What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-05 · 321 added, 358 removed, 1202 unchanged (36% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

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

March 31, 2025 (unaudited) and December 31, 2024

(derived from audited financial statements)

(in thousands, except share and per share data)

September 30, 2024 December 31, 2023

(in thousands, except share data)

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 100,199 $ 50,172

Available for sale ("AFS") securities, at fair value (amortized cost of $ 168,882 , net of allowance for credit losses of $ 0 at September 30, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

Available for sale ("AFS") securities, at fair value (amortized cost of $ 160,504 , net of allowance for credit losses of $ 0 at March 31, 2025 and amortized cost of $ 165,604 , net of allowance for credit losses of $ 0 at December 31, 2024)

139,642 142,851

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 71,046 , net of allowance for credit losses of $ 0 at September 30, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 66,191 , net of allowance for credit losses of $ 0 at March 31, 2025 and fair value of $ 65,622 , net of allowance for credit losses of $ 0 at December 31, 2024)

84,301 85,504

31 unchanged sentences

Consolidated Statements of Operations (unaudited)

Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended March 31, 2025 and 2024

(in thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three Months Ended

March 31, 2025 March 31, 2024

Interest and dividend income:

17 unchanged sentences

Net realized gains on debt securities — —

Net (losses) gains on equity securities ( 78 ) 116 ( 569 ) 170

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

Net gains on equity securities 10 167

Other 243 253

21 unchanged sentences

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

Three and Nine months ended September 30, 2024 and 2023

Consolidated Statements of Comprehensive Income (unaudited)

Three months ended March 31, 2025 and 2024

(in thousands)

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three Months Ended

March 31, 2025 March 31, 2024

Net income attributable to common stockholders $ 3,197 $ 4,088

2 unchanged sentences

Net unrealized gains (losses) arising during period, net of tax 1,455 ( 702 )

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

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

Other comprehensive income (loss), net of tax 1,455 ( 702 )

Comprehensive income (loss) $ 6,838 $ ( 364 ) $ 14,532 $ 5,283

Comprehensive income $ 4,652 $ 3,386

See accompanying condensed notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

(in thousands, except shares and per share data)

3 unchanged sentences

Net income — — — 3,197 — 3,197

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

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

Restricted common stock awarded under the equity incentive plan 16,955 — — — —

Other comprehensive income, net of tax — — — — 1,455 1,455

Surrender of restricted shares of common stock to satisfy the withholding taxes due upon vesting ( 11,481 ) — ( 183 ) — — ( 183 )

Restricted common stock issued upon achievement of the 2022 performance criteria 16,021 — — — — —

Common stock repurchased ( 50,000 ) — ( 570 ) ( 28 ) — ( 598 )

Amortization of restricted stock — — 158 — — 158

Common stock options exercised 3,000 — 28 — — 28

Stock based compensation expense — — 68 — — 68

Cash dividends ($ 0.36 per share)

1 unchanged sentence

Balance at March 31, 2025 9,989,536 100 114,477 80,439 ( 14,965 ) 180,051

Net income — — — 3,675 — 3,675

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

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

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

Amortization of restricted stock — — 158 — — 158

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

Net income — — — 3,286 — 3,286

Other comprehensive income, net of tax — — — — 3,552 3,552

Common stock repurchased ( 223,205 ) ( 2 ) ( 2,542 ) ( 349 ) — ( 2,893 )

Amortization of restricted stock — — 159 — — 159

Balance, September 30, 2024 10,074,136 $ 101 $ 115,455 $ 78,438 $ ( 13,845 ) $ 180,149

See accompanying condensed notes to unaudited consolidated financial statements.

8 unchanged sentences

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

Forfeiture of unvested shares ( 1,168 ) — — — — —

Surrender of restricted shares of common stock ( 10,287 ) — ( 129 ) — — ( 129 )

Surrender of restricted shares of common stock to satisfy the withholding taxes due upon vesting ( 9,471 ) — ( 113 ) — — ( 113 )

Restricted common stock awarded under the equity incentive plan 16,955 — — — — —

Restricted stock issued upon achievement of the 2021 performance criteria 8,805 — — — — —

Amortization of restricted stock — — 216 — — 216

Cumulative change in accounting principle for adoption of ASU 2016-13 — — — ( 4,432 ) — ( 4,432 )

Cumulative change in accounting principle for adoption of ASU 2023-02 — — — 130 — 130

Common stock repurchased ( 50,000 ) — ( 570 ) ( 28 ) — ( 598 )

Stock based compensation expense — — 158 — — 158

Cash dividends ($ 0.32 per share)

2 unchanged sentences

Net income — — — 3,675 — 3,675

Other comprehensive loss, net of tax — — — — ( 2,286 ) ( 2,286 )

Forfeiture of unvested shares ( 1,500 ) — — — — —

Common stock options exercised 3,000 — 28 — — 28

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

Surrender of restricted shares of common stock to satisfy the withholding taxes due upon vesting ( 539 ) — ( 6 ) — — ( 6 )

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

Amortization of restricted stock — — 166 — — 166

Stock based compensation expense — — 158 — — 158

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

Net income — — — 3,286 — 3,286

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

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

Amortization of restricted stock — — 208 — — 208

Other comprehensive income, net of tax — — — — 3,552 3,552

Common stock repurchased ( 223,205 ) ( 2 ) ( 2,542 ) ( 349 ) — ( 2,893 )

