10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q  

(Mark One)

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

For the quarterly period ended September 30, 2020

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 001-33003

CITIZENS COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	20-5120010
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

2174 EastRidge Center

Eau Claire, WI 54701

(Address and Zip Code of principal executive offices)

715-836-9994

(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 each exchange on which registered
Common Stock, $.01 par value per share	CZWI	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, 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  ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

At November 6, 2020 there were 11,154,563 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

CITIZENS COMMUNITY BANCORP, INC.

FORM 10-Q

September 30, 2020

INDEX

			Page Number
Part I – FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019	5
		Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2020 and 2019	6
		Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2020 and 2019	7
		Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the nine months ended September 30, 2020 and the year ended December 31, 2019	8
		Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019	10
		Condensed Notes to Consolidated Financial Statements (Unaudited)	12
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	71
	Item 4.	Controls and Procedures	73
Part II – OTHER INFORMATION			73
	Item 1.	Legal Proceedings	73
	Item 1A.	Risk Factors	74
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
	Item 3.	Defaults Upon Senior Securities	75
	Item 4.	Mine Safety Disclosures	75
	Item 5.	Other Information	75
	Item 6.	Exhibits	76
SIGNATURES			77

3

PART 1 – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

4

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Balance Sheets

September 30, 2020 (unaudited) and December 31, 2019

(derived from audited financial statements)

(in thousands, except share and per share data)

	September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	$	115,474	$	55,840
Other interest-bearing deposits	3,752		4,744
Securities available for sale "AFS"	150,908		180,119
Securities held to maturity "HTM"	16,927		2,851
Equity securities with readily determinable fair value	187		246
Other investments	15,075		15,005
Loans receivable	1,230,139		1,177,380
Allowance for loan losses	(14,836)		(10,320)
Loans receivable, net	1,215,303		1,167,060
Loans held for sale	4,938		5,893
Mortgage servicing rights	3,498		4,282
Office properties and equipment, net	21,607		21,106
Accrued interest receivable	5,829		4,738
Intangible assets	5,893		7,587
Goodwill	31,498		31,498
Foreclosed and repossessed assets, net	812		1,460
Bank owned life insurance ("BOLI")	23,514		23,063
Other assets	7,378		5,757
TOTAL ASSETS	$	1,622,593	$	1,531,249
Liabilities and Stockholders’ Equity
Liabilities:
Deposits	$	1,270,778	$	1,195,702
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) advances	124,491		130,971
Other borrowings	58,297		43,560
Other liabilities	11,704		10,463
Total liabilities	1,465,270		1,380,696
Stockholders’ Equity:
Common stock—$0.01 par value, authorized 30,000,000; 11,154,645 and 11,266,954 shares issued and outstanding, respectively	112		113
Additional paid-in capital	127,778		128,856
Retained earnings	29,239		22,517
Unearned deferred compensation	(710)		(462)
Accumulated other comprehensive income (loss)	904		(471)
Total stockholders’ equity	157,323		150,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,622,593	$	1,531,249

See accompanying condensed notes to unaudited consolidated financial statements.

5

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Operations (unaudited)

Three and Nine Months Ended September 30, 2020 and 2019

(in thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Interest and dividend income:
Interest and fees on loans	$	14,154	$	14,646	$	44,300	$	40,036
Interest on investments	1,064		1,577		3,712		4,241
Total interest and dividend income	15,218		16,223		48,012		44,277
Interest expense:
Interest on deposits	2,255		3,371		8,042		8,890
Interest on FHLB and FRB borrowed funds	430		639		1,386		2,213
Interest on other borrowed funds	624		620		1,701		1,436
Total interest expense	3,309		4,630		11,129		12,539
Net interest income before provision for loan losses	11,909		11,593		36,883		31,738
Provision for loan losses	1,500		575		5,250		2,125
Net interest income after provision for loan losses	10,409		11,018		31,633		29,613
Non-interest income:
Service charges on deposit accounts	431		625		1,336		1,756
Interchange income	556		476		1,509		1,267
Loan servicing income	1,144		714		3,144		1,902
Gain on sale of loans	1,987		679		4,585		1,560
Loan fees and service charges	320		471		1,041		860
Insurance commission income	—		197		474		573
Net gains (losses) on investment securities	(1)		96		97		151
Net gain (loss) on sale of branch	—		—		—		2,295
Net gain (loss) on sale of acquired business lines	180		—		432		—
Settlement proceeds	—		—		131		—
Other	445		363		929		827
Total non-interest income	5,062		3,621		13,678		11,191
Non-interest expense:
Compensation and related benefits	5,538		5,295		16,881		14,605
Occupancy	993		905		2,898		2,725
Office	532		599		1,650		1,649
Data processing	1,145		1,092		3,165		2,953
Amortization of intangible assets	399		412		1,223		1,085
Mortgage servicing rights expense	603		325		2,330		822
Advertising, marketing and public relations	260		315		802		974
FDIC premium assessment	188		78		436		318
Professional services	434		561		1,391		1,961
Gain on repossessed assets, net	(105)		(16)		(195)		(143)
Other	737		3,409		2,266		5,309
Total non-interest expense	10,724		12,975		32,847		32,258
Income before provision for income tax	4,747		1,664		12,464		8,546
Provision for income taxes	1,267		430		3,309		2,252
Net income attributable to common stockholders	$	3,480	$	1,234	$	9,155	$	6,294
Per share information:
Basic earnings	$	0.31	$	0.11	$	0.82	$	0.57
Diluted earnings	$	0.31	$	0.11	$	0.82	$	0.57
Cash dividends paid	$	—	$	—	$	0.21	$	0.20

See accompanying condensed notes to unaudited consolidated financial statements.

6

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Comprehensive Income (unaudited)

Three and Nine months ended September 30, 2020 and 2019

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Net income attributable to common stockholders	$	3,480	$	1,234	$	9,155	$	6,294
Other comprehensive income, net of tax:
Securities available for sale
Net unrealized gains arising during period	885		319		1,488		2,177
Reclassification adjustment for net gains included in net income	—		—		(113)		(19)
Other comprehensive income	885		319		1,375		2,158
Comprehensive income	$	4,365	$	1,553	$	10,530	$	8,452

See accompanying condensed notes to unaudited consolidated financial statements.

7

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Nine Months Ended September 30, 2020

(in thousands, except shares and per share data)

				Additional Paid-In Capital		Retained Earnings		Unearned Deferred Compensation		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance, January 1, 2020	11,266,954	$	113	$	128,856	$	22,517	$	(462)	$	(471)	$	150,553
Net income	—	—		—		2,606		—		—		2,606
Other comprehensive income, net of tax	—	—		—		—		—		(1,138)		(1,138)
Surrender of restricted shares of common stock	(1,746)	—		(21)		—		—		—		(21)
Common stock awarded under the equity incentive plan	41,507	—		669		—		(669)		—		—
Common stock fractional share audit adjustment	(40)	—		—		—		—		—		—
Common stock repurchased	(155,666)	(1)		(1,776)		(61)		—		—		(1,838)
Stock option expense	—	—		4		—		—		—		4
Amortization of restricted stock	—	—		—		—		139		—		139
Cash dividends ($0.21 per share)	—	—		—		(2,372)		—		—		(2,372)
Balance at March 31, 2020	11,151,009	112		127,732		22,690		(992)		(1,609)		147,933
Net income	—	—		—		3,069		—		—		3,069
Other comprehensive income, net of tax	—	—		—		—		—		1,628		1,628
Surrender of restricted shares of common stock	(314)	—		(2)		—		—		—		(2)
Stock option expense	—	—		4		—		—		—		4
Amortization of restricted stock	—	—		—		—		158		—		158
Balance at June 30, 2020	11,150,695	112		127,734		25,759		(834)		19		152,790
Net income	—	—		—		3,480		—		—		3,480
Other comprehensive income, net of tax	—	—		—		—		—		885		885
Surrender of restricted shares of common stock	(50)	—				—		—		—		—
Common stock awarded under the equity incentive plan	4,000	—		41		—		(41)		—		—
Stock option expense	—	—		3		—		—		—		3
Amortization of restricted stock	—	—		—		—		165		—		165
Balance, September 30, 2020	11,154,645	$	112	$	127,778	$	29,239	$	(710)	$	904	$	157,323

See accompanying condensed notes to unaudited consolidated financial statements.

8

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Twelve Months Ended December 31, 2019

(in thousands, except shares and per share data)

				Additional Paid-In Capital		Retained Earnings		Unearned Deferred Compensation		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance, January 1, 2019	10,953,512	$	109	$	125,512	$	15,264	$	(857)	$	(1,841)	$	138,187
Net income	—	—		—		953		—		—		953
Other comprehensive income, net of tax	—	—		—		—		—		1,164		1,164
Forfeiture of unvested shares	(958)	—		(13)		—		13		—		—
Surrender of restricted shares of common stock	(798)	—		(9)		—		—		—		(9)
Common stock awarded under the equity incentive plan	10,847	—		252		—		(252)		—		—
Common stock options exercised	27,430	1		194		—		—		—		195
Stock option expense	—	—		4		—		—		—		4
Amortization of restricted stock	—	—		—		—		140		—		140
Adoption of ASU 2016-01; Equity securities	—	—		—		45		—		(45)		—
Adoption of ASU 2016-02; Leases	—	—		—		(56)		—		—		(56)
Cash dividends ($0.20 per share)	—	—		—		(2,198)		—		—		(2,198)
Balance at March 31, 2019	10,990,033	110		125,940		14,008		(956)		(722)		138,380
Net income	—	—		—		4,107		—		—		4,107
Other comprehensive income, net of tax	—	—		—		—		—		675		675
Forfeiture of unvested shares	(7,958)	—		(118)		—		118		—		—
Surrender of restricted shares of common stock	(3,067)	—		(35)		—		—		—		(35)
Common stock awarded under the equity incentive plan	2,000	—		22		—		(22)		—		—
Common stock options exercised	1,000	—		8		—		—		—		8
Stock option expense	—	—		5		—		—		—		5
Amortization of restricted stock	—	—		—		—		103		—		103
Adoption of ASU 2016-02; Leases	—	—		—		(1)		—		—		(1)
Balance at June 30, 2019	10,982,008	110		125,822		18,114		(757)		(47)		143,242
Net income	—	—		—		1,234		—		—		1,234
Other comprehensive income, net of tax	—	—		—		—		—		319		319
Surrender of restricted shares of common stock	(297)	—		(3)		—		—		—		(3)
Common stock issued to F&M shareholders	288,999	3		3,102		—		—		—		3,105
Stock option expense	—	—		5		—		—		—		5
Amortization of restricted stock	—	—		—		—		127		—		127
Balance, September 30, 2019	11,270,710	113		128,926		19,348		(630)		272		148,029
Net income	—	—		—		3,169		—		—		3,169
Other comprehensive income, net of tax	—	—		—		—		—		(743)		(743)
Forfeiture of unvested shares	(3,251)	—		(68)		—		68		—		—
Surrender of restricted shares of common stock	(505)	—		(6)		—		—		—		(6)
Stock option expense	—	—		4		—		—		—		4
Amortization of restricted stock	—	—		—		—		100		—		100
Balance, December 31, 2019	11,266,954	$	113	$	128,856	$	22,517	$	(462)	$	(471)	$	150,553

See accompanying condensed notes to unaudited consolidated financial statements.

