10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 0-33203

LANDMARK BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-1930755
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

701 Poyntz Avenue, Manhattan, Kansas 66502

(Address of principal executive offices) (Zip code)

(785) 565-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of exchange on which registered:
Common Stock, par value $0.01 per share	LARK	Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: as of August 10, 2023, the issuer had outstanding 5,220,767 shares of its common stock, $0.01 par value per share.

LANDMARK BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page Number
	PART I
Item 1.	Financial Statements	2 - 30
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31 – 39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40 – 41
Item 4.	Controls and Procedures	42
	PART II
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
	Signature Page	44

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)	June 30,			December 31,
	2023			2022
	(Unaudited)
Assets
Cash and cash equivalents	$	20,038		$	23,156
Interest-bearing deposits at other banks		8,336			9,084
Investment securities available-for-sale, at fair value		484,378			489,306
Investment securities, held-to-maturity, net of allowance for credit losses of $91 and $0, fair value of $3,300 and $3,452		3,496			3,524
Bank stocks, at cost		9,445			5,470
Loans, net of allowance for credit losses of $10,449 and $8,791		882,549			841,149
Loans held for sale, at fair value		3,900			2,488
Bank owned life insurance		37,764			37,323
Premises and equipment, net		24,027			24,327
Goodwill		32,199			32,199
Other intangible assets, net		3,612			4,006
Mortgage servicing rights		3,514			3,813
Real estate owned, net		934			934
Accrued interest and other assets		25,148			26,088
Total assets	$	1,539,340		$	1,502,867
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	382,410		$	410,142
Money market and checking		606,474			626,659
Savings		160,426			170,570
Certificates of deposit		131,661			93,278
Total deposits		1,280,971			1,300,649
Federal Home Loan Bank borrowings		76,185			8,200
Subordinated debentures		21,651			21,651
Other borrowings		22,293			38,402
Accrued interest and other liabilities		20,887			22,532
Total liabilities		1,421,987			1,391,434
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued		-			-
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 5,215,925 and 5,213,232 shares issued at June 30, 2023 and December 31, 2022, respectively		52			52
Additional paid-in capital		84,475			84,273
Retained earnings		55,498			52,174
Accumulated other comprehensive loss		(22,672	)		(25,066	)
Total stockholders’ equity		117,353			111,433
Total liabilities and stockholders’ equity	$	1,539,340		$	1,502,867

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30,				June 30,
	2023		2022		2023		2022
Interest income:
Loans	$	12,623	$	7,156	$	23,999	$	14,347
Investment securities:
Taxable		2,379		1,417		4,696		2,408
Tax-exempt		775		730		1,561		1,452
Interest-bearing deposits at banks		49		126		147		188
Total interest income		15,826		9,429		30,403		18,395
Interest expense:
Deposits		3,452		358		5,991		553
Subordinated debentures		387		165		751		288
Borrowings		1,154		8		1,881		11
Total interest expense		4,993		531		8,623		852
Net interest income		10,833		8,898		21,780		17,543
Provision (benefit) for credit losses		250		-		299		(500	)
Net interest income after provision (benefit) for credit losses		10,583		8,898		21,481		18,043
Non-interest income:
Fees and service charges		2,481		2,380		4,839		4,568
Gains on sales of loans, net		830		1,073		1,523		1,978
Increase in cash surrender value of bank owned life insurance		223		190		441		377
Other		295		153		521		436
Total non-interest income		3,829		3,796		7,324		7,359
Non-interest expense:
Compensation and benefits		5,572		4,953		11,114		9,728
Occupancy and equipment		1,394		1,177		2,763		2,410
Data processing		431		362		1,020		702
Amortization of mortgage servicing rights and other intangibles		472		335		933		651
Professional fees		607		415		1,098		866
Acquisition costs		-		221		-		221
Other		1,873		1,559		3,764		3,282
Total non-interest expense		10,349		9,022		20,692		17,860
Earnings before income taxes		4,063		3,672		8,113		7,542
Income tax expense		701		639		1,394		1,376
Net earnings	$	3,362	$	3,033	$	6,719	$	6,166
Earnings per share:
Basic (1)	$	0.64	$	0.58	$	1.29	$	1.18
Diluted (1)	$	0.64	$	0.58	$	1.29	$	1.17
Dividends per share (1)	$	0.21	$	0.20	$	0.42	$	0.40

(1) Per share amounts for the periods ended June 30, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net earnings	$	3,362		$	3,033		$	6,719		$	6,166
Net unrealized holding (losses) gains on available-for-sale securities		(3,568	)		(10,247	)		3,171			(29,186	)
Income tax effect on net unrealized holding losses (gains)		874			2,511			(777	)		7,150
Other comprehensive (loss) income		(2,694	)		(7,736	)		2,394			(22,036	)
Total comprehensive income (loss)	$	668		$	(4,703	)	$	9,113		$	(15,870	)

See accompanying notes to consolidated financial statements.

4

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive income (loss)			Total
Balance at April 1, 2022	$	50	$	79,206	$	54,677		$	-		$	(10,420	)	$	123,513
Net earnings		-		-		3,033			-			-			3,033
Other comprehensive loss		-		-		-			-			(7,736	)		(7,736	)
Dividends paid ($0.20 per share)		-		-		(1,048	)		-			-			(1,048	)
Stock-based compensation		-		78		-			-			-			78
Purchase of 21,115 treasury shares		-		-		-			(538	)		-			(538	)
Balance at June 30, 2022	$	50	$	79,284	$	56,662		$	(538	)	$	(18,156	)	$	117,302
Balance at April 1, 2023	$	52	$	84,413	$	53,231		$	-		$	(19,978	)	$	117,718
Net earnings		-		-		3,362			-			-			3,362
Other comprehensive loss		-		-		-			-			(2,694	)		(2,694	)
Dividends paid ($0.21 per share)		-		-		(1,095	)		-			-			(1,095	)
Stock-based compensation		-		62		-			-			-			62
Balance at June 30, 2023	$	52	$	84,475	$	55,498		$	-		$	(22,672	)	$	117,353

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive income (loss)			Total
Balance at January 1, 2022	$	50	$	79,120	$	52,593		$	-		$	3,880		$	135,643
Net earnings		-		-		6,166						-			6,166
Other comprehensive loss		-		-		-			-			(22,036	)		(22,036	)
Dividends paid ($0.40 per share)		-		-		(2,097	)		-			-			(2,097	)
Stock-based compensation		-		164		-			-			-			164
Purchase of 21,115 treasury shares		-		-		-			(538	)		-			(538	)
Balance at June 30, 2022	$	50	$	79,284	$	56,662		$	(538	)	$	(18,156	)	$	117,302
Balance at January 1, 2023	$	52	$	84,273	$	52,174		$	-		$	(25,066	)	$	111,433
Net earnings		-		-		6,719						-			6,719
Other comprehensive income		-		-		-			-			2,394			2,394
Dividends paid ($0.42 per share)		-		-		(2,191	)		-			-			(2,191	)
Cumulative effect of change in accounting principle from implementation of ASU 2016-13		-		-		(1,204	)		-			-			(1,204	)
Forfeiture of restricted common stock, 350 shares		-		-		-			-			-			-
Stock-based compensation		-		150		-			-			-			150
Exercise of stock options, 2,693 shares		-		52		-			-			-			52
Balance at June 30, 2023	$	52	$	84,475	$	55,498		$	-		$	(22,672	)	$	117,353

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30
	2023			2022
Cash flows from operating activities:
Net earnings	$	6,719		$	6,166
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision (benefit) for credit losses		299			(500	)
Amortization of investment security premiums, net		171			978
Accretion of purchase accounting adjustments		(439	)		(9	)
Amortization of mortgage servicing rights and other intangibles		933			651
Depreciation		617			563
Increase in cash surrender value of bank owned life insurance		(441	)		(377	)
Stock-based compensation		150			164
Deferred income taxes		384			(70	)
Net gains on sales of premises and equipment and foreclosed assets		-			(114	)
Net gains on sales of loans		(1,523	)		(1,978	)
Proceeds from sales of loans		44,686			79,920
Origination of loans held for sale		(44,815	)		(79,862	)
Changes in assets and liabilities:
Accrued interest and other assets		170			767
Accrued expenses, taxes, and other liabilities		(1,675	)		(769	)
Net cash provided by operating activities		5,236			5,530
Cash flows from investing activities:
Net increase in loans		(42,786	)		(8,088	)
Net change in interest-bearing deposits at banks		738			(993	)
Maturities and prepayments of investment securities		26,110			24,097
Purchases of investment securities		(18,172	)		(159,481	)
Redemption of bank stocks		4,008			185
Purchase of bank stocks		(7,983	)		(161	)
Proceeds from sales of premises and equipment and foreclosed assets		-			1,379
Purchases of premises and equipment, net		(317	)		(439	)
Net cash used in investing activities		(38,402	)		(143,501	)
Cash flows from financing activities:
Net decrease in deposits		(19,689	)		(17,014	)
Federal Home Loan Bank advance borrowings		392,214			-
Federal Home Loan Bank advance repayments		(324,229	)		-
Repayments on other borrowings		(666	)		(1,180	)
Change in repurchase agreements		(15,443	)		-
Proceeds from exercise of stock options		52			-
Payment of dividends		(2,191	)		(2,097	)
Purchase of treasury stock		-			(538	)
Net cash provided by (used in) financing activities		30,048			(20,829	)
Net decrease in cash and cash equivalents		(3,118	)		(158,800	)
Cash and cash equivalents at beginning of period		23,156			189,213
Cash and cash equivalents at end of period	$	20,038		$	30,413

(Continued)

6

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30,
	2023		2022
Supplemental disclosure of cash flow information:
Cash payments for income taxes	$	-	$	20
Cash paid for interest		7,849		845
Cash paid for operating leases		85		97
Supplemental schedule of noncash investing and financing activities:
Investment securities purchases not yet settled		-		685

See accompanying notes to consolidated financial statements.

7

LANDMARK BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, Landmark National Bank (the “Bank”) and Landmark Risk Management Inc., have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2023, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the three and six-month interim period ended June 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023 or any other future time period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

2. Recent Developments

The increase in interest rates has impacted financial institutions resulting in higher costs of funding and lower fair values for investment securities. During 2023, three large regional banks have been closed by the Federal Deposit Insurance Corporation (FDIC) mainly due to liquidity concerns, resulting from interest rate risk issues and large concentrations of uninsured corporate deposits. The liquidity issues were unique to the way these banks operated and we don’t believe are reflective of our Company. The Company believes it maintains strong capital and liquidity, and a stable, conservative deposit portfolio with a majority of deposits being retail-based and FDIC insured. The Company spends significant time each month monitoring interest rate and concentration risks through asset/liability management and lending strategies that involve a relationship-based banking model that the Company believes offers stability and consistency.

3. Summary of Significant Accounting Policies

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL.” The provisions of the update eliminated the probable initial recognition threshold under previous GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the expected term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update, credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans. Under prior GAAP, a purchased loan’s contractual balance was adjusted to fair value through a credit discount, and no reserve was recorded on the purchased loan upon acquisition. Under CECL loans determined to be purchased credit deteriorated will have an allowance for credit losses established through purchase accounting. Finally, increased disclosure requirements under CECL oblige organizations to present credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. In October 2019, the FASB approved a change in the effective dates for CECL which delayed the effective date to fiscal years beginning after December 15, 2022 for smaller reporting companies.

On January 1, 2023, the Company adopted CECL. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity investment securities. It also applies to off-balance credit exposures not accounted for as insurance (loan commitments and standby letters of credit). In addition, ASC 326 made changes to the accounting for available-for-sale investment securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP requirements. The adoption of CECL resulted in an increase in the allowance for credit losses on loans of $1.5 million, an initial allowance for credit losses on held-to-maturity investment securities of $72,000, an increase in deferred tax assets of $391,000 and a decrease in retained earnings of $1.2 million. The increases in allowance for credit losses is primarily due to moving to a weighted average remaining maturity allowance methodology and the transition of purchase accounting discounts on loans from an adjustment to amortized cost in the allowance calculation.

8

The following table illustrates the impact of ASC 326:

	January 1, 2023
(Dollars in thousands)	As reported under ASC 326		Pre-ASC 326 adoption		Impact of ASC 326 adoption
Allowance for credit losses:
Held-to-maturity investment securities	$	72	$	-	$	72
One-to-four family residential real estate loans	$	1,677	$	655	$	1,022
Construction and land loans		166		117		49
Commercial real estate loans		4,221		3,158		1,063
Commercial loans		2,898		2,753		145
Paycheck protection program loans		-		-		-
Agriculture loans		1,142		1,966		(824	)
Municipal loans		16		5		11
Consumer loans		194		137		57
Total allowance for credit losses for loans	$	10,314	$	8,791	$	1,523
Unfunded loan commitments	$	170	$	170	$	-

Investment Securities. Investment securities are classified as held-to-maturity when management has the positive intent and ability to hold them to maturity. Securities are classified as available-for-sale when they might be sold before maturity. Held-to-maturity securities are carried at amortized cost while available-for-sale securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Realized gains and losses on sales of available-for-sale securities are recorded on a trade date basis and are calculated using the specific identification method.

Allowance for Credit Losses – Held-to-Maturity Investment Securities. Management measures expected credit losses on held-to-maturity investment securities on a collective basis by major security type. Accrued interest is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical loss information adjusted for current conditions and reasonable and supportable forecasts.

Allowance for Credit Losses – Available-for-Sale Investment Securities. For available-for-sale investment securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of the security or security issuer, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected was less than the amortized cost basis, a credit loss existed and an allowance for credit losses would be recorded for the credit loss, which is limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for or reversal of credit loss expense. Losses are charged against the allowance for credit losses when the Company determines the available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. The Company does not estimate credit losses on available-for-sale security accrued interest receivable.

9

Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. The amortized cost is the principal balance outstanding net of previous charge-offs, and for purchased loans, net of unamortized purchase premiums and discounts. Interest income is accrued on the unpaid principal balance. Origination fees received on loans held in portfolio and the estimated direct costs of origination are deferred and amortized to interest income using the level yield method without anticipating prepayments.

The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of the principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are evaluated individually and are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses - Loans. The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers asset quality trends, composition and trends in the loan portfolio, underlying collateral values, industry trends and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses expected in the loan portfolio at the balance sheet date. The allowance is adjusted through provision for credit losses and charge-offs, net of recoveries of amounts previously charged off.

The allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses.

One-to-Four Family Residential Real Estate. One-to-four family residential real estate loans consists primarily of loans secured by 1-4 family residential properties. Repayment is primarily dependent on the personal cash flow of the borrower.

Construction and Land. Construction and land loans consist primarily of loans to facilitate the development of both residential and commercial real estate. Repayment is primarily dependent on the completion of the development and refinancing to longer term financing.

Commercial Real Estate. Commercial real estate loans consist primarily of loans secured by office buildings, industrial buildings, warehouses, retail buildings and multi-family housing and are primarily owner-occupied. For such loans, repayment is largely dependent upon the operation of the borrower’s business.

Commercial. Commercial loans include loans to business enterprises issued for commercial, industrial and/or other professional purposes. These loans are generally secured by equipment, inventory and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

Agriculture. Agriculture loans include operating and real estate loans to agriculture enterprises. Generally, the borrower’s ability to repay is based on the cash flows from farming operations.

Municipal. Municipal loans are generally related to equipment leasing or general fund loans. Repayment is primarily dependent on the tax revenue of the municipal entity.

Consumer. Consumer loans include automobile, boat, home improvement and home equity loans. Repayment is primarily dependent on the personal cash flow of the borrower.

The Company utilized a weighted average remaining maturity allowance methodology to calculate the allowance for credit losses. Historical loss rates are adjusted for current conditions and reasonable and supportable forecasts. Following the economic forecast period loss rates revert back to historical loss rates over a reasonable period of time. Additional adjustments for qualitative factors are included to quantify the risks within each of the loan categories that are not included in the historical loss rates or economic projections. The data for the allowance calculation may be obtained from internal or external sources.

10

Loans that do not share similar risk characteristics with the collectively evaluated pools are evaluated on an individual basis and are excluded from the collectively evaluated loan pools. Such loans are evaluated for credit losses based on either discounted cash flows or the fair value of collateral.

The Company estimates expected credit losses over the contractual term of obligations to extend credit, unless the obligation is unconditionally cancellable. The allowance for off-balance-sheet exposures is adjusted through the provision for credit losses. The estimates are determined based on the likelihood of funding during the contractual term and an estimate of credit losses subsequent to funding. Estimated credit losses on subsequently funded balances are based on the same assumptions used to estimated credit losses on loans.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures which eliminated the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. The update also enhanced disclosure required for loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply the loan refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments to this ASU require a public business entity to disclose current period gross charge-offs by year of origination for loans in the vintage disclosures.

On January 1, 2023, the Company adopted ASU 2022-02, electing the prospective approach. The adoption did not have a material effect on the Company’s operating results or financial condition. The disclosures in this document have been updated to reflect the new guidance.

Loans Modifications. Loan modifications, including modifications to borrowers experiencing financial difficulty, are treated as a new loan if two conditions are met. The terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks and modifications to the terms of the original loan are more than minor.

11

4. Investments

A summary of investment securities available-for-sale and held-to-maturity is as follows:

(Dollars in thousands)	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	128,458	$	-	$	(6,978	)	$	121,480
Municipal obligations, tax exempt		127,921		56		(3,526	)		124,451
Municipal obligations, taxable		82,456		79		(4,822	)		77,713
Agency mortgage-backed securities		175,571		31		(14,868	)		160,734
Total available-for-sale	$	514,406	$	166	$	(30,194	)	$	484,378

	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,496	$	-	$	(196	)	$	3,300
Total held-to-maturity	$	3,496	$	-	$	(196	)	$	3,300

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	130,684	$	-	$	(7,573	)	$	123,111
U. S. federal agency obligations		2,002		-		(14	)		1,988
Municipal obligations, tax exempt		130,848		59		(3,645	)		127,262
Municipal obligations, taxable		73,520		14		(6,290	)		67,244
Agency mortgage-backed securities		185,451		172		(15,922	)		169,701
Total available-for-sale	$	522,505	$	245	$	(33,444	)	$	489,306

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,524	$	5	$	(77	)	$	3,452
Total held-to-maturity	$	3,524	$	5	$	(77	)	$	3,452

The amortized cost of the above held-to-maturity investment securities has been further reduced by the allowance for credit losses of $91,000 at June 30, 2023.

12

The tables above show that some of the securities in the available-for-sale and held-to-maturity investment portfolios had unrealized losses, or were temporarily impaired, as of June 30, 2023 and December 31, 2022. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of June 30, 2023
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	13,995	$	(562	)	$	107,485	$	(6,416	)	$	121,480	$	(6,978	)
Municipal obligations, tax exempt		268		58,460		(861	)		54,533		(2,665	)		112,993		(3,526	)
Municipal obligations, taxable		119		32,430		(891	)		39,464		(3,931	)		71,894		(4,822	)
Agency mortgage-backed securities		102		27,246		(610	)		127,921		(14,258	)		155,167		(14,868	)
Total for available-for-sale		556	$	132,131	$	(2,924	)	$	329,403	$	(27,270	)	$	461,534	$	(30,194	)
Held-to-maturity:
Other		7	$	3,300	$	(196	)	$	-	$	-		$	3,300	$	(196	)
Total held-to-maturity		7		3,300		(196	)		-		-			3,300		(196	)

			As of December 31, 2022
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	85,988	$	(4,591	)	$	37,123	$	(2,982	)	$	123,111	$	(7,573	)
U.S. federal agency obligations		1		1,988		(14	)		-		-			1,988		(14	)
Municipal obligations, tax exempt		274		107,262		(3,020	)		8,495		(625	)		115,757		(3,645	)
Municipal obligations, taxable		108		54,746		(5,006	)		7,571		(1,284	)		62,317		(6,290	)
Agency mortgage-backed securities		100		78,971		(4,550	)		79,882		(11,372	)		158,853		(15,922	)
Total for available-for-sale		550		328,955		(17,181	)		133,071		(16,263	)		462,026		(33,444	)
Held-to-maturity:
Other		6	$	3,009	$	(77	)	$	-	$	-		$	3,009	$	(77	)
Total held-to-maturity		6		3,009		(77	)		-		-			3,009		(77	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of its cost basis, the Company believed that the U.S. treasury securities identified in the table above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2023, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and the Government National Mortgage Association. The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the table above were temporarily impaired as of June 30, 2023 and December 31, 2022.

13

The Company’s other investment securities portfolio consists of seven subordinated debentures issued by financial institutions. These investment securities were acquired in the Freedom Bank acquisition and classified as held-to-maturity. The securities were issued in 2021 and 2022 with a 10 year maturity and a fixed rate for five years. The securities are callable after the end of the fixed rate term. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the other securities identified in the tables above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The following table provides information on the Company’s allowance for credit losses related to held-to-maturity investment securities.

(Dollars in thousands)
Balance at January 1, 2023	$	-
Impact of adopting ASC 326		72
Provision for credit losses		19
Balance at June 30, 2023	$	91

The table below sets forth amortized cost and fair value of investment securities at June 30, 2023. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Available-for-sale:
Due in less than one year	$	33,292	$	32,728
Due after one year but within five years		263,298		246,734
Due after five years but within ten years		162,266		151,903
Due after ten years		55,550		53,013
Total available-for-sale	$	514,406	$	484,378
Held-to-maturity:
Due after five years but within ten years		3,496		3,300
Total held-to-maturity	$	3,496	$	3,300

The Company did not record any sales of available-for-sale securities during the six months ended June 30, 2023 and 2022.

Securities with carrying values of $420.9 million and $420.8 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2023 and December 31, 2022, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

14

5. Loans and Allowance for Credit Losses

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2023			2022
One-to-four family residential real estate loans	$	259,655		$	236,982
Construction and land loans		22,016			22,725
Commercial real estate loans		314,889			304,074
Commercial loans		181,424			173,415
Paycheck protection program loans		-			21
Agriculture loans		84,345			84,283
Municipal loans		2,711			2,026
Consumer loans		28,219			26,664
Total gross loans		893,259			850,190
Net deferred loan costs (fees) and loans in process		(261	)		(250	)
Allowance for credit losses		(10,449	)		(8,791	)
Loans, net	$	882,549		$	841,149

15

The following tables provide information on the Company’s allowance for credit losses by loan class and allowance methodology:

	Three and six months ended June 30, 2023
(Dollars in thousands)	One-to-four family residential real estate loans		Construction and land loans			Commercial real estate loans			Commercial loans			Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2023	$	1,757	$	170		$	4,438		$	2,614		$	-	$	1,059		$	17		$	212		$	10,267
Charge-offs		-		-			-			(90	)		-		-			-			(68	)		(158	)
Recoveries		-		-			-			10			-		57			-			23			90
Provision for credit losses		95		(9	)		(65	)		176			-		18			(1	)		36			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449
Allowance for credit losses:
Balance at January 1, 2023	$	655	$	117		$	3,158		$	2,753		$	-	$	1,966		$	5		$	137		$	8,791
Impact of adopting ASC 326		1,022		49			1,063			145			-		(824	)		11			57			1,523
Charge-offs		-		-			-			(107	)		-		-			-			(159	)		(266	)
Recoveries		-		-			-			19			-		73			-			59			151
Provision for credit losses		175		(5	)		152			(100	)		-		(81	)		-			109			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449

	Three and six months ended June 30, 2022
(Dollars in thousands)	One-to-four family residential real estate loans			Construction and land loans			Commercial real estate loans			Commercial loans		Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2022	$	624		$	146		$	3,061		$	2,465	$	-	$	1,929		$	6		$	126		$	8,357
Charge-offs		-			-			-			-		-		-			-			(76	)		(76	)
Recoveries		-			-			-			9		-		2			-			23			34
Provision for credit losses		(44	)		(13	)		(79	)		177		-		(111	)		-			70			-
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315
Allowance for credit losses:
Balance at January 1, 2022	$	623		$	138		$	3,051		$	2,613	$	-	$	2,221		$	6		$	123		$	8,775
Charge-offs		-			-			-			-		-		-			-			(129	)		(129	)
Recoveries		-			100			-			23		-		3			6			37			169
Provision for credit losses		(43	)		(105	)		(69	)		15		-		(404	)		(6	)		112			(500	)
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315

	As of December 31, 2022
(Dollars in thousands)	One-to-four family residential real estate loan		Construction and land loans		Commercial real estate loans		Commercial loans		Paycheck protection program loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for credit losses:
Individually evaluated for loss	$	-	$	-	$	-	$	636	$	-	$	18	$	-	$	-	$	654
Collectively evaluated for loss		655		117		3,158		2,117		-		1,948		5		137		8,137
Total	$	655	$	117	$	3,158	$	2,753	$	-	$	1,966	$	5	$	137	$	8,791
Loan balances:
Individually evaluated for loss	$	326	$	412	$	1,224	$	812	$	-	$	1,319	$	36	$	-	$	4,129
Collectively evaluated for loss		236,656		22,313		302,850		172,603		21		82,964		1,990		26,664		846,061
Total	$	236,982	$	22,725	$	304,074	$	173,415	$	21	$	84,283	$	2,026	$	26,664	$	850,190

16

The Company recorded net loan charge-offs of $68,000 during the second quarter of 2023 compared to net loan charge-offs of $42,000 during the second quarter of 2022. The Company recorded net loan charge-offs of $115,000 during the six months ended June 30, 2023 compared to net loan recoveries of $40,000 during the six months ended June 30, 2022.