Stock based compensation expense — — 159 — — 159

Balance, September 30, 2024 10,074,136 101 115,455 78,438 ( 13,845 ) 180,149

1 unchanged sentence

Other comprehensive loss, net of tax — — — — ( 2,575 ) ( 2,575 )

Forfeiture of unvested shares ( 246 ) — — — — —

Common stock options exercised 2,000 — 22 — — 22

Common stock repurchased ( 93,894 ) ( 1 ) ( 1,069 ) ( 300 ) — ( 1,370 )

Amortization of restricted stock — — 132 — — 132

Stock based compensation expense — — 156 — — 156

Balance, December 31, 2024 9,981,996 $ 100 $ 114,564 $ 80,840 $ ( 16,420 ) $ 179,084

2 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Nine Months Ended September 30, 2024 and 2023

Three Months Ended March 31, 2025 and 2024

(in thousands)

Nine Months Ended

September 30, 2024 September 30, 2023

Three Months Ended

March 31, 2025 March 31, 2024

Cash flows from operating activities:

3 unchanged sentences

Depreciation expense 526 561

(Negative provision) provision for credit losses ( 2,725 ) 175

Net loss (gain) on equity securities 569 ( 170 )

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

Deferred tax asset valuation allowance — 1,828

Negative provision for credit losses ( 250 ) ( 800 )

Net gain on equity securities ( 10 ) ( 167 )

Increase in mortgage servicing rights resulting from transfers of financial assets ( 60 ) ( 57 )

Mortgage servicing rights amortization and impairment, net 427 456

Mortgage servicing rights amortization 140 148

Amortization of intangible assets 179 179

Amortization of restricted stock 475 590

Decrease in deferred income taxes 284 226

Stock based compensation expense 68 158

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

(Increase) decrease in deferred income taxes ( 18 ) 355

Increase in cash surrender value of life insurance ( 194 ) ( 189 )

Net gain from disposals of foreclosed and repossessed assets ( 23 ) 62

Net loss from disposals of foreclosed and repossessed assets 19 —

Provision for valuation allowance on foreclosed properties ( 15 ) —

2 unchanged sentences

Originations of loans held for sale ( 15,890 ) ( 11,750 )

Proceeds from insurance claim on foreclosed and repossessed assets — 27

Amortization of debt issuance costs 58 58

Net change in:

2 unchanged sentences

Total adjustments ( 1,584 ) 5,060

Net cash provided by operating activities 17,582 9,172

Net cash from operating activities 1,613 9,148

Cash flows from investing activities:

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

Net decrease in other interest bearing deposits — 249

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

Proceeds from principal payments of available for sale securities 11,544 13,164

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

Proceeds from principal payments and maturities of available for sale securities 5,114 3,202

Proceeds from principal payments and maturities of held to maturity securities 1,199 1,284

1 unchanged sentence

Purchase of equity investments ( 750 ) —

Net sales (purchases) of other investments 558 725

Net sales of other investments 4 2,703

Proceeds from sales of foreclosed and repossessed assets 35 —

Proceeds from insurance claim on foreclosed and repossessed assets 27 —

Net decrease (increase) in loans 36,702 ( 35,606 )

Net decrease in loans 16,159 10,888

Net capital expenditures ( 100 ) ( 214 )

Proceeds from disposal of office properties and equipment — 13

Net cash provided by (used in) investing activities 52,980 ( 24,259 )

Net cash from investing activities 21,661 18,046

Cash flows from financing activities:

Change in short term Federal Home Loan Bank advances, net — ( 34,500 )

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

Federal Home Loan Bank advance long-term maturities ( 5,000 ) ( 5,530 )

Amortization of debt issuance costs 166 165

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

Net increase in deposits 35,506 8,393

Restricted common stock awarded under the equity incentive plan — 1

Repurchase shares of common stock — ( 598 )

2 unchanged sentences

Cash dividends paid ( 3,598 ) ( 3,346 )

Net cash (used in) provided by financing activities ( 71,068 ) 12,256

Net cash from financing activities 26,753 ( 35,694 )

Net decrease in cash and cash equivalents 50,027 ( 8,500 )

16 unchanged sentences

As used in this quarterly report, the terms “we”, “us”, “our”, and “Citizens Community Bancorp, Inc.” mean the Company and its wholly owned subsidiary, the Bank, unless the context indicates other meaning.

The Bank is a national banking association (a “National Bank”) and operates under the title of Citizens Community Federal National Association (“Citizens Community Federal N.A.” or “Bank” or “CCFBank”).

The Company is a bank holding company, supervised by the Federal Reserve Bank of Minneapolis (the “FRB”), and operates under the title of Citizens Community Bancorp, Inc.

5 unchanged sentences

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

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of September 30, 2024, through the date on which the consolidated financial statements were available to be issued on November 5, 2024, for items that should potentially be recognized or disclosed in these consolidated financial statements.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of March 31, 2025, through the date on which the consolidated financial statements were available to be issued on May 8, 2025, for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited.

10 unchanged sentences

those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 13, 2025;

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

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended June 30, 2024, filed with the SEC on August 6, 2024;

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

the matters described in Forward-Looking Statements in Part 1, Item 2 of this Form 10-Q;

and external market factors such as market interest rates and unemployment rates;

4 unchanged sentences

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

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

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

Held to maturity securities are stated at amortized cost.

19 unchanged sentences

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

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

Accrued interest receivable on available-for-sale and held-to-maturity securities was $ 903 and $ 920 at March 31, 2025 and December 31, 2024, respectively.

The Company has no available for sale securities or held to maturity securities which it deems to have a credit loss at March 31, 2025.

