

Unvested and outstanding at end of period 56,126 $ 12.30 75,601 $ 12.41

March 31, 2024

June 30, 2024

Number of Shares Weighted

4 unchanged sentences

Unvested at end of period 33,188 $ 13.09

The Company accounts for stock option-based employee compensation related to the Company’s 2008 Equity Incentive Plan using the fair-value-based method.

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

The compensation cost recognized for stock option-based employee compensation related to the 2008 plan for the three month periods ended March 31, 2024, and March 31, 2023, was $ 0 for both periods, as all options have vested.

Common Stock Option Awards

2 unchanged sentences

Term in Years Aggregate

March 31, 2024

June 30, 2024

Outstanding at beginning of year 54,000 $ 11.59

8 unchanged sentences

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

Three months ended March 31, 2024 Twelve months ended December 31, 2023

Six months ended June 30, 2024 Twelve months ended December 31, 2023

Intrinsic value of options exercised $ — $ 2

10 unchanged sentences

At the end of each reporting period, the Company estimates its potential liability related to the Plan and records any change to this liability as compensation expense in the consolidated statement of operations.

At March 31, 2024, the related liability was $ 26 , which is included in other liabilities on the consolidated balance sheet.

For the three months ended March 31, 2024, the Company recorded related expense of $ 26 , which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

At June 30, 2024, the related liability was $ 63 , which is included in other liabilities on the consolidated balance sheet.

For the three and six months ended June 30, 2024, the Company recorded related expense of $ 37 and $ 63 which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

NOTE 10 – FAIR VALUE ACCOUNTING

11 unchanged sentences

Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

The following tables present the financial instruments measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

March 31, 2024

June 30, 2024

Investment securities:

5 unchanged sentences

Equity Investments:

Equity Investments 570 570 — —

Farmer Mac equity securities 515 515 — —

Preferred equity 1,812 — — 1,812

Equity investments measured at NAV(1) 2,696 — — —

9 unchanged sentences

Equity Investments:

Equity Investments 557 557 — —

Farmer Mac equity securities 557 557 — —

Equity investments measured at NAV(1) 2,727 — — —

2 unchanged sentences

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

For the the three months ended March 31, 2024, and twelve months ended December 31, 2023, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the three months ended March 31, 2024, or twelve months ended December 31, 2023.

There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the three months ended March 31, 2024, or twelve months ended December 31, 2023, respectively.

During the three months ended June 30, 2024, senior debt of a community development financial institution, classified as available-for-sale securities was exchanged for preferred equity of the financial institution’s operating subsidiary.

At June 30, 2024, the Company owned $ 1,812 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

For the twelve months ended December 31, 2023, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

During the three and six months ended June 30, 2024, $ 2,082 of senior debt, previously measured as a Level 1 instrument, was exchanged for preferred equity, now measured as a Level 3 instrument, resulting in a transfer out of Level 1 fair value measurement to Level 3 fair value measurement.

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements relating to the available-for-sale securities above during the twelve months ended December 31, 2023.

There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the twelve months ended December 31, 2023, respectively.

Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of March 31, 2024 and December 31, 2023:

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023:

Carrying Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

March 31, 2024

June 30, 2024

Foreclosed and repossessed assets, net $ 1,662 $ — $ — $ 1,662

7 unchanged sentences

Total $ 9,159 $ — $ — $ 10,883

The fair value of collateral dependent loans with allowances, and impaired loans 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 with allowances 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 foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned.

3 unchanged sentences

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

March 31, 2024.

June 30, 2024.

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

March 31, 2024

June 30, 2024

Foreclosed and repossessed assets, net $ 1,662 Appraisal value Estimated costs to sell 10 % - 15 %

10 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Valuation Method Used Carrying

7 unchanged sentences

Securities held to maturity “HTM” (Level II) 88,605 69,027 91,229 73,262

Equity investments (Level I) 570 NA 557 NA

Equity investments valued at NAV(1) N/A 2,711 NA 2,727 NA

Farmer Mac equity securities (Level I) 515 515 557 557

Preferred equity (Level III) 1,812 1,812 — —

Equity investments valued at NAV(1) N/A 2,696 N/A 2,727 N/A

Other investments (Level II) 13,878 13,878 15,725 15,725

13 unchanged sentences

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

Three Months Ended

(Share count in thousands) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

(Share count in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income attributable to common stockholders $ 3,675 $ 3,206 $ 7,763 $ 6,868

8 unchanged sentences

Dilutive shares outstanding consist of exercisable stock options whose strike prices were less than the quarterly average closing price of the Company’s common stock.