9

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Cash Flows (unaudited)

Nine Months Ended September 30, 2020 and 2019

(in thousands)

	Nine Months Ended
	September 30, 2020		September 30, 2019
Cash flows from operating activities:
Net income attributable to common stockholders	$	9,155	$	6,294
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization, net of discount accretion on investment securities	156		762
Depreciation expense	1,436		1,110
Provision for loan losses	5,250		2,125
Net realized loss (gain) on equity securities	59		(125)
Net realized gain on debt securities	(156)		(26)
Increase in MSR assets resulting from transfers of financial assets	(1,546)		(581)
Mortgage servicing rights expense	2,330		822
Amortization of intangible assets	1,223		1,085
Amortization of restricted stock	462		370
Net stock based compensation expense	11		14
Loss (gain) on sale of office properties and equipment	30		(32)
Deferred income taxes	(1,299)		—
Increase in cash surrender value of life insurance	(451)		(384)
Net (gain) loss from disposals of foreclosed and repossessed assets	(195)		(143)
Gain on sale of loans held for sale, net	(4,585)		(1,560)
Net change in loans held for sale	5,540		225
Decrease in accrued interest receivable and other assets	(1,934)		3,009
Increase (decrease) in other liabilities	836		(6,482)
Net gain on sale of insurance agency	(252)		—
Total adjustments	6,915		189
Net cash provided by operating activities	16,070		6,483
Cash flows from investing activities:
Net decrease in other interest-bearing deposits	992		3,207
Purchase of available for sale securities	(20,956)		(23,457)
Purchase of held to maturity securities	(15,147)		—
Proceeds from principal payments and sale of available for sale securities	52,083		26,370
Proceeds from principal payments and maturities of held to maturity securities	1,051		1,185
Net sales of other investments	(70)		1,084
Proceeds from sale of foreclosed and repossessed assets	2,098		2,238
Net increase in loans	(54,748)		(6,710)
Net capital expenditures	(1,975)		(6,149)
Net cash (disbursed) acquired in business combinations	—		(8,137)
Proceeds from disposal of office properties and equipment	8		300
Net proceeds from sale of insurance agency	1,128		—
Net cash used in investing activities	(35,536)		(10,069)

10

Cash flows from financing activities:
Net (decrease) increase in short-term Federal Home Loan Bank advances	(40,980)		(16,469)
Long-term Federal Home Loan Bank advances	66,500		—
Long-term Federal Home Loan Bank maturities	(32,000)		—
Amortization of debt issuance costs	60		—
Proceeds from other borrowings, net of origination costs	14,677		—
Proceeds from other borrowings to fund business combination, net of origination costs	—		29,889
Principal payment reduction to other borrowings	—		(10,000)
Net increase in deposits	75,076		5,601
Common stock issued in F&M acquisition less capitalized equity costs	—		3,105
Repurchase shares of common stock	(1,838)		—
Surrender of restricted shares of common stock	(23)		(47)
Common stock options exercised	—		203
Cash dividends paid	(2,372)		(2,198)
Net cash provided by financing activities	79,100		10,084
Net (decrease) increase in cash and cash equivalents	59,634		6,498
Cash and cash equivalents at beginning of period	55,840		45,778
Cash and cash equivalents at end of period	$	115,474	$	52,276

Supplemental cash flow information:
Cash paid during the period for:
Interest on deposits	$	8,066	$	8,775
Interest on borrowings	$	2,999	$	3,966
Income taxes	$	4,820	$	3,847
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$	1,057	$	898
Fair value of assets acquired, net of cash and cash equivalents	$	—	$	177,494
Fair value of liabilities assumed, net of cash and cash equivalents	$	—	$	169,724

See accompanying condensed notes to unaudited consolidated financial statements. 

11

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(UNAUDITED)

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Citizens Community Federal N.A. (the “Bank”), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. As used in this quarterly report, the terms “we”, “us”, “our”, and “Citizens Community Bancorp, Inc.” mean the Company and its wholly owned subsidiary, the Bank, unless the context indicates other meaning.

The Bank is a national banking association (a “National Bank”) and operates under the title of Citizens Community Federal National Association (“Citizens Community Federal N.A.” or “Bank” or “CCFBank”). The Company is a bank holding company, supervised by the Federal Reserve Bank of Minneapolis (the “FRB”), and operates under the title of Citizens Community Bancorp, Inc. Wells Insurance Agency (“WIA”) was a wholly owned subsidiary of the Bank, providing insurance products to the Bank’s customers and was sold on June 30, 2020. F&M Investment Corp. of Tomah was a wholly owned subsidiary of the Bank that was formerly utilized by F. & M. Bancorp. of Tomah, Inc. (“F & M”) to manage its municipal bond portfolio, and has been dissolved. The U.S. Office of the Comptroller of the Currency (the “OCC”), is the primary federal regulator for the Bank.

The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary, serving customers in Wisconsin and Minnesota through 28 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, agricultural operators and consumers, including one-to-four family residential mortgages.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the September 30, 2020 balance sheet date and through the date the financial statements were available to be issued for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated herein, and except for shares and per share amounts, all amounts are in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany accounts and transactions have been eliminated.

Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, mortgage servicing rights, foreclosed and repossessed assets, valuation of intangible assets arising from acquisitions, useful lives for depreciation and amortization, valuation of goodwill and long-lived assets, stock based compensation, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020; the matters described in “Risk Factors” in Item 1A of our Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and in Item 1A of this Form 10-Q; external market factors such as market interest rates and unemployment rates; changes to operating policies and procedures and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

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

12

are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to: the Company’s intent and ability to sell the debt security prior to recovery, that it is more likely than not that the Company will not sell the security prior to recovery, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded in other comprehensive income or loss as separate components of stockholders’ equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company’s consolidated statement of operations. Non-credit components of the unrealized losses on available for sale securities will continue to be recognized in other comprehensive income (loss), net of tax.

Equity securities with readily determinable fair value - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities. Farmer Mac equity securities are carried at their fair market value, which is readily determinable. Changes in fair value are recognized as net gains (losses) on investment securities in the consolidated Statement of Operations.

Other Investments - As a member of the Federal Reserve Bank (“FRB”) System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. These securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other exchange traded equity securities. As no ready market exists for these stocks, and they have no quoted market value, these investments are carried at cost and periodically evaluated for impairment based on the ultimate recovery of par value. Cash dividends are reported as other income in the consolidated statement of operations.

Also included in other investments is stock of our correspondent bank, Bankers’ Bank, without readily determinable fair value. This stock is carried at cost plus or minus changes resulting from observable price changes in orderly transactions for this stock, less other-than-temporary impairment charges, if any.

Management’s evaluation for impairment of these other investments, includes consideration of the financial condition and other available relevant information of the issuer. Based on management’s quarterly evaluation, no impairment has been recorded on these securities. Other investments totaling $15,075 at September 30, 2020 consisted of $8,231 of FHLB stock, $5,169 of Federal Reserve Bank stock and $1,675 of Bankers’ Bank stock. Other investments totaling $15,005 at December 31, 2019 consisted of $8,196 of FHLB stock and $5,162 of Federal Reserve Bank stock and $1,647 of Bankers’ Bank stock.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of: deferred loan fees and costs, accretable yield on acquired loans and non-accretable discount on purchased credit impaired loans. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Late charge fees are recognized into income when collected.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial/agricultural real estate loans past due 90 days or more;

•Commercial and industrial/agricultural operating loans past due 90 days or more;

•Closed end consumer installment loans past due 120 days or more; and

•Residential mortgage loans and open ended consumer installment loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash

13

basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a six month payment history has been established. Interest on accruing troubled debt restructured (“TDR”) loans is recognized as income as it accrues, based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed ended consumer installment loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial/agricultural real estate, commercial and industrial and agricultural operating loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan’s contractual terms is not expected. Impaired loans consist of all TDRs, as well as individual loans not considered a TDR, that are either (1) rated substandard or worse, (2) on nonaccrual status or (3) PCI loans which were deemed impaired at the time of acquisition. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. For TDR’s or substandard loans deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) its outstanding principal balance; (b) the present value of the loan’s estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any loan collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain substandard loans that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for ALL purposes, and accordingly, are not separately identified for ALL disclosures.

Acquired Loans— Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value with no carryover of related allowance for loan losses. Any allowance for loan loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that no longer are expected to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including: the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans. As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

Loans acquired with deteriorated credit quality are accounted for in accordance with Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, the Company considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality. These factors include, but are not limited to: loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring.

14

Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable discount is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect.

Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable discount to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life.

Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool.

For all acquired loans, the outstanding loan balances less any related accretable discount and/or non-accretable difference is referred to as the loans’ carrying amount.

Loans Held for Sale — Loans held for sale are those loans the Company has the intent to sell in the foreseeable future. They are carried at the lower of aggregate cost or fair value. Gains and losses on sales of loans are recognized at settlement dates, and are determined by the difference between the sales proceeds and the carrying value of the loans after allocating costs to servicing rights retained. Such gains and losses are included in non-interest income in the consolidated statements of operations. All sales are made without recourse. Interest rate lock commitments on mortgage loans to be funded and sold are valued at fair value, and are included in other assets or liabilities, if material.

Mortgage Servicing Rights— Mortgage servicing rights (“MSR”) assets result as the Company sells loans to investors in the secondary market and retains the rights to service mortgage loans sold to others. MSR assets are initially measured at fair value; assessed at least annually for impairment; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.

The valuation of MSRs and related amortization, included in amortization of mortgage servicing rights in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs. Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary, if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a write-down is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other in the consolidated statements of operations.

Transfers of financial assets—Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the entity, (2) the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and (3) the entity does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity.

Goodwill and other intangible assets-The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, “Intangibles - Goodwill and Other.”  The Company records the excess of the cost of acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill.  The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives utilizing the straight-line method.  On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amounts of the intangible assets may be impaired.  The Company does not amortize goodwill and any acquired intangible asset with an indefinite useful economic life, but reviews them for impairment at a reporting unit level on an annual basis, or when

15

events or changes in circumstances indicate that the carrying amounts may be impaired.  A reporting unit is defined as any distinct, separately identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management.  The Company has one reporting unit as of December 31, 2019 which is related to its banking activities. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2019. The Company performed a goodwill impairment analysis as of September 30, 2020, due to triggering events being identified, and determined that goodwill was not impaired.

Leases - We determine if an arrangement is a lease at inception. All of our existing leases have been determined to be operating leases under ASC 842. Right-of-use (“ROU”) assets are included in other assets in our consolidated balance sheets. Operating lease liabilities are included in other liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date, based on the present value of lease payments over the lease term. As none of our existing leases provide an implicit rate, we use our incremental borrowing rate, based on information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease, when it is reasonably certain that we will exercise that option. Lease expense is recognized based on the total contractually required lease payments, over the term of the lease, on a straight-line basis.

Debt and equity issuance costs—Debt issuance costs, which consist primarily of fees paid to note lenders, are deferred and included in other borrowings in the consolidated balance sheet. Debt issuance costs are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statement of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheet, in the period of the share issuance.

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

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Revenue Recognition - The Company recognizes revenue in the consolidated statements of operations as it is earned and when collectability is reasonably assured. The primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts. Non-interest income is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income includes fees from deposit accounts, ATM and debit card fees, mortgage banking activities, and other miscellaneous services and transactions. Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later.  The Company also receives contingent commissions from insurance companies which are based on the overall profitability of their relationship based primarily on the loss experience of the insurance placed by the

16

Company.  Contingent commissions from insurance companies are recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company’s stock price on the reporting date.

Operating Segments—While our executive officers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

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

Recent Accounting Pronouncements—The Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have potentially significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

Recent Accounting Pronouncements—Adopted

ASU 2014-09; Revenue from Contracts with Customers (Topic 606)—Under the ASU, as modified by subsequent ASUs, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration the entity expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company applied the five-step method outlined in the ASU to all revenue streams scoped-in by the ASU and elected the modified retrospective implementation method. Substantially all of the Company’s interest income and certain non-interest income items were not impacted by the adoption of this ASU because the revenue from those contracts with customers is covered by other guidance in U.S. GAAP. The Company’s largest sources of non-interest revenue which are subject to the guidance include fees and service charges on loan and deposit accounts and interchange revenue from debit card transactions. ASU 2014-09, as amended, became effective for the Company’s annual and interim periods beginning in the first quarter 2019. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as the change in the timing and pattern of the Company’s revenue recognition related to scoped-in non-interest income recognized under the newly issued ASU is consistent with the current applicable accounting guidance. The Company has made all required additional disclosures related to non-interest income in the consolidated financial statements, primarily in Revenue Recognition policy included herein in Note 1.

ASU 2016-01; Recognition and Measurement of Financial Assets and Liabilities—The guidance requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. The Company’s adoption of ASU 2016-01 as of January 1, 2019, constitutes a change in accounting principle. The Company recorded a cumulative effect adjustment to retained earnings of $45 as of January 1, 2019, as a result of implementing this new accounting standard.

ASU 2016-02; Leases (Topic 842)—The ASU changed current GAAP by requiring that lease assets and liabilities arising from operating leases be recognized on the balance sheet. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, Codification Improvements to Topic 842, Leases, amending various aspects of Topic 842. Topic 842 does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee from current U.S. GAAP. For leases with a term of 12 months or less, a lessee would be permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and liabilities. Topic 842 became effective for the Company for annual and interim periods beginning in the first quarter 2019.