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

6 unchanged sentences

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

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

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

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

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

We record the unrealized gains and losses resulting from changes in the fair value of these investments as

net gains or losses on investment securities in our consolidated statements of operations.

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

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

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 (“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.

2 unchanged sentences

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

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

Cash dividends are reported as interest on investments in the consolidated statements 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.

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

Other investments totaling $ 12,311 at September 30, 2024 consisted of $ 3,875 of FHLB stock, $ 5,712 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

Other investments totaling $ 12,496 at March 31, 2025 consisted of $ 3,856 of FHLB stock, $ 5,722 of Federal Reserve Bank stock and $ 2,918 of Bankers’ Bank stock.

Other investments totaling $ 12,500 at December 31, 2024, consisted of $ 3,865 of FHLB stock and $ 5,717 of Federal Reserve Bank stock and $ 2,918 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 and is presented as a separate line item on the consolidated balance sheets.

11 unchanged sentences

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.

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 either charged off or a specific reserve is established 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.

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.

1 unchanged sentence

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

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

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

8 unchanged sentences

and other relevant factors determined by management.

To ensure that the ACL is maintained at an adequate level, a detailed analysis is

performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

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

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

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

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

The ACL on loans is measured collectively on a pooled basis when similar risk characteristics exist, and on an individual basis when management determines

that the loan does not share similar risk characteristics with other loans.

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

9 unchanged sentences

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.

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.

6 unchanged sentences

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 $ 4,554 and $ 4,467 at March 31, 2025 and December 31, 2024, respectively.

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.

2 unchanged sentences

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.

13 unchanged sentences

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

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

changes in the

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

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

16 unchanged sentences

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

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

The Company has one reporting unit as of March 31, 2025, which is related to its banking activities.

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

3 unchanged sentences

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 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.

The Company has monitored events and conditions since December 31, 2024, and has determined that no triggering event has occurred that would require goodwill to be tested for impairment.

10 unchanged sentences

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’s have not been consolidated.

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’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.

1 unchanged sentence

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

As of September 30, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 4,719 .

As of March 31, 2025, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 4,220 .

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 September 30, 2024, there were no known instances of noncompliance associated with either investment.

As of March 31, 2025, there were no known instances of noncompliance associated with either investment.

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

11 unchanged sentences

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

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 11,000 and $ 44,000 short-term and $ 10,000 and $ 35,530 long-term FHLB advances as of September 30, 2024 and December 31, 2023, respectively.

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

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 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.

Federal Home Loan Bank (“FHLB”) advances - The Bank held no short-term or long-term FHLB advances as of March 31, 2025.

The Bank held no short-term FHLB advances and $ 5,000 long-term FHLB advances as of December 31, 2024.

For cash flow purposes the short-term FHLB advances, if any, 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 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.

10 unchanged sentences

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

recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

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

existing assets and liabilities and their respective tax basis.

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

6 unchanged sentences

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

The Company’s effective tax rates were 21.5 % and 50.5 % for the three months ended September 30, 2024 and September 30, 2023, and 21.6 % and 34.3 % for the nine months ended September 30, 2024 and September 30, 2023.

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

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

Income tax expense in 2023, was lower due to the retroactive, effect of this change.

This reduction of income tax expense was offset by a one-time tax expense of $ 1,828 in the three and nine-month periods ended September 30, 2023, as the impact of the resulting lower incremental tax rate decreased the estimated future realization of an existing deferred tax asset resulting in a valuation allowance.

The Company’s effective tax rates were 19.6 % and 21.3 % for the three months ended March 31, 2025 and March 31, 2024, respectively.

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.

3 unchanged sentences

The Company does not have any materially significant payment terms as payment is received shortly after the satisfaction of the performance obligation.

The non-interest income line items recognized under the scope of Topic 606 are as follows:

The statement of operations line items recognized under the scope of Topic 606 are as follows:

Service charges on deposit accounts - Service charges on accounts consist of monthly service fees, transaction-based fees, overdraft fees and other deposit account related fees.

3 unchanged sentences

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.

5 unchanged sentences

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.

1 unchanged sentence

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.

13 unchanged sentences

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

At September 30, 2024, the Company had $ 3,411 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

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

At March 31, 2025, the Company had $ 5,414 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of March 31, 2025.

Common Stock Repurchased -The Company is incorporated in Maryland.

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

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

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 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.

2 unchanged sentences

Recent Accounting Pronouncements—Adopted

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

LIBOR) reforms.

ASU 2020-04 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 remained in effect through December 31, 2024.

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

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

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 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 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, is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

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

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

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.

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

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income as of March 31, 2025 and December 31, 2024, respectively, were as follows:

Available-for-sale securities Amortized

Losses Estimated

September 30, 2024

March 31, 2025

government agency obligations $ 13,062 $ 24 $ 100 $ 12,986

9 unchanged sentences

Total available-for-sale securities $ 165,604 $ 182 $ 22,935 $ 142,851

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

The amortized cost and fair value of securities held to maturity and the corresponding amounts of gross unrecognized gains and losses as of March 31, 2025 and December 31, 2024, respectively, were as follows:

Held-to-maturity securities Amortized

Losses Estimated

September 30, 2024

March 31, 2025

Obligations of states and political subdivisions $ 400 $ — $ 21 $ 379

5 unchanged sentences

Total held-to-maturity securities $ 85,504 $ 4 $ 19,886 $ 65,622

At September 30, 2024, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 34,700 as collateral to secure a line of credit with the Federal Reserve Bank.

