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Item 8. Financial Statements and Supplementary Data

2025-03-13 compared with 2024-03-05 · 468 added, 466 removed, 1334 unchanged (41% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( Crowe LLP ;

Oak Brook Terrace, Illinois ;

PCAOB ID 173 )

Report of Independent Registered Public Accounting Firm ( Eide Bailly LLP ;

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors

of Citizens Community Bancorp, Inc.

Eau Claire, Wisconsin

Opinion on the Financial Statements

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

(the “Company”) as of December 31, 2024, the related consolidated statement of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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.

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.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Collectively Evaluated Loans – Quantitative Calculation

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company’s allowance for credit losses (ACL) totaled $20.5 million as of December 31, 2024.

The ACL is based on expected credit losses over the contractual life of loans, incorporating relevant information including historical loss experience, current economic conditions, and reasonable and supportable forecasts.

Management utilizes a loss rate model for estimating credit losses, applying risk drivers based on loan pool characteristics.

Credit loss estimates are based on projected cash flows, adjusted for expected prepayments, economic conditions as forecasted by a third-party source.

We identified auditing the quantitative calculation of the ACL on collectively evaluated loans as a critical audit matter due to the complexity of the models used, the subjective assumptions and judgments involved, and the high degree of estimation

uncertainty required by management.

This required significant auditor judgment and effort to evaluate the appropriateness of the methodology, the accuracy of the data used and the reasonableness of assumptions utilized.

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

Testing the design and operating effectiveness of controls over the quantitative portion of the ACL on collectively evaluated loans, including controls addressing:

• Relevance and reliability of data used in the in the quantitative allowance for credit losses calculation.

• Reasonableness of significant assumptions and judgments applied within the quantitative allowance for credit losses calculation including the appropriateness of peer group and selection of the forecast utilized.

• The results of the third-party ACL validation for the loss rate model.

Substantively testing management’s process, including evaluating their judgments and assumptions, for developing the ACL on loans collectively evaluated, which included:

• Testing completeness and accuracy of loan data used in the quantitative allowance for credit loss model including the use of internal specialists to assist in testing the accuracy and completeness of the statistical models and peer data used.

• Evaluating management’s assumptions and judgments in the selection and application of economic forecasts.

• Using the work of specialists to assist in evaluating the relevance and reliability of data used by the Company’s third-party vendor to develop forecast scenarios.

• Testing the mathematical accuracy of the calculation and the appropriate application of the methodology as designed.

/s/ Crowe LLP

We have served as the Company’s auditor since 2024.

Oakbrook Terrace, Illinois

March 13, 2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

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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, 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.

and Subsidiary (the Company) as of December 31, 2023, and the related consolidated statements of operations , comprehensive income, changes in stockholders’ equity, and cash flows for the year 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 financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Change in Accounting Principle

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Our opinion is not modified with respect to this matter.

Critical Audit Matters

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments.

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 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 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

We have served as the Company’s auditor since 2020.

We served as the Company’s auditor from 2020 to 2023.

Phoenix, Arizona

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Cash and cash equivalents $ 50,172 $ 37,138

Other interest bearing deposits — 249

Available for sale ("AFS") securities, at 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 $ 165,604 , net of allowance for credit losses of $ 0 at December 31, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

142,851 155,743

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

Held-to-maturity ("HTM") securities, at amortized cost (fair value of net of $ 65,622 , net of allowance for credit losses of $ 0 at December 31, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

85,504 91,229

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Total liabilities 1,569,435 1,678,057

Commitments and contingent liabilities

Stockholders’ Equity:

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Net interest income before provision for credit losses 46,474 48,349

Provision for credit losses ( 475 ) 1,475

(Negative) provision for credit losses ( 3,175 ) ( 475 )

Net interest income after provision for credit losses 49,649 48,824

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Loan fees and service charges 996 432

Net gains on investment securities 459 541

Net realized gains on debt securities — 12

Net (losses) gains on equity securities ( 856 ) 447

Bank Owned Life Insurance (BOLI) death benefit 184 —

Other 1,125 1,176

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Professional services 1,763 1,524

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

New market tax credit depletion — 650

Losses on repossessed assets, net 294 62

Other 2,979 3,152

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(in thousands)

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Net income attributable to common stockholders $ 13,751 $ 13,059

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Securities available-for-sale

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

Net unrealized gains arising during period, net of tax 778 337

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

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

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

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

Other comprehensive income, net of tax 908 328

Comprehensive income $ 14,659 $ 13,387

See accompanying notes to audited consolidated financial statements.

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Net income — — — 13,059 — 13,059

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

Other comprehensive income, net of tax — — — — 328 328

Forfeiture of unvested shares ( 4,752 ) — — — — —

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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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Amortization of restricted stock — — 631 — — 631

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 ($ 0.32 per share)

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

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

Net accretion on debt securities ( 78 ) ( 64 )

Depreciation expense 2,174 2,371

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 —

Negative provision for credit losses ( 3,175 ) ( 475 )

Net loss (gain) on equity securities 856 ( 447 )

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

Deferred tax asset valuation allowance — 1,792

Increase in mortgage servicing rights resulting from transfers of financial assets ( 332 ) ( 218 )

Mortgage servicing rights amortization and impairment reversal, net 615 222

Mortgage servicing rights amortization and impairment, net 534 615

Amortization of intangible assets 715 755

Amortization of restricted stock 631 722

Net stock based compensation expense — 3

Loss on closure of branch facilities — 380

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Net (gain) loss from disposals of foreclosed and repossessed assets ( 19 ) 62