The Company leased (1) 9 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases that resulted in the recognition of right-of-use assets and corresponding lease liabilities of approximately $5,000 on the consolidated balance sheet under Topic 842. Adoption of Topic 842 did not have a material impact on the Company’s consolidated statement of operations. Management adopted the guidance on January 1, 2019, and elected certain practical expedients offered by the FASB, including foregoing the restatement of comparative periods upon adoption. Management also excluded short-term leases from the recognition of right-of-use asset and lease liabilities. Additionally, the Company elected the transition relief allowed by FASB in foregoing reassessment of the following: whether any existing contracts were or contained leases, the classification of existing leases, and the determination of initial direct costs for existing leases. As of September 30, 2020, the Company leases (1) 6 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases. See Note 5 for additional detail.

17

ASU 2017-04; Intangibles - Goodwill and Other (Topic 350)—The ASU simplifies the accounting for goodwill impairment. This guidance, among other things, removes step two of the goodwill impairment test thus eliminating the need to determine the fair value of individual assets and liabilities of the reporting unit. Upon adoption of this ASU, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This may result in either greater or less impairment being recognized than under current guidance. The Company adopted this Update for the Company’s annual goodwill impairment tests beginning in the year ended December 31, 2019. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2018-13, Fair Value Measurement (Topic 820)—The ASU modifies disclosure requirements on fair value measurements. This ASU removes requirements to disclose, (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and (2) the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. ASU 2018-13 clarifies that, disclosure regarding measurement uncertainty, is intended to communicate information about the uncertainty in measurement, as of the reporting date. ASU 2018-13 adds certain disclosure requirements, including (1) disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this ASU, in the first quarter of 2020. The amendments on (1) changes in unrealized gains and losses, (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and (3) the narrative description of measurement uncertainty, are being applied prospectively. All other amendments have been applied retrospectively for all periods presented. Adoption of this ASU had no material impact on its consolidated financial position or results of operations.

ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)—The ASU was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement), by providing guidance for determining when the arrangement includes a software license. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract, with similar costs to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments. This guidance became effective for the Company beginning in the first quarter of 2020. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting--The ASU provides optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contacts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. ASU 2020-04 is effective for the Company immediately and through December 31, 2022. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting variable rate loans. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 2016-13; Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments--The ASU changes accounting for credit losses on loans receivable and debt securities from an incurred loss methodology to an expected credit loss methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Accordingly, ASU 2016-13 requires the use of forward-looking information to form credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, though the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU 2019-10, extending the effective date to fiscal years beginning after December 15, 2022, which is the Company’s fiscal year ending December 31, 2023. Earlier adoption is permitted; however, the Company does not currently plan to adopt the ASU early. Management is assessing alternative loss estimation methodologies and the Company’s data and system needs in order to evaluate the impact that adoption of this standard will have on the Company’s financial condition and results of operations. The Company anticipates recording the effect of implementing this ASU through a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU is effective, which will be January 1, 2023.

18

NOTE 2 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2020 and December 31, 2019, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
U.S. government agency obligations	$	34,059	$	391	$	71	$	34,379
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	49,870		1,888		—		51,758
Corporate debt securities	15,211		277		124		15,364
Corporate asset-based securities	36,443		38		938		35,543
Trust preferred securities	13,938		69		283		13,724
Total available for sale securities	$	149,661	$	2,663	$	1,416	$	150,908
December 31, 2019
U.S. government agency obligations	$	52,020	$	132	$	347	$	51,805
Obligations of states and political subdivisions	281		—		—		281
Mortgage-backed securities	70,806		635		110		71,331
Corporate debt securities	18,776		66		117		18,725
Corporate asset-based securities	27,718		—		864		26,854
Trust preferred securities	11,167		35		79		11,123
Total available for sale securities	$	180,768	$	868	$	1,517	$	180,119

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Obligations of states and political subdivisions	$	300	$	—	$	—	$	300
Mortgage-backed securities	16,627		306		—		16,933
Total held to maturity securities	$	16,927	$	306	$	—	$	17,233
December 31, 2019
Obligations of states and political subdivisions	$	300	$	2	$	—	$	302
Mortgage-backed securities	2,551		104		—		2,655
Total held to maturity securities	$	2,851	$	106	$	—	$	2,957

As of September 30, 2020, the Bank has pledged U.S. Government Agency securities with a carrying value of $595 and mortgage-backed securities with a carrying value of $3,855 as collateral against specific municipal deposits. At September 30, 2020, the Bank has pledged mortgage-backed securities with a carrying value of $1,299 as collateral against a borrowing line of credit with the Federal Reserve Bank. However, as of September 30, 2020, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of September 30, 2020, the Bank also has mortgage-backed securities with a carrying value of $530 pledged as collateral to the Federal Home Loan Bank of Des Moines.

19

The estimated fair value of securities at September 30, 2020 and December 31, 2019, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

	September 30, 2020				December 31, 2019
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—	$	141	$	141
Due after one year through five years	3,850		4,064		5,900		5,959
Due after five years through ten years	39,417		39,461		43,269		43,180
Due after ten years	56,524		55,625		60,652		59,508
Total securities with contractual maturities	$	99,791	$	99,150	$	109,962	$	108,788
Mortgage backed securities	49,870		51,758		70,806		71,331
Securities without contractual maturities	—		—		—		—
Total available for sale securities	$	149,661	$	150,908	$	180,768	$	180,119

	September 30, 2020				December 31, 2019
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	300	$	300	$	300	$	302
Total securities with contractual maturities	300		300		300		302
Mortgage backed securities	16,627		16,933		2,551		2,655
Total held to maturity securities	$	16,927	$	17,233	$	2,851	$	2,957

Securities with unrealized losses at September 30, 2020 and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2020
U.S. government agency obligations	$	9,596	$	24	$	5,364	$	47	$	14,960	$	71
Corporate debt securities	2,009		17		1,393		107		3,402		124
Corporate asset-based securities	—		—		33,603		938		33,603		938
Trust preferred securities	10,963		283		—		—		10,963		283
Total	$	22,568	$	324	$	40,360	$	1,092	$	62,928	$	1,416
December 31, 2019
U.S. government agency obligations	$	14,593	$	156	$	10,540	$	191	$	25,133	$	347
Mortgage backed securities	22,537		62		5,883		48		28,420		110
Corporate debt securities	7,001		15		1,398		102		8,399		117
Corporate asset-based securities	8,683		285		18,171		579		26,854		864
Trust preferred securities	7,420		79		—		—		7,420		79
Total	$	60,234	$	597	$	35,992	$	920	$	96,226	$	1,517

There were no held to maturity securities in a net loss position at either September 30, 2020 or December 31, 2019.

The Company evaluates AFS securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. In making this evaluation, management considers the extent to which the fair value

20

has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

As of September 30, 2020, the Company does not consider its AFS securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration; thus, no other-than-temporary impairment on AFS securities was recorded. There were no other-than-temporary impairments charged to earnings during the three or nine months ended September 30, 2020 or the three or nine months ended September 30, 2019.

During the three and nine months ended September 30, 2020, the Bank sold approximately $0 and $10,700 of fixed-rate mortgage-backed certificates with a realized gain of $0 and $156, respectively, which is included in net gains on investment securities in the Consolidated Statements of Operations. During the three and nine months ended September 30, 2019, the Bank sold approximately $7,950 of fixed rate securities with a realized gain of $26, which is included in net gains on investment securities in the Consolidated Statements of Operations.

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

Portfolio Segments:

    Commercial and agricultural real estate loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business. Management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The level of owner-occupied property versus non-owner-occupied property are tracked and monitored on a regular basis. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 75%.

Commercial and industrial (“C&I”) loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Agricultural operating loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines. Operating lines are typically written for one year and secured by the crop and other farm assets or other business assets, as considered necessary. Agricultural loans carry significant credit risks as they may involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields.

Residential mortgage loans are collateralized by primary and secondary positions on real estate and are underwritten primarily based on borrower’s documented income, credit scores, and collateral values. Under consumer home equity loan guidelines, the borrower will be approved for a loan based on a percentage of their home’s appraised value less the balance owed on the existing first mortgage. Credit risk is minimized within the residential mortgage portfolio due to relatively small loan account balances spread across many individual borrowers. Management evaluates trends in past due loans and current economic factors such as the housing price index on a regular basis.

Consumer installment loans are comprised of originated indirect paper loans secured primarily by boats and recreational vehicles and other consumer loans secured primarily by automobiles and other personal assets. The Bank ceased new originations of indirect paper loans in early fiscal 2017. Consumer loan underwriting terms often depend on the collateral type, debt to income ratio and the borrower’s creditworthiness as evidenced by their credit score. In the event of a consumer installment loan default, collateral value alone may not provide an adequate source of repayment of the outstanding loan balance. This shortage is a result of the greater likelihood of damage, loss and depreciation for consumer based collateral.

21

Credit Quality/Risk Ratings:

    Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant.

Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio ratings are presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows:

1 through 4 - Pass. A “Pass” loan means that the condition of the borrower and the performance of the loan is satisfactory or better.

5 - Watch. A “Watch” loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future.

6 - Special Mention. A “Special Mention” loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future.

7 - Substandard. A “Substandard” loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

8 - Doubtful. A “Doubtful” loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

9 - Loss. Loans classified as “Loss” are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future.

22

Below is a summary of originated and acquired loans by type and risk rating as of September 30, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	318,915	$	1,947	$	1,166	$	—	$	—	$	322,028
Agricultural real estate	30,807		454		1,269		—		—		32,530
Multi-family real estate	100,148		—		—		—		—		100,148
Construction and land development	77,514		—		3,478		—		—		80,992
C&I/Agricultural operating:
Commercial and industrial	75,338		802		3,819		—		—		79,959
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	23,040		28		1,256		—		—		24,324
Residential mortgage:
Residential mortgage	85,922		7		4,171		—		—		90,100
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other consumer	13,135		—		86		—		—		13,221
Total originated loans	$	898,517	$	3,238	$	15,795	$	—	$	—	$	917,550
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	168,360	$	4,237	$	6,048	$	—	$	—	$	178,645
Agricultural real estate	33,765		—		6,848		—		—		40,613
Multi-family real estate	9,372		—		148		—		—		9,520
Construction and land development	8,264		—		82		—		—		8,346
C&I/Agricultural operating:
Commercial and industrial	23,572		59		782		—		—		24,413
Agricultural operating	8,688		—		946		—		—		9,634
Residential mortgage:
Residential mortgage	49,243		243		2,268		—		—		51,754
Consumer installment:
Other consumer	1,404		—		5		—		—		1,409
Total acquired loans	$	302,668	$	4,539	$	17,127	$	—	$	—	$	324,334
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	487,275	$	6,184	$	7,214	$	—	$	—	$	500,673
Agricultural real estate	64,572		454		8,117		—		—		73,143
Multi-family real estate	109,520		—		148		—		—		109,668
Construction and land development	85,778		—		3,560		—		—		89,338
Commercial/Agricultural non-real estate:
Commercial and industrial	98,910		861		4,601		—		—		104,372
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	31,728		28		2,202		—		—		33,958
Residential mortgage:
Residential mortgage	135,165		250		6,439		—		—		141,854
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other Consumer	14,539		—		91		—		—		14,630
Gross loans	$	1,201,185	$	7,777	$	32,922	$	—	$	—	$	1,241,884
Less:
Unearned net deferred fees and costs and loans in process											(5,033)
Unamortized discount on acquired loans											(6,712)
Allowance for loan losses											(14,836)
Loans receivable, net											$	1,215,303

23

Below is a summary of originated loans by type and risk rating as of December 31, 2019:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	301,381	$	266	$	899	$	—	$	—	$	302,546
Agricultural real estate	31,129		829		2,068		—		—		34,026
Multi-family real estate	71,877		—		—		—		—		71,877
Construction and land development	67,989		—		3,478		—		—		71,467
C&I/Agricultural operating:
Commercial and industrial	85,248		1,023		3,459		—		—		89,730
Agricultural operating	19,545		402		770		—		—		20,717
Residential mortgage:
Residential mortgage	104,428		—		4,191		—		—		108,619
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:					—
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	15,425		—		121		—		—		15,546
Total originated loans	$	744,768	$	2,520	$	15,232	$	—	$	—	$	762,520
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	196,692	$	6,084	$	9,137	$	—	$	—	$	211,913
Agricultural real estate	42,381		534		8,422		—		—		51,337
Multi-family real estate	13,533		—		1,598		—		—		15,131
Construction and land development	14,181		—		762		—		—		14,943
C&I/Agricultural operating:
Commercial and industrial	41,587		932		1,485		—		—		44,004
Agricultural operating	15,621		350		1,092		—		—		17,063
Residential mortgage:
Residential mortgage	65,125		436		2,152		—		—		67,713
Consumer installment:
Other Consumer	2,628		—		12		—		—		2,640
Total acquired loans	$	391,748	$	8,336	$	24,660	$	—	$	—	$	424,744
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	498,073	$	6,350	$	10,036	$	—	$	—	514,459
Agricultural real estate	73,510		1,363		10,490		—		—		85,363
Multi-family real estate	85,410		—		1,598		—		—		87,008
Construction and land development	82,170		—		4,240		—		—		86,410
C&I/Agricultural operating:
Commercial and industrial	126,835		1,955		4,944		—		—		133,734
Agricultural operating	35,166		752		1,862		—		—		37,780
Residential mortgage:
Residential mortgage	169,553		436		6,343		—		—		176,332
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	18,053		—		133		—		—		18,186
Gross loans	$	1,136,516	$	10,856	$	39,892	$	—	$	—	$	1,187,264
Less:
Unearned net deferred fees and costs and loans in process											(393)
Unamortized discount on acquired loans											(9,491)
Allowance for loan losses											(10,320)
Loans receivable, net											$	1,167,060

24

Allowance for Loan Losses - The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

As an integral part of their examination process, various regulatory agencies also review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.