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

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

At March 31, 2025, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 33,594 as collateral to secure a line of credit with the Federal Reserve Bank.

As of March 31, 2025, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of March 31, 2025, the Bank has pledged certain of its U.S.

Government Agency securities with a carrying value of $ 297 and mortgage-backed securities with a carrying value of $ 2,005 as collateral against specific municipal deposits.

As of September 30, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 103 pledged as collateral to the Federal Home Loan Bank of Des Moines.

As of March 31, 2025, the Bank also has mortgage-backed securities with a carrying value of $ 480 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2024 the Bank had pledged certain of its mortgage-backed securities with a carrying value of $ 33,994 as collateral to secure a line of credit with the Federal Reserve Bank.

2 unchanged sentences

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 had 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 three and nine month periods ended September 30, 2024, there were no sales of available for sale securities.

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

The exchange resulted in 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 three month period ended September 30, 2023, there were no sales of available for sale securities.

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

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

September 30, 2024 December 31, 2023

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

For the three month periods ended March 31, 2025, and March 31, 2024, there were no sales of available for sale securities.

The estimated fair value of securities at March 31, 2025 and December 31, 2024, by contractual maturity, is shown below.

March 31, 2025 December 31, 2024

Available-for-sale securities Amortized

9 unchanged sentences

Total available for sale securities $ 160,504 $ 139,642 $ 165,604 $ 142,851

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Held-to-maturity securities Amortized

8 unchanged sentences

Total held to maturity securities $ 84,301 $ 66,191 $ 85,504 $ 65,622

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

Securities with unrealized losses at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Less than 12 Months 12 Months or More Total

3 unchanged sentences

Value Unrealized

September 30, 2024

March 31, 2025

government agency obligations $ 3,207 $ 11 $ 5,914 $ 89 $ 9,121 $ 100

9 unchanged sentences

Total $ 9,143 $ 138 $ 118,004 $ 22,797 $ 127,147 $ 22,935

At September 30, 2024 no ACL was established for available for sale or held to maturity securities.

At March 31, 2025 no ACL was established for available for sale or held to maturity securities.

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

1 unchanged sentence

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

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

At March 31, 2025, there were no past due held to maturity securities.

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

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

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

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

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

22 unchanged sentences

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.

4 unchanged sentences

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

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

September 30, 2024

A summary of loans at March 31, 2025, and December 31, 2024, follows:

March 31, 2025

December 31, 2024

38 unchanged sentences

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

As of September 30, 2024, and December 31, 2023, there were no loans classified as doubtful with a risk rating of 8 and no loans classified as loss with a risk rating of 9.

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

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

As of March 31, 2025, and December 31, 2024, 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 March 31, 2025, and gross charge-offs for the three months ended March 31, 2025:

Amortized Cost Basis by Origination Year

131 unchanged sentences

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

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

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

Allowance for Credit Losses - Loans- The ACL is comprised of collectively evaluated and individually evaluated components.

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

4 unchanged sentences

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

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

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three months ended March 31, 2025:

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

Three months ended September 30, 2024

Three months ended March 31, 2025

Allowance for Credit Losses - Loans:

4 unchanged sentences

ACL - Loans, at end of period $ 16,244 $ 1,430 $ 2,338 $ 193 $ 20,205

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

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

Nine months ended September 30, 2024

Allowance for Credit Losses - Loans:

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

Charge-offs ( 39 ) — ( 4 ) ( 28 ) ( 71 )

Recoveries 46 35 7 10 98

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations ( 1,868 ) 211 ( 253 ) ( 25 ) ( 1,935 )

ACL - Loans, at end of period $ 16,923 $ 1,351 $ 2,494 $ 232 $ 21,000

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

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

Three months ended September 30, 2023

Three months ended March 31, 2024

Allowance for Credit Losses - Loans:

4 unchanged sentences

ACL - Loans, at end of period $ 18,255 $ 1,166 $ 2,765 $ 250 $ 22,436

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

Nine months ended September 30, 2023

Allowance for Credit Losses - Loans:

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

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

Charge-offs ( 46 ) — ( 78 ) ( 30 ) — ( 154 )

Recoveries 236 41 40 24 — 341

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

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

The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the twelve months ended December 31, 2024:

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

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

Twelve months ended December 31, 2024

1 unchanged sentence

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

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

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

2 unchanged sentences

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

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 460 at September 30, 2024, and $ 1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets.

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

September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended December 31, 2023 and Twelve Months Ended

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 435 at March 31, 2025, and $ 334 at December 31, 2024, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three months ended March 31, 2025, and the twelve months ended December 31, 2024.

March 31, 2025 and Three Months Ended December 31, 2024 and Twelve Months Ended

ACL - Unfunded Commitments - beginning of period $ 334 $ 1,250

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

Additions to ACL - Unfunded Commitments via provision for credit losses charged to operations 101 ( 916 )

2 unchanged sentences

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

September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended

March 31, 2025 and Three Months Ended March 31, 2024 and Three Months Ended

(Negative) provision for credit losses on:

2 unchanged sentences

Total (negative) provision for credit losses $ ( 250 ) $ ( 800 )

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

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of March 31, 2025, and December 31, 2024, respectively, was as follows:

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

Past Due Current Total

September 30, 2024

March 31, 2025

Commercial/Agricultural real estate:

31 unchanged sentences

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

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

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

Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at March 31, 2025, December 31, 2024, and March 31, 2024, with no allowance for credit losses:

March 31, 2025 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Loans Past Due over 89 Days Still Accruing