The following table presents information on non-accrual and loans past due over 89 days and still accruing:

(Dollars in thousands)	As of June 30, 2023
	Non-accrual with no allowance for credit loss		Non-accrual with allowance for credit losses		Loans past due over 89 days still accruing
One-to-four family residential real estate loans	$	38	$	-	$	-
Construction and land loans		194		-		-
Commercial real estate loans		1,218		-		-
Commercial loans		112		1,000		-
Paycheck protection program loans		-		-		-
Agriculture loans		214		8		-
Municipal loans		-		-		-
Consumer loans		-		-		-
Total loans	$	1,776	$	1,008	$	-

The following table presents information on impaired loans:

(Dollars in thousands)	As of December 31, 2022
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	326	$	326	$	326	$	-	$	-	$	357	$	9
Construction and land		843		412		412		-		-		243		10
Commercial real estate		1,224		1,224		1,224		-		-		1,224		47
Commercial		1,063		812		75		737		636		865		5
Agriculture		1,402		1,319		1,301		18		18		1,433		64
Municipal		36		36		36		-		-		36		1
Total impaired loans	$	4,894	$	4,129	$	3,374	$	755	$	654	$	4,158	$	136

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is 90 days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans 90 days or more delinquent and accruing interest at June 30, 2023 or December 31, 2022.

17

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2023
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	3		$	234		$	-		$	237		$	38		$	275		$	259,380
Construction and land loans					-			-			-			194			194			21,822
Commercial real estate loans		-			184			-			184			1,218			1,402			313,487
Commercial loans		104			63			-			167			1,112			1,279			180,145
Paycheck protection program loans		-			-			-			-			-			-			-
Agriculture loans		-			5			-			5			222			227			84,118
Municipal loans		-			-			-			-			-			-			2,711
Consumer loans		20			1			-			21			-			21			28,198
Total	$	127		$	487		$	-		$	614		$	2,784		$	3,398		$	889,861
Percent of gross loans		0.01	%		0.05	%		0.00	%		0.07	%		0.31	%		0.38	%		99.62	%

(Dollars in thousands)	As of December 31, 2022
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	8		$	72		$	-		$	80		$	170		$	250		$	236,732
Construction and land loans		-			-			-			-			195			195			22,530
Commercial real estate loans		-			-			-			-			1,224			1,224			302,850
Commercial loans		-			411			-			411			812			1,223			172,192
Paycheck protection program loans		-			-			-			-			-			-			21
Agriculture loans		-			180			-			180			925			1,105			83,178
Municipal loans		-			-			-			-			-			-			2,026
Consumer loans		67			-			-			67			-			67			26,597
Total	$	75		$	663		$	-		$	738		$	3,326		$	4,064		$	846,126
Percent of gross loans		0.01	%		0.08	%		0.00	%		0.09	%		0.39	%		0.48	%		99.52	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2023 and 2022 would have increased interest income by $280,000 and $95,000, respectively. No interest income related to non-accrual loans was included in interest income for the three and six months ended June 30, 2023 and 2022.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

18

The following table presents information on the Company’s risk category of loans by type and year of origination:

(Dollars in thousands)	As of June 30, 2023
	2023		2022			2021			2020		2019		Prior		Revolving loans amortized cost			Revolving loans converted to term		Total
One-to-four family residential real estate loans
Nonclassified	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,282	$	3,966		$	423	$	259,617
Classified		-		-			-			-		-		38		-			-		38
Total	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,320	$	3,966		$	423	$	259,655
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Construction and land loans
Nonclassified	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	369	$	1,173		$	359	$	21,822
Classified		-		-			-			-		-		194		-			-		194
Total	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	563	$	1,173		$	359	$	22,016
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial real estate loans
Nonclassified	$	19,401	$	77,956		$	59,861		$	55,043	$	31,249	$	64,697	$	3,262		$	420	$	311,889
Classified		-		-			488			28		184		2,300		-			-		3,000
Total	$	19,401	$	77,956		$	60,349		$	55,071	$	31,433	$	66,997	$	3,262		$	420	$	314,889
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial loans
Nonclassified	$	17,850	$	39,227		$	21,332		$	18,866	$	3,514	$	5,696	$	65,487		$	5,007	$	176,979
Classified		190		867			286			413		543		34		1,905			207		4,445
Total	$	18,040	$	40,094		$	21,618		$	19,279	$	4,057	$	5,730	$	67,392		$	5,214	$	181,424
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	-		$	-	$	(107	)
Agriculture loans
Nonclassified	$	2,647	$	12,667		$	5,664		$	4,473	$	4,296	$	12,876	$	41,345		$	155	$	84,123
Classified		-		-			-			-		50		114		58			-		222
Total	$	2,647	$	12,667		$	5,664		$	4,473	$	4,346	$	12,990	$	41,403		$	155	$	84,345
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Municipal loans
Nonclassified	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Classified		-		-			-			-		-		-		-			-		-
Total	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Consumer loans
Nonclassified	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Classified		-		-			-			-		-		-		-			-		-
Total	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	(159	)	$	-	$	(159	)
Total loans
Nonclassified	$	85,794	$	227,312		$	139,477		$	117,269	$	55,053	$	123,882	$	130,185		$	6,388	$	885,360
Classified		190		867			774			441		777		2,680		1,963			207		7,899
Total	$	85,984	$	228,179		$	140,251		$	117,710	$	55,830	$	126,562	$	132,148		$	6,595	$	893,259
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	(159	)	$	-	$	(266	)

19

The following table provides information on the Company’s risk categories by loan class:

	As of December 31, 2022
(Dollars in thousands)	Nonclassified		Classified
One-to-four family residential real estate loans	$	236,663	$	319
Construction and land loans		22,530		195
Commercial real estate loans		300,216		3,858
Commercial loans		165,709		7,706
Paycheck protection program loans		21		-
Agriculture loans		83,358		925
Municipal loan		2,026		-
Consumer loans		26,664		-
Total	$	837,187	$	13,003

The following table provides information on the Company’s allowance for credit losses related to unfunded loan commitments.

(dollars in thousands)
Balance at January 1, 2023	$	170
Impact of adopting ASC 326		-
Provision for credit losses		30
Balance at June 30, 2023	$	200

The following table presents the amortized cost basis of loans at June 30, 2023 that were both experiencing financial difficulty and modified during the six months ended June 30, 2023 by class, type of modification and includes the financial effect of the modification.

(Dollars in thousands)	As of June 30, 2023
	Amortized cost basis		% of loan class total			Financial effect
Term extension:
Commercial	$	151		0.1	%	90 day payment deferral

As of June 30, 2023, all loans experiencing both financial difficulty and modified during the three and six months ended June 30, 2023 were current under the terms of the agreements. There were no commitments to lend additional funds to the borrowers and there were no charge-offs recorded against the loans. The Company had no allowance for credit losses recorded against these loans as of June 30, 2023. The Company did not have any loan modifications that had a payment default during the three and six months ended June 30, 2023.

6. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual impairment test as of December 31, 2022 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2023 that required an interim goodwill impairment test.

20

Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization was as follows:

(Dollars in thousands)	As of June 30, 2023
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(2,268	)	$	3,612

(Dollars in thousands)	As of December 31, 2022
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(1,874	)	$	4,006

The following sets forth estimated amortization expense for core deposit and intangible assets for the remainder of 2023 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2023	$	371
2024		663
2025		588
2026		512
2027		436
2028		360
Thereafter		682
Total	$	3,612

7. Mortgage Loan Servicing

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2023		2022
FHLMC	$	678,149	$	685,859
FHLB		28,129		27,285
Total	$	706,278	$	713,144

Custodial escrow balances maintained in connection with serviced loans were $6.2 million and $5.3 million at June 30, 2023 and December 31, 2022, respectively. Gross service fee income related to such loans was $441,000 and $453,000 for the three months ended June 30, 2023 and 2022, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $894,000 and $907,000 for the six months ended June 30, 2023 and 2022, respectively.

21

Activity for mortgage servicing rights was as follows:

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2023			2022			2023			2022
Mortgage servicing rights:
Balance at beginning of period	$	3,652		$	4,128		$	3,813		$	4,193
Additions		137			217			240			451
Amortization		(275	)		(320	)		(539	)		(619	)
Balance at end of period	$	3,514		$	4,025		$	3,514		$	4,025

The fair value of mortgage servicing rights was $10.3 million at June 30, 2023 and December 31, 2022, respectively. Fair value at June 30, 2023 was determined using discount rate of 9.50%; prepayment speeds ranging from 6.00% to 22.26%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.57%. Fair value at December 31, 2022 was determined using discount rates at 9.50%; prepayment speeds ranging from 6.00% to 21.34%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.47%.

The Company had a mortgage repurchase reserve of $204,000 at June 30, 2023 and $225,000 at December 31, 2022, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company charged a $6,000 loss against the reserve during three months ended June 30, 2023 and losses of $21,000 against the reserve during the six months ended June 30, 2023. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the three or six months ended June 30, 2022. As of June 30, 2023, the Company had one outstanding mortgage repurchase request.

8. Earnings per Share

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The diluted earnings per share computation for the three and six months ended June 30, 2023 excluded 77,511 of unexercised stock options because their inclusion would have been anti-dilutive during such periods. The diluted earnings per share computation for the three and six months ended June 30, 2022 excluded 53,642 of unexercised stock options because their inclusion would have been anti-dilutive during such periods. The Company’s Board of Directors declared a cash dividend of $0.21 per share to be paid September 6, 2023, to common stockholders of record as of the close of business on August 23, 2023. The shares used in the calculation of basic and diluted earnings per share are shown below:

(Dollars in thousands, except per share amounts)	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net earnings	$	3,362	$	3,033	$	6,719	$	6,166
Weighted average common shares outstanding - basic (1)		5,215,575		5,237,837		5,214,357		5,242,558
Assumed exercise of stock options (1)		3,975		14,709		5,403		17,756
Weighted average common shares outstanding - diluted (1)		5,219,550		5,252,546		5,219,760		5,260,313
Earnings per share (1):
Basic	$	0.64	$	0.58	$	1.29	$	1.18
Diluted	$	0.64	$	0.58	$	1.29	$	1.17

(1) Share and per share values for the periods ended June 30, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

9. Federal Home Loan Bank Borrowings

The Bank has a line of credit, renewable annually each September, with the Federal Home Loan Bank (“FHLB’) under which there were $76.2 million of borrowings at June 30, 2023 and $8.2 million at December 31, 2022. Interest on any outstanding balance on the line of credit accrues at the federal funds rate plus 0.15% (5.23% at June 30, 2023). The Company had no letters of credit issued through the FHLB at June 30, 2023 or December 31, 2022 to secure municipal deposits. The Company did not have any term advances from FHLB at June 30, 2023 or December 31, 2022.

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Although no loans are specifically pledged, the FHLB requires the Bank to maintain eligible collateral (qualifying loans and investment securities) that has a lending value at least equal to its required collateral. At June 30, 2023 and December 31, 2022, there was a blanket pledge of loans and securities totaling $277.5 million and $139.0 million, respectively. At June 30, 2023 and December 31, 2022, the Bank’s total borrowing capacity with the FHLB was approximately $206.3 million and $111.0 million, respectively. At June 30, 2023 and December 31, 2022, the Bank’s available borrowing capacity was $129.0 million and $101.8 million, respectively. The difference between the Bank’s total borrowing capacity and available borrowing capacity is related to the amount of borrowings outstanding. The available borrowing capacity with the FHLB is collateral based, and the Bank’s ability to borrow is subject to maintaining collateral that meets the eligibility requirements. The borrowing capacity is not committed and is subject to FHLB credit requirements and policies. In addition, the Bank must maintain a restricted investment in FHLB stock to maintain access to borrowings.

10. Other Borrowings

The Company has a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2023, with an interest rate that adjusts daily based on the prime rate less 0.25%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, the Company did not have an outstanding balance on the line of credit.

On September 29, 2022, the Company borrowed $10.0 million from an unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. Early principal payments are allowed and the balance was $8.3 million and $9.0 million at June 30, 2023 and December 31, 2022, respectively.

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet.

Repurchase agreements are comprised of non-insured customer funds, totaling $14.0 million at June 30, 2023 and $29.4 million at December 31, 2022, which were secured by $30.4 million and $38.4 million of the Company’s investment portfolio at the same dates, respectively.

The following is a summary of the balances and collateral of the Company’s repurchase agreements:

	As of June 30, 2023
(dollars in thousands)	Overnight						Greater
	and Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	13,251	$	-	$	-	$	-	$	13,251
Agency mortgage-backed securities		707		-		-		-		707
Total	$	13,958	$	-	$	-	$	-	$	13,958

	As of December 31, 2022
(dollars in thousands)	Overnight		Up to				Greater
	and Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	25,973	$	-	$	-	$	-	$	25,973
U.S. federal agency obligations		1,236		-		-		-		1,236
Agency mortgage-backed securities		2,193		-		-		-		2,193
Total	$	29,402	$	-	$	-	$	-	$	29,402

The investment securities are held by a third party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

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11. Revenue from Contracts with Customers

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. Items outside the scope of ASC 606 are noted as such.

	Three months ended				Six months ended
(Dollars in thousands)	June 30,				June 30,
	2023		2022		2023		2022
Non-interest income:
Service charges on deposit accounts
Overdraft fees	$	954	$	907	$	1,829	$	1,730
Other		242		164		474		324
Interchange income		805		785		1,542		1,492
Loan servicing fees (1)		441		453		894		907
Office lease income (1)		148		33		218		66
Gains on sales of loans (1)		830		1,073		1,523		1,978
Bank owned life insurance income (1)		223		190		441		377
Gains on sales of real estate owned		-		-		-		114
Other		186		191		403		371
Total non-interest income	$	3,829	$	3,796	$	7,324	$	7,359

(1) Not within the scope of ASC 606.

A description of the Company’s revenue streams under ASC 606 follows:

Service Charges on Deposit Accounts

The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM usage fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period during which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income

The Company earns interchange fees from debit cardholder transactions conducted through the interchange payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Gains (Losses) on Sales of Real Estate Owned

The Company records a gain or loss from the sale of real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. There were no sales of real estate owned that were financed by the Company during the first six months of 2023 or 2022.

12. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

24

Fair value estimates of the Company’s financial instruments as of June 30, 2023 and December 31, 2022, including methods and assumptions utilized, are set forth below:

	As of June 30, 2023
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	20,038		$	20,038		$	-		$	-	$	20,038
Interest-bearing deposits at other banks		8,336			-			8,336			-		8,336
Investment securities available-for-sale		484,378			121,480			362,898			-		484,378
Investment securities held-to-maturity		3,496			-			3,300			-		3,300
Bank stocks, at cost		9,445			n/a			n/a			n/a		n/a
Loans, net		882,549			-			-			869,114		869,114
Loans held for sale		3,900			-			3,900			-		3,900
Mortgage servicing rights		3,514			-			10,336			-		10,336
Accrued interest receivable		6,033			273			2,232			3,528		6,033
Derivative financial instruments		282			-			282			-		282
Financial liabilities:
Non-maturity deposits	$	(1,149,310	)	$	(1,149,310	)	$	-		$	-	$	(1,149,310	)
Certificates of deposit		(131,661	)		-			(129,468	)		-		(129,468	)
FHLB borrowings		(76,185	)		-			(76,185	)		-		(76,185	)
Subordinated debentures		(21,651	)		-			(18,481	)		-		(18,481	)
Other borrowings		(22,293	)		-			(22,000	)		-		(22,000	)
Accrued interest payable		(1,213	)		-			(1,213	)		-		(1,213	)

	As of December 31, 2022
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	23,156		$	23,156		$	-		$	-	$	23,156
Interest-bearing deposits at other banks		9,084			-			9,084			-		9,084
Investment securities available-for-sale		489,306			123,111			366,195			-		489,306
Investment securities held-to-maturity		3,524			-			3,452			-		3,452
Bank stocks, at cost		5,470			n/a			n/a			n/a		n/a
Loans, net		841,149			-			-			828,726		828,726
Loans held for sale		2,488			-			2,488			-		2,488
Mortgage servicing rights		3,813			-			10,282			-		10,282
Accrued interest receivable		5,879			426			2,150			3,303		5,879
Derivative financial instruments		126			-			126			-		126
Financial liabilities:
Non-maturity deposits	$	(1,207,371	)	$	(1,207,371	)	$	-		$	-	$	(1,207,371	)
Certificates of deposit		(93,278	)		-			(90,760	)		-		(90,760	)
FHLB borrowings		(8,200	)		-			(8,200	)		-		(8,200	)
Subordinated debentures		(21,651	)		-			(18,189	)		-		(18,189	)
Other borrowings		(38,402	)		-			(36,183	)		-		(36,183	)
Accrued interest payable		(439	)		-			(439	)		-		(439	)

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2023 or during the year ended December 31, 2022.

25

Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following tables represent the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2023
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	121,480	$	121,480	$	-	$	-
Municipal obligations, tax exempt		124,451		-		124,451		-
Municipal obligations, taxable		77,713		-		77,713		-
Agency mortgage-backed securities		160,734		-		160,734		-
Loans held for sale		3,900		-		3,900		-
Derivative financial instruments		282		-		282		-

			As of December 31, 2022
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	123,111	$	123,111	$	-	$	-
U. S. federal agency obligations		1,988		-		1,988		-
Municipal obligations, tax exempt		127,262		-		127,262		-
Municipal obligations, taxable		67,244		-		67,244		-
Agency mortgage-backed securities		169,701		-		169,701		-
Loans held for sale		2,488		-		2,488		-
Derivative financial instruments		126		-		126		-

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency obligations, municipal obligations, agency mortgage-backed securities and certificates of deposit. Quoted exchange prices are available for the Company’s U.S. treasury securities, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed securities are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal obligations are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Mortgage loans originated and intended for sale in the secondary market are carried at fair value. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2. Changes in the fair value of mortgage loans originated and intended for sale in the secondary market and derivative financial instruments are included in gains on sales of loans.

26

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
	June 30,		December 31,
(Dollars in thousands)	2023		2022
Aggregate fair value	$	3,900	$	2,488
Contractual balance		3,842		2,468
Gain	$	58	$	20

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sales of loans, net in the consolidated statements of earnings. The total amount of gains from changes in fair value of derivative financial instruments included in earnings were as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2023		2022			2023		2022
Total change in fair value	$	45	$	(15	)	$	156	$	(28	)

Valuation Methods for Instruments Measured at Fair Value on a Nonrecurring Basis

The Company does not record its loan portfolio at fair value. Collateral-dependent loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Individually evaluated loans are reviewed at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s individually evaluated loans was $3.5 million at June 30, 2023 and $4.1 million at December 31, 2022, respectively. The Company’s individually evaluated loans with an allowance for credit losses was $1.5 million and $755,000, with an allocated allowance of $647,000 and $654,000, at June 30, 2023 and December 31, 2022, respectively.

Real estate owned includes assets acquired through, or in lieu of, foreclosure and land previously acquired for expansion. Real estate owned is initially recorded at the fair value of the collateral less estimated selling costs. Subsequent valuations are updated periodically and are based upon independent appraisals, third party price opinions or internal pricing models. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Real estate owned is reviewed and evaluated at least annually for additional impairment and adjusted accordingly, based on the same factors identified above.

27

The following table presents quantitative information about Level 3 fair value measurements measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2023
Impaired loans:
Commercial	$	529	Sales comparison	Adjustment to comparable value		0%-30	%
Agriculture		324	Sales comparison	Adjustment to appraised value		0%-50	%
As of December 31, 2022
Impaired loans:
Commercial	$	101	Sales comparison	Adjustment to comparable value		0%-25	%
Real estate owned:
One-to-four family residential real estate		272	Sales comparison	Adjustment to appraised value		15	%
Commercial real estate		234	Sales comparison	Adjustment to appraised value		15	%

13. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of June 30, 2023, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the Basel III Rule, which is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).

The Basel III Rule includes a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, equal to 2.5% of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements for the common equity Tier 1 capital ratio, and Tier 1 capital and total risk based capital ratios.

As of June 30, 2023 and December 31, 2022, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

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The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022.

						For capital
	Actual					adequacy purposes
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2023
Leverage	$	126,939		8.39	%	$	60,513		4.0	%
Common Equity Tier 1 Capital		105,939		10.42	%		71,149		7.0	%
Tier 1 Capital		126,939		12.49	%		86,396		8.5	%
Total Risk Based Capital		136,776		13.46	%		106,724		10.5	%
As of December 31, 2022
Leverage	$	122,275		8.14	%	$	60,100		4.0	%
Common Equity Tier 1 Capital		101,275		10.37	%		68,352		7.0	%
Tier 1 Capital		122,275		12.52	%		82,999		8.5	%
Total Risk Based Capital		131,236		13.44	%		102,528		10.5	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022:

											To be well-capitalized
											under prompt
						For capital					corrective
	Actual					adequacy purposes					action provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)			Amount		Ratio
As of June 30, 2023
Leverage	$	131,737		8.73	%	$	60,341		4.0	%	$	75,426		5.0	%
Common Equity Tier 1 Capital		131,737		12.97	%		71,082		7.0	%		66,005		6.5	%
Tier 1 Capital		131,737		12.97	%		86,314		8.5	%		81,237		8.0	%
Total Risk Based Capital		141,574		13.94	%		106,623		10.5	%		101,546		10.0	%
As of December 31, 2022
Leverage	$	128,643		8.59	%	$	59,933		4.0	%	$	74,917		5.0	%
Common Equity Tier 1 Capital		128,643		13.18	%		68,309		7.0	%		63,430		6.5	%
Tier 1 Capital		128,643		13.18	%		82,947		8.5	%		78,068		8.0	%
Total Risk Based Capital		137,604		14.10	%		102,464		10.5	%		97,585		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

29

14. Impact of Recent Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2016-13 and ASU 2022-02 which is described in note 3.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this update simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this ASU are effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In October 2019, the FASB approved a change in the effective dates for ASU 2017-04 which delayed the effective date to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted ASU 2017-04 effective January 1, 2023. The adoption of ASU 2017-04 did not have a material effect on the Company’s operating results or financial condition.

In May 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference rate reform relates to the effects undertaken to eliminate certain reference rates such as the London Interbank Offered Rate (“LIBOR”) and introduce new reference rates that may be based on larger or more liquid observations and transactions. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other contracts. Generally, ASU 2020-04 would allow entities to consider contract modifications due to reference rate reform to be a continuation of an existing contract; thus, the Company would not have to determine if the modification is considered insignificant. The standard was effective upon issuance and the amendments may be applied prospectively through December 31, 2022 such that changes made to contracts beginning on or after January 1, 2023 would not apply. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date, which extended the sunset date from December 31, 2022 to December 31, 2024. LIBOR continued to be published until June 30, 2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview. Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly owned subsidiary, Landmark National Bank, and in the insurance business through its wholly owned subsidiary, Landmark Risk Management, Inc. References to the “Company,” “we,” “us,” and “our” refer collectively to Landmark Bancorp, Inc., Landmark National Bank and Landmark Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes continuing a tradition of holding and acquiring quality assets while growing our commercial, commercial real estate and agriculture loan portfolios. We are committed to developing relationships with our borrowers and providing a total banking service.

The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. Although not our primary business function, we invest in certain investment and mortgage-related securities using deposits and other borrowings as funding sources.

Landmark Risk Management, Inc., which was formed and began operations in 2017, is a Nevada-based captive insurance company which provides property and casualty insurance coverage to the Company and the Bank for which insurance may not be currently available or economically feasible in the current insurance marketplace. Landmark Risk Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. On April 10, 2023, the IRS issued IR-2023-74 proposing regulations that classify 831(b) captives with less than a 65% claims loss ratio as a “listed transaction”. We are currently reviewing the proposed regulations and consulting with tax advisors to understand the impact on Landmark Risk Management if the final regulations are substantially similar to the proposed regulations. Based on our initial understanding of the proposed regulation, estimated federal tax benefits of approximately $1.1 million, based on a corporate tax rate of 21%, since 2017 may potentially be subject to this new rule which may result in repayment along with payments of interest and penalties. The ultimate impact of the proposal and the impact on the Company is uncertain.

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees, gains from the sale of newly originated loans, gains or losses on investments and certain other non-interest related items. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, data processing expenses and provision for credit losses.

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

Currently, our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and thirty additional branch offices in central, eastern, southeast and southwest Kansas, and our ownership of Landmark Risk Management, Inc. On October 1, 2022, the Company completed its acquisition of Freedom Bancshares, Inc., the holding company of Freedom Bank. Freedom Bank was founded in 2006 and operates out of a single location in Overland Park, Kansas.

In July 2023, we declared our 88^th consecutive quarterly dividend, and we currently have no plans to change our dividend strategy given our current capital and liquidity position. However, while we have achieved a strong capital base and expect to continue operating profitably, this is dependent upon the performance of the economy. In addition, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, we will not be permitted to make capital distributions (including for dividends and repurchases of stock) or pay discretionary bonuses to executive officers without restriction if we do not maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer, a standard we exceeded at June 30, 2023.

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Critical Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial condition and results of operations and require our management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for credit losses and the accounting for business combinations, each of which involve significant judgment by our management. On January 1, 2023, we adopted CECL which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology. The CECL model is subject to changes in our economic forecast, which can impact the calculation of our allowance for credit losses substantially. The impact of the adoption and more information on our allowance for credit losses is included in Notes 3 and 5 of the consolidated financial statements. Our most significant critical accounting estimates relate to the allowance for credit losses on loans, which involve significant judgment by our management. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers asset quality trends, composition and trends in the loan portfolio, underlying collateral values, industry trends and other pertinent factors, including regulatory recommendations, which impacts the estimate of future credit losses. Other than CECL, there have been no material changes to the critical accounting policies included under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 30, 2023.