Changes in the ALL by loan type for the periods presented below were as follows:

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, July 1, 2020	$	8,297	$	1,778	$	980	$	480	$	574	$	12,109
Charge-offs	—		(103)		(4)		(10)		—		(117)
Recoveries	74		—		2		18		—		94
Provision	430		188		(15)		64		56		723
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2020	746		334		112		72		—		1,264
Charge-offs	—		—		(47)		—		—		(47)
Recoveries	1		30		—		2		—		33
Provision	623		(58)		199		13		—		777
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836

25

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(632)		(4)		(124)		—		(760)
Recoveries	74		—		7		55		—		136
Provision	2,522		852		81		154		273		3,882
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, January 1, 2020	526		27		163		53		—		769
Charge-offs	—		(159)		(74)		(2)		—		(235)
Recoveries	77		30		14		4		—		125
Provision	767		408		161		32		—		1,368
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836
Allowance for Loan Losses at September 30, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	772	$	159	$	249	$	1	$	—	$	1,181
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	9,399	$	2,010	$	978	$	638	$	630	$	13,655
Loans Receivable as of September 30, 2020:											—
Ending balance of originated loans	$	535,698	$	243,449	$	96,647	$	41,756	$	—	$	917,550
Ending balance of purchased credit-impaired loans	21,453		2,077		1,553		—		—		25,083
Ending balance of other acquired loans	215,671		31,970		50,201		1,409		—		299,251
Ending balance of loans	$	772,822	$	277,496	$	148,401	$	43,165	$	—	$	1,241,884
Ending balance: individually evaluated for impairment	$	13,190	$	6,275	$	8,436	$	367	$	—	$	28,268
Ending balance: collectively evaluated for impairment	$	759,632	$	271,221	$	139,965	$	42,798	$	—	$	1,213,616

26

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, July 1, 2019	$	5,010	$	1,470	$	977	$	528	$	299	$	8,284
Charge-offs	—		—		(89)		(36)		—		(125)
Recoveries	—		—		—		17		—		17
Provision	281		130		117		(12)		2		518
Total Allowance on originated loans	5,291		1,600		1,005		497		301		8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2019	181		85		153		56		—		475
Charge-offs	—		—		(45)		(9)		—		(54)
Recoveries	—		—		1		4		—		5
Provision	(10)		2		61		4		—		57
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177

27

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, January 1, 2019	$	4,019	$	1,258	$	1,048	$	641	$	214	$	7,180
Charge-offs	(225)		—		(119)		(142)		—		(486)
Recoveries	—		—		—		53		—		53
Provision	1,497		342		76		(55)		87		1,947
Total Allowance on originated loans	$	5,291	$	1,600	$	1,005	$	497	$	301	$	8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans
Beginning balance, January 1, 2019	183		32		205		65		(61)		424
Charge-offs	—		—		(105)		(29)		—		(134)
Recoveries	3		—		2		10		—		15
Provision	(15)		55		68		9		61		178
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177
Allowance for Loan Losses at September 30, 2019:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	205	$	252	$	191	$	15	$	—	$	663
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	5,257	$	1,435	$	984	$	537	$	301	$	8,514
Loans Receivable as of September 30, 2019:
Ending balance of originated loans	$	401,211	$	102,998	$	124,627	$	58,612	$	—	$	687,448
Ending balance of purchased credit-impaired loans	33,840		5,320		2,273		—		—		41,433
Ending balance of other acquired loans	272,744		58,741		71,290		3,052		—		405,827
Ending balance of loans	$	707,795	$	167,059	$	198,190	$	61,664	$	—	$	1,134,708
Ending balance: individually evaluated for impairment	$	16,458	$	7,215	$	8,626	$	419	$	—	$	32,718
Ending balance: collectively evaluated for impairment	$	691,337	$	159,844	$	189,564	$	61,245	$	—	$	1,101,990

28

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Commercial/Agriculture Real Estate Loans				C&I/Agricultural Operating				Residential Mortgage				Consumer Installment				Totals
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Performing loans
Performing TDR loans	$	5,480	$	1,730	$	3,868	$	366	$	3,178	$	3,206	$	53	$	68	$	12,579	$	5,370
Performing loans other	759,328		758,237		271,124		167,596		141,755		178,415		42,994		57,486		1,215,201		1,161,734
Total performing loans	764,808		759,967		274,992		167,962		144,933		181,621		43,047		57,554		1,227,780		1,167,104
Nonperforming loans (1)
Nonperforming TDR loans	5,037		4,868		1,490		1,973		672		383		—		—		7,199		7,224
Nonperforming loans other	2,977		8,405		1,014		1,579		2,796		2,735		118		217		6,905		12,936
Total nonperforming loans	8,014		13,273		2,504		3,552		3,468		3,118		118		217		14,104		20,160
Total loans	$	772,822	$	773,240	$	277,496	$	171,514	$	148,401	$	184,739	$	43,165	$	57,771	$	1,241,884	$	1,187,264

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

As of September 30, 2020, the Company had $260.8 million in unused commitments, compared to $246.7 million in unused commitments as of December 31, 2019.

29

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2020 and December 31, 2019, respectively, was as follows:

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 89 Days Past Due and Accruing		Total Past Due and Accruing		Nonaccrual Loans		Total Past Due Accruing and Nonaccrual Loans		Current		Total Loans
September 30, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	247	$	99	$	—	$	346	$	2,614	$	2,960	$	497,713	$	500,673
Agricultural real estate	179		—		—		179		5,252		5,431		67,712		73,143
Multi-family real estate	—		—		—		—		148		148		109,520		109,668
Construction and land development	224		379		—		603		—		603		88,735		89,338
C&I/Agricultural operating:
Commercial and industrial	163		—		—		163		853		1,016		103,355		104,371
C&I SBA PPP loans	—		—		—		—		—		—		139,166		139,166
Agricultural operating	451		600		—		1,051		1,651		2,702		31,256		33,958
Residential mortgage:
Residential mortgage	2,256		960		838		4,054		2,302		6,356		135,498		141,854
Purchased HELOC loans	—		67		94		161		234		395		6,152		6,547
Consumer installment:
Originated indirect paper	111		41		17		169		74		243		28,293		28,536
Other Consumer	63		15		1		79		26		105		14,525		14,630
Total	$	3,694	$	2,161	$	950	$	6,805	$	13,154	$	19,959	$	1,221,925	$	1,241,884
December 31, 2019
Commercial/Agricultural real estate:
Commercial real estate	$	2,804	$	847	$	—	$	3,651	$	4,214	$	7,865	$	506,594	$	514,459
Agricultural real estate	509		—		—		509		7,568		8,077		77,286		85,363
Multi-family real estate	—		—		—		—		1,449		1,449		85,559		87,008
Construction and land development	436		—		—		436		42		478		85,932		86,410
C&I/Agricultural operating:
Commercial and industrial	1,024		—		—		1,024		1,850		2,874		130,860		133,734
Agricultural operating	73		49		—		122		1,702		1,824		35,956		37,780
Residential mortgage:
Residential mortgage	4,929		1,597		649		7,175		2,063		9,238		167,094		176,332
Purchased HELOC loans	293		378		407		1,078		—		1,078		7,329		8,407
Consumer installment:
Originated indirect paper	168		52		20		240		137		377		39,208		39,585
Other Consumer	204		43		28		275		31		306		17,880		18,186
Total	$	10,440	$	2,966	$	1,104	$	14,510	$	19,056	$	33,566	$	1,153,698	$	1,187,264

30

At September 30, 2020, the Company has identified impaired loans of $51,689, consisting of $19,778 TDR loans, the carrying amount of purchased credit impaired loans of $23,422 and $8,489 of substandard non-TDR loans. The $51,689 total of impaired loans includes $12,579 of performing TDR loans. At December 31, 2019, the Company has identified impaired loans of $63,196, consisting of $12,594 TDR loans, the carrying amount of purchased credit impaired loans of $31,978 and $18,624 of substandard non-TDR loans. The $63,196 total of impaired loans includes $5,370 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis.

A summary of the Company’s impaired loans as of September 30, 2020, December 31, 2019 and September 30, 2019 was as follows:

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2020
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	30,419	$	30,419	$	—	$	30,344	$	454	$	35,467	$	1,374
C&I/Agricultural operating	6,860		6,860		—		7,070		35		8,169		188
Residential mortgage	8,715		8,715		—		8,668		107		8,705		356
Consumer installment	363		363		—		363		6		371		23
Total	$	46,357	$	46,357	$	—	$	46,445	$	602	$	52,712	$	1,941
With An Allowance Recorded:
Commercial/agriculture real estate	$	3,177	$	3,177	$	772	$	3,597	$	48	$	2,660	$	73
C&I/Agricultural operating	1,034		1,034		159		669		—		762		12
Residential mortgage	1,118		1,118		249		970		7		1,275		36
Consumer installment	3		3		1		9		—		35		—
Total	$	5,332	$	5,332	$	1,181	$	5,245	$	55	$	4,732	$	121
September 30, 2020 Totals:
Commercial/agriculture real estate	$	33,596	$	33,596	$	772	$	33,941	$	502	$	38,127	$	1,447
C&I/Agricultural operating	7,894		7,894		159		7,739		35		8,931		200
Residential mortgage	9,833		9,833		249		9,638		114		9,980		392
Consumer installment	366		366		1		372		6		406		23
Total	$	51,689	$	51,689	$	1,181	$	51,690	$	657	$	57,444	$	2,062

31

	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	40,514	$	40,514	$	—
C&I/Agricultural operating	9,477		9,477		—
Residential mortgage	8,695		8,695		—
Consumer installment	379		379		—
Total	$	59,065	$	59,065	$	—
With An Allowance Recorded:
Commercial/agriculture real estate	$	2,143	$	2,143	$	495
C&I/Agricultural operating	490		490		312
Residential mortgage	1,431		1,431		136
Consumer installment	67		67		13
Total	$	4,131	$	4,131	$	956
December 31, 2019 Totals
Commercial/agriculture real estate	$	42,657	$	42,657	$	495
C&I/Agricultural operating	9,967		9,967		312
Residential mortgage	10,126		10,126		136
Consumer installment	446		446		13
Total	$	63,196	$	63,196	$	956

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	43,907	$	43,907	$	—	$	36,724	$	721	$	36,379	$	2,212
C&I/Agricultural operating	10,298		10,298		—		9,417		166		8,599		543
Residential mortgage	9,016		9,016		—		8,593		141		8,945		370
Consumer installment	358		358		—		300		7		292		24
Total	$	63,579	$	63,579	$	—	$	55,034	$	1,035	$	54,215	$	3,149
With An Allowance Recorded:
Commercial/agriculture real estate	$	1,634	$	1,634	$	205	$	1,384	$	—	$	1,307	$	—
C&I/Agricultural operating	541		541		252		576		—		284		11
Residential mortgage	1,598		1,598		191		1,340		24		1,465		62
Consumer installment	62		62		15		85		—		104		2
Total	$	3,835	$	3,835	$	663	$	3,385	$	24	$	3,160	$	75
September 30, 2019 Totals:
Commercial/agriculture real estate	$	45,541	$	45,541	$	205	$	38,108	$	721	$	37,686	$	2,212
C&I/Agricultural operating	10,839		10,839		252		9,993		166		8,883		554
Residential mortgage	10,614		10,614		191		9,933		165		10,410		432
Consumer installment	420		420		15		385		7		396		26
Total	$	67,414	$	67,414	$	663	$	58,419	$	1,059	$	57,375	$	3,224

32

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty, and the Bank grants a concession to that borrower that the Bank would not otherwise consider, except for the borrower’s financial difficulties. Concessions may include: extension of the loan’s term, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were three delinquent accruing TDRs greater than 60 days past due with a recorded investment of $310 at September 30, 2020, compared to two such loans with a recorded investment of $101 at December 31, 2019.