Commercial/Agricultural real estate:

1 unchanged sentence

Agricultural real estate 5,934 5,734 —

Construction and land development 106 106

C&I/Agricultural operating:

6 unchanged sentences

Originated indirect paper 1 1 —

Other consumer 1 1

Total $ 13,091 $ 12,647 $ 568

December 31, 2023 Total Nonaccrual Loans Nonaccrual 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:

3 unchanged sentences

C&I/Agricultural operating:

Commercial and industrial 597 564 —

Agricultural operating 793 793 —

1 unchanged sentence

Residential mortgage 741 548 186

Purchased HELOC loans 117 117 —

Consumer installment:

Originated indirect paper 1 1 —

Other consumer 18 18

Total $ 13,168 $ 12,520 $ 186

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

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

Commercial/Agricultural real estate:

1 unchanged sentence

Agricultural real estate 382 383 —

Construction and land development 94 94

C&I/Agricultural operating:

Commercial and industrial 440 289 —

Agricultural operating 1,106 1,106 —

18 unchanged sentences

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

The following tables present the amortized cost basis of collateral dependent loans by portfolio segment and collateral type that were individually evaluated to determine expected credit losses and the related allowance for credit losses as of September 30, 2024, and December 31, 2023.

Collateral Type

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

March 31, 2025 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

Commercial/Agricultural real estate:

1 unchanged sentence

Agricultural real estate 5,934 — 5,934 5,734 201 99

Construction and land development 106 — 106 106 — —

C&I/Agricultural operating:

22 unchanged sentences

Total $ 18,395 $ 2,626 $ 21,021 $ 17,459 $ 3,562 $ 455

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

There were unused lines of credit totaling $ 10 on loans with borrowers experiencing financial difficulties as of September 30, 2024.

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

Term Extension

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

Residential mortgage $ 5 — %

Other consumer $ 1 0.02 %

There was one outstanding commitment to borrowers experiencing financial difficulty as of March 31, 2025.

There were unused lines of credit totaling $ 9 on loans with borrowers experiencing financial difficulties as of March 31, 2025.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended March 31, 2025:

Other-Than-Insignificant Payment Delay

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

Loan Class Amortized Cost Basis at March 31, 2025 % of Total Class of Financing Receivables

Commercial real estate $ 322 0.05 %

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

Term Extension

Loan Class Financial Effect

Residential mortgage A weighted average of 36 months was added to the term of the loans

Other Consumer A weighted average of 12 months was added to the term of the loans

Residential mortgage $ 120 0.09 %

The following tables describe the financial effect of the loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025:

Other-Than-Insignificant Payment Delay

1 unchanged sentence

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

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

Residential mortgage Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications made to Borrowers Experiencing Financial Difficulty during the twelve months ended March 31, 2025:

Term Extension

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

Loan Class Amortized Cost Basis at March 31, 2025 % of Total Class of Financing Receivables

Commercial and industrial $ 745 0.68 %

Agricultural operating $ 191 0.65 %

Residential mortgage $ 19 0.01 %

Other Consumer $ 1 0.02 %

Other-Than-Insignificant Payment Delay

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

Loan Class Amortized Cost Basis at March 31, 2025 % of Total Class of Financing Receivables

Commercial real estate $ 1,504 0.21 %

1 unchanged sentence

Residential mortgage $ 275 0.21 %

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

Term Extension and Principal Forgiveness

Loan Class Amortized Cost Basis at March 31, 2025 % of Total Class of Financing Receivables

Other consumer $ 2 0.04 %

The following tables describe the financial effect of the loan modifications made to borrowers experiencing financial difficulty during the twelve months ended March 31, 2025:

Term Extension

1 unchanged sentence

Commercial and industrial A weighted average of 12 months was added to the term of the loans

Agricultural operating A weighted average of 8 months was added to the term of the loans

Residential mortgage A weighted average of 55 months was added to the term of the loans

Other consumer Payments were deferred a weighted average of 12 months

Other-Than-Insignificant Payment Delay

3 unchanged sentences

Residential mortgage Payments were deferred a weighted average of 3 months

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

Term Extension and Principal Forgiveness

Loan Class 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 three months ended March 31, 2024:

Term Extension

Loan Class Amortized Cost Basis at

September 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,826 0.65 %

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

March 31, 2024 % of Total Class of Financing Receivables

Commercial and industrial $ 2,300 1.80 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

March 31, 2024 % of Total Class of Financing Receivables

Residential mortgage $ 82 0.06 %

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

Term Extension

Loan Class Financial Effect

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

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

Commercial and industrial A weighted average of 11 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Residential mortgage Payments were deferred a weighted average of 3 months

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

Term Extension

Loan Class Amortized Cost Basis at

September 30, 2023 % of Total Class of Financing Receivables

March 31, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 4,564 0.61 %

Agricultural operating $ 179 0.73 %

Residential mortgage $ 36 0.03 %

Commercial and industrial $ 2,300 1.80 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

September 30, 2023 % of Total Class of Financing Receivables

March 31, 2024 % of Total Class of Financing Receivables

Residential mortgage $ 151 0.12 %

Other consumer $ 20 0.31 %

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

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

Term Extension

Loan Class Financial Effect

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

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

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

Commercial and industrial A weighted average of 11 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

1 unchanged sentence

Residential Mortgage Payments were deferred a weighted average of 4 months

Other consumer Payments were deferred a weighted average of 3 months

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

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

The following table shows the performance of such loans that have been modified during the twelve months ended March 31, 2025.