Summary of Results. During the second quarter of 2023, we recorded net earnings of $3.4 million, which was an increase of $329,000, or 10.8%, from the $3.0 million of net earnings in the second quarter of 2022. During the first six months of 2023, we recorded net earnings of $6.7 million, which was an increase of $553,000, or 9.0%, from the $6.2 million of net earnings in the first six months of 2022. The increase in net earnings during 2023 was primarily an increase in interest income due to an increase in average interest earning assets and higher yields on those assets. The increase in assets was due to our acquisition of Freedom Bank and organic growth. Higher interest rates and average balances of interest bearing liabilities also increased our interest expense. The acquisition of Freedom Bank also contributed to an increase in non-interest expense in 2023.

The following table summarizes earnings and key performance measures for the periods presented:

	As of or for the						As of or for the
(Dollars in thousands, except per share amounts)	three months ended June 30,						six months ended June 30,
	2023			2022			2023			2022
Net earnings:
Net earnings	$	3,362		$	3,033		$	6,719		$	6,166
Basic earnings per share (1)	$	0.64		$	0.58		$	1.29		$	1.18
Diluted earnings per share (1)	$	0.64		$	0.58		$	1.29		$	1.17
Earnings ratios:
Return on average assets (2)		0.88	%		0.93	%		0.89	%		0.95	%
Return on average equity (2)		11.52	%		10.04	%		11.77	%		9.81	%
Equity to total assets		7.62	%		9.08	%		7.62	%		9.08	%
Net interest margin (2) (3)		3.21	%		3.05	%		3.26	%		3.02	%
Dividend payout ratio		32.31	%		34.43	%		32.56	%		34.15	%

(1)	Per share values for the periods ended June 30, 2022 have been adjusted to give effect to the 5% dividend paid during December 2022.
(2)	Ratios have been annualized and are not necessarily indicative of the results for the entire year.
(3)	Net interest margin is presented on a fully tax equivalent basis, using a 21% federal tax rate.

Interest Income. Interest income of $15.8 million for the quarter ended June 30, 2023 increased $6.4 million, or 67.8%, as compared to the same period of 2022. Interest income on loans increased $5.5 million, or 76.4%, to $12.6 million for the quarter ended June 30, 2023, compared to the same period of 2022 due to higher yields and average balances. Our yields increased from 4.40% in the second quarter of 2022 to 5.80% in the second quarter of 2023. The increase in interest income on loans was also driven by an increase in average loan balances which increased from $653.0 million in the second quarter of 2022 to $873.9 million in the second quarter of 2023. Interest income on investment securities increased $1.0 million, or 46.9%, to $3.2 million for the second quarter of 2023, as compared to $2.1 million in the same period of 2022. The increase in interest income on investment securities was primarily the result of an increased yields on investment securities, which increased from 1.97% in the second quarter of 2022 to 2.70% in the second quarter of 2023. Also contributing to the higher investment securities income was an increase in the average balances of investment securities which increased from $477.0 million in the second quarter of 2022 to $495.5 million in the second quarter of 2023.

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Interest income of $30.4 million for the six months ended June 30, 2023 increased $12.0 million, or 65.3%, as compared to the same period of 2022. Interest income on loans increased $9.7 million, or 67.3%, to $24.0 million for the six months ended June 30, 2023, compared to the same period of 2022 due to an increase in our average loan balances, which increased from $644.6 million during the first six months of 2022 to $862.2 million during the first six months of 2023. Also contributing to higher interest income were higher yields on loans, which increased from 4.49% in the six months ended June 30, 2022 to 5.62% during the six months ended June 30, 2023. Interest income on investment securities increased $2.4 million, or 62.1%, to $6.3 million for the first six months of 2023, as compared to $3.9 million in the same period of 2022. The increase in interest income on investment securities was the result of higher yields, which increased from 1.90% in the first six months of 2022 to 2.69% in the first six months of 2023. Also contributing to the higher yields on investment securities were higher average balances on investment securities, which increased from $449.7 million in the first six months of 2022 compared to $497.5 million in the first six months of 2023.

Interest Expense. Interest expense during the quarter ended June 30, 2023 increased $4.5 million, to $5.0 million, as compared to the same period of 2022. Interest expense on interest-bearing deposits increased $3.1 million, to $3.5 million for the quarter ended June 30, 2023 as compared to the same period of 2022. Our total cost of interest-bearing deposits increased from 0.18% in the second quarter of 2022 to 1.57% in the second quarter of 2023 as a result of higher rates and increased competition for deposits. Also contributing to higher interest expense was an increase in average interest-bearing deposit balances, which increased from $791.3 million in the second quarter of 2022 to $882.7 million in the second quarter of 2023. For the second quarter of 2023, interest expense on borrowings increased $1.4 million, to $1.5 million as compared to the same period of 2022 due to an increase in our average borrowings and subordinated debentures which increased from $28.6 million in the second quarter of 2022 to $115.7 million in the same period of 2023. Also contributing to the increase in interest expense on borrowings were higher rates, which increased from 2.42% in the second quarter of 2022 to 5.34% in the same period of 2023.

Interest expense during the six months ended June 30, 2023 increased $7.8 million, to $8.6 million, as compared to the same period of 2022. Interest expense on interest-bearing deposits increased $5.4 million, to $6.0 million for the six months ended June 30, 2023 as compared to the same period of 2022. The increase in interest expense on interest-bearing deposits was the result of higher rates paid on money market and checking accounts, as the rates reprice based on market indexes. The increase in interest expense on deposits was due to an increase in average interest-bearing deposit balances, which increased from $791.8 million in the first six months of 2022 to $877.8 million in the same period of 2023. For the first six months of 2023, interest expense on borrowings increased $2.3 million, to $2.6 million as compared to the same period of 2022, due primarily to an increase in our average outstanding borrowings and subordinated debentures which increased from $28.6 million in the first six months of 2022 to $105.1 million in the first six months of 2023. Also contributing to the higher interest expense on borrowings were higher average rates on our borrowings, which increased to 5.05% for the first six months of 2023 compared to 2.11% for the same period of 2022.

Net Interest Income. Net interest income increased $1.9 million, or 21.7%, to $10.8 million for the second quarter of 2023 compared to the same period of 2022. The increase in net interest income was primarily a result of an increase in interest on loans and investments, partially offset by higher interest expense. The accretion of purchase accounting adjustments increased net interest income by $263,000 in the second quarter of 2023 compared to a decrease of $4,000 in the second quarter of 2022 and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, the increase in interest rates raised the yields on our interest-earning assets and the cost of our interest-bearing liabilities. Net interest margin, on a tax-equivalent basis, increased from 3.05% in the second quarter of 2022 to 3.21% in the same period of 2023. Continued increases in interest rates may not result in a higher net interest margin as a result of increased competition for loans and deposits. Additionally, the deposit increases we have seen over the past few years may reverse resulting in the need for higher cost funding.

Net interest income increased $4.2 million, or 24.2%, to $21.8 million for the first six months of 2023 compared to the same period of 2022. The increase in net interest income was primarily a result of an increase in interest on loans and investments, partially offset by higher interest expense. The accretion of purchase accounting adjustments increased net interest income by $439,000 in the first six months of 2023 compared to an increase of $9,000 in the first six months of 2022 and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, the increase in interest rates raised the yields on our interest-earning assets and the cost of our interest-bearing liabilities. Net interest margin, on a tax-equivalent basis, increased from 3.02% in the first six months of 2022 to 3.26% in the same period of 2023.

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Average Assets/Liabilities. The following table reflects the tax-equivalent yields earned on average interest-earning assets and costs of average interest-bearing liabilities for the periods indicated (derived by dividing income or expense by the monthly average balance of assets or liabilities, respectively) as well as “net interest margin” (which reflects the effect of the net earnings balance) for the periods shown:

	Three months ended							Three months ended
	June 30, 2023							June 30, 2022
(Dollars in thousands)	Average balance		Income/ expense		Average yield/cost			Average balance		Income/ expense		Average yield/cost
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	9,600	$	49		2.05	%	$	66,048	$	126		0.77	%
Investment securities (1)		495,456		3,338		2.70	%		477,035		2,338		1.97	%
Loans receivable, net (2)		873,910		12,627		5.80	%		653,013		7,161		4.40	%
Total interest-earning assets		1,378,966		16,014		4.66	%		1,196,096		9,625		3.23	%
Non-interest-earning assets		146,623							111,016
Total	$	1,525,589						$	1,307,112
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market and checking	$	591,498	$	2,587		1.75	%	$	521,148	$	274		0.21	%
Savings accounts		163,876		25		0.06	%		169,618		10		0.02	%
Certificates of deposit		127,352		840		2.65	%		100,491		74		0.30	%
Total interest-bearing deposits		882,726		3,452		1.57	%		791,257		358		0.18	%
FHLB advances and other borrowings		77,176		1,027		5.34	%		-		-		0.00	%
Subordinated debentures		21,651		387		7.17	%		21,651		165		3.06	%
Repurchase agreements		16,909		127		3.01	%		6,981		8		0.46	%
Total borrowings		115,736		1,541		5.34	%		28,632		173		2.42	%
Total interest-bearing liabilities		998,462		4,993		2.01	%		819,889		531		0.26	%
Non-interest-bearing liabilities		410,089							366,076
Stockholders’ equity		117,038							121,147
Total	$	1,525,589						$	1,307,112
Interest rate spread (3)						2.65	%						2.97	%
Net interest margin (4)			$	11,021		3.21	%			$	9,094		3.05	%
Tax-equivalent interest - imputed				188							196
Net interest income			$	10,833						$	8,898
Ratio of average interest-earning assets to average interest-bearing liabilities						138.1	%						145.9	%

(1)	Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 21% federal tax rate.
(2)	Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 21% federal tax rate.
(3)	Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(4)	Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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	Six months ended							Six months ended
	June 30, 2023							June 30, 2022
(Dollars in thousands)	Average balance		Income/ expense		Average yield/cost			Average balance		Income/ expense		Average yield/cost
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	12,112	$	147		2.45	%	$	103,314	$	188		0.37	%
Investment securities (1)		497,486		6,633		2.69	%		449,667		4,241		1.90	%
Loans receivable, net (2)		862,186		24,008		5.62	%		644,569		14,357		4.49	%
Total interest-earning assets		1,371,784		30,788		4.53	%		1,197,550		18,786		3.16	%
Non-interest-earning assets		146,589							108,896
Total	$	1,518,373						$	1,306,446
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market and checking	$	595,780	$	4,694		1.59	%	$	523,086	$	374		0.14	%
Savings accounts		166,721		61		0.07	%		166,039		20		0.02	%
Certificates of deposit		115,340		1,236		2.16	%		102,678		159		0.31	%
Total interest-bearing deposits		877,841		5,991		1.38	%		791,803		553		0.14	%
FHLB advances and other borrowings		61,285		1,594		5.25	%		-		-		0.00	%
Subordinated debentures		21,651		751		6.99	%		21,651		288		2.68	%
Repurchase agreements		22,199		287		2.61	%		6,903		11		0.32	%
Total borrowings		105,135		2,632		5.05	%		28,554		299		2.11	%
Total interest-bearing liabilities		982,976		8,623		1.77	%		820,357		852		0.21	%
Non-interest-bearing liabilities		420,310							359,332
Stockholders’ equity		115,087							126,757
Total	$	1,518,373						$	1,306,446
Interest rate spread (3)						2.76	%						2.95	%
Net interest margin (4)			$	22,165		3.26	%			$	17,934		3.02	%
Tax-equivalent interest - imputed				385							391
Net interest income			$	21,780						$	17,543
Ratio of average interest-earning assets to average interest-bearing liabilities						139.6	%						146.0	%

(1)	Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 21% federal tax rate.
(2)	Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 21% federal tax rate.
(3)	Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(4)	Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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Rate/Volume Table. The following table describes the extent to which changes in tax-equivalent interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities affected the Company’s interest income and expense for the periods indicated. The table distinguishes between (i) changes attributable to rate (changes in rate multiplied by prior volume), (ii) changes attributable to volume (changes in volume multiplied by prior rate), and (iii) net change (the sum of (i) and (ii)). The net changes attributable to the combined effect of volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

	Three months ended June 30,								Six months ended June 30,
	2023 vs 2022								2023 vs 2022
	Increase/(decrease) attributable to								Increase/(decrease) attributable to
	Volume		Rate			Net			Volume		Rate			Net
	(Dollars in thousands)								(Dollars in thousands)
Interest income:
Interest-bearing deposits at banks	$	81	$	(158	)	$	(77	)	$	8	$	(49	)	$	(41	)
Investment securities		95		905			1,000			487		1,905			2,392
Loans		2,817		2,649			5,466			5,529		4,122			9,651
Total		2,993		3,396			6,389			6,024		5,978			12,002
Interest expense:
Deposits		46		3,048			3,094			66		5,372			5,438
FHLB advances and other borrowings		-		1,027			1,027			-		1,594			1,594
Subordinated debentures and other borrowings		-		222			222			-		463			463
Repurchase agreements		24		95			119			65		211			276
Total		70		4,392			4,462			131		7,640			7,771
Net interest income	$	2,923	$	(996	)	$	1,927		$	5,893	$	(1,662	)	$	4,231

Provision for Credit Losses. On January 1, 2023, the Company adopted CECL and has established an allowance for credit losses (“ACL”) based on this framework. The ACL is based on the historical loss rates and the weighted average remaining maturity for financial assets measured at amortized costs including loans, investment securities and unfunded loan commitments. The historical loss rates are adjusted to reflect reasonable and supportable forecasts to estimate expected credit losses over the life of the financial asset. Upon adoption, the ACL on loans increased by $1.5 million and the ACL on held-to-maturity investment securities of $72,000 was recorded.

During the second quarter of 2023, we recorded a $250,000 provision for credit losses as compared to no provision for credit losses recorded in the same period of 2022. We recorded net loan charge-offs of $68,000 during the second quarter of 2023 compared to net loan charge-off of $42,000 during the second quarter of 2022.

During the first six months of 2023, we recorded a $299,000 provision for credit losses compared to a benefit for loan losses of $500,000 in the first six months of 2022. The $229,000 provision for credit losses during the first six months of 2023 consisted of a $250,000 provision to the allowance for credit losses on loans, $30,000 to unfunded loan commitments and $19,000 to the allowance for credit losses on held-to-maturity investment securities. We recorded net loan charge-offs of $115,000 during the six months ended June 30, 2023 compared to net loan recoveries of $40,000 during the six months ended June 30, 2022.

For further discussion of the allowance for credit losses, refer to the “Asset Quality and Distribution” section below.

Non-interest Income. Total non-interest income was $3.8 million in the second quarter of 2023, an increase of $33,000, or 0.9%, from the same period in 2022. The increase in non-interest income during the second quarter of 2023 compared to the same period last year was primarily due to an increase of $101,000 in fees and service charges primarily due to higher fees related to deposit accounts. Other non-interest income also increased by $142,000 which was primarily due to an increase in lease income associated with part of a branch facility that was vacant in the prior year. Partially offsetting this increase was a decrease of $243,000 in gains on sales of one-to-four family residential real estate loans as higher interest rates and low housing inventories reduced originations of these loans, which are typically sold in the secondary market. Higher mortgage rates however did result in increased originations of adjustable-rate loans this quarter which are maintained in our one-to-four family residential loan portfolio.

Total non-interest income was $7.3 million in the first half of 2023, a decrease of $35,000, or 0.5%, from the first half of 2022, primarily as a result of a decrease of $455,000 in gains on sales of loans. Our gains on sales of loans decreased as our originations of secondary market one-to-four family residential real estate loans slowed due to the increase in mortgage interest rates and decreased inventory in the housing market in our market areas. Offsetting the decrease in non-interest income was an increase of $271,000 in fees and services charges due primarily to higher overdraft charges and servicing fees.

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Non-interest Expense. Non-interest expense totaled $10.3 million for the second quarter of 2023, an increase of $1.3 million, or 14.7%, over the same quarter of 2022. The increase in non-interest expense in the second quarter of 2023 compared to the same period last year was mainly due to higher compensation and benefits, occupancy and equipment, data processing and other non-interest expense due to the acquisition of Freedom Bank. Also contributing to the increases were higher amortization costs associated with the purchase accounting entries related to the acquisition. Offsetting the increase was a decrease in acquisition costs from the second quarter of 2022 associated with the acquisition of Freedom Bank.

Non-interest expense totaled $20.7 million for the first six months of 2023, an increase of $2.8 million or 15.9%, from $17.9 million for the first six months of 2022. The increase in non-interest expense in the first half of 2023 compared to the same period last year was mainly due to higher compensation and benefits, occupancy and equipment, data processing, and other non-interest expense due to the acquisition of Freedom Bank. Partially offsetting the increases in non-interest expense were acquisition costs of $221,000 during the first six months of 2023 related to the acquisition of Freedom Bank.

Income Tax Expense. During the second quarter of 2023, we recorded income tax expense of $701,000, compared to $639,000 during the same period of 2022. Our effective tax rate decreased from 17.4% in the second quarter of 2022 to 17.3% in the second quarter of 2023.

We recorded income tax expense of $1.4 million for the first six months of 2023 compared to $1.4 million in the same period of 2022. Our effective tax rate was 18.2% in the first half of 2022 compared to 17.2% in the first half of 2023. The decrease in the effective tax rate was primarily due higher tax-exempt income between the periods.

Financial Condition. Economic conditions in the United States slowed during the first six months of 2023 as elevated inflation levels and higher interest rates impacted the economy. The increase in interest rates has impacted financial institutions resulting in higher costs of funding and lower fair values for investment securities. Three large regional banks have been closed by the Federal Deposit Insurance Corporation (FDIC) mainly due to liquidity concerns, resulting from interest rate risk issues and large concentrations of uninsured corporate deposits. The liquidity issues were unique to the way these banks operated and are not reflective of our Company. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a majority of our deposits being retail-based and FDIC insured. We spend significant time each month monitoring our interest rate and concentration risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability and consistency. The State of Kansas and the geographic markets in which the Company operates were also impacted by these economic headwinds. Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting all areas of the economy both nationally and locally. The Company’s allowance for credit losses included estimates of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets increased $36.5 million, or 2.4%, from December 31, 2022 to $1.5 billion at June 30, 2023.

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At June 30, 2023, our allowance for credit losses on loans totaled $10.4 million, or 1.17% of gross loans outstanding, compared to $8.8 million, or 1.03% of gross loans outstanding, at December 31, 2022. The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to the adoption of CECL on January 1, 2023.

As of June 30, 2023 and December 31, 2022, approximately $7.9 million and $13.0 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that these loans were identified as potential problem loans having more than normal risk and raised doubts as to the ability of the borrowers to comply with present loan repayment terms. Even though borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the ACL was sufficient to cover expected losses related to such loans at June 30, 2023 and December 31, 2022, respectively.

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Loans past due 30-89 days and still accruing interest totaled $614,000, or 0.07% of gross loans, at June 30, 2023, compared to $738,000, or 0.09% of gross loans, at December 31, 2022. At June 30, 2023, $2.8 million in loans were on non-accrual status, or 0.31% of gross loans, compared to $3.3 million, or 0.39% of gross loans, at December 31, 2022. Non-accrual loans consist of loans 90 or more days past due and certain impaired loans. There were no loans 90 days delinquent and accruing interest at June 30, 2023 or December 31, 2022.

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial real estate and construction and land relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At June 30, 2023 and December 31, 2022, we had $934,000 of real estate owned. As of June 30, 2023, real estate owned primarily consisted of commercial buildings, undeveloped land and residential real estate properties. The Company is currently marketing all of the remaining properties in real estate owned.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We experienced a decrease of $19.7 million, or 1.5% in total deposits during the first six months of 2023, to $1.3 billion at June 30, 2023. The decrease in deposits was primarily due to a seasonal decline in public funds accounts and a decline in non-interest bearing deposits. Deposit balances have also been impacted by customers seeking FDIC insurance and higher rates. This trend has resulted in customers changing to different deposit products as well as moving balances to other financial institutions and new customers opening accounts.

Non-interest-bearing deposits at June 30, 2023, were $382.4 million, or 29.9% of deposits, compared to $410.1 million, or 31.5% of deposits, at December 31, 2022. Money market and checking deposit accounts were 47.3% of our deposit portfolio and totaled $606.5 million at June 30, 2023, compared to $626.7 million, or 48.2% of deposits, at December 31, 2022. Savings accounts decreased to $160.4 million, or 12.5% of deposits, at June 30, 2023, from $170.6 million, or 13.1% of deposits, at December 31, 2022. Certificates of deposit totaled $131.7 million, or 10.3% of deposits, at June 30, 2023, compared to $93.3 million, or 7.2% of deposits, at December 31, 2022. The increase in certificates of deposit was primarily related to higher public fund balances, customers seeking higher interest rates and brokered certificates of deposits, which increased from $1.0 million at December 31, 2022 to $11.2 million at June 30, 2023.

Total deposits include estimated uninsured deposits of $193.1 million and $192.9 million as of June 30, 2023 and December 31, 2022, respectively. This represents approximately 15% of our total deposits at June 30, 2023 and compares favorably with other similar community banking organizations. Over 96% of the Company’s total deposits were considered core deposits at June 30, 2023. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.

Certificates of deposit at June 30, 2023, scheduled to mature in one year or less totaled $117.8 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.

Total borrowings increased $51.9 million to $120.1 million at June 30, 2023, from $68.3 million at December 31, 2022. The increase in total borrowings was due to an increase in FHLB borrowings. The increase in FHLB borrowings was to fund loan growth and to offset the decline in deposits.

Cash Flows. During the six months ended June 30, 2023, our cash and cash equivalents decreased by $3.1 million. Our operating activities provided net cash of $5.2 million during the first six months of 2023 primarily as a result of net earnings. Our investing activities used net cash of $38.4 million during the first six months of 2023, primarily due to loan growth. Financing activities provided net cash of $30.0 million during the first six months of 2023, primarily as a result of an increase in FHLB borrowings.

Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $512.8 million at June 30, 2023 and $521.5 million at December 31, 2022. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments or holding higher balances of cash and cash equivalents.

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Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of FHLB advances, a line of credit with the FHLB, other borrowings or through pledging or sales of investment securities. While the sale of available-for-sale investment securities would result in losses due to the current interest environment, pledging these securities as collateral would not result in a loss. At June 30, 2023, we had $76.2 million borrowed on our line of credit with the FHLB. At June 30, 2023, we had collateral pledged to the FHLB that would allow us to borrow $206.3 million, subject to FHLB credit requirements and policies. At June 30, 2023, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $60.8 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $30.0 million in available credit under which we had no outstanding borrowings at June 30, 2023. At June 30, 2023, we had subordinated debentures totaling $21.7 million and $14.0 million of repurchase agreements. At June 30, 2023, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2023, with an interest rate that adjusts daily based on the prime rate less 0.50%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at June 30, 2023. The Company also borrowed $8.3 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original $10.0 million of borrowings was used to fund part of the acquisition of Freedom Bancshares, Inc.

Off Balance Sheet Arrangements. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $2.4 million at June 30, 2023.

At June 30, 2023, we had outstanding loan commitments, excluding standby letters of credit, of $187.1 million. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

Capital. Current regulatory capital regulations require financial institutions (including banks and bank holding companies) to meet certain regulatory capital requirements. The Company and the Bank are subject to the Basel III Rules that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).

The Basel III Rules require a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a Tier 1 capital to risk-weighted assets minimum ratio of 6.0%, a Total Capital to risk-weighted assets minimum ratio of 8.0%, and a Tier 1 leverage minimum ratio of 4.0%. A capital conservation buffer, equal to 2.5% common equity Tier 1 capital, is also established above the regulatory minimum capital requirements (other than the Tier 1 leverage ratio). As of June 30, 2023 and December 31, 2022, the Bank met the requirements to be “well capitalized,” which is the highest rating available under the regulatory capital regulations framework for prompt corrective action. Management believed that as of June 30, 2023, the Company and the Bank met all capital adequacy requirements to which we are subject.

Dividends. During the quarter ended June 30, 2023, we paid a quarterly cash dividend of $0.21 per share to our stockholders.

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. In addition, under the Basel III Rules, financial institutions have to maintain 2.5% in common equity Tier 1 capital attributable to the capital conservation buffer in order to pay dividends and make other capital distributions. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of June 30, 2023. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank’s current year’s net earnings plus the adjusted retained earnings for the three preceding years. As of June 30, 2023, approximately $10.7 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.

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Additionally, our ability to pay dividends is limited by the subordinated debentures that are held by three business trusts that we control. Interest payments on the debentures must be paid before we pay dividends on our capital stock, including our common stock. We have the right to defer interest payments on the debentures for up to 20 consecutive quarters. However, if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our assets and liabilities are principally financial in nature, and the resulting net interest income thereon is subject to changes in market interest rates and the mix of various assets and liabilities. Interest rates in the financial markets affect our decisions relating to pricing our assets and liabilities, which impact net interest income, a significant cash flow source for us. As a result, a substantial portion of our risk management activities relates to managing interest rate risk.

Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models. We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process.

We have been successful in meeting the interest rate sensitivity objectives set forth in our policy. Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including one using interest rates as of the forecast date, and forecasting volumes for the twelve-month projection. This position is then subjected to a shift in interest rates of 100, 200 and 300 basis points with an impact to our net interest income on a one-year horizon as follows:

	As of June 30, 2023						As of December 31, 2022
Scenario	Dollar change in net interest income ($000’s)			Percent change in net interest income			Dollar change in net interest income ($000’s)			Percent change in net interest income
300 basis point rising	$	(5,299	)		(12.1	)%	$	(3,245	)		(6.6	)%
200 basis point rising	$	(3,601	)		(8.3	)%	$	(2,218	)		(4.5	)%
100 basis point rising	$	(1,917	)		(4.4	)%	$	(1,215	)		(2.5	)%
100 basis point falling	$	1,957			4.5	%	$	747			1.5	%
200 basis point falling	$	3,042			7.0	%	$	434			0.9	%
300 basis point falling	$	3,779			8.7	%	$	(67	)		(0.1	)%

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-Looking Statements

This document (including information incorporated by reference) contains, and future oral and written statements by us and our management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on operations and future prospects of us and our subsidiaries include, but are not limited to, the following:

● The effects of changes in interest rates (including the effects of changes in the rate of prepayments of our assets) and the policies of the Federal Reserve including on our net interest income and the value of our security portfolio.