Following is a summary of TDR loans by accrual status as of September 30, 2020 and December 31, 2019.

	September 30, 2020		December 31, 2019
Troubled debt restructure loans:
Accrual status	$	12,579	$	5,396
Non-accrual status	7,199		7,198
Total	$	19,778	$	12,594

There was one loan commitment meeting our TDR criteria as of September 30, 2020 totaling $17 and no loan commitments meeting our TDR criteria as of December 31, 2019. There were unused lines of credit totaling $85 and $12 meeting our TDR criteria as of September 30, 2020 and December 31, 2019, respectively.

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and nine months ended September 30, 2020 and September 30, 2019:     

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	3	$	3,550	$	—	$	276	$	—	$	3,826	$	3,826	$	—
C&I/Agricultural operating	2	3,000		—		—		—		3,000		3,000		—
Residential mortgage	8	59		500		32		—		591		591		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	13	$	6,609	$	500	$	308	$	—	$	7,417	$	7,417	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	12	$	4,442	$	198	$	293	$	—	$	4,933	$	4,933	$	—
C&I/Agricultural operating	5	3,295		78		—		—		3,373		3,373		—
Residential mortgage	13	148		858		117		—		1,123		1,123		—
Consumer installment	2	3		—		4		—		7		7		—
Totals	32	$	7,888	$	1,134	$	414	$	—	$	9,436	$	9,436	$	—

33

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	7	$	1,987	$	—	$	25	$	—	$	2,012	$	2,012	$	—
C&I/Agricultural operating	1	—		—		60		—		60		60		—
Residential mortgage	2	106		—		—		—		106		106		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	10	$	2,093	$	—	$	85	$	—	$	2,178	$	2,178	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	14	$	2,005	$	78	$	1,215	$	—	$	3,298	$	3,298	$	—
C&I/Agricultural operating	7	165		364		469		—		998		998		—
Residential mortgage	9	431		—		171		—		602		602		—
Consumer installment	1	2		—		—		—		2		2		—
Totals	31	$	2,603	$	442	$	1,855	$	—	$	4,900	$	4,900	$	—

A summary of loans by loan segment modified in a troubled debt restructuring as of September 30, 2020 and September 30, 2019, was as follows:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	34	$	10,517	27	$	5,917
C&I/Agricultural operating	17	5,358		16	2,366
Residential mortgage	50	3,850		42	3,438
Consumer installment	7	53		8	74
Total troubled debt restructurings	108	$	19,778	93	$	11,795

34

The following table provides information related to restructured loans that were considered in default as of September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	15	$	5,037	9	$	2,343
C&I/Agricultural operating	12	1,490		12	1,914
Residential mortgage	8	672		3	344
Total troubled debt restructurings	35	$	7,199	24	$	4,601

The following table provides information related to restructured loans that became in default during the three months ended September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	—	$	—	2	$	120
Residential mortgage	2	234		—	—
Total troubled debt restructurings	2	$	234	2	$	120

The following table provides information related to restructured loans that became in default during the nine months ended September 30, 2020 and September 30, 2019:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	2	$	140	7	$	227
C&I/Agricultural operating	1	78		4	857
Residential mortgage	3	279		—	—
Total troubled debt restructurings	6	$	497	11	$	1,084

35

All acquired loans were initially recorded at fair value at the acquisition date. The outstanding balance and the carrying amount of acquired loans included in the consolidated balance sheet are as follows:

	September 30, 2020		December 31, 2019
Accountable for under ASC 310-30 (Purchased Credit Impaired “PCI” loans)
Outstanding balance	$	25,083	$	38,268
Carrying amount	$	23,422	$	31,978
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	299,251	$	386,476
Carrying amount	$	294,201	$	383,275
Total acquired loans
Outstanding balance	$	324,334	$	424,744
Carrying amount	$	317,623	$	415,253

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

	September 30, 2020		September 30, 2019
Accretable discount, beginning of period	$	3,201	$	3,163
Additions to accretable discount for acquired performing loans	—		814
Accelerated accretion from payoff of certain PCI loans with transferred non-accretable difference	(99)		—
Transfers from non-accretable difference to accretable discount	2,704		80
Scheduled accretion	(756)		(622)
Accretable discounts, end of period	$	5,050	$	3,435

Non-accretable difference on purchase credit impaired loans was $1,661 and $6,290 at September 30, 2020 and December 31, 2019, respectively.

36

NOTE 4 – MORTGAGE SERVICING RIGHTS

Mortgage servicing rights--Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of these loans as of September 30, 2020 and December 31, 2019 were $555,700 and $524,715, respectively, and consisted of one to four family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and the Federal National Mortgage Association. The current period valuation allowance is included as amortization of mortgage servicing rights in non-interest expense on the consolidated statement of operations.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $6,753 and $2,868, at September 30, 2020 and December 31, 2019, respectively. Mortgage servicing rights activity for the nine month period ended September 30, 2020 and twelve months ended December 31, 2019 were as follows:

	As of and for the Nine Months Ended			As of and for the Twelve Months Ended
Mortgage servicing rights:	September 30, 2020			December 31, 2019
Mortgage servicing assets, net; beginning of period	$	4,541		$	4,486
MSR asset acquired	—			—
Increase in MSR assets resulting from transfers of financial assets	1,546			904
Amortization during the period	(908)			(849)
	5,179			4,541
Valuation Allowances:
Balance at beginning of period	(259)			—
Additions	(1,422)			(259)
Recoveries	—			—
Write-downs	—			—
Balance at end of period	(1,681)			(259)
Mortgage servicing assets, net; end of period	$	3,498		$	4,282
Fair value of MSR asset; end of period	$	3,509		$	4,309
Residential mortgage loans serviced for others	$	555,700		$	524,715
Net book value of MSR asset to loans serviced for others	0.63		%	0.82		%

37

NOTE 5 – LEASES

We have operating leases for our corporate offices (1), bank branch offices (6), other production offices (1) and certain office equipment. Our leases have remaining lease terms ranging from approximately 3 months to 8 years, some of which include options to extend the leases for up to 5 additional years. As of September 30, 2020, we have no additional lease commitments that have not yet commenced.

	Nine Months Ended
	September 30, 2020			September 30, 2019
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	477		$	665
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—		$	158
	September 30, 2020			December 31, 2019
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,803		$	2,787
Operating lease liabilities	$	2,910		$	2,845
Weighted average remaining lease term in years; operating leases	6.1			6.63
Weighted average discount rate; operating leases	2.63		%	3.07		%

Cash obligations under lease contracts are as follows:

Fiscal years ending December 31,
2020	$	161
2021	592
2022	558
2023	505
2024	419
Thereafter	1,229
Total	3,464
Less: effects of discounting	(554)
Lease liability recognized	$	2,910

38

NOTE 6 – DEPOSITS

The following is a summary of deposits by type at September 30, 2020 and December 31, 2019, respectively: 

	September 30, 2020		December 31, 2019
Non-interest bearing demand deposits	$	229,217	$	168,157
Interest bearing demand deposits	279,648		223,102
Savings accounts	191,511		156,599
Money market accounts	246,651		246,430
Certificate accounts	323,751		401,414
Total deposits	$	1,270,778	$	1,195,702
Brokered deposits included above:	$	3,250	$	50,377

At September 30, 2020, the scheduled maturities of time deposits were as follows:

September 30, 2021	$	216,854
September 30, 2022	96,391
September 30, 2023	6,669
September 30, 2024	2,976
September 30, 2025	861
After September 30, 2025	—
Total	$	323,751

39

NOTE 7 – FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2020 and December 31, 2019 is as follows:

		September 30, 2020						December 31, 2019
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4), (5)	2020	$	1,000	1.76	%	1.76	%	$	69,000	1.67	%	2.05	%
	2021	8,000		—	%	2.16	%	4,000		1.85	%	2.16	%
	2022	15,000		2.34	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	—		—	%	—	%
	2024	20,530		—	%	1.45	%	530		—	%	—	%
	2025	5,000		1.45	%	1.45	%	—		—	%	—	%
	2029	42,500		1.00	%	1.13	%	42,500		1.00	%	1.13	%
	2030	12,500		0.52	%	0.86	%	—		—	%	—	%
Subtotal		124,530						131,030
Unamortized discount on acquired notes		(39)						(59)
Federal Home Loan Bank advances, net		$	124,491					$	130,971
Senior Notes (6)	2031	$	28,856	3.50	%	3.50	%	$	28,856	4.00	%	4.75	%
Subordinated Notes (7)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%
		$	30,000
Unamortized debt issuance costs		$	(559)					$	(296)
Total other borrowings		$	58,297					$	43,560
Totals		$	182,788					$	174,531

(1)    The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $681,951 and $792,909 at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $105,858 compared to $203,935 as of December 31, 2019.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $162,530 and $151,530, during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019, respectively.

(3) The weighted-average interest rates on FHLB borrowings maturing within twelve months as of September 30, 2020 and December 31, 2019 were 0.82% and 1.74%, respectively.

(4) Six of the FHLB notes with remaining balances totaling $9,530 were acquired as a result of the F&M acquisition. These notes mature on various dates through 2024 with a weighted average rate of 2.02% and weighted average maturity of 14 months.

(5)    FHLB term notes totaling $55,000, with various maturity dates in 2029 and 2030, can be called or replaced by the FHLB on a quarterly basis, beginning approximately three months after the initial advance.

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

(a) A term note, requiring quarterly interest-only payments through June 2022, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate with a floor rate of 3.50%.

40

(b) A $5,000 line of credit, maturing in August 2021, that remains undrawn upon.

(7)    Subordinated notes resulted from the following:

(a) The Company’s private sale in August 2017, which bears a fixed interest rate of 6.75% for five years. In August 2022, they convert to a three-month LIBOR plus 4.90% rate, and the interest rate will reset quarterly thereafter. Interest-only payments are due quarterly.

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bears a fixed interest rate of 6.00% for five years. In September 2025, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 591 basis points. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

Federal Home Loan Bank Letters of Credit

The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank. This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest bearing deposit balances. These balances were $180,325 and $147,991 at September 30, 2020 and December 31, 2019, respectively.

Federal Reserve Bank Paycheck Protection Program Liquidity Facility (“FRB PPPLF”) Program

The Bank has originated Small Business Association’s Paycheck Protection Program (“SBA PPP”) loans and has complied with the requirements to pledge these loans to the FRB PPPLF program which provides 100% funding for SBA PPP loans upon request. The Bank has no outstanding loan balances under this facility at September 30, 2020 and December 31, 2019. Maximum month-end borrowed amounts outstanding under this agreement were $25,136 and $0, during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019, respectively.

NOTE 8 - CAPITAL MATTERS

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.

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. At September 30, 2020, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

41

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	170,610	15.0	%	$	91,021	> =	8.0	%	$	113,776	> =	10.0	%
Tier 1 capital (to risk weighted assets)	156,388		13.7	%	68,266		> =	6.0	%	91,021		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	156,388		13.7	%	51,199		> =	4.5	%	73,955		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	156,388		9.9	%	63,465		> =	4.0	%	79,331		> =	5.0	%
As of December 31, 2019
Total capital (to risk weighted assets)	$	160,302	13.1	%	$	98,174	> =	8.0	%	$	122,718	> =	10.0	%
Tier 1 capital (to risk weighted assets)	149,982		12.2	%	73,631		> =	6.0	%	98,174		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	149,982		12.2	%	55,223		> =	4.5	%	79,767		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	149,982		10.4	%	57,834		> =	4.0	%	72,293		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount	Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	163,250	14.3	%	$	91,021	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	119,028		10.5	%	68,266		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	119,028		10.5	%	51,199		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	119,028		7.5	%	63,465		> =	4.0	%	N/A	N/A
As of December 31, 2019
Total capital (to risk weighted assets)	$	137,259	11.2	%	$	98,174	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	111,939		9.1	%	73,631		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	111,939		9.1	%	55,223		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	111,939		7.7	%	57,834		> =	4.0	%	N/A	N/A

-

42

NOTE 9 – STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s 2004 Recognition and Retention Plan and 2004 Stock Option and Incentive Plan. These plans were terminated on January 18, 2018.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years. As of September 30, 2020, 89,183 restricted shares and 181,000 options had been granted to eligible participants. Due to the plan’s expiration, no new awards can be granted under this plan. Restricted shares granted under the 2008 Equity Incentive Plan were awarded at no cost to the employee and vest pro rata over a two to five-year period from the grant date. Options granted to date under this plan vest pro rata over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date.