Provision for valuation allowance on foreclosed properties 313 —

Gain on sale of loans held for sale, net ( 2,216 ) ( 1,692 )

Proceeds from sale of loans held for sale 60,347 46,907

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

New market tax credit depletion expense — 650

Originations of loans held for sale ( 53,687 ) ( 50,988 )

Net change in:

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Total adjustments 6,425 65

Net cash provided by operating activities 13,124 29,288

Net cash from operating activities 20,176 13,124

Cash flows from investing activities:

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

Net decrease in other interest bearing deposits — 249

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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 5,707 5,134

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Purchase of equity investments ( 450 ) ( 1,350 )

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

Net sales of other investments 520 284

Proceeds from sales of foreclosed and repossessed assets 877 307

Net increase in loans ( 48,298 ) ( 101,371 )

Proceeds from insurance claim on foreclosed and repossessed assets 27 —

Net decrease (increase) in loans 92,317 ( 48,298 )

Net capital expenditures ( 889 ) ( 1,367 )

Proceeds from disposal of office properties and equipment 13 12

New market tax credit investment — ( 4,056 )

Net cash used in investing activities ( 34,205 ) ( 119,187 )

Net cash from investing activities 113,739 ( 34,205 )

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

Change in short term in Federal Home Loan Bank advances, net ( 44,000 ) ( 68,000 )

Federal Home Loan Bank advance call payments ( 10,000 ) ( 15,000 )

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

Federal Home Loan Bank advances — 25,000

Federal Home Loan Bank maturities ( 20,530 ) ( 5,000 )

Amortization of debt issuance costs 224 223

Proceeds from other borrowings, net of origination costs — 34,191

Other borrowings principal reductions ( 6,083 ) ( 5,167 )

Other borrowings called and repaid — ( 15,000 )

Net increase in deposits 94,361 37,185

Net (decrease) increase in deposits ( 30,952 ) 94,361

Restricted common stock awarded under the equity incentive plan — 1

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

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

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

Net cash from financing activities ( 120,881 ) 22,856

Net increase in cash and cash equivalents 13,034 1,775

Cash and cash equivalents at beginning of period 37,138 35,363

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Cash and Cash Equivalents— For purposes of reporting cash flows in the consolidated financial statements, cash and cash equivalents include cash, due from banks, and interest bearing deposits with original maturities of three months or less.

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.

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;

Held to Maturity and Available for Sale – 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.

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.

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

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Investment securities not classified as held-to-maturity are classified as available-for-sale.

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.

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.

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.

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 realized gains on debt securities.

Interest income includes amortization of purchase premium or accretion of purchase discount.

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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.

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.

Accrued interest receivable on available-for-sale and held-to-maturity securities was $ 920 at December 31, 2024.

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

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

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

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

Changes in fair value are recognized as net (losses) gains on equity securities in the consolidated statements 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 Volcker Rule-compliant Small Business Investment Company (SBIC) and an investment fund.

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

Other investments - As a member of the Federal Reserve Bank System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities.

Other investments - As a member of the Federal Reserve Bank (“FRB”) System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities.

These securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par.

Therefore, they are less liquid than other exchange traded equity securities.

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

As no ready market exists for these stocks, and they have no quoted

market value, these investments are carried at cost and periodically evaluated for impairment based on the ultimate recovery of par value.

Cash dividends are reported as interest on investments in the consolidated statement of operations.

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

This stock is carried at cost plus or minus changes resulting from observable price changes in orderly transactions for this stock, less other-than-temporary impairment charges, if any.

This stock is carried at cost plus or minus changes resulting from observable price changes in orderly transactions for this stock, less impairment charges, if any.

Management’s evaluation for impairment of these other investments includes consideration of the financial condition and other available relevant information of the issuer.

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Other investments totaling $ 15,725 at December 31, 2023, consisted of $ 7,302 of FHLB stock, $ 5,699 of Federal Reserve Bank stock and $ 2,724 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 deteriorated (PCD) loans.

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

Interest income is accrued on the unpaid principal balance of these loans and is presented as a separate line item on the consolidated balance sheets.

Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method over the contractual life of the loan with no prepayments assumed.

If the loan is prepaid, any amortized net fee is recognized at that time.

If the loan is prepaid, any unamortized net fee is recognized at that time.

Late charge fees are recognized into income when collected.

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Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status.

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

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

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

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

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

Closed ended consumer installment 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 120 days or more.

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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.

Aggregated risk drivers are then calculated at a

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.

For commercial/agricultural real estate loans, 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.

For commercial and industrial/agricultural operating, residential, and consumer loans, the loss rate is then combined with the loans balance and contractual maturity, to determine expected future losses.

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.

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 and not included in the collective evaluation.

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

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

However, if it is probable that the Company will foreclose on the collateral, the use of the fair value of the collateral to calculate the allowance for credit loss is required.

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

Accrued interest receivable on loans was $ 4,467 at December 31, 2024.

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.

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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.

The ACL on unfunded commitments is adjusted through provision for credit losses on the 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.

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assessed for impairment at least annually;

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

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

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

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

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

1 unchanged sentence

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

Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

Servicing fee income, which is reported on the consolidated statements of operations in non-interest income as loan servicing fee income, is recorded for fees earned for servicing loans.