● The strength of the United States economy in general and the strength of the local economies in which we conduct our operations, including the effects of inflationary pressures and supply chain constraints on such economies, which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of our assets.

● The economic impact of past and any future terrorist attacks, acts of war, including the current conflict in Ukraine, or threats thereof, and the response of the United States to any such threats and attacks.

● The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, consumer protection, insurance, tax, trade and monetary and financial matters, including any changes in response to the recent failures of other banks.

● Our ability to compete with other financial institutions due to increases in competitive pressures in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies.

● Our inability to obtain new customers and to retain existing customers.

● The timely development and acceptance of products and services.

● Technological changes implemented by us and by other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers.

● Our ability to develop and maintain secure and reliable electronic systems.

● The effectiveness of our risk management framework.

● The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents and our ability to identify and address such incidents.

● Interruptions involving our information technology and telecommunications systems or third-party servicers.

● The effects of severe weather, natural disasters, widespread disease or pandemics (including the COVID-19 pandemic), and other external events.

● Our ability to retain key executives and employees and the difficulty that we may experience in replacing key executives and employees in an effective manner.

● Consumer spending and saving habits which may change in a manner that affects our business adversely.

● Our ability to successfully integrate acquired businesses and future growth.

● The costs, effects and outcomes of existing or future litigation.

● Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the FASB, such as the implementation of CECL.

● Our ability to effectively manage our credit risk.

● Our ability to forecast probable credit losses and maintain an adequate allowance for credit losses.

● Fluctuations in the value of securities held in our securities portfolio.

● Concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients.

● The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure.

● The level of non-performing assets on our balance sheets.

● Our ability to raise additional capital if needed.

● The effects of declines in real estate markets.

● The effects of fraudulent activity on the part of our employees, customers, vendors, or counterparties.

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These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 30, 2023.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2023. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2023 to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2023 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company or its subsidiaries is a party or which any of their property is subject, other than ordinary routine litigation incidental to their respective businesses.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors set forth under Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit 3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s transition report on Form 10-K filed with the SEC on March 29, 2002 (SEC file no. 000-33203))
Exhibit 3.2	Certificate of Amendment of the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Company’s report on Form 10-K filed with the SEC on March 29, 2013 (SEC file no. 000-33203))
Exhibit 3.3	Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Form S-4 filed with the SEC on June 7, 2001 (SEC file no. 333-62466))
Exhibit 31.1	Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 31.2	Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files pursuant to Rule 405 of Regulation S-T formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022; (ii) Consolidated Statements of Earnings for three and six months ended June 30, 2023 and June 30, 2022; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and June 30, 2022; (iv) Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and June 30, 2022; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and June 30 2022; and (vi) Notes to Consolidated Financial Statements
Exhibit 104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LANDMARK BANCORP, INC.
Date: August 11, 2023	/s/ Michael E. Scheopner
	Michael E. Scheopner
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: August 11, 2023	/s/ Mark A. Herpich
	Mark A. Herpich
	Vice President, Secretary, Treasurer
	and Chief Financial Officer
	(Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Michael E. Scheopner, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2023	/s/ Michael E. Scheopner
	Michael E. Scheopner
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Mark A. Herpich, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2023	/s/ Mark A. Herpich
	Mark A. Herpich
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael E. Scheopner, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael E. Scheopner

Michael E. Scheopner

Chief Executive Officer

August 11, 2023

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Herpich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark A. Herpich

Mark A. Herpich

Chief Financial Officer

August 11, 2023

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 10, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	0-33203
Entity Registrant Name	LANDMARK BANCORP, INC.
Entity Central Index Key	0001141688
Entity Tax Identification Number	43-1930755
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	701 Poyntz Avenue
Entity Address, City or Town	Manhattan
Entity Address, State or Province	KS
Entity Address, Postal Zip Code	66502
City Area Code	(785)
Local Phone Number	565-2000
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	LARK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,220,767

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets
Cash and cash equivalents	$ 20,038	$ 23,156
Interest-bearing deposits at other banks	8,336	9,084
Investment securities available-for-sale, at fair value	484,378	489,306
Investment securities, held-to-maturity, net of allowance for credit losses of $91 and $0, fair value of $3,300 and $3,452	3,496	3,524
Bank stocks, at cost	9,445	5,470
Loans, net of allowance for credit losses of $10,449 and $8,791	882,549	841,149
Loans held for sale, at fair value	3,900	2,488
Bank owned life insurance	37,764	37,323
Premises and equipment, net	24,027	24,327
Goodwill	32,199	32,199
Other intangible assets, net	3,612	4,006
Mortgage servicing rights	3,514	3,813
Real estate owned, net	934	934
Accrued interest and other assets	25,148	26,088
Total assets	1,539,340	1,502,867
Deposits:
Non-interest-bearing demand	382,410	410,142
Money market and checking	606,474	626,659
Savings	160,426	170,570
Certificates of deposit	131,661	93,278
Total deposits	1,280,971	1,300,649
Federal Home Loan Bank borrowings	76,185	8,200
Subordinated debentures	21,651	21,651
Other borrowings	22,293	38,402
Accrued interest and other liabilities	20,887	22,532
Total liabilities	1,421,987	1,391,434
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 5,215,925 and 5,213,232 shares issued at June 30, 2023 and December 31, 2022, respectively	52	52
Additional paid-in capital	84,475	84,273
Retained earnings	55,498	52,174
Accumulated other comprehensive loss	(22,672)	(25,066)
Total stockholders’ equity	117,353	111,433
Total liabilities and stockholders’ equity	$ 1,539,340	$ 1,502,867

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 91
Held-to-Maturity, Fair Value	3,300	3,452
Allowance for loans losses	$ 10,449	$ 8,791
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	7,500,000	7,500,000
Common stock, shares issued	5,215,925	5,213,232

XML

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest income:
Loans		$ 12,623	$ 7,156	$ 23,999	$ 14,347
Investment securities:
Taxable		2,379	1,417	4,696	2,408
Tax-exempt		775	730	1,561	1,452
Interest-bearing deposits at banks		49	126	147	188
Total interest income		15,826	9,429	30,403	18,395
Interest expense:
Deposits		3,452	358	5,991	553
Subordinated debentures		387	165	751	288
Borrowings		1,154	8	1,881	11
Total interest expense		4,993	531	8,623	852
Net interest income		10,833	8,898	21,780	17,543
Provision (benefit) for credit losses		250		299	(500)
Net interest income after provision (benefit) for credit losses		10,583	8,898	21,481	18,043
Non-interest income:
Fees and service charges		2,481	2,380	4,839	4,568
Gains on sales of loans, net	[1]	830	1,073	1,523	1,978
Increase in cash surrender value of bank owned life insurance	[1]	223	190	441	377
Other		295	153	521	436
Total non-interest income		3,829	3,796	7,324	7,359
Non-interest expense:
Compensation and benefits		5,572	4,953	11,114	9,728
Occupancy and equipment		1,394	1,177	2,763	2,410
Data processing		431	362	1,020	702
Amortization of mortgage servicing rights and other intangibles		472	335	933	651
Professional fees		607	415	1,098	866
Acquisition costs			221		221
Other		1,873	1,559	3,764	3,282
Total non-interest expense		10,349	9,022	20,692	17,860
Earnings before income taxes		4,063	3,672	8,113	7,542
Income tax expense		701	639	1,394	1,376
Net earnings		$ 3,362	$ 3,033	$ 6,719	$ 6,166
Earnings per share:
Basic	[2],[3]	$ 0.64	$ 0.58	$ 1.29	$ 1.18
Diluted	[2],[3]	0.64	0.58	1.29	1.17
Dividends per share	[2]	$ 0.21	$ 0.20	$ 0.42	$ 0.40

[1] Not within the scope of ASC 606.

[2] Per share amounts for the periods ended June 30, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

[3] Share and per share values for the periods ended June 30, 2022 have been adjusted to give effect to the 5%

XML

Consolidated Statements of Earnings (Unaudited) (Parenthetical)	6 Months Ended
	Jun. 30, 2023
Consolidated Statements Of Earnings Unaudited
Stock dividend percentage	5.00%

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net earnings	$ 3,362	$ 3,033	$ 6,719	$ 6,166
Net unrealized holding (losses) gains on available-for-sale securities	(3,568)	(10,247)	3,171	(29,186)
Income tax effect on net unrealized holding losses (gains)	874	2,511	(777)	7,150
Other comprehensive (loss) income	(2,694)	(7,736)	2,394	(22,036)
Total comprehensive income (loss)	$ 668	$ (4,703)	$ 9,113	$ (15,870)

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2021	$ 50	$ 79,120	$ 52,593		$ 3,880	$ 135,643
Net earnings			6,166			6,166
Other comprehensive income (loss)					(22,036)	(22,036)
Dividends paid			(2,097)			(2,097)
Stock-based compensation		164				164
Purchase of 21,115 treasury shares				(538)		(538)
Balance at Jun. 30, 2022	50	79,284	56,662	(538)	(18,156)	117,302
Balance at Mar. 31, 2022	50	79,206	54,677		(10,420)	123,513
Net earnings			3,033			3,033
Other comprehensive income (loss)					(7,736)	(7,736)
Dividends paid			(1,048)			(1,048)
Stock-based compensation		78				78
Purchase of 21,115 treasury shares				(538)		(538)
Balance at Jun. 30, 2022	50	79,284	56,662	(538)	(18,156)	117,302
Balance at Dec. 31, 2022	52	84,273	52,174		(25,066)	111,433
Net earnings			6,719			6,719
Other comprehensive income (loss)					2,394	2,394
Dividends paid			(2,191)			(2,191)
Stock-based compensation		150				150
Cumulative effect of change in accounting principle from implementation of ASU 2016-13			(1,204)			(1,204)
Forfeiture of restricted common stock, 350 shares
Exercise of stock options, 2,693 shares		52				52
Balance at Jun. 30, 2023	52	84,475	55,498		(22,672)	117,353
Balance at Mar. 31, 2023	52	84,413	53,231		(19,978)	117,718
Net earnings			3,362			3,362
Other comprehensive income (loss)					(2,694)	(2,694)
Dividends paid			(1,095)			(1,095)
Stock-based compensation		62				62
Balance at Jun. 30, 2023	$ 52	$ 84,475	$ 55,498		$ (22,672)	$ 117,353

XML

Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends paid per share	$ 0.21	$ 0.20	$ 0.42	$ 0.40
Purchase of treasury shares		21,115		21,115
Restricted stock award, net of forfeitures			350
Exercise of stock options, shares			2,693

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net earnings		$ 6,719	$ 6,166
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision (benefit) for credit losses		299	(500)
Amortization of investment security premiums, net		171	978
Accretion of purchase accounting adjustments		(439)	(9)
Amortization of mortgage servicing rights and other intangibles		933	651
Depreciation		617	563
Increase in cash surrender value of bank owned life insurance	[1]	(441)	(377)
Stock-based compensation		150	164
Deferred income taxes		384	(70)
Net gains on sales of premises and equipment and foreclosed assets			(114)
Net gains on sales of loans	[1]	(1,523)	(1,978)
Proceeds from sales of loans		44,686	79,920
Origination of loans held for sale		(44,815)	(79,862)
Changes in assets and liabilities:
Accrued interest and other assets		170	767
Accrued expenses, taxes, and other liabilities		(1,675)	(769)
Net cash provided by operating activities		5,236	5,530
Cash flows from investing activities:
Net increase in loans		(42,786)	(8,088)
Net change in interest-bearing deposits at banks		738	(993)
Maturities and prepayments of investment securities		26,110	24,097
Purchases of investment securities		(18,172)	(159,481)
Redemption of bank stocks		4,008	185
Purchase of bank stocks		(7,983)	(161)
Proceeds from sales of premises and equipment and foreclosed assets			1,379
Purchases of premises and equipment, net		(317)	(439)
Net cash used in investing activities		(38,402)	(143,501)
Cash flows from financing activities:
Net decrease in deposits		(19,689)	(17,014)
Federal Home Loan Bank advance borrowings		392,214
Federal Home Loan Bank advance repayments		(324,229)
Repayments on other borrowings		(666)	(1,180)
Change in repurchase agreements		(15,443)
Proceeds from exercise of stock options		52
Payment of dividends		(2,191)	(2,097)
Purchase of treasury stock			(538)
Net cash provided by (used in) financing activities		30,048	(20,829)
Net decrease in cash and cash equivalents		(3,118)	(158,800)
Cash and cash equivalents at beginning of period		23,156	189,213
Cash and cash equivalents at end of period		20,038	30,413
Supplemental disclosure of cash flow information:
Cash payments for income taxes			20
Cash paid for interest		7,849	845
Cash paid for operating leases		85	97
Supplemental schedule of noncash investing and financing activities:
Investment securities purchases not yet settled			$ 685

[1] Not within the scope of ASC 606.

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Interim Financial Statements

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, Landmark National Bank (the “Bank”) and Landmark Risk Management Inc., have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2023, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the three and six-month interim period ended June 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023 or any other future time period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

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Recent Developments

6 Months Ended

Jun. 30, 2023

Recent Developments

Recent Developments

2. Recent Developments

The increase in interest rates has impacted financial institutions resulting in higher costs of funding and lower fair values for investment securities. During 2023, three large regional banks have been closed by the Federal Deposit Insurance Corporation (FDIC) mainly due to liquidity concerns, resulting from interest rate risk issues and large concentrations of uninsured corporate deposits. The liquidity issues were unique to the way these banks operated and we don’t believe are reflective of our Company. The Company believes it maintains strong capital and liquidity, and a stable, conservative deposit portfolio with a majority of deposits being retail-based and FDIC insured. The Company spends significant time each month monitoring interest rate and concentration risks through asset/liability management and lending strategies that involve a relationship-based banking model that the Company believes offers stability and consistency.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL.” The provisions of the update eliminated the probable initial recognition threshold under previous GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the expected term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update, credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans. Under prior GAAP, a purchased loan’s contractual balance was adjusted to fair value through a credit discount, and no reserve was recorded on the purchased loan upon acquisition. Under CECL loans determined to be purchased credit deteriorated will have an allowance for credit losses established through purchase accounting. Finally, increased disclosure requirements under CECL oblige organizations to present credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. In October 2019, the FASB approved a change in the effective dates for CECL which delayed the effective date to fiscal years beginning after December 15, 2022 for smaller reporting companies.

On January 1, 2023, the Company adopted CECL. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity investment securities. It also applies to off-balance credit exposures not accounted for as insurance (loan commitments and standby letters of credit). In addition, ASC 326 made changes to the accounting for available-for-sale investment securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP requirements. The adoption of CECL resulted in an increase in the allowance for credit losses on loans of $1.5 million, an initial allowance for credit losses on held-to-maturity investment securities of $72,000, an increase in deferred tax assets of $391,000 and a decrease in retained earnings of $1.2 million. The increases in allowance for credit losses is primarily due to moving to a weighted average remaining maturity allowance methodology and the transition of purchase accounting discounts on loans from an adjustment to amortized cost in the allowance calculation.

The following table illustrates the impact of ASC 326:

	January 1, 2023
(Dollars in thousands)	As reported under ASC 326		Pre-ASC 326 adoption		Impact of ASC 326 adoption
Allowance for credit losses:
Held-to-maturity investment securities	$	72	$	-	$	72
One-to-four family residential real estate loans	$	1,677	$	655	$	1,022
Construction and land loans		166		117		49
Commercial real estate loans		4,221		3,158		1,063
Commercial loans		2,898		2,753		145
Paycheck protection program loans		-		-		-
Agriculture loans		1,142		1,966		(824	)
Municipal loans		16		5		11
Consumer loans		194		137		57
Total allowance for credit losses for loans	$	10,314	$	8,791	$	1,523
Unfunded loan commitments	$	170	$	170	$	-

Investment Securities. Investment securities are classified as held-to-maturity when management has the positive intent and ability to hold them to maturity. Securities are classified as available-for-sale when they might be sold before maturity. Held-to-maturity securities are carried at amortized cost while available-for-sale securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Realized gains and losses on sales of available-for-sale securities are recorded on a trade date basis and are calculated using the specific identification method.

Allowance for Credit Losses – Held-to-Maturity Investment Securities. Management measures expected credit losses on held-to-maturity investment securities on a collective basis by major security type. Accrued interest is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical loss information adjusted for current conditions and reasonable and supportable forecasts.

Allowance for Credit Losses – Available-for-Sale Investment Securities. For available-for-sale investment securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of the security or security issuer, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected was less than the amortized cost basis, a credit loss existed and an allowance for credit losses would be recorded for the credit loss, which is limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for or reversal of credit loss expense. Losses are charged against the allowance for credit losses when the Company determines the available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. The Company does not estimate credit losses on available-for-sale security accrued interest receivable.

Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. The amortized cost is the principal balance outstanding net of previous charge-offs, and for purchased loans, net of unamortized purchase premiums and discounts. Interest income is accrued on the unpaid principal balance. Origination fees received on loans held in portfolio and the estimated direct costs of origination are deferred and amortized to interest income using the level yield method without anticipating prepayments.

The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of the principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are evaluated individually and are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses - Loans. The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers asset quality trends, composition and trends in the loan portfolio, underlying collateral values, industry trends and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses expected in the loan portfolio at the balance sheet date. The allowance is adjusted through provision for credit losses and charge-offs, net of recoveries of amounts previously charged off.

The allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses.

One-to-Four Family Residential Real Estate. One-to-four family residential real estate loans consists primarily of loans secured by 1-4 family residential properties. Repayment is primarily dependent on the personal cash flow of the borrower.

Construction and Land. Construction and land loans consist primarily of loans to facilitate the development of both residential and commercial real estate. Repayment is primarily dependent on the completion of the development and refinancing to longer term financing.

Commercial Real Estate. Commercial real estate loans consist primarily of loans secured by office buildings, industrial buildings, warehouses, retail buildings and multi-family housing and are primarily owner-occupied. For such loans, repayment is largely dependent upon the operation of the borrower’s business.

Commercial. Commercial loans include loans to business enterprises issued for commercial, industrial and/or other professional purposes. These loans are generally secured by equipment, inventory and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

Agriculture. Agriculture loans include operating and real estate loans to agriculture enterprises. Generally, the borrower’s ability to repay is based on the cash flows from farming operations.

Municipal. Municipal loans are generally related to equipment leasing or general fund loans. Repayment is primarily dependent on the tax revenue of the municipal entity.

Consumer. Consumer loans include automobile, boat, home improvement and home equity loans. Repayment is primarily dependent on the personal cash flow of the borrower.

The Company utilized a weighted average remaining maturity allowance methodology to calculate the allowance for credit losses. Historical loss rates are adjusted for current conditions and reasonable and supportable forecasts. Following the economic forecast period loss rates revert back to historical loss rates over a reasonable period of time. Additional adjustments for qualitative factors are included to quantify the risks within each of the loan categories that are not included in the historical loss rates or economic projections. The data for the allowance calculation may be obtained from internal or external sources.

Loans that do not share similar risk characteristics with the collectively evaluated pools are evaluated on an individual basis and are excluded from the collectively evaluated loan pools. Such loans are evaluated for credit losses based on either discounted cash flows or the fair value of collateral.

The Company estimates expected credit losses over the contractual term of obligations to extend credit, unless the obligation is unconditionally cancellable. The allowance for off-balance-sheet exposures is adjusted through the provision for credit losses. The estimates are determined based on the likelihood of funding during the contractual term and an estimate of credit losses subsequent to funding. Estimated credit losses on subsequently funded balances are based on the same assumptions used to estimated credit losses on loans.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures which eliminated the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. The update also enhanced disclosure required for loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply the loan refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments to this ASU require a public business entity to disclose current period gross charge-offs by year of origination for loans in the vintage disclosures.

On January 1, 2023, the Company adopted ASU 2022-02, electing the prospective approach. The adoption did not have a material effect on the Company’s operating results or financial condition. The disclosures in this document have been updated to reflect the new guidance.

Loans Modifications. Loan modifications, including modifications to borrowers experiencing financial difficulty, are treated as a new loan if two conditions are met. The terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks and modifications to the terms of the original loan are more than minor.

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Investments

6 Months Ended

Jun. 30, 2023

Schedule of Investments [Abstract]

Investments

4. Investments

A summary of investment securities available-for-sale and held-to-maturity is as follows:

(Dollars in thousands)	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	128,458	$	-	$	(6,978	)	$	121,480
Municipal obligations, tax exempt		127,921		56		(3,526	)		124,451
Municipal obligations, taxable		82,456		79		(4,822	)		77,713
Agency mortgage-backed securities		175,571		31		(14,868	)		160,734
Total available-for-sale	$	514,406	$	166	$	(30,194	)	$	484,378

	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,496	$	-	$	(196	)	$	3,300
Total held-to-maturity	$	3,496	$	-	$	(196	)	$	3,300

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	130,684	$	-	$	(7,573	)	$	123,111
U. S. federal agency obligations		2,002		-		(14	)		1,988
Municipal obligations, tax exempt		130,848		59		(3,645	)		127,262
Municipal obligations, taxable		73,520		14		(6,290	)		67,244
Agency mortgage-backed securities		185,451		172		(15,922	)		169,701
Total available-for-sale	$	522,505	$	245	$	(33,444	)	$	489,306

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,524	$	5	$	(77	)	$	3,452
Total held-to-maturity	$	3,524	$	5	$	(77	)	$	3,452

The amortized cost of the above held-to-maturity investment securities has been further reduced by the allowance for credit losses of $91,000 at June 30, 2023.

The tables above show that some of the securities in the available-for-sale and held-to-maturity investment portfolios had unrealized losses, or were temporarily impaired, as of June 30, 2023 and December 31, 2022. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of June 30, 2023
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	13,995	$	(562	)	$	107,485	$	(6,416	)	$	121,480	$	(6,978	)
Municipal obligations, tax exempt		268		58,460		(861	)		54,533		(2,665	)		112,993		(3,526	)
Municipal obligations, taxable		119		32,430		(891	)		39,464		(3,931	)		71,894		(4,822	)
Agency mortgage-backed securities		102		27,246		(610	)		127,921		(14,258	)		155,167		(14,868	)
Total for available-for-sale		556	$	132,131	$	(2,924	)	$	329,403	$	(27,270	)	$	461,534	$	(30,194	)
Held-to-maturity:
Other		7	$	3,300	$	(196	)	$	-	$	-		$	3,300	$	(196	)
Total held-to-maturity		7		3,300		(196	)		-		-			3,300		(196	)

			As of December 31, 2022
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	85,988	$	(4,591	)	$	37,123	$	(2,982	)	$	123,111	$	(7,573	)
U.S. federal agency obligations		1		1,988		(14	)		-		-			1,988		(14	)
Municipal obligations, tax exempt		274		107,262		(3,020	)		8,495		(625	)		115,757		(3,645	)
Municipal obligations, taxable		108		54,746		(5,006	)		7,571		(1,284	)		62,317		(6,290	)
Agency mortgage-backed securities		100		78,971		(4,550	)		79,882		(11,372	)		158,853		(15,922	)
Total for available-for-sale		550		328,955		(17,181	)		133,071		(16,263	)		462,026		(33,444	)
Held-to-maturity:
Other		6	$	3,009	$	(77	)	$	-	$	-		$	3,009	$	(77	)
Total held-to-maturity		6		3,009		(77	)		-		-			3,009		(77	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of its cost basis, the Company believed that the U.S. treasury securities identified in the table above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2023, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and the Government National Mortgage Association. The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the table above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The Company’s other investment securities portfolio consists of seven subordinated debentures issued by financial institutions. These investment securities were acquired in the Freedom Bank acquisition and classified as held-to-maturity. The securities were issued in 2021 and 2022 with a 10 year maturity and a fixed rate for five years. The securities are callable after the end of the fixed rate term. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the other securities identified in the tables above were temporarily impaired as of June 30, 2023 and December 31, 2022.

The following table provides information on the Company’s allowance for credit losses related to held-to-maturity investment securities.

(Dollars in thousands)
Balance at January 1, 2023	$	-
Impact of adopting ASC 326		72
Provision for credit losses		19
Balance at June 30, 2023	$	91

The table below sets forth amortized cost and fair value of investment securities at June 30, 2023. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Available-for-sale:
Due in less than one year	$	33,292	$	32,728
Due after one year but within five years		263,298		246,734
Due after five years but within ten years		162,266		151,903
Due after ten years		55,550		53,013
Total available-for-sale	$	514,406	$	484,378
Held-to-maturity:
Due after five years but within ten years		3,496		3,300
Total held-to-maturity	$	3,496	$	3,300

The Company did not record any sales of available-for-sale securities during the six months ended June 30, 2023 and 2022.

