What changed in this filing

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Item 1. Business

2021-03-05 compared with 2020-03-06 · 47 added, 30 removed, 294 unchanged (21% of the section changed)

22 unchanged sentences

As of December 31, 2020, mortgage loans totaled $2.058 billion and comprised 75.94% of the Bank’s loan portfolio.

Residential real estate loans totaled $1,059.97 million and were 40.16% of the Bank’s loan portfolio as of December 31, 2019 .

Residential real estate loans totaled $1.020 billion and were 37.63% of the Bank’s loan portfolio as of December 31, 2020.

These loans include first and junior liens on 1 to 4 family residences.

43 unchanged sentences

The primary repayment risks of commercial loans are that the cash flows of the borrower may be unpredictable, and the collateral securing these loans may fluctuate in value.

In response to the Coronavirus Disease 2019 ("COVID-19"), during the year ended December 31, 2020, the Company provided $127.10 million of Paycheck Protection Program (PPP) loans which are included with commercial and financial loans in the financial statements.

See further discussion in Item 1A and Item 7.

Agricultural Loans

19 unchanged sentences

Years Ended December 31,

2020 2019 2018

(Amounts In Thousands)

4 unchanged sentences

Federal funds sold 191 79 46

Loans, net 2,704,989 2,611,546 2,487,736

Property and equipment, net 36,385 36,584 37,766

Other assets 51,939 44,631 32,178

$ 3,556,023 $ 3,239,635 $ 3,000,289

LIABILITIES AND STOCKHOLDERS' EQUITY

8 unchanged sentences

Stockholders' equity 393,748 353,068 324,377

$ 3,556,023 $ 3,239,635 $ 3,000,289

Other Information

4 unchanged sentences

The executive officers of the Company and the Bank, along with their respective ages and positions held, are identified in the table below.

Name Age Position

Seegmiller 68 Mr.

Seegmiller, who joined the Company in 1975, has served as its President since 1986.

1 unchanged sentence

Seegmiller was the Senior Vice President of Lending.

DeMaris has held the position of Secretary, Treasurer and Principal Financial Officer since 2012.

Finer has held the position of Senior Vice President, Director of Real Estate Lending since 2005.

Ropp has held the position of Senior Vice President, Director of Commercial Banking since 2008.

Zuber has held the position of Senior Vice President, Director of Trust Services since 1987.

Globokar has held the position of Senior Vice President, Trust Officer since 2015.

Frieden has held the position of Senior Vice President, Human Resource Director since 2005.

DeMaris 51 Ms.

DeMaris held the position of Secretary, Treasurer and Principal Financial Officer from 2012 until September 2020.

The Company has commenced a search for a chief financial officer and will make a subsequent announcement regarding such appointment upon completion.

Finer has held the position of Senior Vice President, Director of Mortgage Lending since 2005.

Frieden 50 Ms.

Frieden has held the position of Senior Vice President, Director of Human Resources since 2005.

Globokar 47 Mr.

Globokar has held the position of Senior Vice President, Director of Trust and Wealth Management Services since 2020.

Hinrichs 47 Mr.

Hinrichs has held the position of Senior Vice President, Director of Operations and Digital Banking since 2019.

Marple 51 Mr.

Marple has held the position of Senior Vice President, Director of Information Services since 2019.

Nelson 41 Ms.

Nelson has held the position of Senior Vice President, General Counsel since May 2020.

Ropp has held the position of Senior Vice President, Director of Commercial Banking since 2008.

Sheehan 50 Mr.

Sheehan has held the position of Senior Vice President, Director of Risk Management since 2019.

Shileny 44 Ms.

Shileny has held the position of Senior Vice President, Director of Administration since 2019.

Marple has held the position of Senior Vice President, Director of Information Services since 2019.

Slaubaugh 43 Ms.

Slaubaugh has held the position of Senior Vice President, Director of Retail Banking since 2016.

Zuber held the position of Senior Vice President, Director of Trust Services from 1987 until June 2020 and was succeeded by Mr.

Johnson County

26 unchanged sentences

A comparison of the number of office locations and deposits in the three counties as of June, 2020 (most recent date of available data from the FDIC and national credit union websites) is as follows:

Johnson County

Washington County

(in millions)

Johnson County Linn County Washington County

Offices Deposits

(in millions) Offices Deposits

(in millions)

46 unchanged sentences

Under the BASEL III rules, the minimum capital ratios are 4% for Tier 1 Leverage Capital Ratio, 4.5% for the Common Equity Tier 1 Capital Ratio, 6% for the Tier 1 Risk-Based Capital Ratio and 8% for the Total Risk-Based Capital Ratio.

A capital conservation buffer was phased in beginning January 1, 2016, at 0.625% of risk-weighted assets and increased each subsequent year by an additional 0.625% until reaching 2.5% on January 1, 2019.

As of December 31, 2019 , the Company had regulatory capital in excess of the Federal Reserve’s minimum and well-capitalized definition requirements, with a Tier 1 Leverage Capital Ratio of 12.77%, with Common Equity Tier 1 Ratio of 16.90%, with Tier 1 Risk-Based Capital Ratio of 16.90% and Total Risk-Based Capital Ratio of 18.15%.