On March 27, 2018, the stockholders of Citizens Community Bancorp, Inc. approved the 2018 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2018 Equity Incentive Plan is 350,000 shares. As of September 30, 2020, 99,575 restricted shares had been granted under this plan. As of September 30, 2020, no stock options had been granted under this plan.

Net compensation expense related to restricted stock awards from these plans was $165 and $462 for the three and nine months ended September 30, 2020, compared to $127 and $370 for the three and nine months ended September 30, 2019.

Restricted Common Stock Award

	September 30, 2020			December 31, 2019
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	43,457	$	12.76	75,407	$	13.24
Granted	45,507	11.79		12,847	11.50
Vested	(14,545)	12.78		(32,630)	12.89
Forfeited	—	—		(12,167)	13.28
Unvested and outstanding at end of year	74,419	$	12.16	43,457	$	12.76

The Company accounts for stock-based employee compensation related to the Company’s 2008 Equity Incentive Plan and 2018 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation related to these plans for the three and nine month periods ended September 30, 2020 was $3 and $11, respectively. The compensation cost recognized for stock-based employee compensation related to these plans for the three and nine month periods ended September 30, 2019 was $5 and $14, respectively.

43

Common Stock Option Awards

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
September 30, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,000)	12.77
Outstanding at end of year	73,100	$	11.08	5.75
Exercisable at end of year	52,900	$	10.76	5.59	$	—
Fully vested and expected to vest	73,100	$	11.08	5.75	$	—
December 31, 2019
Outstanding at beginning of year	108,930	$	10.15
Exercised	(28,430)	7.12
Forfeited or expired	(2,400)	12.38
Outstanding at end of year	78,100	$	11.18	6.55
Exercisable at end of year	44,700	$	10.73	6.30	$	67
Fully vested and expected to vest	78,100	$	11.18	6.55	$	81

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan for the respective periods follows:

	Nine months ended September 30, 2020		Twelve months ended December 31, 2019
Intrinsic value of options exercised	$	—	$	130
Cash received from options exercised	$	—	$	203
Tax benefit realized from options exercised	$	—	$	—

NOTE 10 – FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The topic describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company 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 the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value (Level 3 inputs).

44

Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

	Fair Value			Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Investment securities:
U.S. government agency obligations	$	34,379		$	—	$	34,379	$	—
Obligations of states and political subdivisions	140			—		140		—
Mortgage-backed securities	51,758			—		51,758		—
Corporate debt securities	15,364			—		15,364		—
Corporate asset-based securities	35,543			—		35,543		—
Trust preferred securities	13,724			—		13,724		—
Total	$	150,908	150908000	$	—	$	150,908	$	—
December 31, 2019
Investment securities:
U.S. government agency obligations	$	51,805		$	—	$	51,805	$	—
Obligations of states and political subdivisions	281			—		281		—
Mortgage-backed securities	71,331			—		71,331		—
Corporate debt securities	18,725			—		18,725		—
Corporate asset backed securities	26,854			—		26,854		—
Trust preferred securities	11,123			—		11,123		—
Total	$	180,119		$	—	$	180,119	$	—

Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2020 and December 31, 2019:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Foreclosed and repossessed assets, net	$	812	$	—	$	—	$	812
Impaired loans with allocated allowances	4,151		—		—		4,151
Mortgage servicing rights	3,498		—		—		3,509
Total	$	8,461	$	—	$	—	$	8,472
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	$	—	$	—	$	1,460
Impaired loans with allocated allowances	3,175		—		—		3,175
Mortgage servicing rights	4,282		—		—		4,309
Total	$	8,917	$	—	$	—	$	8,944

45

The fair value of impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans.

The fair value of foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned. The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned.

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

The following table represents additional quantitative information about assets measured at fair value on a

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

September 30, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
September 30, 2020
Foreclosed and repossessed assets, net	$	812	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	4,151	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	3,509	Discounted cash flows	Discounted rates	9 - 12%
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	3,175	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	4,309	Discounted cash flows	Discounted rates	9.5% - 12.5%

(1)     Fair value is generally determined through independent third-party appraisals of the underlying

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

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

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

    and delinquent property taxes.

46

The table below represents what we would receive to sell an asset or what we would have to pay to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount and estimated fair value of the Company’s financial instruments as of the dates indicated below were as follows:

		September 30, 2020				December 31, 2019
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	115,474	$	115,474	$	55,840	$	55,840
Other interest-bearing deposits	(Level II)	3,752		3,838		4,744		4,792
Securities available for sale “AFS”	(Level II)	150,908		150,908		180,119		180,119
Securities held to maturity “HTM”	(Level II)	16,927		17,233		2,851		2,957
Equity securities with readily determinable fair value	(Level I)	187		187		246		246
Other investments	(Level II)	15,075		15,075		15,005		15,005
Loans receivable, net	(Level III)	1,215,303		1,204,923		1,167,060		1,161,660
Loans held for sale	(Level II)	4,938		4,938		5,893		5,893
Mortgage servicing rights	(Level III)	3,498		3,509		4,282		4,309
Accrued interest receivable	(Level 1)	5,829		5,829		4,738		4,738
Financial liabilities:
Deposits	(Level III)	$	1,270,778	$	1,275,000	$	1,195,702	$	1,192,777
FHLB advances	(Level II)	124,491		129,798		130,971		131,593
Other borrowings	(Level I)	58,297		58,297		43,560		43,560
Accrued interest payable	(Level I)	517		517		453		453

47

NOTE 11 – OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the tax effects allocated to each component of other comprehensive income for the three and

nine months ended September 30, 2020 and 2019:

	Three months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319
Reclassification adjustment for gains included in net income	—		—		—		—		—		—
Other comprehensive income	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319

	Nine months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	2,052	$	(564)	$	1,488	$	3,003	$	(826)	$	2,177
Reclassification adjustment for gains included in net income	(156)		43		(113)		(26)		7		(19)
Other comprehensive income	$	1,896	$	(521)	$	1,375	$	2,977	$	(819)	$	2,158

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2019 and the nine months ended September 30, 2020 were as follows:

	Unrealized Gains (Losses) on Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2019	$	(2,540)	$	(1,841)
Current year-to-date other comprehensive income	1,953		1,415
Adoption of ASU 2016-01; Equity securities (1)	(62)		(45)
Ending balance, December 31, 2019	$	(649)	$	(471)
Current year-to-date other comprehensive income	1,896		1,375
Ending balance, September 30, 2020	$	1,247	$	904

(1) Amounts reclassified to retained earnings due to January 1, 2019 adoption of ASU 2016-02. For further information, refer to Note 1, “Nature of Business and Summary of Significant Policies; Recent Pronouncements-Adopted”.

48

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2020 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2020		Nine months ended September 30, 2020		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	156		Net gains on investment securities
Tax Effect	—		(43)			Provision for income taxes
Total reclassifications for the period	$	—	$	113		Net gain attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2019		Nine months ended September 30, 2019		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	26		Net gains on investment securities
Tax Effect	—		(7)			Provision for income taxes
Total reclassifications for the period	$	—	$	19		Net gain attributable to common shareholders

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

49

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

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the Company intends that these forward-looking statements be covered by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates”, “intend,” “may,” “preliminary,” “planned,” “potential,” “should,” “will,” “would,” or the negative of those terms or other words of similar meaning.  Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are inherently subject to many uncertainties in the Company’s operations and business environment.

Factors that could affect actual results or outcomes include the matters described under the caption “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020 (“2019 10-K”), the matters described in “Risk Factors” in Item 1A of our Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and in Item 1A of this Form 10-Q, and the following:

•conditions in the financial markets and economic conditions generally;

•adverse impacts to the Company or Bank arising from the COVID-19 pandemic;

•the possibility of a deterioration in the residential real estate markets;

•interest rate risk;

•lending risk;

•the sufficiency of loan allowances;

•changes in the fair value or ratings downgrades of our securities;

•competitive pressures among depository and other financial institutions;

•our ability to maintain our reputation;

•our ability to realize the benefits of net deferred tax assets;

•our ability to maintain or increase our market share;

•acts of terrorism and political or military actions by the United States or other governments;

•legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank;

•increases in FDIC insurance premiums or special assessments by the FDIC;

•disintermediation risk;

•our inability to obtain needed liquidity;

•risks related to the ongoing integration of F&M into the Company’s operations;

•our ability to successfully execute our acquisition growth strategy;

•risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits;

•our ability to raise capital needed to fund growth or meet regulatory requirements;

•the possibility that our internal controls and procedures could fail or be circumvented;

•our ability to attract and retain key personnel;

•our ability to keep pace with technological change;

•cybersecurity risks;

•changes in federal or state tax laws;

•changes in accounting principles, policies or guidelines and their impact on financial performance;

•restrictions on our ability to pay dividends; and

•the potential volatility of our stock price.

Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this filing and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this report.

50

GENERAL

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of September 30, 2020, and our consolidated results of operations for the three and nine months ended September 30, 2020, compared to the same period in the prior fiscal year for the three and nine months ended September 30, 2019. This discussion should be read in conjunction with the interim consolidated financial statements and the condensed notes thereto included with this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes related thereto included in our 2019 10-K. Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenue, expenses and their related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that our management believes to be relevant at the time our consolidated financial statements are prepared. Some of these estimates are more critical than others. In addition to the policies included in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included as an exhibit in our annual report on our 2019 10-K, our critical accounting estimates are as follows:

Allowance for Loan Losses.

We maintain an allowance for loan losses to absorb probable and inherent losses in our loan portfolio. The allowance is based on ongoing, quarterly assessments of the estimated probable incurred losses in our loan portfolio. In evaluating the level of the allowance for loan loss, we consider the types of loans and the amount of loans in our loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, prevailing economic conditions and other relevant factors determined by management. We follow all applicable regulatory guidance, including the “Interagency Policy Statement on the Allowance for Loan and Lease Losses,” issued by the Federal Financial Institutions Examination Council (FFIEC). We believe that the Bank’s Allowance for Loan Losses Policy conforms to all applicable regulatory requirements. However, based on periodic examinations by regulators, the amount of the allowance for loan losses recorded during a particular period may be adjusted.

Our determination of the allowance for loan losses is based on (1) specific allowances for specifically identified and evaluated impaired loans and their corresponding estimated loss based on likelihood of default, payment history, and net realizable value of underlying collateral. Specific allocations for collateral dependent loans are based on fair value of the underlying collateral relative to the unpaid principal balance of individually impaired loans. For loans that are not collateral dependent, the specific allocation is based on the present value of expected future cash flows discounted at the loan’s original effective interest rate through the repayment period; and (2) a general allowance on loans not specifically identified in (1) above, based on historical loss ratios, which are adjusted for qualitative and general economic factors. We continue to refine our allowance for loan losses methodology, with an increased emphasis on historical performance adjusted for applicable economic and qualitative factors.

Assessing the allowance for loan losses is inherently subjective as it requires making material estimates, including the amount and timing of future cash flows expected to be received on impaired loans, any of which estimates may be susceptible to significant change. In our opinion, the allowance, when taken as a whole, reflects estimated probable loan losses in our loan portfolio.

Goodwill.

We account for goodwill and other intangible assets in accordance with ASC Topic 350, “Intangibles - Goodwill and Other.” The Company records the excess of the cost of acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill. The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives utilizing the straight-line method. On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amounts of the intangible assets may be impaired. The Company does not amortize goodwill and any acquired intangible asset with an indefinite useful economic life, but reviews them for impairment at a reporting unit level on an annual basis, or when events or changes in circumstances indicate that the carrying amounts may be impaired. A reporting unit is defined as any distinct, separately

51

identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management. The Company has one reporting unit as of September 30, 2020 which is related to its banking activities. The Company performed the required goodwill impairment test and determined that goodwill was not impaired as of December 31, 2019. The Company performed a goodwill impairment analysis as of September 30, 2020, due to triggering events being identified, and determined that goodwill was not impaired.

Fair Value Measurements and Valuation Methodologies.