Securities with carrying values of $420.9 million and $420.8 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2023 and December 31, 2022, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

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Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans and Allowance for Credit Losses

5. Loans and Allowance for Credit Losses

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2023			2022
One-to-four family residential real estate loans	$	259,655		$	236,982
Construction and land loans		22,016			22,725
Commercial real estate loans		314,889			304,074
Commercial loans		181,424			173,415
Paycheck protection program loans		-			21
Agriculture loans		84,345			84,283
Municipal loans		2,711			2,026
Consumer loans		28,219			26,664
Total gross loans		893,259			850,190
Net deferred loan costs (fees) and loans in process		(261	)		(250	)
Allowance for credit losses		(10,449	)		(8,791	)
Loans, net	$	882,549		$	841,149

The following tables provide information on the Company’s allowance for credit losses by loan class and allowance methodology:

	Three and six months ended June 30, 2023
(Dollars in thousands)	One-to-four family residential real estate loans		Construction and land loans			Commercial real estate loans			Commercial loans			Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2023	$	1,757	$	170		$	4,438		$	2,614		$	-	$	1,059		$	17		$	212		$	10,267
Charge-offs		-		-			-			(90	)		-		-			-			(68	)		(158	)
Recoveries		-		-			-			10			-		57			-			23			90
Provision for credit losses		95		(9	)		(65	)		176			-		18			(1	)		36			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449
Allowance for credit losses:
Balance at January 1, 2023	$	655	$	117		$	3,158		$	2,753		$	-	$	1,966		$	5		$	137		$	8,791
Impact of adopting ASC 326		1,022		49			1,063			145			-		(824	)		11			57			1,523
Charge-offs		-		-			-			(107	)		-		-			-			(159	)		(266	)
Recoveries		-		-			-			19			-		73			-			59			151
Provision for credit losses		175		(5	)		152			(100	)		-		(81	)		-			109			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449

	Three and six months ended June 30, 2022
(Dollars in thousands)	One-to-four family residential real estate loans			Construction and land loans			Commercial real estate loans			Commercial loans		Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2022	$	624		$	146		$	3,061		$	2,465	$	-	$	1,929		$	6		$	126		$	8,357
Charge-offs		-			-			-			-		-		-			-			(76	)		(76	)
Recoveries		-			-			-			9		-		2			-			23			34
Provision for credit losses		(44	)		(13	)		(79	)		177		-		(111	)		-			70			-
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315
Allowance for credit losses:
Balance at January 1, 2022	$	623		$	138		$	3,051		$	2,613	$	-	$	2,221		$	6		$	123		$	8,775
Charge-offs		-			-			-			-		-		-			-			(129	)		(129	)
Recoveries		-			100			-			23		-		3			6			37			169
Provision for credit losses		(43	)		(105	)		(69	)		15		-		(404	)		(6	)		112			(500	)
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315

	As of December 31, 2022
(Dollars in thousands)	One-to-four family residential real estate loan		Construction and land loans		Commercial real estate loans		Commercial loans		Paycheck protection program loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for credit losses:
Individually evaluated for loss	$	-	$	-	$	-	$	636	$	-	$	18	$	-	$	-	$	654
Collectively evaluated for loss		655		117		3,158		2,117		-		1,948		5		137		8,137
Total	$	655	$	117	$	3,158	$	2,753	$	-	$	1,966	$	5	$	137	$	8,791
Loan balances:
Individually evaluated for loss	$	326	$	412	$	1,224	$	812	$	-	$	1,319	$	36	$	-	$	4,129
Collectively evaluated for loss		236,656		22,313		302,850		172,603		21		82,964		1,990		26,664		846,061
Total	$	236,982	$	22,725	$	304,074	$	173,415	$	21	$	84,283	$	2,026	$	26,664	$	850,190

The Company recorded net loan charge-offs of $68,000 during the second quarter of 2023 compared to net loan charge-offs of $42,000 during the second quarter of 2022. The Company recorded net loan charge-offs of $115,000 during the six months ended June 30, 2023 compared to net loan recoveries of $40,000 during the six months ended June 30, 2022.

The following table presents information on non-accrual and loans past due over 89 days and still accruing:

(Dollars in thousands)	As of June 30, 2023
	Non-accrual with no allowance for credit loss		Non-accrual with allowance for credit losses		Loans past due over 89 days still accruing
One-to-four family residential real estate loans	$	38	$	-	$	-
Construction and land loans		194		-		-
Commercial real estate loans		1,218		-		-
Commercial loans		112		1,000		-
Paycheck protection program loans		-		-		-
Agriculture loans		214		8		-
Municipal loans		-		-		-
Consumer loans		-		-		-
Total loans	$	1,776	$	1,008	$	-

The following table presents information on impaired loans:

(Dollars in thousands)	As of December 31, 2022
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	326	$	326	$	326	$	-	$	-	$	357	$	9
Construction and land		843		412		412		-		-		243		10
Commercial real estate		1,224		1,224		1,224		-		-		1,224		47
Commercial		1,063		812		75		737		636		865		5
Agriculture		1,402		1,319		1,301		18		18		1,433		64
Municipal		36		36		36		-		-		36		1
Total impaired loans	$	4,894	$	4,129	$	3,374	$	755	$	654	$	4,158	$	136

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is 90 days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans 90 days or more delinquent and accruing interest at June 30, 2023 or December 31, 2022.

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2023
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	3		$	234		$	-		$	237		$	38		$	275		$	259,380
Construction and land loans					-			-			-			194			194			21,822
Commercial real estate loans		-			184			-			184			1,218			1,402			313,487
Commercial loans		104			63			-			167			1,112			1,279			180,145
Paycheck protection program loans		-			-			-			-			-			-			-
Agriculture loans		-			5			-			5			222			227			84,118
Municipal loans		-			-			-			-			-			-			2,711
Consumer loans		20			1			-			21			-			21			28,198
Total	$	127		$	487		$	-		$	614		$	2,784		$	3,398		$	889,861
Percent of gross loans		0.01	%		0.05	%		0.00	%		0.07	%		0.31	%		0.38	%		99.62	%

(Dollars in thousands)	As of December 31, 2022
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	8		$	72		$	-		$	80		$	170		$	250		$	236,732
Construction and land loans		-			-			-			-			195			195			22,530
Commercial real estate loans		-			-			-			-			1,224			1,224			302,850
Commercial loans		-			411			-			411			812			1,223			172,192
Paycheck protection program loans		-			-			-			-			-			-			21
Agriculture loans		-			180			-			180			925			1,105			83,178
Municipal loans		-			-			-			-			-			-			2,026
Consumer loans		67			-			-			67			-			67			26,597
Total	$	75		$	663		$	-		$	738		$	3,326		$	4,064		$	846,126
Percent of gross loans		0.01	%		0.08	%		0.00	%		0.09	%		0.39	%		0.48	%		99.52	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2023 and 2022 would have increased interest income by $280,000 and $95,000, respectively. No interest income related to non-accrual loans was included in interest income for the three and six months ended June 30, 2023 and 2022.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

The following table presents information on the Company’s risk category of loans by type and year of origination:

(Dollars in thousands)	As of June 30, 2023
	2023		2022			2021			2020		2019		Prior		Revolving loans amortized cost			Revolving loans converted to term		Total
One-to-four family residential real estate loans
Nonclassified	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,282	$	3,966		$	423	$	259,617
Classified		-		-			-			-		-		38		-			-		38
Total	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,320	$	3,966		$	423	$	259,655
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Construction and land loans
Nonclassified	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	369	$	1,173		$	359	$	21,822
Classified		-		-			-			-		-		194		-			-		194
Total	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	563	$	1,173		$	359	$	22,016
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial real estate loans
Nonclassified	$	19,401	$	77,956		$	59,861		$	55,043	$	31,249	$	64,697	$	3,262		$	420	$	311,889
Classified		-		-			488			28		184		2,300		-			-		3,000
Total	$	19,401	$	77,956		$	60,349		$	55,071	$	31,433	$	66,997	$	3,262		$	420	$	314,889
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial loans
Nonclassified	$	17,850	$	39,227		$	21,332		$	18,866	$	3,514	$	5,696	$	65,487		$	5,007	$	176,979
Classified		190		867			286			413		543		34		1,905			207		4,445
Total	$	18,040	$	40,094		$	21,618		$	19,279	$	4,057	$	5,730	$	67,392		$	5,214	$	181,424
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	-		$	-	$	(107	)
Agriculture loans
Nonclassified	$	2,647	$	12,667		$	5,664		$	4,473	$	4,296	$	12,876	$	41,345		$	155	$	84,123
Classified		-		-			-			-		50		114		58			-		222
Total	$	2,647	$	12,667		$	5,664		$	4,473	$	4,346	$	12,990	$	41,403		$	155	$	84,345
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Municipal loans
Nonclassified	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Classified		-		-			-			-		-		-		-			-		-
Total	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Consumer loans
Nonclassified	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Classified		-		-			-			-		-		-		-			-		-
Total	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	(159	)	$	-	$	(159	)
Total loans
Nonclassified	$	85,794	$	227,312		$	139,477		$	117,269	$	55,053	$	123,882	$	130,185		$	6,388	$	885,360
Classified		190		867			774			441		777		2,680		1,963			207		7,899
Total	$	85,984	$	228,179		$	140,251		$	117,710	$	55,830	$	126,562	$	132,148		$	6,595	$	893,259
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	(159	)	$	-	$	(266	)

The following table provides information on the Company’s risk categories by loan class:

	As of December 31, 2022
(Dollars in thousands)	Nonclassified		Classified
One-to-four family residential real estate loans	$	236,663	$	319
Construction and land loans		22,530		195
Commercial real estate loans		300,216		3,858
Commercial loans		165,709		7,706
Paycheck protection program loans		21		-
Agriculture loans		83,358		925
Municipal loan		2,026		-
Consumer loans		26,664		-
Total	$	837,187	$	13,003

The following table provides information on the Company’s allowance for credit losses related to unfunded loan commitments.

(dollars in thousands)
Balance at January 1, 2023	$	170
Impact of adopting ASC 326		-
Provision for credit losses		30
Balance at June 30, 2023	$	200

The following table presents the amortized cost basis of loans at June 30, 2023 that were both experiencing financial difficulty and modified during the six months ended June 30, 2023 by class, type of modification and includes the financial effect of the modification.

(Dollars in thousands)	As of June 30, 2023
	Amortized cost basis		% of loan class total			Financial effect
Term extension:
Commercial	$	151		0.1	%	90 day payment deferral

As of June 30, 2023, all loans experiencing both financial difficulty and modified during the three and six months ended June 30, 2023 were current under the terms of the agreements. There were no commitments to lend additional funds to the borrowers and there were no charge-offs recorded against the loans. The Company had no allowance for credit losses recorded against these loans as of June 30, 2023. The Company did not have any loan modifications that had a payment default during the three and six months ended June 30, 2023.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual impairment test as of December 31, 2022 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2023 that required an interim goodwill impairment test.

Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization was as follows:

(Dollars in thousands)	As of June 30, 2023
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(2,268	)	$	3,612

(Dollars in thousands)	As of December 31, 2022
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(1,874	)	$	4,006

The following sets forth estimated amortization expense for core deposit and intangible assets for the remainder of 2023 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2023	$	371
2024		663
2025		588
2026		512
2027		436
2028		360
Thereafter		682
Total	$	3,612

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Mortgage Loan Servicing

6 Months Ended

Jun. 30, 2023

Mortgage Loan Servicing

Mortgage Loan Servicing

7. Mortgage Loan Servicing

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2023		2022
FHLMC	$	678,149	$	685,859
FHLB		28,129		27,285
Total	$	706,278	$	713,144

Custodial escrow balances maintained in connection with serviced loans were $6.2 million and $5.3 million at June 30, 2023 and December 31, 2022, respectively. Gross service fee income related to such loans was $441,000 and $453,000 for the three months ended June 30, 2023 and 2022, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $894,000 and $907,000 for the six months ended June 30, 2023 and 2022, respectively.

Activity for mortgage servicing rights was as follows:

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2023			2022			2023			2022
Mortgage servicing rights:
Balance at beginning of period	$	3,652		$	4,128		$	3,813		$	4,193
Additions		137			217			240			451
Amortization		(275	)		(320	)		(539	)		(619	)
Balance at end of period	$	3,514		$	4,025		$	3,514		$	4,025

The fair value of mortgage servicing rights was $10.3 million at June 30, 2023 and December 31, 2022, respectively. Fair value at June 30, 2023 was determined using discount rate of 9.50%; prepayment speeds ranging from 6.00% to 22.26%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.57%. Fair value at December 31, 2022 was determined using discount rates at 9.50%; prepayment speeds ranging from 6.00% to 21.34%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.47%.

The Company had a mortgage repurchase reserve of $204,000 at June 30, 2023 and $225,000 at December 31, 2022, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company charged a $6,000 loss against the reserve during three months ended June 30, 2023 and losses of $21,000 against the reserve during the six months ended June 30, 2023. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the three or six months ended June 30, 2022. As of June 30, 2023, the Company had one outstanding mortgage repurchase request.

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Earnings per Share

6 Months Ended

Jun. 30, 2023

Earnings per share:

Earnings per Share

8. Earnings per Share

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The diluted earnings per share computation for the three and six months ended June 30, 2023 excluded 77,511 of unexercised stock options because their inclusion would have been anti-dilutive during such periods. The diluted earnings per share computation for the three and six months ended June 30, 2022 excluded 53,642 of unexercised stock options because their inclusion would have been anti-dilutive during such periods. The Company’s Board of Directors declared a cash dividend of $0.21 per share to be paid September 6, 2023, to common stockholders of record as of the close of business on August 23, 2023. The shares used in the calculation of basic and diluted earnings per share are shown below:

(Dollars in thousands, except per share amounts)	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net earnings	$	3,362	$	3,033	$	6,719	$	6,166
Weighted average common shares outstanding - basic (1)		5,215,575		5,237,837		5,214,357		5,242,558
Assumed exercise of stock options (1)		3,975		14,709		5,403		17,756
Weighted average common shares outstanding - diluted (1)		5,219,550		5,252,546		5,219,760		5,260,313
Earnings per share (1):
Basic	$	0.64	$	0.58	$	1.29	$	1.18
Diluted	$	0.64	$	0.58	$	1.29	$	1.17

(1) Share and per share values for the periods ended June 30, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

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Federal Home Loan Bank Borrowings

6 Months Ended

Jun. 30, 2023

Federal Home Loan Bank Borrowings

9. Federal Home Loan Bank Borrowings

The Bank has a line of credit, renewable annually each September, with the Federal Home Loan Bank (“FHLB’) under which there were $76.2 million of borrowings at June 30, 2023 and $8.2 million at December 31, 2022. Interest on any outstanding balance on the line of credit accrues at the federal funds rate plus 0.15% (5.23% at June 30, 2023). The Company had no letters of credit issued through the FHLB at June 30, 2023 or December 31, 2022 to secure municipal deposits. The Company did not have any term advances from FHLB at June 30, 2023 or December 31, 2022.

Although no loans are specifically pledged, the FHLB requires the Bank to maintain eligible collateral (qualifying loans and investment securities) that has a lending value at least equal to its required collateral. At June 30, 2023 and December 31, 2022, there was a blanket pledge of loans and securities totaling $277.5 million and $139.0 million, respectively. At June 30, 2023 and December 31, 2022, the Bank’s total borrowing capacity with the FHLB was approximately $206.3 million and $111.0 million, respectively. At June 30, 2023 and December 31, 2022, the Bank’s available borrowing capacity was $129.0 million and $101.8 million, respectively. The difference between the Bank’s total borrowing capacity and available borrowing capacity is related to the amount of borrowings outstanding. The available borrowing capacity with the FHLB is collateral based, and the Bank’s ability to borrow is subject to maintaining collateral that meets the eligibility requirements. The borrowing capacity is not committed and is subject to FHLB credit requirements and policies. In addition, the Bank must maintain a restricted investment in FHLB stock to maintain access to borrowings.

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Other Borrowings

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Other Borrowings

10. Other Borrowings

The Company has a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2023, with an interest rate that adjusts daily based on the prime rate less 0.25%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, the Company did not have an outstanding balance on the line of credit.

On September 29, 2022, the Company borrowed $10.0 million from an unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. Early principal payments are allowed and the balance was $8.3 million and $9.0 million at June 30, 2023 and December 31, 2022, respectively.

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet.

Repurchase agreements are comprised of non-insured customer funds, totaling $14.0 million at June 30, 2023 and $29.4 million at December 31, 2022, which were secured by $30.4 million and $38.4 million of the Company’s investment portfolio at the same dates, respectively.

The following is a summary of the balances and collateral of the Company’s repurchase agreements:

	As of June 30, 2023
(dollars in thousands)	Overnight						Greater
	and Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	13,251	$	-	$	-	$	-	$	13,251
Agency mortgage-backed securities		707		-		-		-		707
Total	$	13,958	$	-	$	-	$	-	$	13,958

	As of December 31, 2022
(dollars in thousands)	Overnight		Up to				Greater
	and Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	25,973	$	-	$	-	$	-	$	25,973
U.S. federal agency obligations		1,236		-		-		-		1,236
Agency mortgage-backed securities		2,193		-		-		-		2,193
Total	$	29,402	$	-	$	-	$	-	$	29,402

The investment securities are held by a third party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

11. Revenue from Contracts with Customers

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. Items outside the scope of ASC 606 are noted as such.

	Three months ended				Six months ended
(Dollars in thousands)	June 30,				June 30,
	2023		2022		2023		2022
Non-interest income:
Service charges on deposit accounts
Overdraft fees	$	954	$	907	$	1,829	$	1,730
Other		242		164		474		324
Interchange income		805		785		1,542		1,492
Loan servicing fees (1)		441		453		894		907
Office lease income (1)		148		33		218		66
Gains on sales of loans (1)		830		1,073		1,523		1,978
Bank owned life insurance income (1)		223		190		441		377
Gains on sales of real estate owned		-		-		-		114
Other		186		191		403		371
Total non-interest income	$	3,829	$	3,796	$	7,324	$	7,359

(1) Not within the scope of ASC 606.

A description of the Company’s revenue streams under ASC 606 follows:

Service Charges on Deposit Accounts

The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM usage fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period during which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income

The Company earns interchange fees from debit cardholder transactions conducted through the interchange payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Gains (Losses) on Sales of Real Estate Owned

The Company records a gain or loss from the sale of real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. There were no sales of real estate owned that were financed by the Company during the first six months of 2023 or 2022.

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Fair Value of Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments and Fair Value Measurements

12. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value estimates of the Company’s financial instruments as of June 30, 2023 and December 31, 2022, including methods and assumptions utilized, are set forth below:

	As of June 30, 2023
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	20,038		$	20,038		$	-		$	-	$	20,038
Interest-bearing deposits at other banks		8,336			-			8,336			-		8,336
Investment securities available-for-sale		484,378			121,480			362,898			-		484,378
Investment securities held-to-maturity		3,496			-			3,300			-		3,300
Bank stocks, at cost		9,445			n/a			n/a			n/a		n/a
Loans, net		882,549			-			-			869,114		869,114
Loans held for sale		3,900			-			3,900			-		3,900
Mortgage servicing rights		3,514			-			10,336			-		10,336
Accrued interest receivable		6,033			273			2,232			3,528		6,033
Derivative financial instruments		282			-			282			-		282
Financial liabilities:
Non-maturity deposits	$	(1,149,310	)	$	(1,149,310	)	$	-		$	-	$	(1,149,310	)
Certificates of deposit		(131,661	)		-			(129,468	)		-		(129,468	)
FHLB borrowings		(76,185	)		-			(76,185	)		-		(76,185	)
Subordinated debentures		(21,651	)		-			(18,481	)		-		(18,481	)
Other borrowings		(22,293	)		-			(22,000	)		-		(22,000	)
Accrued interest payable		(1,213	)		-			(1,213	)		-		(1,213	)

	As of December 31, 2022
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	23,156		$	23,156		$	-		$	-	$	23,156
Interest-bearing deposits at other banks		9,084			-			9,084			-		9,084
Investment securities available-for-sale		489,306			123,111			366,195			-		489,306
Investment securities held-to-maturity		3,524			-			3,452			-		3,452
Bank stocks, at cost		5,470			n/a			n/a			n/a		n/a
Loans, net		841,149			-			-			828,726		828,726
Loans held for sale		2,488			-			2,488			-		2,488
Mortgage servicing rights		3,813			-			10,282			-		10,282
Accrued interest receivable		5,879			426			2,150			3,303		5,879
Derivative financial instruments		126			-			126			-		126
Financial liabilities:
Non-maturity deposits	$	(1,207,371	)	$	(1,207,371	)	$	-		$	-	$	(1,207,371	)
Certificates of deposit		(93,278	)		-			(90,760	)		-		(90,760	)
FHLB borrowings		(8,200	)		-			(8,200	)		-		(8,200	)
Subordinated debentures		(21,651	)		-			(18,189	)		-		(18,189	)
Other borrowings		(38,402	)		-			(36,183	)		-		(36,183	)
Accrued interest payable		(439	)		-			(439	)		-		(439	)

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2023 or during the year ended December 31, 2022.

Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following tables represent the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2023
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	121,480	$	121,480	$	-	$	-
Municipal obligations, tax exempt		124,451		-		124,451		-
Municipal obligations, taxable		77,713		-		77,713		-
Agency mortgage-backed securities		160,734		-		160,734		-
Loans held for sale		3,900		-		3,900		-
Derivative financial instruments		282		-		282		-

			As of December 31, 2022
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	123,111	$	123,111	$	-	$	-
U. S. federal agency obligations		1,988		-		1,988		-
Municipal obligations, tax exempt		127,262		-		127,262		-
Municipal obligations, taxable		67,244		-		67,244		-
Agency mortgage-backed securities		169,701		-		169,701		-
Loans held for sale		2,488		-		2,488		-
Derivative financial instruments		126		-		126		-

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency obligations, municipal obligations, agency mortgage-backed securities and certificates of deposit. Quoted exchange prices are available for the Company’s U.S. treasury securities, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed securities are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal obligations are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Mortgage loans originated and intended for sale in the secondary market are carried at fair value. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2. Changes in the fair value of mortgage loans originated and intended for sale in the secondary market and derivative financial instruments are included in gains on sales of loans.

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
	June 30,		December 31,
(Dollars in thousands)	2023		2022
Aggregate fair value	$	3,900	$	2,488
Contractual balance		3,842		2,468
Gain	$	58	$	20

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sales of loans, net in the consolidated statements of earnings. The total amount of gains from changes in fair value of derivative financial instruments included in earnings were as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2023		2022			2023		2022
Total change in fair value	$	45	$	(15	)	$	156	$	(28	)

Valuation Methods for Instruments Measured at Fair Value on a Nonrecurring Basis

The Company does not record its loan portfolio at fair value. Collateral-dependent loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Individually evaluated loans are reviewed at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s individually evaluated loans was $3.5 million at June 30, 2023 and $4.1 million at December 31, 2022, respectively. The Company’s individually evaluated loans with an allowance for credit losses was $1.5 million and $755,000, with an allocated allowance of $647,000 and $654,000, at June 30, 2023 and December 31, 2022, respectively.

Real estate owned includes assets acquired through, or in lieu of, foreclosure and land previously acquired for expansion. Real estate owned is initially recorded at the fair value of the collateral less estimated selling costs. Subsequent valuations are updated periodically and are based upon independent appraisals, third party price opinions or internal pricing models. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Real estate owned is reviewed and evaluated at least annually for additional impairment and adjusted accordingly, based on the same factors identified above.

The following table presents quantitative information about Level 3 fair value measurements measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2023
Impaired loans:
Commercial	$	529	Sales comparison	Adjustment to comparable value		0%-30	%
Agriculture		324	Sales comparison	Adjustment to appraised value		0%-50	%
As of December 31, 2022
Impaired loans:
Commercial	$	101	Sales comparison	Adjustment to comparable value		0%-25	%
Real estate owned:
One-to-four family residential real estate		272	Sales comparison	Adjustment to appraised value		15	%
Commercial real estate		234	Sales comparison	Adjustment to appraised value		15	%

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Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2023

Regulatory Capital Requirements

13. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of June 30, 2023, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the Basel III Rule, which is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).

The Basel III Rule includes a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, equal to 2.5% of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements for the common equity Tier 1 capital ratio, and Tier 1 capital and total risk based capital ratios.

As of June 30, 2023 and December 31, 2022, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022.

						For capital
	Actual					adequacy purposes
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2023
Leverage	$	126,939		8.39	%	$	60,513		4.0	%
Common Equity Tier 1 Capital		105,939		10.42	%		71,149		7.0	%
Tier 1 Capital		126,939		12.49	%		86,396		8.5	%
Total Risk Based Capital		136,776		13.46	%		106,724		10.5	%
As of December 31, 2022
Leverage	$	122,275		8.14	%	$	60,100		4.0	%
Common Equity Tier 1 Capital		101,275		10.37	%		68,352		7.0	%
Tier 1 Capital		122,275		12.52	%		82,999		8.5	%
Total Risk Based Capital		131,236		13.44	%		102,528		10.5	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022:

											To be well-capitalized
											under prompt
						For capital					corrective
	Actual					adequacy purposes					action provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)			Amount		Ratio
As of June 30, 2023
Leverage	$	131,737		8.73	%	$	60,341		4.0	%	$	75,426		5.0	%
Common Equity Tier 1 Capital		131,737		12.97	%		71,082		7.0	%		66,005		6.5	%
Tier 1 Capital		131,737		12.97	%		86,314		8.5	%		81,237		8.0	%
Total Risk Based Capital		141,574		13.94	%		106,623		10.5	%		101,546		10.0	%
As of December 31, 2022
Leverage	$	128,643		8.59	%	$	59,933		4.0	%	$	74,917		5.0	%
Common Equity Tier 1 Capital		128,643		13.18	%		68,309		7.0	%		63,430		6.5	%
Tier 1 Capital		128,643		13.18	%		82,947		8.5	%		78,068		8.0	%
Total Risk Based Capital		137,604		14.10	%		102,464		10.5	%		97,585		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

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Impact of Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Impact of Recent Accounting Pronouncements

14. Impact of Recent Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2016-13 and ASU 2022-02 which is described in note 3.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this update simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this ASU are effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In October 2019, the FASB approved a change in the effective dates for ASU 2017-04 which delayed the effective date to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company adopted ASU 2017-04 effective January 1, 2023. The adoption of ASU 2017-04 did not have a material effect on the Company’s operating results or financial condition.