Although management believes that the assumptions used to

evaluate the MSRs for impairment are reasonable, future adjustment may be necessary if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

Servicing fee income, which is reported on the consolidated statements of operations in non-interest income as loan servicing income, is recorded for fees earned for servicing loans.

The fees are based on a contractual percentage of outstanding principal;

or a fixed amount per loan and are recorded as income when earned.

The amortization of mortgage servicing rights is netted against loan servicing fee income.

Office Properties and Equipment— Premises and equipment are stated at cost less accumulated depreciation.

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An impairment charge is recognized if the carrying value of goodwill exceeds the implied fair value of goodwill.

The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2023.

The Company has performed the required annual goodwill impairment test and has determined that goodwill was not impaired as of October 31, 2024, and no circumstances arose after October 31, 2024, that indicated impairment existed at December 31, 2024, per the quarterly analysis.

See Note 6 for additional information on goodwill and other intangible assets.

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

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

New Markets Tax Credits - As a part of its commitment to the communities it serves, in the first quarter of 2022 and the third quarter of 2024, the Company made investments in LLC’s that are sponsoring community development projects that have been awarded New Markets Tax Credits (“NMTC”) through the U.S.

Department of the Treasury’s Community Development Financial Institutions Fund.

This investment is Community Reinvestment Act eligible and is designed to generate a return primarily through the realization of the tax credit.

This LLC is considered a Variable Interest Entity (“VIE”), as the Company represents the holder of the equity investment at risk.

These investments are Community Reinvestment Act eligible and are designed to generate a return primarily through the realization of the tax credit.

These LLC’s are considered a Variable Interest Entity (VIE) as the Company represents the holder of the equity investment at risk.

However, the Company does not have the ability to direct the activities that most significantly affect the performance of the LLC.

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.

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.

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

With the adoption of ASU 2023-02 on January 1, 2023, the investments are 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.

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

As of December 31, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 4,480 .

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.

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

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

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 0 and $ 44,000 short-term and $ 5,000 and $ 35,530 long-term FHLB advances as of December 31, 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.

Debt and equity issuance costs— Debt issuance costs, which consist primarily of fees paid to note lenders, are deferred and included in other borrowings in the consolidated balance sheets.

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

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

Senior note debt issuance costs, are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations.

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

Share-Based Compensation— The Company may grant restricted stock awards and other stock-based awards to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement.

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.

The time based restricted shares granted under the 2018 Equity Incentive Plan (the “Plan”) are subject to a three-year vesting period.

Compensation expense for time based restricted stock is recognized over the requisite service period of three years for the entire award on a straight-line basis.

Performance based restricted shares are earned over a three-year period based on Board approved performance metrics and expense is recorded based on expected shares vesting.

The performance based restricted stock award participants do not have voting rights and do not receive dividends or other distributions paid with respect to the performance based restricted shares.

Upon vesting of restricted stock, the benefit of tax deductions in excess of recognized compensation expense is reflected as an income tax benefit in the Consolidated Statements of Operations.

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

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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 change 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 impacted 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.

In 2024, the effective tax rate was lower than 2023, due to the establishment of the valuation allowance during 2023.

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.

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Payment for service charges on deposit accounts are primarily received immediately or in the following month through a direct charge to a customer’s account.

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

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

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

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Once these criteria are met, the repossessed asset is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer.

In determining the gain on sale or loss on the sale, the Company adjust the transaction price and related gain or loss on sale if a significant financing component is present.

In determining the gain on sale or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present.

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

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

Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company’s stock price on the reporting date.

Diluted earnings per common share includes the dilutive effect of additional

potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company’s stock price on the reporting date.

Loss Contingencies— Loss contingencies, including claims and legal actions arising in the normal course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount of loss can be reasonably estimated.

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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.

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.

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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 December 31, 2024.

Common Stock Repurchased -The Company is incorporated in Maryland.

Under Maryland Law, 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 (loss) income.

Operating Segments— While our executive officers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis.

Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Operating Segments— The Chi e f Operating Decision Maker regularly reviews consolidated financial statements, as well as detailed revenue and net interest income and expense results in order to assess the Company’s performance and allocate resources.

Wh i le the Chi e f Operating Decision Maker monitors the revenue streams of the various banking products and services, financial performance is evaluated and resource allocation decisions are made on a Company-wide basis.

Accordingly, all of the Company’s banking operations are considered by the Chi e f Operating Decision Maker to be the Company’s sole reportable operating segment.

Reclassifications— Certain items previously reported were reclassified for consistency with the current presentation.

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LIBOR) reforms.

ASU 2020-04 and ASU 2021-01 was effective immediately upon issuance and will remain in effect 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.

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.

Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Accordingly, ASU 2016-13 requires the use of forward-looking information to form credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, though the inputs to those techniques will change to reflect the full amount of expected credit losses.

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

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

Earlier adoption was permitted;

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

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.

The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit losses model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty.

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.

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.

The Company has adopted all applicable disclosure requirements set forth in this update with.no material impact on the Company’s financial condition or results of operations.

ASU 2023-07, Segment Reporting (Topic 820):

Improvements to Reportable Segment Disclosures —This ASU, issued in November 2023, requires all public entities to provide enhanced disclosures about significant segment expenses.

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

Adoptions of ASU 2023-07 had no material effect on the Company’s consolidated balance sheet, operations or cash flows.