At both March 31, 2024 and March 31, 2023, there were 20 exercisable stock options, with a potentially dilutive effect.

However their strike prices were higher than the quarterly average closing price of the Company’s common stock and thus, excluded from diluted shares outstanding.

At June 30, 2024 and June 30, 2023, there were 20 and 40 exercisable stock options, respectively, with a potentially dilutive effect.

However their strike prices were higher than the quarterly and annual average closing prices of the Company’s common stock and thus, excluded from diluted shares outstanding.

NOTE 12 – OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three months ended March 31, 2024 and 2023:

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Amount Tax Benefit

3 unchanged sentences

(Expense) Net-of-Tax

Unrealized gains (losses) on securities:

Net unrealized gains (losses) arising during the period $ 669 $ ( 166 ) $ 503 $ ( 3,140 ) $ 863 $ ( 2,277 )

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

Reclassification for net loss on exchanged security, included in net income, net of tax 168 ( 38 ) 130 — — —

Other comprehensive income (loss) $ 837 $ ( 204 ) $ 633 $ ( 3,152 ) $ 866 $ ( 2,286 )

Six Months Ended

June 30, 2024 June 30, 2023

Amount Tax Benefit

(Expense) Net-of-Tax

Amount Before-Tax

Amount Tax Benefit

(Expense) Net-of-Tax

Unrealized (losses) gains on securities:

Net unrealized (losses) gains arising during the period $ ( 891 ) $ 189 $ ( 702 ) $ 1,469 $ ( 404 ) $ 1,065

Other comprehensive (loss) income $ ( 891 ) $ 189 $ ( 702 ) $ 1,469 $ ( 404 ) $ 1,065

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2023 and the three months ended March 31, 2024 were as follows:

Net unrealized losses arising during the period $ ( 223 ) $ 24 $ ( 199 ) $ ( 1,672 ) $ 460 $ ( 1,212 )

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

Reclassification for net loss on exchanged security, included in net income, net of tax 168 ( 38 ) 130 — — —

Other comprehensive loss $ ( 55 ) $ ( 14 ) $ ( 69 ) $ ( 1,684 ) $ 463 $ ( 1,221 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2023 and the six months ended June 30, 2024 were as follows:

Gains (Losses)

3 unchanged sentences

Beginning Balance, January 1, 2023 $ ( 24,353 ) $ ( 17,656 )

Current year-to-date other comprehensive gain 352 328

Current year-to-date other comprehensive income 352 328

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

Current year-to-date other comprehensive loss ( 55 ) ( 69 )

Ending balance, March 31, 2024 $ ( 24,892 ) $ ( 18,030 )

Reclassifications out of accumulated other comprehensive income (loss) for the three month periods ended March 31, 2024 and March 31, 2023 were as follows:

Ending balance, June 30, 2024 $ ( 24,056 ) $ ( 17,397 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and six month periods ended June 30, 2024 and June 30, 2023 were as follows:

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended March 31, 2024 Three months ended March 31, 2023 (1) Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2024 Six months ended June 30, 2024 Affected Line Item on the Statement of Operations

Unrealized gains and losses

Sale of securities $ — $ — Net gains (losses) on investment securities

Debt security exchanged for equity security $ ( 168 ) $ ( 168 ) Net (losses) gains on investment securities

Tax effect 38 38 Provision for income taxes

Total reclassifications for the period $ ( 130 ) $ ( 130 ) Net loss attributable to common stockholders

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

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

Unrealized gains and losses

Sale of securities $ 12 $ 12 Net (losses) gains on investment securities

Tax effect ( 3 ) ( 3 ) Provision for income taxes

Total reclassifications for the period $ 9 $ 9 Net income attributable to common stockholders

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

What changed 10-Q

Item 1. Financial Statements