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

1 unchanged sentence

Commercial and industrial 1,496 50 — —

Agricultural operating 191 — — —

Residential mortgage 19 275 — —

1 unchanged sentence

Total $ 2,890 $ 423 $ 224 $ —

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

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

The following table shows the performance of such loans that have been modified during the twelve months ended March 31, 2024.

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

Commercial real estate $ 4,564 $ — $ — $ —

Agricultural operating 179 — — —

Commercial and industrial 2,300 — — —

Residential mortgage 82 — — 69

Other consumer 20 — — —

Total $ 6,946 $ — $ — $ 69

1 unchanged sentence

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

The unpaid balances of these loans as of September 30, 2024 and December 31, 2023 were $ 482,868 and $ 495,531 , respectively, and consisted of one to four family residential real estate loans.

The unpaid balances of these loans as of March 31, 2025 and December 31, 2024 were $ 475,763 and $ 479,578 , 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 $ 6,393 and $ 2,665 at September 30, 2024 and December 31, 2023, respectively.

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

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

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 4,194 and $ 2,430 at March 31, 2025 and December 31, 2024, respectively.

Mortgage servicing rights activity for the three month periods ended March 31, 2025 and March 31, 2024, were as follows:

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

March 31, 2025 March 31, 2024

Mortgage servicing rights:

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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 $ 308 and $ 321 for the three months ended September 30, 2024 and September 30, 2023, respectively.

Servicing fees totaled $ 929 and $ 976 for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Servicing fees totaled $ 300 and $ 311 for the three months ended March 31, 2025 and March 31, 2024, respectively.

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

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Central to the valuation model is the discount rate.

Fair value at September 30, 2024, was determined using discount rates ranging from 9.125 % to 12.125 %.

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

Fair value at March 31, 2025, was determined using discount rates ranging from 9.625 % to 12.625 %.

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

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

NOTE 5 – LEASES

We have operating leases for 1 corporate office, 3 bank branch offices, 2 former bank branch office, and 1 ATM location.

We have operating leases for 1 corporate office, 2 bank branch offices, 2 former bank branch offices, and 1 ATM location.

Our leases have remaining lease terms ranging from approximately 0.50 to 3.25 years.

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

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

As of March 31, 2025, we have no lease commitments that have not yet commenced.

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

Nine Months Ended

September 30, 2024 September 30, 2023

Three Months Ended

March 31, 2025 March 31, 2024

The components of total lease cost were as follows:

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Operating cash flows from operating leases $ 126 $ 136

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

Operating leases $ 2 $ 225

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Supplemental balance sheet information related to leases was as follows:

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Lease liability recognized $ 970

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

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

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

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

NOTE 6 – DEPOSITS

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

September 30, 2024 December 31, 2023

The following is a summary of deposits by type at March 31, 2025 and December 31, 2024, respectively:

March 31, 2025 December 31, 2024

Non-interest bearing demand deposits $ 253,343 $ 252,656

4 unchanged sentences

Total deposits $ 1,523,654 $ 1,488,148

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

At March 31, 2025, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2025, which is the nine months ended:

December 31, 2025 $ 305,088

5 unchanged sentences

Total $ 345,654

Certificate accounts of $250 or more were $ 100,945 and $ 103,802 at September 30, 2024 and December 31, 2023, respectively.

Brokered deposits were $ 66,654 at September 30, 2024 and consisted of $ 48,578 of brokered certificate accounts and $ 18,076 of brokered money market accounts.

Certificate accounts of $250 or more were $ 59,438 and $ 68,977 at March 31, 2025 and December 31, 2024, respectively.

Brokered deposits were $ 10,542 at March 31, 2025 and consisted of $ 5,489 of brokered certificate accounts and $ 5,053 of brokered money market accounts.

Brokered Deposits were $ 19,125 at December 31, 2024 and consisted of $ 14,123 of brokered certificate accounts and $ 5,002 of brokered money market accounts.

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

December 31, 2024 $ 34,455

December 31, 2025 (1) 8,634

December 31, 2028 (1) 5,489

Total $ 48,578

(1) The Company can call the brokered certificate accounts maturing in the years ended December 31, 2025 and 2028, monthly beginning in March 2024.

At March 31, 2025, there was one brokered certificate account, totaling $ 5,489 , maturing in the year ended, December 31, 2028.

The Company can call this brokered certificate prior to the maturity date, with 15 calendar days prior written notice to the Payee.

NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

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

September 30, 2024

A summary of Federal Home Loan Bank advances and other borrowings at March 31, 2025 and December 31, 2024, is as follows:

March 31, 2025

December 31, 2024

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Federal Home Loan Bank advances (1), (2), (3) 2025 $ 0 — % — % 2025 $ 5,000 1.45 % 1.45 %

2025 5,000 1.45 % 1.45 % 2025 5,000 1.45 % 1.45 %

2028 — 0.00 % 0.00 % 2028 10,000 3.82 % 3.82 %

Federal Home Loan Bank advances $ 0 $ 5,000

6 unchanged sentences

Totals $ 61,664 $ 66,606

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,081,967 and $ 1,106,267 at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 414,369 compared to $ 370,569 as of December 31, 2023.

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

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of September 30, 2024 and December 31, 2023 were 3.28 % and 4.16 %, respectively.

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

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,032,313 and $ 1,075,001 at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 501,532 compared to $ 424,658 as of December 31, 2024.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 5,000 and $ 81,000 , during the three months ended March 31, 2025 and the twelve months ended December 31, 2024, respectively.