Recently Issued, But Not Yet Effective Accounting Pronouncements

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.

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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.

ASU 2024-03, Income Statement, Reporting of Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses— This ASU, issued in November 2024, is effective for fiscal years beginning after December 15, 2027, and interim periods therein, with early adoption permitted.

This ASU requires more detailed note disclosure about the types of expenses in commonly presented expense captions.

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

NOTE 2 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of December 31, 2023 and December 31, 2022, respectively, were as follows:

The amortized cost, estimated fair value and related unrealized gains and losses on securities available-for-sale and unrecognized gains and losses on securities held-to-maturity as of December 31, 2024 and December 31, 2023, respectively, were as follows:

Available-for-sale securities Amortized

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Government Agency securities with a carrying value of $ 339 and mortgage-backed securities with a carrying value of $ 1,766 as collateral against specific municipal deposits.

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.

As of December 31, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 506 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2023, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 29,191 as collateral to secure a line of credit with the Federal Reserve Bank.

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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.

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 .

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.

For the twelve-month period ended December 31, 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 the recognition of $ 168 of unrealized losses on available-for-sale securities, previously included in other comprehensive income, as

well as an additional $ 270 loss, for a total loss of $ 438 .

This total loss of $ 438 was recognized on the June 30, 2024, consolidated statement of operations as net losses on equity securities.

For the twelve-month period ended December 31, 2023, gross sales of available-for-sale securities were $ 5,105 .

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

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

The estimated fair value of available-for-sale securities at December 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.

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

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 securities due to the call feature.

Securities not due at a single maturity date are shown separately.

December 31, 2024 December 31, 2023

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Total held-to-maturity securities $ 85,504 $ 65,622 $ 91,229 $ 73,262

Securities with unrealized losses at December 31, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Securities with unrealized losses for which an allowance for credit losses has not been recorded at December 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:

Less than 12 Months 12 Months or More Total

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

Less than 12 Months 12 Months or More Total

Held to maturity securities Fair

Value Unrealized

December 31, 2023

Obligations of states and political subdivisions $ — $ — $ 565 $ 35 $ 565 $ 35

Mortgage-backed securities — — 72,507 17,938 72,507 17,938

Total $ — $ — $ 73,072 $ 17,973 $ 73,072 $ 17,973

December 31, 2022

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

Mortgage-backed securities 16,627 2,416 59,367 17,137 75,994 19,553

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

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.

At December 31, 2024, no ACL was established for available-for-sale 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.

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

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

At December 31, 2024, no ACL was established for held-to-maturity securities based on the composition of the securities portfolio.

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

NOTE 3 – LOANS, ALLOWANCE FOR CREDIT LOSSES

Portfolio Segments:

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Management evaluates trends in past due loans and current economic factors such as the housing price index on a regular basis.

Consumer installment loans are comprised of originated indirect paper loans secured primarily by boats and recreational vehicles and other consumer loans secured primarily by automobiles and other personal assets.

Consumer installment loans are comprised of other consumer loans secured primarily by automobiles and other personal assets and originated indirect paper loans secured primarily by boats and recreational vehicles.

Consumer loan underwriting terms often depend on the collateral type, debt to income ratio and the borrower’s creditworthiness as evidenced by their credit score.

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

A summary of loans at December 31, 2023 follows:

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

December 31, 2024

Amortized Cost % of Total

December 31, 2023

Amortized Cost % of Total Amortized Cost % of Total

Commercial/Agricultural real estate:

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Net loans receivable $ 1,348,432 $ 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:

Commercial real estate $ 725,971 51.5 %

Agricultural real estate 87,908 6.2 %

Multi-family real estate 208,908 14.8 %

Construction and land development 102,492 7.3 %

C&I/Agricultural operating:

Commercial and industrial 136,013 9.6 %

Agricultural operating 28,806 2.0 %

Residential mortgage:

Residential mortgage 105,389 7.5 %

Purchased HELOC loans 3,262 0.2 %

Consumer installment:

Originated indirect paper 10,236 0.7 %

Other consumer 7,150 0.5 %

Gross Loans $ 1,416,135 100.3 %

Unearned net deferred fees and costs and loans in process ( 2,585 ) ( 0.2 ) %

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

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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As of December 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 they are classified as pass graded 1 - 5 and once 90 days past due at month-end or nonaccrual, 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 December 31, 2024, and gross charge-offs for the twelve months ended December 31, 2024:

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Total current period gross charge-offs $ — $ 135 $ 10 $ 40 $ 5 $ 21 $ 10 $ — $ 221

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

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 $ 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

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

Certain directors and executive officers of the Company are defined as related parties.

16 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 twelve months ended December 31, 2023:

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, 2024 and December 31, 2023:

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

Twelve months ended December 31, 2024

Allowance for Credit Losses - Loans:

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

Charge-offs ( 39 ) ( 143 ) ( 4 ) ( 35 ) ( 221 )

Recoveries 56 36 7 22 121

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations ( 2,285 ) 332 ( 258 ) ( 48 ) ( 2,259 )

ACL - Loans, at end of period $ 16,516 $ 1,330 $ 2,489 $ 214 $ 20,549

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

14 unchanged sentences

ACL - Unfunded Commitments - End of period $ 334 $ 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

Twelve months ended December 31, 2022:

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

Charge-offs ( 48 ) ( 36 ) ( 33 ) ( 3 ) — ( 120 )