As of March 31, 2020, the Bank elected to use the Community Bank Leverage Ratio (CBLR) framework as provided for in the Economic Growth, Regulatory Relief and Consumer Protection Act.

Under the CBLR framework, the Bank is required to maintain a CBLR of greater than 9%.

The Coronavirus Aid, Relief and Economic Security ("CARES") Act reduced the minimum ratio to 8% beginning in the 2nd quarter of 2020 through December 31, 2020, increasing to 8.5% for 2021 and returning to 9% beginning January 1, 2022.

As of December 31, 2020, the Company had regulatory capital in excess of the Federal Reserve’s minimum requirement, with a CBLR of 11.91%.

The ability of the Company to pay dividends to its shareholders is dependent upon the earnings and capital adequacy of its subsidiary Bank, which directly impact the ability of the Bank to pay dividends to the Company.

17 unchanged sentences

In addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation (FICO), a mixed-ownership government corporation established in the 1980’s to recapitalize the Federal Savings and Loan Insurance Corporation.

The current annualized assessment rate is 0.00 basis points due to the FICO bonds maturing in 2019.

The current annualized assessment rate is 3.00 basis points.

Capital Requirements .

6 unchanged sentences

In determining the Tier 1 risk-based leverage ratio, the Superintendent uses total equity capital without unrealized securities gains and the allowance for loan losses less any intangible assets.

At December 31, 2019 , the Tier 1 risk-based leverage ratio of the Bank was 12.81% and exceeded the ratio required by the Superintendent.

At December 31, 2020, the Community Bank Leverage Ratio of the Bank was 11.94% and exceeded the ratio required by the Superintendent.

Capital adequacy for banks took on an added dimension with the establishment of a formal system of prompt corrective action under the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) which provides the federal banking regulators of the Bank with broad power to take prompt corrective action to resolve the problems of undercapitalized banking institutions.

4 unchanged sentences

The actual amounts of risk-based capital and risk-based capital ratios as of December 31, 2020 and the minimum regulatory requirements for the Company and the Bank are presented below (amounts in thousands):

For Capital Adequacy Purposes

To Be Well Capitalized Under Prompt Corrective Action Provisions

Actual For Capital Adequacy Purposes

Amount Ratio Ratio

As of December 31, 2020:

Total risk-based capital

Tier 1 risk-based capital

Tier 1 common equity

Leverage ratio

Total risk-based capital

Tier 1 risk-based capital

Tier 1 common equity

Leverage ratio

Community Bank Leverage Ratio $ 452,123 11.91 % 8.00 %

Community Bank Leverage Ratio 453,073 11.94 8.00

Supervisory Assessments .

6 unchanged sentences

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) posed a significant impact on financial regulations.

The Dodd-Frank Act created an independent regulatory body, the Bureau of Consumer Financial Protection (“Bureau”), with authority and responsibility to set rules and regulations for most consumer protection laws applicable to all banks – large and small - adds another regulator to scrutinize and police financial activities.

The Dodd-Frank Act created an independent regulatory body, the Bureau of Consumer Financial Protection (“Bureau”), with authority and responsibility to set rules and regulations for most consumer protection laws applicable to all banks – large and small - which adds another regulator to scrutinize and police financial activities.

The Bureau has responsibility for mortgage reform and enforcement, as well as broad new powers over consumer financial activities which could impact what consumer financial services would be available and how they are provided.

13 unchanged sentences

The Bank is subject to certain restrictions imposed by federal law on extensions of credit to the Company, on investments in the stock or other securities of the Company and the acceptance of the stock or other securities of the Company as collateral for loans.

Certain limitations and reporting requirements are also placed on extensions of credit by the Bank to its directors and officers, to directors and officers of the Company and its subsidiary, to principal stockholders of the Company, and to related interests of such directors, officers and principal stockholders.

the Company, and to related interests of such directors, officers and principal stockholders.

In addition, federal law and regulations may affect the terms upon which any person becoming a director or officer of the Company or one of its subsidiaries or a principal stockholder of the Company may obtain credit from banks with which the Bank maintains a correspondent relationship.

38 unchanged sentences

Generally, the Dodd-Frank Act is effective the day after it was signed into law, but different effective dates apply to specific sections of the Dodd-Frank Act.

The Dodd-Frank Act is expected to be fully phased in over twelve years.

The Dodd-Frank Act was expected to be fully phased in over several years.

Among other things, the Dodd-Frank Act may result in added costs of doing business and regulatory compliance burdens and affect competition among financial services entities.

Uncertainty exists as to the ultimate impact of many provisions of the Dodd-Frank Act, which could have a material adverse impact on the financial services industry as a whole and on the Company’s business, results of operations and financial condition.

Additional information, including a summary of certain provisions of the Dodd-Frank Act, is available on the Federal Deposit Insurance Corporation website at www.fdic.gov/regulations/reform/initiatives.html.

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

What changed 10-K

Item 1. Business