In May 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference rate reform relates to the effects undertaken to eliminate certain reference rates such as the London Interbank Offered Rate (“LIBOR”) and introduce new reference rates that may be based on larger or more liquid observations and transactions. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other contracts. Generally, ASU 2020-04 would allow entities to consider contract modifications due to reference rate reform to be a continuation of an existing contract; thus, the Company would not have to determine if the modification is considered insignificant. The standard was effective upon issuance and the amendments may be applied prospectively through December 31, 2022 such that changes made to contracts beginning on or after January 1, 2023 would not apply. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date, which extended the sunset date from December 31, 2022 to December 31, 2024. LIBOR continued to be published until June 30, 2023.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Investment Securities

Investment Securities. Investment securities are classified as held-to-maturity when management has the positive intent and ability to hold them to maturity. Securities are classified as available-for-sale when they might be sold before maturity. Held-to-maturity securities are carried at amortized cost while available-for-sale securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Realized gains and losses on sales of available-for-sale securities are recorded on a trade date basis and are calculated using the specific identification method.

Allowance for Credit Losses – Held-to-Maturity Investment Securities

Allowance for Credit Losses – Held-to-Maturity Investment Securities. Management measures expected credit losses on held-to-maturity investment securities on a collective basis by major security type. Accrued interest is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical loss information adjusted for current conditions and reasonable and supportable forecasts.

Allowance for Credit Losses – Available-for-Sale Investment Securities

Allowance for Credit Losses – Available-for-Sale Investment Securities. For available-for-sale investment securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of the security or security issuer, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected was less than the amortized cost basis, a credit loss existed and an allowance for credit losses would be recorded for the credit loss, which is limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for or reversal of credit loss expense. Losses are charged against the allowance for credit losses when the Company determines the available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. The Company does not estimate credit losses on available-for-sale security accrued interest receivable.

Loans

Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. The amortized cost is the principal balance outstanding net of previous charge-offs, and for purchased loans, net of unamortized purchase premiums and discounts. Interest income is accrued on the unpaid principal balance. Origination fees received on loans held in portfolio and the estimated direct costs of origination are deferred and amortized to interest income using the level yield method without anticipating prepayments.

The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of the principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are evaluated individually and are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses - Loans

Allowance for Credit Losses - Loans. The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers asset quality trends, composition and trends in the loan portfolio, underlying collateral values, industry trends and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses expected in the loan portfolio at the balance sheet date. The allowance is adjusted through provision for credit losses and charge-offs, net of recoveries of amounts previously charged off.

The allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses.

One-to-Four Family Residential Real Estate. One-to-four family residential real estate loans consists primarily of loans secured by 1-4 family residential properties. Repayment is primarily dependent on the personal cash flow of the borrower.

Construction and Land. Construction and land loans consist primarily of loans to facilitate the development of both residential and commercial real estate. Repayment is primarily dependent on the completion of the development and refinancing to longer term financing.

Commercial Real Estate. Commercial real estate loans consist primarily of loans secured by office buildings, industrial buildings, warehouses, retail buildings and multi-family housing and are primarily owner-occupied. For such loans, repayment is largely dependent upon the operation of the borrower’s business.

Commercial. Commercial loans include loans to business enterprises issued for commercial, industrial and/or other professional purposes. These loans are generally secured by equipment, inventory and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

Agriculture. Agriculture loans include operating and real estate loans to agriculture enterprises. Generally, the borrower’s ability to repay is based on the cash flows from farming operations.

Municipal. Municipal loans are generally related to equipment leasing or general fund loans. Repayment is primarily dependent on the tax revenue of the municipal entity.

Consumer. Consumer loans include automobile, boat, home improvement and home equity loans. Repayment is primarily dependent on the personal cash flow of the borrower.

The Company utilized a weighted average remaining maturity allowance methodology to calculate the allowance for credit losses. Historical loss rates are adjusted for current conditions and reasonable and supportable forecasts. Following the economic forecast period loss rates revert back to historical loss rates over a reasonable period of time. Additional adjustments for qualitative factors are included to quantify the risks within each of the loan categories that are not included in the historical loss rates or economic projections. The data for the allowance calculation may be obtained from internal or external sources.

Loans that do not share similar risk characteristics with the collectively evaluated pools are evaluated on an individual basis and are excluded from the collectively evaluated loan pools. Such loans are evaluated for credit losses based on either discounted cash flows or the fair value of collateral.

The Company estimates expected credit losses over the contractual term of obligations to extend credit, unless the obligation is unconditionally cancellable. The allowance for off-balance-sheet exposures is adjusted through the provision for credit losses. The estimates are determined based on the likelihood of funding during the contractual term and an estimate of credit losses subsequent to funding. Estimated credit losses on subsequently funded balances are based on the same assumptions used to estimated credit losses on loans.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures which eliminated the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. The update also enhanced disclosure required for loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply the loan refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments to this ASU require a public business entity to disclose current period gross charge-offs by year of origination for loans in the vintage disclosures.

On January 1, 2023, the Company adopted ASU 2022-02, electing the prospective approach. The adoption did not have a material effect on the Company’s operating results or financial condition. The disclosures in this document have been updated to reflect the new guidance.

Loans Modifications

Loans Modifications. Loan modifications, including modifications to borrowers experiencing financial difficulty, are treated as a new loan if two conditions are met. The terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks and modifications to the terms of the original loan are more than minor.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Purchase Accounting Discounts on Loans from an Adjustment to Amortized Cost

The following table illustrates the impact of ASC 326:

	January 1, 2023
(Dollars in thousands)	As reported under ASC 326		Pre-ASC 326 adoption		Impact of ASC 326 adoption
Allowance for credit losses:
Held-to-maturity investment securities	$	72	$	-	$	72
One-to-four family residential real estate loans	$	1,677	$	655	$	1,022
Construction and land loans		166		117		49
Commercial real estate loans		4,221		3,158		1,063
Commercial loans		2,898		2,753		145
Paycheck protection program loans		-		-		-
Agriculture loans		1,142		1,966		(824	)
Municipal loans		16		5		11
Consumer loans		194		137		57
Total allowance for credit losses for loans	$	10,314	$	8,791	$	1,523
Unfunded loan commitments	$	170	$	170	$	-

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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of Investments [Abstract]

Schedule of Available-for-sale and Held to Maturity Seurities

A summary of investment securities available-for-sale and held-to-maturity is as follows:

(Dollars in thousands)	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	128,458	$	-	$	(6,978	)	$	121,480
Municipal obligations, tax exempt		127,921		56		(3,526	)		124,451
Municipal obligations, taxable		82,456		79		(4,822	)		77,713
Agency mortgage-backed securities		175,571		31		(14,868	)		160,734
Total available-for-sale	$	514,406	$	166	$	(30,194	)	$	484,378

	As of June 30, 2023
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,496	$	-	$	(196	)	$	3,300
Total held-to-maturity	$	3,496	$	-	$	(196	)	$	3,300

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	130,684	$	-	$	(7,573	)	$	123,111
U. S. federal agency obligations		2,002		-		(14	)		1,988
Municipal obligations, tax exempt		130,848		59		(3,645	)		127,262
Municipal obligations, taxable		73,520		14		(6,290	)		67,244
Agency mortgage-backed securities		185,451		172		(15,922	)		169,701
Total available-for-sale	$	522,505	$	245	$	(33,444	)	$	489,306

	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Held-to-maturity:
Other	$	3,524	$	5	$	(77	)	$	3,452
Total held-to-maturity	$	3,524	$	5	$	(77	)	$	3,452

Schedule of Available for Sale Securites Continuous Unrealized Loss Position Fair Value

			As of June 30, 2023
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	13,995	$	(562	)	$	107,485	$	(6,416	)	$	121,480	$	(6,978	)
Municipal obligations, tax exempt		268		58,460		(861	)		54,533		(2,665	)		112,993		(3,526	)
Municipal obligations, taxable		119		32,430		(891	)		39,464		(3,931	)		71,894		(4,822	)
Agency mortgage-backed securities		102		27,246		(610	)		127,921		(14,258	)		155,167		(14,868	)
Total for available-for-sale		556	$	132,131	$	(2,924	)	$	329,403	$	(27,270	)	$	461,534	$	(30,194	)
Held-to-maturity:
Other		7	$	3,300	$	(196	)	$	-	$	-		$	3,300	$	(196	)
Total held-to-maturity		7		3,300		(196	)		-		-			3,300		(196	)

			As of December 31, 2022
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Available-for-sale:
U.S. treasury securities		67	$	85,988	$	(4,591	)	$	37,123	$	(2,982	)	$	123,111	$	(7,573	)
U.S. federal agency obligations		1		1,988		(14	)		-		-			1,988		(14	)
Municipal obligations, tax exempt		274		107,262		(3,020	)		8,495		(625	)		115,757		(3,645	)
Municipal obligations, taxable		108		54,746		(5,006	)		7,571		(1,284	)		62,317		(6,290	)
Agency mortgage-backed securities		100		78,971		(4,550	)		79,882		(11,372	)		158,853		(15,922	)
Total for available-for-sale		550		328,955		(17,181	)		133,071		(16,263	)		462,026		(33,444	)
Held-to-maturity:
Other		6	$	3,009	$	(77	)	$	-	$	-		$	3,009	$	(77	)
Total held-to-maturity		6		3,009		(77	)		-		-			3,009		(77	)

Schedule of Allowance for Credit Losses Related to Held-to-maturity Investment Securites

The following table provides information on the Company’s allowance for credit losses related to held-to-maturity investment securities.

(Dollars in thousands)
Balance at January 1, 2023	$	-
Impact of adopting ASC 326		72
Provision for credit losses		19
Balance at June 30, 2023	$	91

Schedule of Investments Classified by Contractual Maturity Date

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Available-for-sale:
Due in less than one year	$	33,292	$	32,728
Due after one year but within five years		263,298		246,734
Due after five years but within ten years		162,266		151,903
Due after ten years		55,550		53,013
Total available-for-sale	$	514,406	$	484,378
Held-to-maturity:
Due after five years but within ten years		3,496		3,300
Total held-to-maturity	$	3,496	$	3,300

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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Schedule of Loans

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2023			2022
One-to-four family residential real estate loans	$	259,655		$	236,982
Construction and land loans		22,016			22,725
Commercial real estate loans		314,889			304,074
Commercial loans		181,424			173,415
Paycheck protection program loans		-			21
Agriculture loans		84,345			84,283
Municipal loans		2,711			2,026
Consumer loans		28,219			26,664
Total gross loans		893,259			850,190
Net deferred loan costs (fees) and loans in process		(261	)		(250	)
Allowance for credit losses		(10,449	)		(8,791	)
Loans, net	$	882,549		$	841,149

Schedule of Allowance for Credit Losses on Financing Receivables

The following tables provide information on the Company’s allowance for credit losses by loan class and allowance methodology:

	Three and six months ended June 30, 2023
(Dollars in thousands)	One-to-four family residential real estate loans		Construction and land loans			Commercial real estate loans			Commercial loans			Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2023	$	1,757	$	170		$	4,438		$	2,614		$	-	$	1,059		$	17		$	212		$	10,267
Charge-offs		-		-			-			(90	)		-		-			-			(68	)		(158	)
Recoveries		-		-			-			10			-		57			-			23			90
Provision for credit losses		95		(9	)		(65	)		176			-		18			(1	)		36			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449
Allowance for credit losses:
Balance at January 1, 2023	$	655	$	117		$	3,158		$	2,753		$	-	$	1,966		$	5		$	137		$	8,791
Impact of adopting ASC 326		1,022		49			1,063			145			-		(824	)		11			57			1,523
Charge-offs		-		-			-			(107	)		-		-			-			(159	)		(266	)
Recoveries		-		-			-			19			-		73			-			59			151
Provision for credit losses		175		(5	)		152			(100	)		-		(81	)		-			109			250
Balance at June 30, 2023	$	1,852	$	161		$	4,373		$	2,710		$	-	$	1,134		$	16		$	203		$	10,449

	Three and six months ended June 30, 2022
(Dollars in thousands)	One-to-four family residential real estate loans			Construction and land loans			Commercial real estate loans			Commercial loans		Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for credit losses:
Balance at April 1, 2022	$	624		$	146		$	3,061		$	2,465	$	-	$	1,929		$	6		$	126		$	8,357
Charge-offs		-			-			-			-		-		-			-			(76	)		(76	)
Recoveries		-			-			-			9		-		2			-			23			34
Provision for credit losses		(44	)		(13	)		(79	)		177		-		(111	)		-			70			-
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315
Allowance for credit losses:
Balance at January 1, 2022	$	623		$	138		$	3,051		$	2,613	$	-	$	2,221		$	6		$	123		$	8,775
Charge-offs		-			-			-			-		-		-			-			(129	)		(129	)
Recoveries		-			100			-			23		-		3			6			37			169
Provision for credit losses		(43	)		(105	)		(69	)		15		-		(404	)		(6	)		112			(500	)
Balance at June 30, 2022	$	580		$	133		$	2,982		$	2,651	$	-	$	1,820		$	6		$	143		$	8,315

	As of December 31, 2022
(Dollars in thousands)	One-to-four family residential real estate loan		Construction and land loans		Commercial real estate loans		Commercial loans		Paycheck protection program loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for credit losses:
Individually evaluated for loss	$	-	$	-	$	-	$	636	$	-	$	18	$	-	$	-	$	654
Collectively evaluated for loss		655		117		3,158		2,117		-		1,948		5		137		8,137
Total	$	655	$	117	$	3,158	$	2,753	$	-	$	1,966	$	5	$	137	$	8,791
Loan balances:
Individually evaluated for loss	$	326	$	412	$	1,224	$	812	$	-	$	1,319	$	36	$	-	$	4,129
Collectively evaluated for loss		236,656		22,313		302,850		172,603		21		82,964		1,990		26,664		846,061
Total	$	236,982	$	22,725	$	304,074	$	173,415	$	21	$	84,283	$	2,026	$	26,664	$	850,190

Schedule of Non-accrual and Loans Past Due Over 89 Days Still Accruing

The following table presents information on non-accrual and loans past due over 89 days and still accruing:

(Dollars in thousands)	As of June 30, 2023
	Non-accrual with no allowance for credit loss		Non-accrual with allowance for credit losses		Loans past due over 89 days still accruing
One-to-four family residential real estate loans	$	38	$	-	$	-
Construction and land loans		194		-		-
Commercial real estate loans		1,218		-		-
Commercial loans		112		1,000		-
Paycheck protection program loans		-		-		-
Agriculture loans		214		8		-
Municipal loans		-		-		-
Consumer loans		-		-		-
Total loans	$	1,776	$	1,008	$	-

Schedule of Impaired Financing Receivables

The following table presents information on impaired loans:

(Dollars in thousands)	As of December 31, 2022
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	326	$	326	$	326	$	-	$	-	$	357	$	9
Construction and land		843		412		412		-		-		243		10
Commercial real estate		1,224		1,224		1,224		-		-		1,224		47
Commercial		1,063		812		75		737		636		865		5
Agriculture		1,402		1,319		1,301		18		18		1,433		64
Municipal		36		36		36		-		-		36		1
Total impaired loans	$	4,894	$	4,129	$	3,374	$	755	$	654	$	4,158	$	136

Schedule of Past Due Financing Receivables

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2023
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	3		$	234		$	-		$	237		$	38		$	275		$	259,380
Construction and land loans					-			-			-			194			194			21,822
Commercial real estate loans		-			184			-			184			1,218			1,402			313,487
Commercial loans		104			63			-			167			1,112			1,279			180,145
Paycheck protection program loans		-			-			-			-			-			-			-
Agriculture loans		-			5			-			5			222			227			84,118
Municipal loans		-			-			-			-			-			-			2,711
Consumer loans		20			1			-			21			-			21			28,198
Total	$	127		$	487		$	-		$	614		$	2,784		$	3,398		$	889,861
Percent of gross loans		0.01	%		0.05	%		0.00	%		0.07	%		0.31	%		0.38	%		99.62	%

(Dollars in thousands)	As of December 31, 2022
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate loans	$	8		$	72		$	-		$	80		$	170		$	250		$	236,732
Construction and land loans		-			-			-			-			195			195			22,530
Commercial real estate loans		-			-			-			-			1,224			1,224			302,850
Commercial loans		-			411			-			411			812			1,223			172,192
Paycheck protection program loans		-			-			-			-			-			-			21
Agriculture loans		-			180			-			180			925			1,105			83,178
Municipal loans		-			-			-			-			-			-			2,026
Consumer loans		67			-			-			67			-			67			26,597
Total	$	75		$	663		$	-		$	738		$	3,326		$	4,064		$	846,126
Percent of gross loans		0.01	%		0.08	%		0.00	%		0.09	%		0.39	%		0.48	%		99.52	%

Schedule of Troubled Debt Restructurings on Financing Receivables and Year of Origination

The following table presents information on the Company’s risk category of loans by type and year of origination:

(Dollars in thousands)	As of June 30, 2023
	2023		2022			2021			2020		2019		Prior		Revolving loans amortized cost			Revolving loans converted to term		Total
One-to-four family residential real estate loans
Nonclassified	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,282	$	3,966		$	423	$	259,617
Classified		-		-			-			-		-		38		-			-		38
Total	$	39,106	$	88,985		$	45,184		$	34,761	$	13,910	$	33,320	$	3,966		$	423	$	259,655
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Construction and land loans
Nonclassified	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	369	$	1,173		$	359	$	21,822
Classified		-		-			-			-		-		194		-			-		194
Total	$	2,717	$	6,565		$	5,848		$	2,712	$	2,079	$	563	$	1,173		$	359	$	22,016
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial real estate loans
Nonclassified	$	19,401	$	77,956		$	59,861		$	55,043	$	31,249	$	64,697	$	3,262		$	420	$	311,889
Classified		-		-			488			28		184		2,300		-			-		3,000
Total	$	19,401	$	77,956		$	60,349		$	55,071	$	31,433	$	66,997	$	3,262		$	420	$	314,889
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Commercial loans
Nonclassified	$	17,850	$	39,227		$	21,332		$	18,866	$	3,514	$	5,696	$	65,487		$	5,007	$	176,979
Classified		190		867			286			413		543		34		1,905			207		4,445
Total	$	18,040	$	40,094		$	21,618		$	19,279	$	4,057	$	5,730	$	67,392		$	5,214	$	181,424
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	-		$	-	$	(107	)
Agriculture loans
Nonclassified	$	2,647	$	12,667		$	5,664		$	4,473	$	4,296	$	12,876	$	41,345		$	155	$	84,123
Classified		-		-			-			-		50		114		58			-		222
Total	$	2,647	$	12,667		$	5,664		$	4,473	$	4,346	$	12,990	$	41,403		$	155	$	84,345
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Municipal loans
Nonclassified	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Classified		-		-			-			-		-		-		-			-		-
Total	$	851	$	144		$	-		$	-	$	-	$	1,716	$	-		$	-	$	2,711
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	-		$	-	$	-
Consumer loans
Nonclassified	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Classified		-		-			-			-		-		-		-			-		-
Total	$	3,222	$	1,768		$	1,588		$	1,414	$	5	$	5,246	$	14,952		$	24	$	28,219
Charge-offs	$	-	$	-		$	-		$	-	$	-	$	-	$	(159	)	$	-	$	(159	)
Total loans
Nonclassified	$	85,794	$	227,312		$	139,477		$	117,269	$	55,053	$	123,882	$	130,185		$	6,388	$	885,360
Classified		190		867			774			441		777		2,680		1,963			207		7,899
Total	$	85,984	$	228,179		$	140,251		$	117,710	$	55,830	$	126,562	$	132,148		$	6,595	$	893,259
Charge-offs	$	-	$	(17	)	$	(90	)	$	-	$	-	$	-	$	(159	)	$	-	$	(266	)

Schedule of Troubled Debt Restructurings on Financing Receivables

The following table provides information on the Company’s risk categories by loan class:

	As of December 31, 2022
(Dollars in thousands)	Nonclassified		Classified
One-to-four family residential real estate loans	$	236,663	$	319
Construction and land loans		22,530		195
Commercial real estate loans		300,216		3,858
Commercial loans		165,709		7,706
Paycheck protection program loans		21		-
Agriculture loans		83,358		925
Municipal loan		2,026		-
Consumer loans		26,664		-
Total	$	837,187	$	13,003

Schedule of Allowance for Credit Losses Related to Unfunded Loan Commitments

The following table provides information on the Company’s allowance for credit losses related to unfunded loan commitments.

(dollars in thousands)
Balance at January 1, 2023	$	170
Impact of adopting ASC 326		-
Provision for credit losses		30
Balance at June 30, 2023	$	200

Schedule of Amortization cost

The following table presents the amortized cost basis of loans at June 30, 2023 that were both experiencing financial difficulty and modified during the six months ended June 30, 2023 by class, type of modification and includes the financial effect of the modification.

(Dollars in thousands)	As of June 30, 2023
	Amortized cost basis		% of loan class total			Financial effect
Term extension:
Commercial	$	151		0.1	%	90 day payment deferral

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Other Intangible Assets and Goodwill

Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization was as follows:

(Dollars in thousands)	As of June 30, 2023
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(2,268	)	$	3,612

(Dollars in thousands)	As of December 31, 2022
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	5,880	$	(1,874	)	$	4,006

Schedule of Finite-lived Intangible Assets, Future Amortization Expense

The following sets forth estimated amortization expense for core deposit and intangible assets for the remainder of 2023 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2023	$	371
2024		663
2025		588
2026		512
2027		436
2028		360
Thereafter		682
Total	$	3,612

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Mortgage Loan Servicing (Tables)

6 Months Ended

Jun. 30, 2023

Mortgage Loan Servicing

Schedule of Participating Mortgage Loans

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2023		2022
FHLMC	$	678,149	$	685,859
FHLB		28,129		27,285
Total	$	706,278	$	713,144

Schedule of Servicing Asset at Amortized Cost

Activity for mortgage servicing rights was as follows:

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2023			2022			2023			2022
Mortgage servicing rights:
Balance at beginning of period	$	3,652		$	4,128		$	3,813		$	4,193
Additions		137			217			240			451
Amortization		(275	)		(320	)		(539	)		(619	)
Balance at end of period	$	3,514		$	4,025		$	3,514		$	4,025

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings per share:

Schedule of Earnings Per Share, Basic and Diluted

(Dollars in thousands, except per share amounts)	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net earnings	$	3,362	$	3,033	$	6,719	$	6,166
Weighted average common shares outstanding - basic (1)		5,215,575		5,237,837		5,214,357		5,242,558
Assumed exercise of stock options (1)		3,975		14,709		5,403		17,756
Weighted average common shares outstanding - diluted (1)		5,219,550		5,252,546		5,219,760		5,260,313
Earnings per share (1):
Basic	$	0.64	$	0.58	$	1.29	$	1.18
Diluted	$	0.64	$	0.58	$	1.29	$	1.17

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Other Borrowings (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Repurchase Agreements

The following is a summary of the balances and collateral of the Company’s repurchase agreements:

	As of June 30, 2023
(dollars in thousands)	Overnight						Greater
	and Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	13,251	$	-	$	-	$	-	$	13,251
Agency mortgage-backed securities		707		-		-		-		707
Total	$	13,958	$	-	$	-	$	-	$	13,958

	As of December 31, 2022
(dollars in thousands)	Overnight		Up to				Greater
	and Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal treasury obligations	$	25,973	$	-	$	-	$	-	$	25,973
U.S. federal agency obligations		1,236		-		-		-		1,236
Agency mortgage-backed securities		2,193		-		-		-		2,193
Total	$	29,402	$	-	$	-	$	-	$	29,402

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue from Contracts with Customers Within Non-interest Income

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. Items outside the scope of ASC 606 are noted as such.

	Three months ended				Six months ended
(Dollars in thousands)	June 30,				June 30,
	2023		2022		2023		2022
Non-interest income:
Service charges on deposit accounts
Overdraft fees	$	954	$	907	$	1,829	$	1,730
Other		242		164		474		324
Interchange income		805		785		1,542		1,492
Loan servicing fees (1)		441		453		894		907
Office lease income (1)		148		33		218		66
Gains on sales of loans (1)		830		1,073		1,523		1,978
Bank owned life insurance income (1)		223		190		441		377
Gains on sales of real estate owned		-		-		-		114
Other		186		191		403		371
Total non-interest income	$	3,829	$	3,796	$	7,324	$	7,359

(1) Not within the scope of ASC 606.

A description of the Company’s revenue streams under ASC 606 follows:

Service Charges on Deposit Accounts

The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM usage fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period during which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income

The Company earns interchange fees from debit cardholder transactions conducted through the interchange payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Gains (Losses) on Sales of Real Estate Owned

The Company records a gain or loss from the sale of real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. There were no sales of real estate owned that were financed by the Company during the first six months of 2023 or 2022.