Recoveries 28 1 27 1 — 57

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, 2023 $ 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

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

Performing TDR loans $ 1,336 $ 960 $ 2,875 $ — $ 5,171

Performing loans other 1,115,465 162,417 104,287 17,345 1,399,514

Total performing loans 1,116,801 163,377 107,162 17,345 1,404,685

Nonperforming loans (1) —

Nonperforming TDR loans 1,878 391 348 — 2,617

Nonperforming loans other 6,600 1,051 1,141 41 8,833

Total nonperforming loans 8,478 1,442 1,489 41 11,450

Total loans $ 1,125,279 $ 164,819 $ 108,651 $ 17,386 $ 1,416,135

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

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, 2024 and December 31, 2023, 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

(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

December 31, 2024

14 unchanged sentences

Total $ 3,374 $ 1,168 $ 2,897 $ 7,439 $ 1,361,542 $ 1,368,981

(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

(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

15 unchanged sentences

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

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

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

December 31, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Loans Past Due Over 89 Days Still Accruing

Commercial/Agricultural real estate:

13 unchanged sentences

Total $ 13,168 $ 12,520 $ 186

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

Commercial/Agricultural real estate:

Commercial real estate $ 10,359 $ 10,347

Agricultural real estate 391 391

Multi-family real estate — —

Construction and land development 54 54

C&I/Agricultural operating:

Commercial and industrial — —

Agricultural operating 1,180 1,180

Residential mortgage:

Residential mortgage 1,167 934

Purchased HELOC loans — —

Consumer installment:

Originated indirect paper 15 15

Other consumer 18 18

Total $ 13,184 $ 12,939

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:

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

The amount of interest income recognized by the Company for the twelve months ended December 31, 2024 and December 31, 2023, due to nonaccrual loan payoffs was $ 473 and $ 505 , respectively.

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

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

The following table presents the amortized cost basis of collateral dependent loans by portfolio segment and collateral type that were individually evaluated to determine expected credit losses and the related allowance for credit losses as of December 31, 2023.

However, if it is probable that the Company will foreclose on the collateral, the use of the fair value of the collateral to calculate the allowance for credit loss is required.

Collateral Type

17 unchanged sentences

There were unused lines of credit totaling $ 135 on loans with borrowers experiencing financial difficulties as of December 31, 2024.

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 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 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

December 31, 2022

With No Related Allowance Recorded:

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:

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 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

December 31, 2022 Totals

Commercial/Agricultural real estate $ 16,849 $ 16,874 $ 519 $ 19,685 $ 822

C&I/Agricultural operating 3,282 3,292 249 4,741 248

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

Term Extension

Loan Class Amortized Cost Basis at

December 31, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 225 0.03 %

Commercial and industrial $ 741 0.64 %

Residential mortgage $ 20 0.02 %

Consumer installment 755 755 10 310 7

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

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

December 31, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 1,182 0.17 %

Commercial and industrial $ 822 0.71 %

Residential mortgage $ 236 0.18 %

Term Extension and Principal Forgiveness

Loan Class Amortized Cost Basis at

December 31, 2024 % of Total Class of Financing Receivables

Other consumer $ 2 0.04 %

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

Term Extension

Loan Class Financial Effect

Commercial real estate A weighted average of 6 months was added to the term of the loans

Commercial and industrial A weighted average of 13 months was added to the term of the loans

Residential mortgage A weighted average of 54 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Commercial real estate Payments were deferred a weighted average of 3 months

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

Residential mortgage Payments were deferred a weighted average of 3 months

Term Extension and Principal Forgiveness

Loan Type Financial Effect

Other Consumer A weighted average of 3 months was added to the term of the loan and a principal balance of $ 2 was forgiven

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

30 unchanged sentences

Total $ 3,178 $ — $ 50 $ —

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.

Concessions may include:

extension of the loan’s term, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms.

A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability.

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.

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

Troubled debt restructure loans:

Accrual status $ 5,171

Non-accrual status 2,617

Total $ 7,788

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

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 $ —

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:

Commercial/ Agricultural real estate 14 $ 3,214

C&I/ Agricultural operating 8 1,351

Residential mortgage 45 3,223

Consumer installment — —

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 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:

Commercial/ Agricultural real estate — $ —

C&I/ Agricultural operating 1 231

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 —

Consumer installment — —

Total troubled debt restructurings 3 $ 271

All acquired loans were initially recorded at fair value at the acquisition date.

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

December 31, 2022

Accountable for under ASC 310-30 (PCI loans)

Outstanding balance $ 7,000

Carrying amount $ 6,904

Accountable for under ASC 310-20 (non-PCI loans)

Outstanding balance $ 136,192

Carrying amount $ 134,522

Total acquired loans

Outstanding balance $ 143,192

Carrying amount $ 141,426

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.

The accretion on this balance is scheduled to be approximately $ 80 in 2023;

however large balance payoffs, as seen in 2022, 2021 and 2020, would accelerate this accretion and lower future years accretion.

Fiscal years ending December 31, Purchase Accounting Accretable Discount

Thereafter 751

Other consumer 20 — — —

Total $ 6,949 $ — $ 69 $ —

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

December 31, 2022

Balance at beginning of period $ 653

Additions to non-accretable difference for acquired purchased credit impaired loans —

Non-accretable difference realized as interest from payoffs of purchased credit impaired loans ( 239 )

Transfers from non-accretable difference to accretable discount ( 126 )

Non-accretable difference transferred to OREO due to loan foreclosure ( 192 )

Balance at end of period $ 96

NOTE 4 – MORTGAGE SERVICING RIGHTS

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

The unpaid balances of the one- to four-family residential mortgage loans as of December 31, 2023 and December 31, 2022 were $ 495,531 and $ 523,736 , respectively.