(3) There were no FHLB borrowings outstanding as of March 31, 2025.

The weighted-average interest rate on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2024 was 1.45 %.

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

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

The letters of credit balances were $ 206,750 and $ 452,280 at September 30, 2024 and December 31, 2023, respectively.

The letters of credit balances were $ 110,750 and $ 209,750 at March 31, 2025 and December 31, 2024, respectively.

Federal Reserve Borrowings

At September 30, 2024 and December 31, 2023, the Bank had the ability to borrow $ 27,145 and $ 22,417 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 34,700 and $ 29,191 as of September 30, 2024, and December 31, 2023, respectively.

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

At March 31, 2025 and December 31, 2024, the Bank had the ability to borrow $ 25,069 and $ 24,942 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 33,594 and $ 33,994 as of March 31, 2025, and December 31, 2024, respectively.

There were no Federal Reserve borrowings outstanding as of March 31, 2025, and December 31, 2024.

Federal Funds Purchased Lines of Credit

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

As of March 31, 2025, 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 maintained three unsecured federal funds purchased lines of credit with its banking partners which totaled $ 70,000 .

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

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

There were no borrowings outstanding on these lines of credit as of March 31, 2025 or December 31, 2024.

NOTE 8 - CAPITAL MATTERS

7 unchanged sentences

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

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

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

At March 31, 2025, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at March 31, 2025, and December 31, 2024, respectively, are presented below:

Actual For Capital Adequacy

3 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

As of September 30, 2024

As of March 31, 2025

Total capital (to risk weighted assets) $ 225,675 15.6 % $ 115,795 > = 8.0 % $ 144,744 > = 10.0 %

7 unchanged sentences

Tier 1 leverage ratio (to adjusted total assets) 207,749 11.9 % 69,787 > = 4.0 % 87,234 > = 5.0 %

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

The Company’s Tier 1 (leverage) and risk-based capital ratios at March 31, 2025 and December 31, 2024, respectively, are presented below:

Actual For Capital Adequacy

Amount Ratio Amount Ratio

As of September 30, 2024

As of March 31, 2025

Total capital (to risk weighted assets) $ 231,949 16.0 % $ 115,988 > = 8.0 %

11 unchanged sentences

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

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

As of March 31, 2025, 331,968 restricted shares had been granted under this plan.

This amount includes 16,021 shares of performance based restricted stock granted in 2022 and issued in January 2025 upon achievement of the performance criteria and completion of the three-year performance period beginning in January 2022 and ending December 31, 2024.

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

As of September 30, 2024, no stock options had been granted under this plan.

As of March 31, 2025, no stock options had been granted under this plan.

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

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

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

As of March 31, 2025, there are no awarded unvested restricted shares, and 49,000 awarded unexercised vested options remaining from the plan.

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

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

Net compensation expense related to restricted stock awards from these plans was $ 159 and $ 475 for the three and nine months ended September 30, 2024, compared to $ 208 and $ 590 for the three and nine months ended September 30, 2023.

Stock based compensation expense related to restricted stock awards from these plans was $ 68 for the three months ended March 31, 2025, compared to $ 158 for three months ended March 31, 2024.

Restricted Common Stock Award

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Number of Shares Weighted

6 unchanged sentences

Unvested and outstanding at end of period 7,609 $ 12.68 39,171 $ 12.48

September 30, 2024

March 31, 2025

Number of Shares Weighted

1 unchanged sentence

Unvested at beginning of year 33,188 $ 13.09

2022 performance shares awarded above target 1,154 14.00

Vested and issued 2022 performance shares ( 16,021 ) 14.00

Unvested at end of period 18,321 $ 12.36

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

5 unchanged sentences

Term in Years Aggregate

September 30, 2024

March 31, 2025

Outstanding at beginning of year 52,000 $ 11.62

Exercised ( 3,000 ) 9.20

Outstanding at end of period 49,000 $ 11.77 1.71 $ 128

3 unchanged sentences

Exercised ( 2,000 ) 11.00

Forfeited or expired ( 1,000 ) 13.76

Outstanding at end of year 52,000 $ 11.62 1.85 $ 243

1 unchanged sentence

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

Nine months ended September 30, 2024 Twelve months ended December 31, 2023

Three months ended March 31, 2025 Twelve months ended December 31, 2024

Intrinsic value of options exercised $ 19 $ 12

4 unchanged sentences

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 performance based cash awards vest based on a combination of a three-year time period from January 23, 2025 through December 31, 2027, and performance targets based on the Company’s return on equity.

For performance based awards, the ultimate cash payout of these awards will be paid within 60 days of December 31, 2027, based on the closing share price of the Company’s common stock as of the performance achievement approval date from the Compensation Committee.

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

1 unchanged sentence

On January 23, 2025, time based awards were based on 15,044 shares and performance based awards were based on 15,049 shares.

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 from January 25, 2024 through December 31, 2026, and performance targets based on the Company’s return on equity.

For performance based awards, the ultimate cash payout of these awards will be paid within 60 days of December 31, 2026, based on the closing share price of the Company’s common stock as of the performance achievement approval date from the Compensation Committee.

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 September 30, 2024, the related liability was $ 121 , which is included in other liabilities on the consolidated balance sheet.

For the three and nine months ended September 30, 2024, the Company recorded related expense of $ 58 and $ 121 which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

At March 31, 2025 and December 31, 2024, the related liability was $ 150 and $ 190 , respectively, which is included in other liabilities on the consolidated balance sheet.