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Fair Value of Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value, by Balance Sheet Grouping

Fair value estimates of the Company’s financial instruments as of June 30, 2023 and December 31, 2022, including methods and assumptions utilized, are set forth below:

	As of June 30, 2023
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	20,038		$	20,038		$	-		$	-	$	20,038
Interest-bearing deposits at other banks		8,336			-			8,336			-		8,336
Investment securities available-for-sale		484,378			121,480			362,898			-		484,378
Investment securities held-to-maturity		3,496			-			3,300			-		3,300
Bank stocks, at cost		9,445			n/a			n/a			n/a		n/a
Loans, net		882,549			-			-			869,114		869,114
Loans held for sale		3,900			-			3,900			-		3,900
Mortgage servicing rights		3,514			-			10,336			-		10,336
Accrued interest receivable		6,033			273			2,232			3,528		6,033
Derivative financial instruments		282			-			282			-		282
Financial liabilities:
Non-maturity deposits	$	(1,149,310	)	$	(1,149,310	)	$	-		$	-	$	(1,149,310	)
Certificates of deposit		(131,661	)		-			(129,468	)		-		(129,468	)
FHLB borrowings		(76,185	)		-			(76,185	)		-		(76,185	)
Subordinated debentures		(21,651	)		-			(18,481	)		-		(18,481	)
Other borrowings		(22,293	)		-			(22,000	)		-		(22,000	)
Accrued interest payable		(1,213	)		-			(1,213	)		-		(1,213	)

	As of December 31, 2022
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	23,156		$	23,156		$	-		$	-	$	23,156
Interest-bearing deposits at other banks		9,084			-			9,084			-		9,084
Investment securities available-for-sale		489,306			123,111			366,195			-		489,306
Investment securities held-to-maturity		3,524			-			3,452			-		3,452
Bank stocks, at cost		5,470			n/a			n/a			n/a		n/a
Loans, net		841,149			-			-			828,726		828,726
Loans held for sale		2,488			-			2,488			-		2,488
Mortgage servicing rights		3,813			-			10,282			-		10,282
Accrued interest receivable		5,879			426			2,150			3,303		5,879
Derivative financial instruments		126			-			126			-		126
Financial liabilities:
Non-maturity deposits	$	(1,207,371	)	$	(1,207,371	)	$	-		$	-	$	(1,207,371	)
Certificates of deposit		(93,278	)		-			(90,760	)		-		(90,760	)
FHLB borrowings		(8,200	)		-			(8,200	)		-		(8,200	)
Subordinated debentures		(21,651	)		-			(18,189	)		-		(18,189	)
Other borrowings		(38,402	)		-			(36,183	)		-		(36,183	)
Accrued interest payable		(439	)		-			(439	)		-		(439	)

Schedule of Fair Value, Assets Measured On Recurring Basis

The following tables represent the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2023
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	121,480	$	121,480	$	-	$	-
Municipal obligations, tax exempt		124,451		-		124,451		-
Municipal obligations, taxable		77,713		-		77,713		-
Agency mortgage-backed securities		160,734		-		160,734		-
Loans held for sale		3,900		-		3,900		-
Derivative financial instruments		282		-		282		-

			As of December 31, 2022
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	123,111	$	123,111	$	-	$	-
U. S. federal agency obligations		1,988		-		1,988		-
Municipal obligations, tax exempt		127,262		-		127,262		-
Municipal obligations, taxable		67,244		-		67,244		-
Agency mortgage-backed securities		169,701		-		169,701		-
Loans held for sale		2,488		-		2,488		-
Derivative financial instruments		126		-		126		-

Schedule of Fair Value Contractual Balance and Gain Loss On Loans Held for Sale

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
	June 30,		December 31,
(Dollars in thousands)	2023		2022
Aggregate fair value	$	3,900	$	2,488
Contractual balance		3,842		2,468
Gain	$	58	$	20

Schedule of Gains and Losses from Changes in Fair Value of Loans Held for Sale

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2023		2022			2023		2022
Total change in fair value	$	45	$	(15	)	$	156	$	(28	)

Schedule of Fair Value Measurements On Nonrecurring, Valuation Techniques

The following table presents quantitative information about Level 3 fair value measurements measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2023
Impaired loans:
Commercial	$	529	Sales comparison	Adjustment to comparable value		0%-30	%
Agriculture		324	Sales comparison	Adjustment to appraised value		0%-50	%
As of December 31, 2022
Impaired loans:
Commercial	$	101	Sales comparison	Adjustment to comparable value		0%-25	%
Real estate owned:
One-to-four family residential real estate		272	Sales comparison	Adjustment to appraised value		15	%
Commercial real estate		234	Sales comparison	Adjustment to appraised value		15	%

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Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022.

						For capital
	Actual					adequacy purposes
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2023
Leverage	$	126,939		8.39	%	$	60,513		4.0	%
Common Equity Tier 1 Capital		105,939		10.42	%		71,149		7.0	%
Tier 1 Capital		126,939		12.49	%		86,396		8.5	%
Total Risk Based Capital		136,776		13.46	%		106,724		10.5	%
As of December 31, 2022
Leverage	$	122,275		8.14	%	$	60,100		4.0	%
Common Equity Tier 1 Capital		101,275		10.37	%		68,352		7.0	%
Tier 1 Capital		122,275		12.52	%		82,999		8.5	%
Total Risk Based Capital		131,236		13.44	%		102,528		10.5	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2023 and December 31, 2022:

											To be well-capitalized
											under prompt
						For capital					corrective
	Actual					adequacy purposes					action provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio (1)			Amount		Ratio
As of June 30, 2023
Leverage	$	131,737		8.73	%	$	60,341		4.0	%	$	75,426		5.0	%
Common Equity Tier 1 Capital		131,737		12.97	%		71,082		7.0	%		66,005		6.5	%
Tier 1 Capital		131,737		12.97	%		86,314		8.5	%		81,237		8.0	%
Total Risk Based Capital		141,574		13.94	%		106,623		10.5	%		101,546		10.0	%
As of December 31, 2022
Leverage	$	128,643		8.59	%	$	59,933		4.0	%	$	74,917		5.0	%
Common Equity Tier 1 Capital		128,643		13.18	%		68,309		7.0	%		63,430		6.5	%
Tier 1 Capital		128,643		13.18	%		82,947		8.5	%		78,068		8.0	%
Total Risk Based Capital		137,604		14.10	%		102,464		10.5	%		97,585		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

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Schedule of Purchase Accounting Discounts on Loans from an Adjustment to Amortized Cost (Details) $ in Thousands	Jan. 01, 2023 USD ($)
Financing Receivable, Past Due [Line Items]
Held-to-maturity investment securities
Total allowance for credit losses for loans	8,791
Unfunded loan commitments	170
Real Estate Portfolio Segment [Member] | One to Four Family Residential Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	655
Real Estate Portfolio Segment [Member] | Construction And Land Loan [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	117
Real Estate Portfolio Segment [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	3,158
Real Estate Portfolio Segment [Member] | Commercial Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	2,753
Real Estate Portfolio Segment [Member] | Paycheck Protection Program Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans
Real Estate Portfolio Segment [Member] | Agriculture Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	1,966
Real Estate Portfolio Segment [Member] | Municipal Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	5
Real Estate Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	137
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Financing Receivable, Past Due [Line Items]
Held-to-maturity investment securities	72
Total allowance for credit losses for loans	10,314
Unfunded loan commitments	170
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | One to Four Family Residential Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	1,677
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Construction And Land Loan [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	166
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	4,221
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Commercial Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	2,898
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Paycheck Protection Program Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Agriculture Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	1,142
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Municipal Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	16
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Real Estate Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	194
Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Past Due [Line Items]
Held-to-maturity investment securities	72
Total allowance for credit losses for loans	1,523
Unfunded loan commitments
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | One to Four Family Residential Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	1,022
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Construction And Land Loan [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	49
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	1,063
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Commercial Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	145
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Paycheck Protection Program Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Agriculture Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	(824)
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Municipal Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	11
Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable, Past Due [Line Items]
Total allowance for credit losses for loans	$ 57

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Allowance for credit losses, increase	$ 1,500,000
Credit losses on held-to-maturity, investment securities	91,000
Deferred tax assets, decrease	391,000
Retained earnings, decrease	1,200,000
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Credit losses on held-to-maturity, investment securities	$ 72,000

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Schedule of Available-for-sale and Held to Maturity Seurities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale	$ 514,406	$ 522,505
Gross unrealized gains,Available-for-sale	166	245
Gross unrealized losses,Available-for-sale	(30,194)	(33,444)
Estimated fair value,Available-for-sale	484,378	489,306
Amortized cost,Held-to-maturity	3,496	3,524
Gross unrealized gains,Held-to-maturity		5
Gross unrealized losses,Held-to-maturity	(196)	(77)
Estimated fair value,Held-to-maturity	3,300	3,452
US Treasury Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale	128,458	130,684
Gross unrealized gains,Available-for-sale
Gross unrealized losses,Available-for-sale	(6,978)	(7,573)
Estimated fair value,Available-for-sale	121,480	123,111
Municipal Obligations, Tax Exempt [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale	127,921	130,848
Gross unrealized gains,Available-for-sale	56	59
Gross unrealized losses,Available-for-sale	(3,526)	(3,645)
Estimated fair value,Available-for-sale	124,451	127,262
Municipal Obligations, Taxable [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale	82,456	73,520
Gross unrealized gains,Available-for-sale	79	14
Gross unrealized losses,Available-for-sale	(4,822)	(6,290)
Estimated fair value,Available-for-sale	77,713	67,244
Agency Mortgage-backed Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale	175,571	185,451
Gross unrealized gains,Available-for-sale	31	172
Gross unrealized losses,Available-for-sale	(14,868)	(15,922)
Estimated fair value,Available-for-sale	160,734	169,701
Other [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Held-to-maturity	3,496	3,524
Gross unrealized gains,Held-to-maturity		5
Gross unrealized losses,Held-to-maturity	(196)	(77)
Estimated fair value,Held-to-maturity	$ 3,300	3,452
U.S. Federal Agency Obligations [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortized cost,Available-for-sale		2,002
Gross unrealized gains,Available-for-sale
Gross unrealized losses,Available-for-sale		(14)
Estimated fair value,Available-for-sale		$ 1,988

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Schedule of Available for Sale Securites Continuous Unrealized Loss Position Fair Value (Details) $ in Thousands	Jun. 30, 2023 USD ($) Number	Dec. 31, 2022 USD ($) Number
Schedule of Investments [Line Items]
No. of securities | Number	556	550
Less than 12 months, Fair value	$ 132,131	$ 328,955
Less than 12 months, Unrealized losses	(2,924)	(17,181)
12 months or longer, Fair value	329,403	133,071
12 months or longer, Unrealized losses	(27,270)	(16,263)
Total, Fair value	461,534	462,026
Total, Unrealized losses	$ (30,194)	$ (33,444)
No. of securities | Number	7	6
Less than 12 months, Fair value	$ 3,300	$ 3,009
Less than 12 months, Unrealized losses	(196)	(77)
12 months or longer, Fair value
12 months or longer, Unrealized losses
Total, Fair value	3,300	3,009
Total, Unrealized losses	$ (196)	$ (77)
US Treasury Securities [Member]
Schedule of Investments [Line Items]
No. of securities | Number	67	67
Less than 12 months, Fair value	$ 13,995	$ 85,988
Less than 12 months, Unrealized losses	(562)	(4,591)
12 months or longer, Fair value	107,485	37,123
12 months or longer, Unrealized losses	(6,416)	(2,982)
Total, Fair value	121,480	123,111
Total, Unrealized losses	$ (6,978)	$ (7,573)
Municipal Obligations, Tax Exempt [Member]
Schedule of Investments [Line Items]
No. of securities | Number	268	274
Less than 12 months, Fair value	$ 58,460	$ 107,262
Less than 12 months, Unrealized losses	(861)	(3,020)
12 months or longer, Fair value	54,533	8,495
12 months or longer, Unrealized losses	(2,665)	(625)
Total, Fair value	112,993	115,757
Total, Unrealized losses	$ (3,526)	$ (3,645)
Municipal Obligations, Taxable [Member]
Schedule of Investments [Line Items]
No. of securities | Number	119	108
Less than 12 months, Fair value	$ 32,430	$ 54,746
Less than 12 months, Unrealized losses	(891)	(5,006)
12 months or longer, Fair value	39,464	7,571
12 months or longer, Unrealized losses	(3,931)	(1,284)
Total, Fair value	71,894	62,317
Total, Unrealized losses	$ (4,822)	$ (6,290)
Agency Mortgage-backed Securities [Member]
Schedule of Investments [Line Items]
No. of securities | Number	102	100
Less than 12 months, Fair value	$ 27,246	$ 78,971
Less than 12 months, Unrealized losses	(610)	(4,550)
12 months or longer, Fair value	127,921	79,882
12 months or longer, Unrealized losses	(14,258)	(11,372)
Total, Fair value	155,167	158,853
Total, Unrealized losses	$ (14,868)	$ (15,922)
Other [Member]
Schedule of Investments [Line Items]
No. of securities | Number	7	6
Less than 12 months, Fair value	$ 3,300	$ 3,009
Less than 12 months, Unrealized losses	(196)	(77)
12 months or longer, Fair value
12 months or longer, Unrealized losses
Total, Fair value	3,300	3,009
Total, Unrealized losses	$ (196)	$ (77)
U.S. Federal Agency Obligations [Member]
Schedule of Investments [Line Items]
No. of securities | Number		1
Less than 12 months, Fair value		$ 1,988
Less than 12 months, Unrealized losses		(14)
12 months or longer, Fair value
12 months or longer, Unrealized losses
Total, Fair value		1,988
Total, Unrealized losses		$ (14)

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Schedule of Allowance for Credit Losses Related to Held-to-maturity Investment Securites (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Schedule of Investments [Abstract]
Balance at January 1, 2023
Impact of adopting ASC 326	72
Provision for credit losses	19
Balance at June 30, 2023	$ 91

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Schedule of Investments Classified by Contractual Maturity Date (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Investments [Abstract]
Amortized cost, due in less than one year	$ 33,292
Estimated fair value, due in less than one year	32,728
Amortized cost, due after one year but within five years	263,298
Estimated fair value, due after one year but within five years	246,734
Amortized cost, due after five years but within ten years	162,266
Estimated fair value, due after five years but within ten years	151,903
Amortized cost, due after ten years	55,550
Estimated fair value, due after ten years	53,013
Amortized cost, Total available-for-sale	514,406	$ 522,505
Estimated fair value, Total available-for-sale	484,378	489,306
Amortized cost, due after five years but within ten years	3,496
Estimated fair value, due after five years but within ten years	3,300
Amortized cost, Total held-to-maturity	3,496	3,524
Estimated fair value, Total held-to-maturity	$ 3,300	$ 3,452

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Investments (Details Narrative) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Trading, Amortized Cost	$ 91,000
Security owned and pledged as collateral, fair value	$ 420,900,000	$ 420,800,000
Investment [Member]
Equity method investment, ownership percentage	10.00%

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Schedule of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	$ 893,259	$ 850,190
Net deferred loan costs (fees) and loans in process	(261)	(250)
Allowance for credit losses	(10,449)	(8,791)
Loans, net	882,549	841,149
One to Four Family Residential Real Estate [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	259,655	236,982
Construction and Land Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	22,016	22,725
Commercial Real Estate Loan [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	314,889	304,074
Commercial Loan [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	181,424	173,415
Paycheck Protection Program Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans		21
Agriculture Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	84,345	84,283
Municipal Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	2,711	2,026
Consumer Loan [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Total gross loans	$ 28,219	$ 26,664

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Schedule of Allowance for Credit Losses on Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	$ 10,267	$ 8,357	$ 8,791	$ 8,775
Charge-offs	(158)	(76)	(266)	(129)
Recoveries	90	34	151	169
Provision for credit losses	250		250	(500)
Impact of adopting ASC 326			1,523
Balance	10,449	8,315	10,449	8,315
Individually evaluated for loss					$ 654
Collectively evaluated for loss					8,137
Total					8,791
Individually evaluated for loss					4,129
Collectively evaluated for loss					846,061
Total	893,259		893,259		850,190
One to Four Family Residential Real Estate Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	1,757	624	655	623
Charge-offs
Recoveries
Provision for credit losses	95	(44)	175	(43)
Impact of adopting ASC 326			1,022
Balance	1,852	580	1,852	580
Individually evaluated for loss
Collectively evaluated for loss					655
Total					655
Individually evaluated for loss					326
Collectively evaluated for loss					236,656
Total					236,982
Construction and Land Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	170	146	117	138
Charge-offs
Recoveries				100
Provision for credit losses	(9)	(13)	(5)	(105)
Impact of adopting ASC 326			49
Balance	161	133	161	133
Individually evaluated for loss
Collectively evaluated for loss					117
Total					117
Individually evaluated for loss					412
Collectively evaluated for loss					22,313
Total	22,016		22,016		22,725
Commercial Real Estate Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	4,438	3,061	3,158	3,051
Charge-offs
Recoveries
Provision for credit losses	(65)	(79)	152	(69)
Impact of adopting ASC 326			1,063
Balance	4,373	2,982	4,373	2,982
Individually evaluated for loss
Collectively evaluated for loss					3,158
Total					3,158
Individually evaluated for loss					1,224
Collectively evaluated for loss					302,850
Total					304,074
Commercial Loan [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	2,614	2,465	2,753	2,613
Charge-offs	(90)		(107)
Recoveries	10	9	19	23
Provision for credit losses	176	177	(100)	15
Impact of adopting ASC 326			145
Balance	2,710	2,651	2,710	2,651
Individually evaluated for loss					636
Collectively evaluated for loss					2,117
Total					2,753
Individually evaluated for loss					812
Collectively evaluated for loss					172,603
Total	181,424		181,424		173,415
Paycheck Protection Program Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance
Charge-offs
Recoveries
Provision for credit losses
Impact of adopting ASC 326
Balance
Individually evaluated for loss
Collectively evaluated for loss
Total
Individually evaluated for loss
Collectively evaluated for loss					21
Total					21
Agriculture Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	1,059	1,929	1,966	2,221
Charge-offs
Recoveries	57	2	73	3
Provision for credit losses	18	(111)	(81)	(404)
Impact of adopting ASC 326			(824)
Balance	1,134	1,820	1,134	1,820
Individually evaluated for loss					18
Collectively evaluated for loss					1,948
Total					1,966
Individually evaluated for loss					1,319
Collectively evaluated for loss					82,964
Total	84,345		84,345		84,283
Municipal Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	17	6	5	6
Charge-offs
Recoveries				6
Provision for credit losses	(1)			(6)
Impact of adopting ASC 326			11
Balance	16	6	16	6
Individually evaluated for loss
Collectively evaluated for loss					5
Total					5
Individually evaluated for loss					36
Collectively evaluated for loss					1,990
Total	2,711		2,711		2,026
Consumer Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Balance	212	126	137	123
Charge-offs	(68)	(76)	(159)	(129)
Recoveries	23	23	59	37
Provision for credit losses	36	70	109	112
Impact of adopting ASC 326			57
Balance	$ 203	$ 143	$ 203	$ 143
Individually evaluated for loss
Collectively evaluated for loss					137
Total					137
Individually evaluated for loss
Collectively evaluated for loss					26,664
Total					$ 26,664

XML

Schedule of Non-accrual and Loans Past Due Over 89 Days Still Accruing (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Non-accrual with allowance for credit losses	$ 2,784	$ 3,326
Loans past due over 89 days still accruing	3,398	$ 4,064
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	1,776
Non-accrual with allowance for credit losses	1,008
Loans past due over 89 days still accruing
One to Four Family Residential Real Estate Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	38
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing
Construction And Land Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	194
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing
Commercial Real Estate Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	1,218
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing
Commercial Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	112
Non-accrual with allowance for credit losses	1,000
Loans past due over 89 days still accruing
Paycheck Protection Program Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing
Agriculture Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss	214
Non-accrual with allowance for credit losses	8
Loans past due over 89 days still accruing
Municipal Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing
Consumer Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit loss
Non-accrual with allowance for credit losses
Loans past due over 89 days still accruing

XML

Schedule of Impaired Financing Receivables (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	$ 4,894,000
Impaired Financing Receivable, Recorded Investment	4,129,000	$ 3,500,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	3,374,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment	755,000
Impaired Financing Receivable, Related Allowance	654,000	$ 647,000
Year-to-date average loan balance	4,158,000
Year-to-date interest income recognized	136,000
One to Four Family Residential Real Estate Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	326,000
Impaired Financing Receivable, Recorded Investment	326,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	326,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment
Impaired Financing Receivable, Related Allowance
Year-to-date average loan balance	357,000
Year-to-date interest income recognized	9,000
Construction and Land Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	843,000
Impaired Financing Receivable, Recorded Investment	412,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	412,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment
Impaired Financing Receivable, Related Allowance
Year-to-date average loan balance	243,000
Year-to-date interest income recognized	10,000
Commercial Real Estate Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	1,224,000
Impaired Financing Receivable, Recorded Investment	1,224,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,224,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment
Impaired Financing Receivable, Related Allowance
Year-to-date average loan balance	1,224,000
Year-to-date interest income recognized	47,000
Commercial Loan [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	1,063,000
Impaired Financing Receivable, Recorded Investment	812,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	75,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment	737,000
Impaired Financing Receivable, Related Allowance	636,000
Year-to-date average loan balance	865,000
Year-to-date interest income recognized	5,000
Agriculture Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	1,402,000
Impaired Financing Receivable, Recorded Investment	1,319,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,301,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment	18,000
Impaired Financing Receivable, Related Allowance	18,000
Year-to-date average loan balance	1,433,000
Year-to-date interest income recognized	64,000
Municipal Loans [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Impaired Financing Receivable, Unpaid Principal Balance	36,000
Impaired Financing Receivable, Recorded Investment	36,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	36,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment
Impaired Financing Receivable, Related Allowance
Year-to-date average loan balance	36,000
Year-to-date interest income recognized	$ 1,000

XML

Schedule of Past Due Financing Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 614	$ 738
Financing Receivable, Nonaccrual	2,784	3,326
Financing Receivable, 90 Days or More Past Due, Still Accruing	$ 3,398	$ 4,064
Percentage of gross loans, Total past due loans accruing	0.07%	0.09%
Percentage of gross loans, Total past due loans accruing	0.31%	0.39%
Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 127	$ 75
Percentage of gross loans, Total past due loans accruing	0.01%	0.01%
Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 487	$ 663
Percentage of gross loans, Total past due loans accruing	0.05%	0.08%
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Financing Receivable, Nonaccrual	1,008
Financing Receivable, 90 Days or More Past Due, Still Accruing
Percentage of gross loans, Total past due loans accruing	0.00%	0.00%
Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 889,861	$ 846,126
Percentage of gross loans, Total past due loans accruing	99.62%	99.52%
Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Percentage of gross loans, Total past due loans accruing	0.38%	0.48%
One to Four Family Residential Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 237	$ 80
Financing Receivable, Nonaccrual	38	170
Financing Receivable, 90 Days or More Past Due, Still Accruing	275	250
One to Four Family Residential Real Estate Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	3	8
One to Four Family Residential Real Estate Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	234	72
One to Four Family Residential Real Estate Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
One to Four Family Residential Real Estate Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	259,380	236,732
Construction and Land Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Financing Receivable, Nonaccrual	194	195
Financing Receivable, 90 Days or More Past Due, Still Accruing	194	195
Construction and Land Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Construction and Land Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Construction and Land Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Construction and Land Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	21,822	22,530
Commercial Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	184
Financing Receivable, Nonaccrual	1,218	1,224
Financing Receivable, 90 Days or More Past Due, Still Accruing	1,402	1,224
Commercial Real Estate Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	184
Commercial Real Estate Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	313,487	302,850
Commercial Loan [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	167	411
Financing Receivable, Nonaccrual	1,112	812
Financing Receivable, 90 Days or More Past Due, Still Accruing	1,279	1,223
Commercial Loan [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	104
Commercial Loan [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	63	411
Commercial Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Commercial Loan [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	180,145	172,192
Paycheck Protection Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Financing Receivable, Nonaccrual
Financing Receivable, 90 Days or More Past Due, Still Accruing
Paycheck Protection Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Paycheck Protection Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Paycheck Protection Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Paycheck Protection Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss		21
Agriculture Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	5	180
Financing Receivable, Nonaccrual	222	925
Financing Receivable, 90 Days or More Past Due, Still Accruing	227	1,105
Agriculture Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Agriculture Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	5	180
Agriculture Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Agriculture Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	84,118	83,178
Municipal Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Financing Receivable, Nonaccrual
Financing Receivable, 90 Days or More Past Due, Still Accruing
Municipal Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Municipal Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Municipal Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Municipal Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	2,711	2,026
Consumer Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	21	67
Financing Receivable, Nonaccrual
Financing Receivable, 90 Days or More Past Due, Still Accruing	21	67
Consumer Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	20	67
Consumer Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1
Consumer Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss
Consumer Loans [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 28,198	$ 26,597