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

The unpaid balances of these loans as of December 31, 2024 and December 31, 2023, were $ 479,578 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 $ 2,430 and $ 2,665 , at December 31, 2024 and December 31, 2023, respectively.

Mortgage servicing rights activity for the years ended December 31, 2023 and December 31, 2022 was as follows:

Mortgage servicing rights activity for the years ended December 31, 2024 and December 31, 2023, were as follows:

As of and for the twelve months ended As of and for the twelve months ended

12 unchanged sentences

Residential mortgage loans serviced for others $ 479,578 $ 495,531

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

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 $ 1,236 and $ 1,292 for the years ended December 31, 2024 and December 31, 2023, respectively.

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

Late fees and ancillary fees related to loan servicing are not material.

8 unchanged sentences

At December 31, 2024, 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

10 unchanged sentences

Office properties and equipment, net $ 17,075 $ 18,373

Depreciation expense was $ 2,371 for the year ended December 31, 2023 and $ 2,357 for the year ended December 31, 2022.

Depreciation expense was $ 2,174 for the year ended December 31, 2024, and $ 2,371 for the year ended December 31, 2023, which is included in Occupancy on the consolidated statements of operations.

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS

11 unchanged sentences

Intangible Assets

Total $ 1,694

NOTE 7 - LEASES

4 unchanged sentences

Lease costs are included in non-interest expense/occupancy in the consolidated statement of operations.

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.

Twelve Months Ended

19 unchanged sentences

operating leases 3.15 % 3.20 %

(1) Operating lease right-of-use assets are recorded as other assets in the consolidated balance sheets.

(2) Operating lease liabilities are recorded as other liabilities in the consolidated balance sheets.

Cash obligations and receipts under lease contracts as of December 31, 2024, are as follows:

5 unchanged sentences

Lease liability recognized $ 1,076

In November of 2022 we closed our leased Red Wing, Minnesota branch.

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

The carrying amount of the right of use asset was compared

to its fair value, which was determined based on an estimate of future sublease income.

It was determined that the right of use asset was impaired and a $ 180 impairment loss was recorded.

In November of 2024, we announced the closure of our Faribault, Minnesota branch in February 2025.

We considered the branch closure a triggering event and the remaining right of use asset will be amortized ratably over the period from the closure decision to the closure date.

In 2024, an additional $ 46 amortization expense was recorded in other non-interest expense in the consolidated statements of operations.

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

In November of 2024, the St Peter lease was terminated.

The net impact of the right of use asset write down and lease termination was a net cost of $ 77 recorded in 2024.

This lease termination cost is included in other non-interest expense in the consolidated statements of operations.

In 2024, we recorded the remaining impairment of $ 66 for the Red Wing lease, previously closed in November 2022.

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

21 unchanged sentences

2028 10,000 3.82 % 3.82 %

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

Federal Home Loan Bank advances $ 5,000 $ 79,530

11 unchanged sentences

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2024 and December 31, 2023, were 1.45 % and 4.16 %, respectively.

(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.

(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 %.

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

(b) A $ 5,000 line of credit, maturing August 1, 2025, that remains undrawn upon.

(6) Subordinated notes resulted from the following:

(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 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 .

(a) 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 .

In September 2025, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 591 basis points.

1 unchanged sentence

Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

(c) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75 % for five years .

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75 % for five years .

In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 329 basis points.

4 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.

These balances were $ 452,280 and $ 191,650 at December 31, 2023 and 2022, respectively.

The letters of credit balances were $ 209,750 and $ 452,280 at December 31, 2024 and 2023, respectively.

Federal Funds Purchased Lines of Credit

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

As of December 31, 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.

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Loss Contingencies— Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

The Company sells the guaranteed portions of SBA 7(a) and 504 loans to third parties.

The Company has a continuing involvement in each of the transferred lending arrangements by way of relationship management and servicing the loans, as well as being subject to normal and customary requirements of the SBA loan program and standard representations and warranties related to sold amounts.

In the event of a loss resulting from default and a determination by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by the Company, the SBA may require the Company to repurchase the loan, deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of the principal loss related to the deficiency from the Company.

The Company must comply with applicable SBA regulations in order to maintain the guarantee.

In addition, the Company retains the option to repurchase the sold guaranteed portion of an SBA loan if the loan defaults.

Management has assessed estimated losses inherent in the outstanding portions of the SBA loans sold in accordance with ASC 450, Contingencies, and determined a recourse reserve based on the probability of future losses for these loans to be $ 420 and $ 0 at December 31, 2024 and 2023, respectively, which is reported in other liabilities on the Consolidated Balance Sheets.

As of and For the Year Ended December 31,

Balance at the beginning of the period $ — $ —

SBA recourse provision 420 —

Balance at the end of the period $ 420 $ —

NOTE 12 - RETIREMENT PLAN

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Employer matching contributions to the plan were $ 628 and $ 651 for the year ended December 31, 2024 and 2023, respectively.

NOTE 13 - STOCK-BASED COMPENSATION

NOTE 13 - STOCK-BASED AND OTHER COMPENSATION

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

4 unchanged sentences

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.