We apply various valuation methodologies to assets and liabilities which often involve a significant degree of judgment, particularly when liquid markets do not exist for the particular items being valued. Quoted market prices are referred to when estimating fair values for certain assets, such as most investment securities. However, for those items for which an observable liquid market does not exist, management utilizes significant estimates and assumptions to value such items. Examples of these items include loans, deposits, borrowings, goodwill, core deposit intangible assets, other assets and liabilities obtained or assumed in business combinations, and certain other financial instruments. These valuations require the use of various assumptions, including, among others, discount rates, rates of return on assets, repayment rates, cash flows, default rates, and liquidation values. The use of different assumptions could produce significantly different results, which could have material positive or negative effects on the Company’s results of operations, financial condition or disclosures of fair value information.

In addition to valuation, the Company must assess whether there are any declines in value below the carrying value of assets that should be considered other than temporary or otherwise require an adjustment in carrying value and recognition of a loss in the consolidated statement of income. Examples include but are not limited to; loans, investment securities, goodwill, core deposit intangible assets and deferred tax assets, among others. Specific assumptions, estimates and judgments utilized by management are discussed in detail herein in management’s discussion and analysis of financial condition and results of operations and in notes 1, 2, 3, 4 and 10 of Condensed Notes to Consolidated Financial Statements.

Income Taxes.

Amounts provided for income tax expenses are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities, which arise principally from temporary differences between the amounts reported in the financial statements and the tax basis of certain assets and liabilities, are included in the amounts provided for income taxes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and if necessary, tax planning strategies in making this assessment.

The assessment of tax assets and liabilities involves the use of estimates, assumptions, interpretations, and judgments concerning certain accounting pronouncements and application of specific provisions of federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be material to our consolidated results of our operations and reported earnings. We believe that the deferred tax assets and liabilities are adequate and properly recorded in the accompanying consolidated financial statements. As of September 30, 2020, management does not believe a valuation allowance related to the realizability of its deferred tax assets is necessary.

52

STATEMENT OF OPERATIONS ANALYSIS

Net Interest Income. Net interest income represents the difference between the dollar amount of interest earned on interest-bearing assets and the dollar amount of interest paid on interest-bearing liabilities. The interest income and expense of financial institutions (including those of the Bank) are significantly affected by general economic conditions, competition, policies of regulatory authorities and other factors.

Interest rate spread and net interest margin are used to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest earning assets and the rate paid for interest-bearing liabilities that fund those assets. Net interest margin is expressed as the percentage of net interest income to average interest earning assets. Net interest margin currently exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discusses net interest income, interest rate spread, and net interest margin for the three and nine-month periods ended September 30, 2020 and September 30, 2019, respectively.

Net interest income was $11.9 million for the three months ended September 30, 2020 and $36.9 million for the nine months ended September 30, 2020, compared to $11.6 million for the three months ended September 30, 2019 and $31.7 million of the nine months ended September 30, 2019. For the three months ended September 30, 2020, net interest income benefited from the origination of $139 million of SBA Paycheck Protection Program (“PPP”) loans and organic loan growth partially offset by a decrease in net interest margin percentage.

The net interest margin for the three-month period ended September 30, 2020 was 3.11%, compared to 3.34% for the three-month period ended September, 2019. The decrease in net interest margin was largely due to: (1) the impact of the Federal Reserve actions to offset the impact of the pandemic in March 2020, during which it lowered overnight interest rates by 125 basis points in 12 days and (2) market reactions to decreasing longer-term interest rates on loans, investments and cash and cash equivalents security yields; partially offset by lower deposit rates due to management action to reduce interest rates. The impact of higher cash and cash equivalents balances decreased the interest margin percentage by two basis points as the rate impact is covered above. Higher non-accretable difference accretion of two basis points offset the negative impact of higher cash balances above.

The net interest margin for the nine-months ended September 30, 2020 was 3.36%, compared to 3.35% for the nine-month period ended September 30, 2019. The modest increase in net interest margin was due to the increase in the accretion of purchased credit impaired discounts, which increased net interest margin by 11 basis points. Other factors affecting the net interest margin for the nine month periods of 2020 to 2019 are similar to those discussed above, with a two basis point decrease in net interest margin due to the impact of higher cash and cash equivalent balances as the rate impact is discussed above.

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following net interest income analysis table presents interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates on a tax equivalent basis. Shown below is the weighted average tax equivalent yield on interest earning assets, rates paid on interest-bearing liabilities and the resultant spread at or during the three and nine-month periods ended September 30, 2020, and for the three and nine-month periods ended September 30, 2019. Non-accruing loans have been included in the table as loans carrying a zero yield.

53

NET INTEREST INCOME ANALYSIS ON A TAX EQUIVALENT BASIS

(Dollar amounts in thousands)

Three months ended September 30, 2020 compared to the three months ended September 30, 2019:

	Three months ended September 30, 2020						Three months ended September 30, 2019
	Average Balance		Interest Income/ Expense		Average Yield/ Rate (1)		Average Balance		Interest Income/ Expense		Average Yield/ Rate (1)
Average interest earning assets:
Cash and cash equivalents	$	77,774	$	18	0.09	%	$	32,376	$	203	2.49	%
Loans	1,258,224		14,154		4.48	%	1,143,252		14,646		5.08	%
Interest-bearing deposits	3,752		23		2.44	%	5,577		34		2.42	%
Investment securities (1)	166,622		846		2.02	%	185,921		1,174		2.56	%
Other investments	15,145		177		4.65	%	13,072		166		5.04	%
Total interest earning assets (1)	$	1,521,517	$	15,218	3.98	%	$	1,380,198	$	16,223	4.67	%
Average interest-bearing liabilities:
Savings accounts	$	183,381	$	98	0.21	%	$	158,967	$	155	0.39	%
Demand deposits	285,993		231		0.32	%	219,955		550		0.99	%
Money market	255,160		280		0.44	%	200,647		593		1.17	%
CD’s	297,691		1,469		1.96	%	381,331		1,870		1.95	%
IRA’s	41,852		177		1.68	%	44,184		203		1.82	%
Total deposits	$	1,064,077	$	2,255	0.84	%	$	1,005,084	$	3,371	1.33	%
FHLB Advances and other borrowings	173,758		1,054		2.41	%	169,908		1,259		2.94	%
Total interest-bearing liabilities	$	1,237,835	$	3,309	1.06	%	$	1,174,992	$	4,630	1.56	%
Net interest income			$	11,909					$	11,593
Interest rate spread					2.92	%					3.11	%
Net interest margin (1)					3.11	%					3.34	%
Average interest earning assets to average interest-bearing liabilities					1.23						1.17

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21.0% for the quarters ended September 30, 2020 and September 30, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $0 and $27 thousand for the three months ended September 30, 2020 and September 30, 2019, respectively.

54

NET INTEREST INCOME ANALYSIS ON A TAX EQUIVALENT BASIS

(Dollar amounts in thousands)

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019:

	Nine months ended September 30, 2020						Nine months ended September 30, 2019
	Average Balance		Interest Income/ Expense		Average Yield/ Rate (1)		Average Balance		Interest Income/ Expense		Average Yield/ Rate (1)
Average interest earning assets:
Cash and cash equivalents	$	42,946	$	141	0.44	%	$	29,489	$	542	2.46	%
Loans	1,232,678		44,300		4.8	%	1,054,492		40,036		5.08	%
Interest-bearing deposits	3,967		73		2.46	%	6,153		107		2.33	%
Investment securities (1)	173,595		2,965		2.28	%	167,023		3,119		2.58	%
Other investments	15,104		533		4.71	%	11,853		473		5.34	%
Total interest earning assets (1)	$	1,468,290	$	48,012	4.37	%	$	1,269,010	$	44,277	4.68	%
Average interest-bearing liabilities:
Savings accounts	$	169,754	$	348	0.27	%	$	156,851	$	479	0.41	%
Demand deposits	262,748		865		0.44	%	200,387		1,288		0.86	%
Money market	244,965		1,240		0.68	%	172,671		1,423		1.10	%
CD’s	326,776		5,021		2.05	%	348,139		5,163		1.98	%
IRA’s	42,221		568		1.80	%	41,576		537		1.73	%
Total deposits	$	1,046,464	$	8,042	1.03	%	$	919,624	$	8,890	1.29	%
FHLB Advances and other borrowings	185,256		3,087		2.23	%	153,960		3649		3.17	%
Total interest-bearing liabilities	$	1,231,720	$	11,129	1.21	%	$	1,073,584	$	12,539	1.56	%
Net interest income			$	36,883					$	31,738
Interest rate spread					3.16	%					3.12	%
Net interest margin (1)					3.36	%					3.35	%
Average interest earning assets to average interest-bearing liabilities					1.19						1.18

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21.0% for the nine months ended September 30, 2020 and September 30, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $1 thousand and $103 thousand for the nine months ended September 30, 2020 and September 30, 2019, respectively.

Rate/Volume Analysis. The following table presents the dollar amount of changes in interest income and interest expense for the components of interest earning assets and interest-bearing liabilities that are presented in the preceding table. For each category of interest earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume, which are changes in the average outstanding balances multiplied by the prior period rate (i.e. holding the initial rate constant); and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e. holding the initial balance constant). Rate changes have been discussed previously. For the three months ended September 30, 2020, compared to the three months ended September 30, 2019, the loan volume increase is primarily due to SBA PPP originations, and the impact of organic growth since October 1, 2019. The decrease in certificate volumes is due to planned runoff of brokered CD’s and to a lesser extent, retail CD’s, partially offset by growth in non-maturity deposits. Volume change factors for the nine month period are similar to the three month period, along with the impact of having nine months of F&M balances in 2020 compared to only three months in the comparable 2019 period, as the F&M acquisition closed July 1, 2019.

55

RATE / VOLUME ANALYSIS

(Dollar amounts in thousands)

Three months ended September 30, 2020 compared to the three months ended September 30, 2019.

	Increase (decrease) due to
	Volume		Rate		Net
Interest income:
Cash and cash equivalents	$	181	$	(366)	$	(185)
Loans	1,393		(1,885)		(492)
Interest-bearing deposits	(11)		—		(11)
Investment securities	(115)		(213)		(328)
Other investments	25		(14)		11
Total interest earning assets	1,473		(2,478)		(1,005)
Interest expense:
Savings accounts	21		(78)		(57)
Demand deposits	136		(455)		(319)
Money market accounts	135		(448)		(313)
CD’s	(413)		12		(401)
IRA’s	(10)		(16)		(26)
Total deposits	(131)		(985)		(1,116)
FHLB Advances and other borrowings	28		(233)		(205)
Total interest bearing liabilities	(103)		(1,218)		(1,321)
Net interest income	$	1,576	$	(1,260)	$	316

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

	Increase (decrease) due to
	Volume		Rate		Net
Interest income:
Cash and cash equivalents	$	191	$	(592)	$	(401)
Loans	6,504		(2,240)		4,264
Interest-bearing deposits	(40)		6		(34)
Investment securities	123		(277)		(154)
Other investments	120		(60)		60
Total interest earning assets	6,898		(3,163)		3,735
Interest expense:
Savings accounts	37		(168)		(131)
Demand deposits	337		(760)		(423)
Money market accounts	497		(680)		(183)
CD’s	(324)		182		(142)
IRA’s	8		23		31
Total deposits	555		(1,403)		(848)
FHLB Advances and other borrowings	662		(1,224)		(562)
Total interest bearing liabilities	1,217		(2,627)		(1,410)
Net interest income	$	5,681	$	(536)	$	5,145

Provision for Loan Losses. We determine our provision for loan losses (“provision”) based on our desire to provide an adequate allowance for loan losses (“ALL”) to reflect probable and inherent credit losses in our loan portfolio. We continue to monitor adverse general economic conditions that could affect our commercial and agricultural portfolios in the future.

56

Total provision for loan losses expense for the three and nine months ended September 30, 2020 was $1,500 and $5,250, respectively. The provision for loan losses was impacted by loan growth, net loan charge offs, increases in unallocated, increases in specific reserves on impaired loans and continued anticipation of pandemic-related adverse economic impacts, including various “Stay-at-Home Orders” which continued to result in temporary business closures, reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers.

Management believes that the provision taken for the current year three-month period is adequate in view of the present condition of our loan portfolio and the sufficiency of collateral supporting our non-performing loans. We continually monitor non-performing loan relationships and will adjust our provision, as necessary, if changing facts and circumstances require a change in the ALL. In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers or our market areas, or otherwise, could all affect the adequacy of our ALL. If there are significant charge-offs against the ALL, or we otherwise determine that the ALL is inadequate, we will need to record an additional provision in the future.

Non-interest Income. The following table reflects the various components of non-interest income for the three and nine month periods ended September 30, 2020 and 2019, respectively.