XML

Schedule of Troubled Debt Restructurings on Financing Receivables and Year of Origination (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Short-Term Debt [Line Items]
Nonclassified	$ 885,360
Classified	7,899
Total	893,259
Charge-offs	(266)
One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	259,617
Classified	38
Total	259,655
Charge-offs
Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	21,822
Classified	194
Total	22,016
Charge-offs
Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	311,889
Classified	3,000
Total	314,889
Charge-offs
Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	176,979
Classified	4,445
Total	181,424
Charge-offs	(107)
Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	84,123
Classified	222
Total	84,345
Charge-offs
Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	2,711
Classified
Total	2,711
Charge-offs
Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	28,219
Classified
Total	28,219
Charge-offs	(159)
2023 [Member]
Short-Term Debt [Line Items]
Nonclassified	85,794
Classified	190
Total	85,984
Charge-offs
2023 [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	39,106
Classified
Total	39,106
Charge-offs
2023 [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	2,717
Classified
Total	2,717
Charge-offs
2023 [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	19,401
Classified
Total	19,401
Charge-offs
2023 [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	17,850
Classified	190
Total	18,040
Charge-offs
2023 [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	2,647
Classified
Total	2,647
Charge-offs
2023 [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	851
Classified
Total	851
Charge-offs
2023 [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	3,222
Classified
Total	3,222
Charge-offs
2022 [Member]
Short-Term Debt [Line Items]
Nonclassified	227,312
Classified	867
Total	228,179
Charge-offs	(17)
2022 [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	88,985
Classified
Total	88,985
Charge-offs
2022 [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	6,565
Classified
Total	6,565
Charge-offs
2022 [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	77,956
Classified
Total	77,956
Charge-offs
2022 [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	39,227
Classified	867
Total	40,094
Charge-offs	(17)
2022 [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	12,667
Classified
Total	12,667
Charge-offs
2022 [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	144
Classified
Total	144
Charge-offs
2022 [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	1,768
Classified
Total	1,768
Charge-offs
2021 [Member]
Short-Term Debt [Line Items]
Nonclassified	139,477
Classified	774
Total	140,251
Charge-offs	(90)
2021 [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	45,184
Classified
Total	45,184
Charge-offs
2021 [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5,848
Classified
Total	5,848
Charge-offs
2021 [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	59,861
Classified	488
Total	60,349
Charge-offs
2021 [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	21,332
Classified	286
Total	21,618
Charge-offs	(90)
2021 [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5,664
Classified
Total	5,664
Charge-offs
2021 [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified
Classified
Total
Charge-offs
2021 [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	1,588
Classified
Total	1,588
Charge-offs
2020 [Member]
Short-Term Debt [Line Items]
Nonclassified	117,269
Classified	441
Total	117,710
Charge-offs
2020 [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	34,761
Classified
Total	34,761
Charge-offs
2020 [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	2,712
Classified
Total	2,712
Charge-offs
2020 [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	55,043
Classified	28
Total	55,071
Charge-offs
2020 [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	18,866
Classified	413
Total	19,279
Charge-offs
2020 [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	4,473
Classified
Total	4,473
Charge-offs
2020 [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified
Classified
Total
Charge-offs
2020 [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	1,414
Classified
Total	1,414
Charge-offs
2019 [Member]
Short-Term Debt [Line Items]
Nonclassified	55,053
Classified	777
Total	55,830
Charge-offs
2019 [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	13,910
Classified
Total	13,910
Charge-offs
2019 [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	2,079
Classified
Total	2,079
Charge-offs
2019 [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	31,249
Classified	184
Total	31,433
Charge-offs
2019 [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	3,514
Classified	543
Total	4,057
Charge-offs
2019 [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	4,296
Classified	50
Total	4,346
Charge-offs
2019 [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified
Classified
Total
Charge-offs
2019 [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5
Classified
Total	5
Charge-offs
Prior [Member]
Short-Term Debt [Line Items]
Nonclassified	123,882
Classified	2,680
Total	126,562
Charge-offs
Prior [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	33,282
Classified	38
Total	33,320
Charge-offs
Prior [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	369
Classified	194
Total	563
Charge-offs
Prior [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	64,697
Classified	2,300
Total	66,997
Charge-offs
Prior [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5,696
Classified	34
Total	5,730
Charge-offs
Prior [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	12,876
Classified	114
Total	12,990
Charge-offs
Prior [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	1,716
Classified
Total	1,716
Charge-offs
Prior [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5,246
Classified
Total	5,246
Charge-offs
Revolving Loans Amortized Cost [Member]
Short-Term Debt [Line Items]
Nonclassified	130,185
Classified	1,963
Total	132,148
Charge-offs	(159)
Revolving Loans Amortized Cost [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	3,966
Classified
Total	3,966
Charge-offs
Revolving Loans Amortized Cost [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	1,173
Classified
Total	1,173
Charge-offs
Revolving Loans Amortized Cost [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	3,262
Classified
Total	3,262
Charge-offs
Revolving Loans Amortized Cost [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	65,487
Classified	1,905
Total	67,392
Charge-offs
Revolving Loans Amortized Cost [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	41,345
Classified	58
Total	41,403
Charge-offs
Revolving Loans Amortized Cost [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified
Classified
Total
Charge-offs
Revolving Loans Amortized Cost [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	14,952
Classified
Total	14,952
Charge-offs	(159)
Revolving Loans Converted To Term [Member]
Short-Term Debt [Line Items]
Nonclassified	6,388
Classified	207
Total	6,595
Charge-offs
Revolving Loans Converted To Term [Member] | One to Four Family Residential Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	423
Classified
Total	423
Charge-offs
Revolving Loans Converted To Term [Member] | Construction and Land Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	359
Classified
Total	359
Charge-offs
Revolving Loans Converted To Term [Member] | Commercial Real Estate [Member]
Short-Term Debt [Line Items]
Nonclassified	420
Classified
Total	420
Charge-offs
Revolving Loans Converted To Term [Member] | Commercial Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	5,007
Classified	207
Total	5,214
Charge-offs
Revolving Loans Converted To Term [Member] | Agriculture Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	155
Classified
Total	155
Charge-offs
Revolving Loans Converted To Term [Member] | Municipal Loans [Member]
Short-Term Debt [Line Items]
Nonclassified
Classified
Total
Charge-offs
Revolving Loans Converted To Term [Member] | Consumer Loans [Member]
Short-Term Debt [Line Items]
Nonclassified	24
Classified
Total	24
Charge-offs

XML

Schedule of Troubled Debt Restructurings on Financing Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 893,259	$ 850,190
One to Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	259,655	236,982
Construction and Land Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	22,016	22,725
Agriculture Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	84,345	84,283
Municipal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 2,711	2,026
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		26,664
Loans Receivables Non Classified [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		837,187
Loans Receivables Non Classified [Member] | One to Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		236,663
Loans Receivables Non Classified [Member] | Construction and Land Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		22,530
Loans Receivables Non Classified [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		300,216
Loans Receivables Non Classified [Member] | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		165,709
Loans Receivables Non Classified [Member] | Paycheck Protection Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		21
Loans Receivables Non Classified [Member] | Agriculture Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		83,358
Loans Receivables Non Classified [Member] | Municipal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		2,026
Loans Receivables Non Classified [Member] | Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		26,664
Loans Receivables Classified [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		13,003
Loans Receivables Classified [Member] | One to Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		319
Loans Receivables Classified [Member] | Construction and Land Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		195
Loans Receivables Classified [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		3,858
Loans Receivables Classified [Member] | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		7,706
Loans Receivables Classified [Member] | Paycheck Protection Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Loans Receivables Classified [Member] | Agriculture Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		925
Loans Receivables Classified [Member] | Municipal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Loans Receivables Classified [Member] | Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total

XML

Schedule of Allowance for Credit Losses Related to Unfunded Loan Commitments (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Financing Receivable, Past Due [Line Items]
Impact of adopting ASC 326	$ 72
Provision for credit losses	19
Unfunded Loan Commitment [Member]
Financing Receivable, Past Due [Line Items]
Balance at January 1, 2023	170
Impact of adopting ASC 326
Provision for credit losses	30
Balance at March 31, 2023	$ 200

XML

Schedule of Amortization cost (Details) - Commercial Loans [Member] $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Amortizated cost basis	$ 151
Percentage of loan class	0.10%
Financial effect	90 day payment deferral

XML

Loans and Allowance for Credit Losses (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Receivables [Abstract]
Allowance for Loan and Lease Losses Write-offs, Net	$ 68,000	$ 42,000	$ 115,000	$ 40,000
Loans and leases receivable, impaired, interest lost on nonaccrual loans			$ 280,000	$ 95,000

XML

Schedule of Other Intangible Assets and Goodwill (Details) - Core Deposits [Member] - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	$ 5,880	$ 5,880
Intangible assets, Accumulated amortization	(2,268)	(1,874)
Intangible assets, Net carrying amount	$ 3,612	$ 4,006

XML

Schedule of Finite-lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 371
2024	663
2025	588
2026	512
2027	436
2028	360
Thereafter	682
Total	$ 3,612

XML

Schedule of Participating Mortgage Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Investments [Line Items]
Total	$ 706,278	$ 713,144
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Schedule of Investments [Line Items]
Total	678,149	685,859
Federal Home Loan Bank Certificates and Obligations (FHLB) [Member]
Schedule of Investments [Line Items]
Total	$ 28,129	$ 27,285

XML

Schedule of Servicing Asset at Amortized Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Mortgage Loan Servicing
Balance at beginning of period	$ 3,652	$ 4,128	$ 3,813	$ 4,193
Additions	137	217	240	451
Amortization	(275)	(320)	(539)	(619)
Balance at end of period	$ 3,514	$ 4,025	$ 3,514	$ 4,025

XML

Mortgage Loan Servicing (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loss on reserve for mortgage loan	$ 6,000		$ 21,000
Weighted Average [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Assumption for fair value of interests continued to be held by transferor servicing assets or liabilities weighted average default rate			1.57%		1.47%
Repurchase reserve	204,000		$ 204,000		$ 225,000
Mortgage Loans Serviced [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Escrow deposit	6,200,000		6,200,000		5,300,000
Interest and Fee Income, Other Loans	441,000	$ 453,000	894,000	$ 907,000
Servicing asset at fair value, amount	$ 10,300,000		$ 10,300,000		$ 10,300,000
Assumption for fair value of assets or liabilities that relate to transferor's continuing involvement, discount rate			9.50%		9.50%
Mortgage Loans Serviced [Member] | Minimum [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Assumption for fair value of assets or liabilities that relate to transferor's continuing involvement, prepayment speed			6.00%		6.00%
Mortgage Loans Serviced [Member] | Maximum [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Assumption for fair value of assets or liabilities that relate to transferor's continuing involvement, prepayment speed			22.26%		21.34%

XML

Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings per share:
Net earnings		$ 3,362	$ 3,033	$ 6,719	$ 6,166
Weighted average common shares outstanding - basic	[1]	5,215,575	5,237,837	5,214,357	5,242,558
Assumed exercise of stock options	[1]	3,975	14,709	5,403	17,756
Weighted average common shares outstanding - diluted	[1]	5,219,550	5,252,546	5,219,760	5,260,313
Basic	[1],[2]	$ 0.64	$ 0.58	$ 1.29	$ 1.18
Diluted	[1],[2]	$ 0.64	$ 0.58	$ 1.29	$ 1.17

[1] Share and per share values for the periods ended June 30, 2022 have been adjusted to give effect to the 5%

[2] Per share amounts for the periods ended June 30, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

XML

Schedule of Earnings Per Share, Basic and Diluted (Details) (Parenthetical)	12 Months Ended
	Dec. 31, 2022
Earnings per share:
Stock dividend, percentage	5.00%

XML

Earnings per Share (Details Narrative) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings per share:
Earnings per share	77,511	53,642	77,511	53,642
Cash dividend declared	$ 0.21		$ 0.21
Dividends payable, date to be paid			Sep. 06, 2023

XML

Federal Home Loan Bank Borrowings (Details Narrative) - Federal Home Loan Bank Advances [Member] - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Transfer of Financial Assets Accounted for as Sales [Line Items]
Long-term line of credit	$ 76.2	$ 8.2
Debt variable rate	5.23%
Debt instrument, collateral amount	$ 277.5	139.0
Debt instrument maximum borrowing capacity amount	206.3	111.0
Debt instrument, unused borrowing capacity, amount	$ 129.0	$ 101.8
Fed Funds Effective Rate Overnight Index Swap Rate [Member]
Transfer of Financial Assets Accounted for as Sales [Line Items]
Debt variable rate	0.15%

XML

Schedule of Repurchase Agreements (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	$ 13,958	$ 29,402
U S Federal Treasury Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	13,251	25,973
Agency Mortgage Backed [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	707	2,193
U.S. Federal Agency Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total		1,236
Overnight And Continuous [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	13,958	29,402
Overnight And Continuous [Member] | U S Federal Treasury Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	13,251	25,973
Overnight And Continuous [Member] | Agency Mortgage Backed [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total	707	2,193
Overnight And Continuous [Member] | U.S. Federal Agency Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total		1,236
Upto 30 Days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Upto 30 Days [Member] | U S Federal Treasury Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Upto 30 Days [Member] | Agency Mortgage Backed [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Upto 30 Days [Member] | U.S. Federal Agency Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
30 - 90 Days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
30 - 90 Days [Member] | U S Federal Treasury Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
30 - 90 Days [Member] | Agency Mortgage Backed [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
30 - 90 Days [Member] | U.S. Federal Agency Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Greater Than 90 Days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Greater Than 90 Days [Member] | U S Federal Treasury Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Greater Than 90 Days [Member] | Agency Mortgage Backed [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total
Greater Than 90 Days [Member] | U.S. Federal Agency Obligations [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Total

XML

Other Borrowings (Details Narrative) - USD ($)		6 Months Ended	12 Months Ended
	Sep. 29, 2022	Jun. 30, 2023	Dec. 31, 2022
Line of Credit Facility [Line Items]
Principal payments		$ 8,300,000	$ 9,000,000.0
Repurchase Agreements [Member]
Line of Credit Facility [Line Items]
Customer funds		14,000,000.0	29,400,000
Debt instrument, collateral amount		30,400,000	38,400,000
Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt instrument, face amount		0	$ 0
Unrelated Financial Institution [Member]
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity	$ 10,000,000.0	$ 5,000,000.0
Line of credit facility, expiration date	Sep. 01, 2027	Nov. 01, 2023
Line of credit facility, interest rate description		prime rate less 0.25%
Line of credit facility, fixed interest rate	6.15%

XML

Schedule of Revenue from Contracts with Customers Within Non-interest Income (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from Contract with Customer [Abstract]
Overdraft fees		$ 954	$ 907	$ 1,829	$ 1,730
Other		242	164	474	324
Interchange income		805	785	1,542	1,492
Loan servicing fees	[1]	441	453	894	907
Office lease income	[1]	148	33	218	66
Gains on sales of loans	[1]	830	1,073	1,523	1,978
Bank owned life insurance income	[1]	223	190	441	377
Gains on sales of real estate owned					114
Other		186	191	403	371
Total non-interest income		$ 3,829	$ 3,796	$ 7,324	$ 7,359

[1] Not within the scope of ASC 606.

XML

Schedule of Fair Value, by Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale, at fair value	$ 484,378	$ 489,306
Investment securities held-to-maturity	3,496	3,524
Loans held for sale	3,900	2,488
Mortgage servicing rights	3,514	3,813
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	20,038	23,156
Interest-bearing deposits at other banks
Investment securities available-for-sale, at fair value	121,480	123,111
Investment securities held-to-maturity
Loans, net
Loans held for sale
Mortgage servicing rights
Accrued interest receivable	273	426
Derivative financial instruments
Non-maturity deposits	(1,149,310)	(1,207,371)
Certificates of deposit
FHLB borrowings
Subordinated debentures
Other borrowings
Accrued interest payable
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents
Interest-bearing deposits at other banks	8,336	9,084
Investment securities available-for-sale, at fair value	362,898	366,195
Investment securities held-to-maturity	3,300	3,452
Loans, net
Loans held for sale	3,900	2,488
Mortgage servicing rights	10,336	10,282
Accrued interest receivable	2,232	2,150
Derivative financial instruments	282	126
Non-maturity deposits
Certificates of deposit	(129,468)	(90,760)
FHLB borrowings	(76,185)	(8,200)
Subordinated debentures	(18,481)	(18,189)
Other borrowings	(22,000)	(36,183)
Accrued interest payable	(1,213)	(439)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents
Interest-bearing deposits at other banks
Investment securities available-for-sale, at fair value
Investment securities held-to-maturity
Loans, net	869,114	828,726
Loans held for sale
Mortgage servicing rights
Accrued interest receivable	3,528	3,303
Derivative financial instruments
Non-maturity deposits
Certificates of deposit
FHLB borrowings
Subordinated debentures
Other borrowings
Accrued interest payable
Fair Value Measured at Net Asset Value Per Share [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	20,038	23,156
Interest-bearing deposits at other banks	8,336	9,084
Investment securities available-for-sale, at fair value	484,378	489,306
Investment securities held-to-maturity	3,300	3,452
Loans, net	869,114	828,726
Loans held for sale	3,900	2,488
Mortgage servicing rights	10,336	10,282
Accrued interest receivable	6,033	5,879
Derivative financial instruments	282	126
Non-maturity deposits	(1,149,310)	(1,207,371)
Certificates of deposit	(129,468)	(90,760)
FHLB borrowings	(76,185)	(8,200)
Subordinated debentures	(18,481)	(18,189)
Other borrowings	(22,000)	(36,183)
Accrued interest payable	(1,213)	(439)
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	20,038	23,156
Interest-bearing deposits at other banks	8,336	9,084
Investment securities available-for-sale, at fair value	484,378	489,306
Investment securities held-to-maturity	3,496	3,524
Investment in federal home loan bank stock fair value	9,445	5,470
Loans, net	882,549	841,149
Loans held for sale	3,900	2,488
Mortgage servicing rights	3,514	3,813
Accrued interest receivable	6,033	5,879
Derivative financial instruments	282	126
Non-maturity deposits	(1,149,310)	(1,207,371)
Certificates of deposit	(131,661)	(93,278)
FHLB borrowings	(76,185)	(8,200)
Subordinated debentures	(21,651)	(21,651)
Other borrowings	(22,293)	(38,402)
Accrued interest payable	$ (1,213)	$ (439)

XML

Schedule of Fair Value, Assets Measured On Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	$ 484,378	$ 489,306
Loans held for sale	3,900	2,488
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	121,480	123,111
Loans held for sale
Derivative financial instruments
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	362,898	366,195
Loans held for sale	3,900	2,488
Derivative financial instruments	282	126
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Loans held for sale
Derivative financial instruments
US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	121,480	123,111
Municipal Obligations, Tax Exempt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	124,451	127,262
Municipal Obligations, Taxable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	77,713	67,244
Agency Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	160,734	169,701
U.S. Federal Agency Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		1,988
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	3,900	2,488
Derivative financial instruments	282	126
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale
Derivative financial instruments
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	3,900	2,488
Derivative financial instruments	282	126
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale
Derivative financial instruments
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	121,480	123,111
Fair Value, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	121,480	123,111
Fair Value, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Municipal Obligations, Tax Exempt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	124,451	127,262
Fair Value, Recurring [Member] | Municipal Obligations, Tax Exempt [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Municipal Obligations, Tax Exempt [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	124,451	127,262
Fair Value, Recurring [Member] | Municipal Obligations, Tax Exempt [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Municipal Obligations, Taxable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	77,713	67,244
Fair Value, Recurring [Member] | Municipal Obligations, Taxable [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Municipal Obligations, Taxable [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	77,713	67,244
Fair Value, Recurring [Member] | Municipal Obligations, Taxable [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Agency Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	160,734	169,701
Fair Value, Recurring [Member] | Agency Mortgage-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | Agency Mortgage-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	160,734	169,701
Fair Value, Recurring [Member] | Agency Mortgage-backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | U.S. Federal Agency Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		1,988
Fair Value, Recurring [Member] | U.S. Federal Agency Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Recurring [Member] | U.S. Federal Agency Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		1,988
Fair Value, Recurring [Member] | U.S. Federal Agency Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value

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Schedule of Fair Value Contractual Balance and Gain Loss On Loans Held for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Aggregate fair value	$ 3,900	$ 2,488
Contractual balance	3,842	2,468
Gain	$ 58	$ 20

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Schedule of Gains and Losses from Changes in Fair Value of Loans Held for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value Disclosures [Abstract]
Total change in fair value	$ 45	$ (15)	$ 156	$ (28)

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Schedule of Fair Value Measurements On Nonrecurring, Valuation Techniques (Details) - Fair Value, Nonrecurring [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure	$ 529	$ 101
Fair Value Measurements, Valuation Techniques	Sales comparison	Sales comparison
Fair Value Measurements, Unobservable inputs	Adjustment to comparable value	Adjustment to comparable value
Commercial Loan [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Measurements Range	0.00%	0.00%
Commercial Loan [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Measurements Range	30.00%	25.00%
Agriculturel Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure	$ 324
Fair Value Measurements, Valuation Techniques	Sales comparison
Fair Value Measurements, Unobservable inputs	Adjustment to appraised value
Agriculturel Loan [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Measurements Range	0.00%
Agriculturel Loan [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Measurements Range	50.00%
One to Four Family Residential Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure		$ 272
Fair Value Measurements, Valuation Techniques		Sales comparison
Fair Value Measurements, Unobservable inputs		Adjustment to appraised value
Fair Value Measurements Real estate owned Range		15.00%
Commercial Real Estate Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure		$ 234
Fair Value Measurements, Valuation Techniques		Sales comparison
Fair Value Measurements, Unobservable inputs		Adjustment to appraised value
Fair Value Measurements Real estate owned Range		15.00%

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Fair Value of Financial Instruments and Fair Value Measurements (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Impaired loan balance	$ 3,500,000	$ 4,129,000
Impaired loss	1,500,000	755,000
Related allowance recorded	$ 647,000	$ 654,000

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Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies (Details) $ in Thousands		Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Actual Ratio, Leverage		0.040
For capital adequacy purposes Ratio, Tier 1 Capital		0.045
Companys Regulatory Capital Requirements [Member]
Actual Amount, Leverage		$ 126,939	$ 122,275
Actual Ratio, Leverage		0.0839	0.0814
For capital adequacy purposes Amount, Leverage		$ 60,513	$ 60,100
For capital adequacy purposes Ratio, Leverage	[1]	4.00%	4.00%
Actual Amount, Common Equity Tier 1 Capital		$ 105,939	$ 101,275
Actual Ratio, Common Equity Tier 1 Capital		10.42%	10.37%
For capital adequacy purposes Amount, Common Equity Tier 1 Capital		$ 71,149	$ 68,352
For capital adequacy purposes Ratio, Common Equity Tier 1 Capital	[1]	7.00%	7.00%
Actual Amount, Tier 1 Capital		$ 126,939	$ 122,275
Actual Ratio, Tier 1 Capital		0.1249	0.1252
For capital adequacy purposes Amount, Tier 1 Capital		$ 86,396	$ 82,999
For capital adequacy purposes Ratio, Tier 1 Capital	[1]	0.085	0.085
Actual Amount, Total Risk Based Capital		$ 136,776	$ 131,236
Actual Ratio, Total Risk Based Capital		0.1346	0.1344
For capital adequacy purposes Amount, Total Risk Based Capital		$ 106,724	$ 102,528
For capital adequacy purposes Ratio, Total Risk Based Capital	[1]	0.105	0.105

[1] The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

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Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies (Details) (Parenthetical)	6 Months Ended
	Jun. 30, 2023
Companys Regulatory Capital Requirements [Member]
Tier one capital conversation buffer	2.50%

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Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations (Details) $ in Thousands		Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Actual Ratio, Leverage		0.040
To be well-capitalized under prompt corrective action provisions, Ratio, Tier 1 Capital		0.060
To be well-capitalized under prompt corrective action provisions, Ratio, Total Risk Based Capital		0.080
Banks Regulatory Capital Requirements [Member]
Actual Amount, Leverage		$ 131,737	$ 128,643
Actual Ratio, Leverage		0.0873	0.0859
For capital adequacy purposes Amount, Leverage		$ 60,341	$ 59,933
For capital adequacy purposes Ratio, Leverage	[1]	0.040	0.040
To be well-capitalized under prompt corrective action provisions, Amount, Leverage		$ 75,426	$ 74,917
To be well-capitalized under prompt corrective action provisions, Ratio, Leverage		0.050	0.050
Actual Amount, Common Equity Tier 1 Capital		$ 131,737	$ 128,643
Actual Ratio, Common Equity Tier 1 Capital		12.97%	13.18%
For capital adequacy purposes Amount, Common Equity Tier 1 Capital		$ 71,082	$ 68,309
For capital adequacy purposes Ratio, Common Equity Tier 1 Capital	[1]	7.00%	7.00%
To be well-capitalized under prompt corrective action provisions, Amount, Common Equity Tier 1 Capital		$ 66,005	$ 63,430
To be well-capitalized under prompt corrective action provisions, Ratio, Common Equity Tier 1 Capital		0.065	0.065
Actual Amount, Tier 1 Capital		$ 131,737	$ 128,643
Actual Ratio, Tier 1 Capital		0.1297	0.1318
For capital adequacy purposes Amount, Tier 1 Capital		$ 86,314	$ 82,947
For capital adequacy purposes Ratio, Tier 1 Capital	[1]	0.085	0.085
To be well-capitalized under prompt corrective action provisions, Amount, Tier 1 Capital		$ 81,237	$ 78,068
To be well-capitalized under prompt corrective action provisions, Ratio, Tier 1 Capital		0.080	0.080
Actual Amount, Total Risk Based Capital		$ 141,574	$ 137,604
Actual Ratio, Total Risk Based Capital		0.1394	0.1410
For capital adequacy purposes Amount, Total Risk Based Capital		$ 106,623	$ 102,464
For capital adequacy purposes Ratio, Total Risk Based Capital	[1]	0.105	0.105
To be well-capitalized under prompt corrective action provisions, Amount, Total Risk Based Capital		$ 101,546	$ 97,585
To be well-capitalized under prompt corrective action provisions, Ratio, Total Risk Based Capital		0.100	0.100

[1] The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

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Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations (Details) (Parenthetical)	6 Months Ended
	Jun. 30, 2023
Banks Regulatory Capital Requirements [Member]
Tier one capital conversation buffer	2.50%

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Regulatory Capital Requirements (Details Narrative) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Line of Credit Facility [Line Items]
Assets, total	$ 1,539,340	$ 1,502,867
Common equity tier one risk based capital required for capital adequacy to risk weighted assets	0.045
Tier one risk based capital required for capital adequacy to risk weighted assets	0.060
Capital required for capital adequacy to risk weighted assets	0.080
Tier one leverage capital required for capital adequacy to average assets	0.040
Capital Conservation Buffer [Member]
Line of Credit Facility [Line Items]
Tier one capital conversation buffer	2.50%
Small Bank Holding Companies [Member]
Line of Credit Facility [Line Items]
Assets, total	$ 3,000,000