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

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

2 unchanged sentences

As of December 31, 2024, there are no awarded unvested restricted shares and 52,000 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.

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 $ 631 and $ 722 for the years ended December 31, 2024 and 2023, respectively.

The remaining unrecognized compensation expense on restricted stock awards is $ 187 at December 31, 2024.

Restricted Common Stock Awards

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Unvested and outstanding at end of period 39,171 $ 12.48 75,601 $ 12.41

The Company accounts for stock-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 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 .

December 31, 2024

Number of Shares Weighted

Performance Based Restricted Shares

Unvested at beginning of year 41,993 $ 12.61

Vested and issued ( 8,805 ) 10.78

Forfeited — —

Unvested at end of period 33,188 $ 13.09

Common Stock Option Awards

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Tax benefit realized from options exercised $ — $ —

Other Compensation

On January 25, 2024, the Company’s board of directors approved a phantom stock plan as part of the Company’s long-term incentive plan.

The Plan allows certain employees to earn future cash awards linked to the company’s future common share price for time and performance based cash awards.

The performance based cash awards vest based on a combination of a three-year time period and performance targets based on the Company’s return on equity.

For performance based awards, the ultimate cash payout of these awards will be based on the January 25, 2027 closing share price of the Company’s common stock.

The time based cash awards vest ratably over a three-year time period.

For time based awards, the ultimate cash payout of these awards will be based on the closing share price of the Company’s common stock on the anniversary of the award date each year.

On January 25, 2024, time based awards were based on 18,509 shares and performance based awards were based on 18,505 shares.

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 December 31, 2024, the related liability was $ 190 , which is included in other liabilities on the consolidated balance sheet.

For the year ended December 31, 2024, the Company recorded related expense of $ 190 , which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

NOTE 14 – INCOME TAXES

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( 739 ) ( 1,478 )

Valuation allowance 1,822 —

Change in valuation allowance 1,118 1,822

Total $ 3,699 $ 5,873

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Tax exempt interest ( 81 ) ( 0.5 ) % ( 52 ) ( 0.3 ) %

Valuation allowance 1,822 9.6 % — — %

Change in valuation allowance 1,118 6.4 % 1,822 9.6 %

Other ( 112 ) ( 0.6 ) % 2 0.1 %

11 unchanged sentences

Lease liability 276 426

Net operating loss 970 —

Net unrealized losses on securities available-for-sale 6,333 6,702

12 unchanged sentences

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.

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.

Management determined a valuation allowance of $ 2,852 was necessary at December 31, 2024, and a valuation allowance of $ 1,822 was necessary at December 31, 2023, 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.

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

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Equity investments:

Equity investments 557 557 — —

Farmer Mac equity securities 569 569

Preferred equity 1,362 — — 1,362

Equity investments measured at NAV(1)

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Corporate debt securities 41,174 — 41,174 —

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

Corporate asset backed securities 24,513 — 24,513 —

Total Investment Securities 155,743 — 155,743 —

Equity investments:

Equity investments 338 338 — —

Farmer Mac equity securities 557 557 — —

Equity investments measured at NAV(1)

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 years ended December 31, 2023 and December 31, 2022, 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 years ended December 31, 2023 or December 31, 2022.

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 years ended December 31, 2023 or December 31, 2022, 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 December 31, 2024, the Company owned $ 1,362 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

For the year 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 year ended December 31, 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.

The exchange resulted in the recognition of $ 168 of unrealized losses on available-for-sale securities during the year ended December 31, 2024, previously included in other comprehensive income, as well as an additional $ 270 loss, for a total loss of $ 438 .

This total loss of $ 438 was recognized on the consolidated statement of operations as net losses on equity securities.

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 year ended December 31, 2023, respectively.

Assets Measured on a Nonrecurring Basis

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Foreclosed and repossessed assets, net $ 915 $ — $ — $ 915

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

Collateral dependent loans 3,107 — — 3,107

Mortgage servicing rights 3,663 — — 5,227

2 unchanged sentences

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

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

Collateral dependent loans 3,499 — — 3,499

Mortgage servicing rights 3,865 — — 5,589

Total $ 9,159 $ — $ — $ 10,883

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.

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 collateral dependent 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.

The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned.

The fair value of mortgage servicing rights referenced above was determined based on a third party discounted cash flow analysis utilizing both observable and unobservable inputs.

The fair value of mortgage servicing rights was estimated using discounted cash flows based on current market rates and other factors.

The following table represents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at December 31, 2024 and December 31, 2023.

6 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 %

1 unchanged sentence

collateral, which generally includes various level 3 inputs which are not observable.