For the three months ended March 31, 2025 and March 31, 2024, the Company recorded related expense of $ 59 and $ 26 , respectively, which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

NOTE 10 – FAIR VALUE ACCOUNTING

11 unchanged sentences

Assets Measured on a Recurring Basis

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

The following tables present the financial instruments measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

September 30, 2024

March 31, 2025

Investment securities:

19 unchanged sentences

Farmer Mac equity securities 569 569 — —

Preferred equity 1,362 — — 1,362

Equity investments measured at NAV(1) 2,771 — — —

3 unchanged sentences

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

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

During the three and nine months ended September 30, 2024, $ 0 and $ 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 $ 0 and $ 168 of unrealized losses on available-for-sale securities during the three and nine months ended September 30, 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 twelve months ended December 31, 2023, respectively.

At March 31, 2025, the Company owned $ 1,362 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

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.

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 three months ended March 31, 2025 and March 31, 2024, respectively..

There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the three months ended March 31, 2025 and March 31, 2024, respectively.

Assets Measured on Nonrecurring Basis

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

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024:

Carrying Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

September 30, 2024

March 31, 2025

Foreclosed and repossessed assets, net $ 876 $ — $ — $ 876

Collateral dependent loans 3,710 — — 3,710

Mortgage servicing rights 3,696 — — 5,025

Total $ 4,586 $ — $ — $ 4,586

2 unchanged sentences

Collateral dependent loans 3,107 — — 3,107

Mortgage servicing rights 3,865 — — 5,589

Total $ 4,022 $ — $ — $ 4,022

5 unchanged sentences

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

September 30, 2024.

March 31, 2025 and December 31, 2024.

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

September 30, 2024

March 31, 2025

Foreclosed and repossessed assets, net $ 876 Appraisal value Estimated costs to sell 10 % - 15 %

Collateral dependent loans $ 3,710 Appraisal value / Internal Collateral valuations Estimated costs to sell 10 % - 15 %

Mortgage servicing rights $ 5,025 Discounted cash flows Discounted rates 9.125 % - 12.125 %

December 31, 2024

1 unchanged sentence

Collateral dependent loans $ 3,107 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) Fair value is generally determined through independent third-party appraisals of the underlying

3 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Valuation Method Used Carrying

24 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(Share count in thousands) March 31, 2025 March 31, 2024

Net income attributable to common stockholders $ 3,197 $ 4,088

8 unchanged sentences

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

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

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

At March 31, 2025 and March 31, 2024, there were 0 and 20 exercisable stock options, respectively, with a potentially dilutive effect.

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

NOTE 12 – OTHER COMPREHENSIVE INCOME (LOSS)

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

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three months ended March 31, 2025 and 2024:

Three Months Ended

September 30, 2024 September 30, 2023

Amount Tax Benefit

(Expense) Net-of-Tax

Amount Before-Tax

Amount Tax Benefit

(Expense) Net-of-Tax

Unrealized gains (losses) on securities:

Net unrealized gains (losses) arising during the period $ 4,605 $ ( 1,053 ) $ 3,552 $ ( 3,701 ) $ 839 $ ( 2,862 )

Other comprehensive income (loss) $ 4,605 $ ( 1,053 ) $ 3,552 $ ( 3,701 ) $ 839 $ ( 2,862 )

Nine Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Amount Tax Benefit

5 unchanged sentences

Net unrealized gains (losses) arising during the period $ 1,891 $ ( 436 ) $ 1,455 $ ( 891 ) $ 189 $ ( 702 )

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

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

Other comprehensive income (loss) $ 1,891 $ ( 436 ) $ 1,455 $ ( 891 ) $ 189 $ ( 702 )

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

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2024 and the three months ended March 31, 2025 were as follows:

Gains (Losses)

6 unchanged sentences

Current year-to-date other comprehensive income 1,891 1,455

Ending balance, September 30, 2024 $ ( 19,450 ) $ ( 13,845 )

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

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

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

Unrealized gains and losses

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 $ — $ ( 130 ) Net loss attributable to common stockholders

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

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

Unrealized gains and losses

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

Tax effect — ( 3 ) Provision for income taxes

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

Ending balance, March 31, 2025 $ ( 20,862 ) $ ( 14,965 )

There were no reclassifications out of accumulated other comprehensive income (loss) for the three month periods ended March 31, 2025 and March 31, 2024.

NOTE 13 – 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.

Three Months Ended

March 31, 2025 March 31, 2024

Interest and dividend income $ 21,103 $ 22,679

Reconciliation of revenue

Other Revenue 2,593 3,264

Total consolidated revenues 23,696 25,943

Interest expense 9,509 10,774

Segment net interest income and non-interest income 14,187 15,169

(Negative) provision for credit losses ( 250 ) ( 800 )

Compensation and related benefits (expense) 5,597 5,483

Other expenses 4,866 5,294

Provision for income taxes (expense) 777 1,104

Segment net income/consolidated net income $ 3,197 $ 4,088

Other segment disclosures:

Interest income $ 21,103 $ 22,679

Interest expense $ 9,509 $ 10,774

Depreciation $ 526 $ 561

Amortization $ 179 $ 179

Other significant noncash items:

(Negative) provision for credit losses $ ( 250 ) $ ( 800 )

Reconciliation of assets:

March 31, 2025 December 31, 2024

Total assets for reportable segments $ 1,779,963 $ 1,748,519

Other assets — —

Total consolidated assets $ 1,779,963 $ 1,748,519

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

What changed 10-Q

Item 1. Financial Statements