(2) The fair value basis of impaired loans and real estate owned may be adjusted to reflect management

(2) The fair value basis of collateral dependent loans, and real estate owned may be adjusted to reflect management

estimates of disposal costs including, but not limited to, real estate brokerage commissions, legal fees,

8 unchanged sentences

Cash and cash equivalents (Level I) $ 50,172 $ 50,172 $ 37,138 $ 37,138

Other interest bearing deposits (Level II) — — 249 250

Securities available-for-sale "AFS" (Level II) 142,851 142,851 155,743 155,743

Securities held-to-maturity "HTM" (Level II) 85,504 65,622 91,229 73,262

Equity investments (Level I) 557 557 338 338

Equity investments valued at NAV (1) N/A 2,727 2,727 1,456 1,456

Farmer Mac equity securities (Level I) 569 569 557 557

Preferred equity (Level III) 1,362 1,362 — —

Equity investments valued at NAV (1) N/A 2,771 N/A 2,727 2,727

Other investments (Level II) 12,500 12,500 15,725 15,725

1 unchanged sentence

Loans held for sale - Residential mortgage (Level I) 441 441 1,134 1,134

Loans held for sale - SBA (Level II) 4,639 4,639 — —

Loans held for sale - SBA / FSA (Level II) 888 888 4,639 4,639

Mortgage servicing rights (Level III) 3,663 5,227 3,865 5,589

20 unchanged sentences

Additional common stock option shares that have not been included due to their antidilutive effect 20 40

NOTE 17 – OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the tax effects allocated to each component of other comprehensive income (loss):

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

At December 31, 2024 and December 31, 2023, there were 20 and 40 exercisable stock options, respectively, with a potentially dilutive effect.

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

NOTE 17 – OTHER COMPREHENSIVE INCOME

The following table shows the tax effects allocated to each component of other comprehensive income:

For the year ended, December 31, For the year ended, December 31,

4 unchanged sentences

(Expense) Net-of-Tax

Unrealized losses on securities:

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

Unrealized gains on securities:

Net unrealized gains arising during the period $ 1,080 $ ( 302 ) $ 778 $ 364 $ ( 27 ) $ 337

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

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:

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

Other comprehensive income $ 1,248 $ ( 340 ) $ 908 $ 352 $ ( 24 ) $ 328

The changes in the accumulated balances for each component of other comprehensive income, net of tax for the years ended December 31, 2024 and December 31, 2023, were as follows:

Unrealized Gains (Losses) on AFS Securities Other Accumulated

1 unchanged sentence

Income (Loss), net of tax

Beginning Balance, January 1, 2022 $ 222 $ 161

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

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

1 unchanged sentence

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

Reclassifications out of accumulated other comprehensive income (loss) for the twelve months ended December 31, 2023 were as follows:

Current year-to-date other comprehensive income 1,248 908

Ending balance, December 31, 2024 $ ( 22,753 ) $ ( 16,420 )

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2024 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) (1) Affected Line Item on the Statement of Operations

Unrealized gains and losses

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

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

Tax effect 38 Provision for income taxes

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

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

(1) Amounts in parentheses indicate decreases to profit/loss.

28 unchanged sentences

Dividend income from bank subsidiary 18,750 12,000

Non-interest income 127 422

Non-interest (loss) gain ( 15 ) 127

Non-interest expense ( 898 ) ( 762 )

10 unchanged sentences

Depreciation expense — 12

Net valuation gain on equity securities ( 127 ) ( 422 )

Stock based compensation expense — 3

Net valuation (loss) gain on equity securities 15 ( 127 )

Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary ( 17,533 ) ( 16,805 )

7 unchanged sentences

Dividend from bank subsidiary 18,750 12,000

Capital contribution to bank subsidiary — ( 15,000 )

Net cash provided by (used in) investing activities 18,575 11,382

Cash flows from financing activities:

Proceeds from other borrowings, net of origination costs — 34,191

Amortization of debt issuance costs 224 223

Other borrowings principal reductions ( 6,083 ) ( 5,167 )

Other borrowings called and repaid — ( 15,000 )

Repurchase shares of common stock ( 6,097 ) ( 420 )

6 unchanged sentences

Cash and cash equivalents at end of year $ 17,786 $ 18,175

NOTE 19 - SEGMENT INFORMATION

The Company’s reportable segment is determined by the Chief Financial Officer, who is the designated chief operating decision maker, based upon information provided about the performance of products and services offered in its banking operations.

Banking operations consist primarily of lending, deposit and investment activities.

The segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review the performance of various components of the business.

Components of the Company’s business include various lending and deposit product offerings, the Company’s investment portfolio, banking branches and market geographies.

The chief operating decision maker will evaluate the financial performance of the Company’s business components, such as by evaluating revenue, interest margins, significant expenses, and budget to actual operating results in assessing the Company’s segment and in determining the allocation of resources.

The chief operating decision maker uses consolidated net income to benchmark the Company against competitors.

Loans, investments, and deposits provide the revenue streams of the banking operation.

Interest expense, provisions for credit losses, and compensation costs provide the significant expenses of the operation.

All operations are domestic.

Year ended December 31, Year ended December 31,

Interest and dividend income $ 89,615 $ 84,248

Reconciliation of revenue

Other Revenue 10,107 10,250

Total consolidated revenues 99,722 94,498

Interest expense 43,141 35,899

Segment net interest income and non-interest income 56,581 58,599

(Negative) provision for credit losses ( 3,175 ) ( 475 )

Compensation and related benefits (expense) 22,741 21,106

Other expenses 19,565 19,036

Provision for income taxes (expense) 3,699 5,873

Segment net income/consolidated net income $ 13,751 $ 13,059

Other segment disclosures:

Interest income $ 89,615 $ 84,248

Interest expense $ 43,141 $ 35,899

Depreciation $ 2,174 $ 2,371

Amortization $ 715 $ 755

Other significant noncash items:

(Negative) provision for credit losses $ ( 3,175 ) $ ( 475 )

Reconciliation of assets:

Total assets for reportable segments $ 1,748,519 $ 1,851,391

Other assets — —

Total consolidated assets $ 1,748,519 $ 1,851,391

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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