	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Non-interest Income:
Service charges on deposit accounts	$	431	$	625	(31.04)	%	$	1,336	$	1,756	(23.92)	%
Interchange income	556		476		16.81	%	1,509		1,267		19.10	%
Loan servicing income	1,144		714		60.22	%	3,144		1,902		65.30	%
Gain on sale of loans	1,987		679		192.64	%	4,585		1,560		193.91	%
Loan fees and service charges	320		471		(32.06)	%	1,041		860		21.05	%
Insurance commission income	—		197		(100.00)	%	475		573		(17.10)	%
Net gains on investment securities	(1)		96		(101.04)	%	97		151		(35.76)	%
Net gain on sale of branch	—		—		N/M		—		2,295		N/M
Net gain on sale of acquired business lines	180		—		N/M		432		—		N/M
Settlement proceeds	—		—		N/M		131		—		N/M
Other	445		363		22.59	%	928		827		12.21	%
Total non-interest income	$	5,062	$	3,621	39.80	%	$	13,678	$	11,191	22.22	%

The growth in most line items, for the nine months ended September 30, are due to the impact of the F&M acquisition on July 1, 2019.

Service charges on deposit accounts decreased to $431 and $1,336 for the three and nine months ended September 30, 2020, from $625 and $1,756 in the comparable prior year periods. This decrease was due to lower retail customer activity and due to higher balances of retail checking accounts, primarily in the three months ended September 30, 2020.

Loan servicing income increased largely due to increased capitalized mortgage servicing rights due to higher mortgage loan origination fees in both the current three and nine-month periods.

Gain on sale of loans increased in both the current three and nine-month periods due to higher mortgage loan origination sold volumes.

The change in loan fees and service charges for the three and nine months ended September 30, 2020, is largely due to changes in commercial loan customer activity, which was significantly higher in the first quarter of 2020

The Company recognized a gain on sale of its Michigan branch of $2,295 in the second quarter of 2019.

In the quarter ended September 30, 2020, the Bank’s acquired wealth management business partner exercised their contractual call originated prior to the acquisition, resulting in the sale of the wealth management business. The sale resulted in a $180 gain, Also, the Company sold the Wells Insurance Agency in June 2020, realizing a net gain of $252.

57

During the quarter ended June 30, 2020, the Company recognized $131 of non-interest income related to a private mortgage-backed security claim. This distribution represents a supplement to the proceeds received in March 2017 from this private mortgage-backed security, previously owned by the Bank, and sold in 2011.

Non-interest Expense. The following table reflects the various components of non-interest expense for the three and nine month periods ended September 30, 2020 and 2019, respectively.

	Three months ended September 30,								Nine months ended September 30,
	2020			2019			% Change		2020			2019			% Change
Non-interest Expense:
Compensation and related benefits	$	5,538		$	5,295		4.59	%	$	16,881		$	14,605		15.58	%
Occupancy	993			905			9.72	%	2,898			2,725			6.35	%
Office	532			599			(11.19)	%	1,650			1,649			0.06	%
Data processing	1,145			1,092			4.85	%	3,165			2,953			7.18	%
Amortization of intangible assets	399			412			(3.16)	%	1,223			1,085			12.72	%
Mortgage servicing rights expense	603			325			85.54	%	2,330			822			183.45	%
Advertising, marketing and public relations	260			315			(17.46)	%	802			974			(17.66)	%
FDIC premium assessment	188			78			141.03	%	436			318			37.11	%
Professional services	434			561			(22.64)	%	1,391			1,961			(29.07)	%
Gains on repossessed assets, net	(105)			(16)			(556.25)	%	(195)			(143)			(36.36)	%
Other	737			3,409			(78.38)	%	2,266			5,309			(57.32)	%
Total non-interest expense	$	10,724		$	12,975		(17.35)	%	$	32,847		$	32,258		1.83	%
Non-interest expense (annualized) / Average assets	2.62		%	3.54		%	(25.95)	%	2.78		%	3.15		%	(11.88)	%

The growth in most line items for the nine months September 30 are due to the impact of the F&M acquisition on July 1, 2019.

Compensation expense, for the nine-month period ended September 30, 2020 was higher than the comparable prior year period due primarily to the impact of the F&M acquisition, and to a lesser extent, higher variable mortgage production compensation related to higher mortgage loan origination activity, primarily in the second and third quarter of 2020. Compensation expense for three months ended September 30, 2020 compared to September 30, 2019 was higher largely due to higher variable mortgage production compensation related to higher mortgage loan activity.

Data processing expense increases were due primarily to higher loan origination activity and larger deposit balances.

Mortgage servicing rights expense increased during the three and nine months ended September 30, 2020 by $278 and $1,508 respectively, compared to the comparable prior year periods. The Company recognized related impairment charges of $250 and $1,422 respectively in the three and nine-month periods ended September 30, 2020 compared to $100 and $210 for the three and nine months ended September 30, 2019, largely due to the impact of higher actual and forecasted prepayment rates. The remaining increase is due to higher amortization based on the current interest rate environment.

Professional services expenses were lower during the three months ended September 30, 2020 compared to the prior period due to merger costs in third quarter 2019. For the nine months ended September 30, 2020 compared to the comparable prior year periods, professional service expenses were lower primarily due to lower audit costs and third quarter 2019 acquisition costs. Higher 2019 audit costs were largely due to the transition period audit required due to the change in the Company’s fiscal year-end.

Other expenses for the three and nine-month period ended September 30, 2020 decreased compared to September 30, 2019, largely due to lower merger-related expenses.

Income Taxes. Income tax expense was $1,267 and $3,309 for the three and nine months ended September 30, 2020 compared to $430 and $2,252 for the three and nine months ended September 30, 2019. The impact of higher non-taxable municipal income in 2019 was offset by higher non-deductible merger costs, netting to approximately the same effective tax rates in both periods.

58

BALANCE SHEET ANALYSIS

Cash and Cash Equivalents. Cash and cash equivalents increased to $115.5 million at September 30, 2020 from $55.8 million at December 31, 2019. Deposit levels remain robust, while the Bank experienced loan growth primarily due to SBA PPP loan originations and chose to modestly shrink the investment portfolio due to current low yielding investment options. As such, the Company has chosen to maintain a higher level of liquidity.

Investment Securities. We manage our securities portfolio to provide liquidity and enhance income. Our investment portfolio is comprised of securities available for sale and securities held to maturity. In the first quarter, the Bank sold approximately $10.7 million of fixed-rate mortgage-backed certificates, (“MBS”) and these were replaced with similar, lower premium MBS.

Securities available for sale, which represent the majority of our investment portfolio, were $150.9 million at September 30, 2020, compared with $180.1 million at December 31, 2019. The reduction in the AFS portfolio is due to maturities and calls of U.S government agency obligations. The maturities and calls in the corporate asset-based securities in 2020 were replaced with bank holding company issued subordinated debt of which the Bank purchased $7.3 million in the third quarter.

Securities held to maturity increased to $16.9 million at September 30, 2020, compared to $2.9 million at December 31, 2019. This increase was due to the purchase of agency mortgage-backed securities in the first quarter and third quarter of 2020.

The amortized cost and market values of our available for sale securities by asset categories as of the dates indicated below were as follows:

Securities available for sale	Amortized Cost		Fair Value
September 30, 2020
U.S. government agency obligations	$	34,059	$	34,379
Obligations of states and political subdivisions	140		140
Mortgage-backed securities	49,870		51,758
Corporate debt securities	15,211		15,364
Corporate asset-based securities	36,443		35,543
Trust preferred securities	13,938		13,724
Totals	$	149,661	$	150,908
December 31, 2019
U.S. government agency obligations	$	52,020	$	51,805
Obligations of states and political subdivisions	281		281
Mortgage backed securities	70,806		71,331
Corporate debt securities	18,776		18,725
Corporate asset-based securities	27,718		26,854
Trust preferred securities	11,167		11,123
Totals	$	180,768	$	180,119

59

The amortized cost and fair value of our held to maturity securities by asset categories as of the dates noted below were as follows:

Securities held to maturity	Amortized Cost		Fair Value
September 30, 2020
Obligations of states and political subdivisions	$	300	$	300
Mortgage-backed securities	16,627		16,933
Totals	$	16,927	$	17,233
December 31, 2019
Obligations of states and political subdivisions	$	300	$	302
Mortgage-backed securities	2,551		2,655
Totals	$	2,851	$	2,957

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

	September 30, 2020				December 31, 2019
Available for sale securities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Agency	$	83,929	$	86,135	$	122,826	$	123,136
AAA	11,185		10,885		4,383		4,245
AA	25,398		24,798		23,475		22,749
A	6,909		7,019		18,776		18,725
BBB	22,240		22,071		11,167		11,123
Non-rated	—		—		141		141
Total available for sale securities	$	149,661	$	150,908	$	180,768	$	180,119

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

	September 30, 2020				December 31, 2019
Securities held to maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. government agency	$	16,627	$	16,933	$	2,551	$	2,655
AA	125		125		125		126
Non-rated	175		175		175		176
Total	$	16,927	$	17,233	$	2,851	$	2,957

At September 30, 2020, securities with a market value of $1.3 million were pledged against a line of credit with the Federal Reserve Bank of Minneapolis. As of September 30, 2020, this line of credit had a zero-outstanding balance. At September 30, 2020, the Bank has pledged mortgage-backed securities with a market value of $3.9 million and U.S. government agency securities with a market value of $0.6 million as collateral against municipal deposits. At September 30, 2020, the Bank also has mortgage-backed securities with a carrying value of $0.5 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

Loans. Total loans outstanding, net of deferred loan fees and costs and unamortized discount on acquired loans, increased by $53 million, to $1.23 billion as of September 30, 2020, from $1.18 billion at December 31, 2019. This growth was due to the impact of the growth in the SBA PPP origination of $139.2 million, partially offset by the net remaining deferred origination fees of $4.0 million. This growth was partially offset by a reduction in acquired commercial loans and originated loan portfolio. In addition, residential mortgage loans and indirect consumer loans of $36.4 million and $11.0 million, respectively, decreased. The following table reflects the composition, or mix of our loan portfolio at September 30, 2020 and December 31, 2019:

60

	September 30, 2020		December 31, 2019
	Amount		Amount
Real estate loans:
Commercial/agricultural real estate
Commercial real estate	$	500,673	$	514,459
Agricultural real estate	73,143		85,363
Multi-family real estate	109,668		87,008
Construction and land development	89,338		86,410
Residential mortgage
Residential mortgage	141,854		176,332
Purchased HELOC loans	6,547		8,407
Total real estate loans	921,223		957,979
C&I/Agricultural operating and Consumer Installment Loans:
C&I/Agricultural operating
Commercial and industrial (“C&I”)	104,372		133,734
Agricultural operating	33,958		37,780
Consumer installment
Originated indirect paper	28,535		39,585
Other Consumer	14,630		18,186
Total C&I/Agricultural operating and Consumer installment Loans	181,495		229,285
Gross loans before C&I SBA PPP loans	1,102,718		1,187,264
SBA PPP loans	139,166		—
Gross loans	$	1,241,884	$	1,187,264
Unearned net deferred fees and costs and loans in process	(5,033)		(393)
Unamortized discount on acquired loans	(6,712)		(9,491)
Total loans (net of unearned income and deferred expense)	1,230,139		1,177,380
Allowance for loan losses	(14,836)		(10,320)
Total loans receivable, net	$	1,215,303	$	1,167,060

Allowance for Loan Losses. The loan portfolio is our primary asset subject to credit risk. To address this credit risk, we maintain an ALL for probable and inherent credit losses through periodic charges to our earnings. These charges are shown in our consolidated statements of operations as PLL. See “Provision for Loan Losses” earlier in this quarterly report. We attempt to control, monitor and minimize credit risk through the use of prudent lending standards, a thorough review of potential borrowers prior to lending and ongoing and timely review of payment performance. Asset quality administration, including early identification of loans performing in a substandard manner, as well as timely and active resolution of problems, further enhances management of credit risk and minimization of loan losses. Any losses that occur and that are charged off against the ALL are periodically reviewed with specific efforts focused on achieving maximum recovery of both principal and interest.

At least quarterly, we review the adequacy of the ALL. Based on an estimate computed pursuant to the requirements of ASC 450-10, “Accounting for Contingencies” and ASC 310-10, “Accounting by Creditors for Impairment of a Loan”, the analysis of the ALL consists of three components: (i) specific credit allocation established for expected losses relating to specific impaired loans for which the recorded investment in the loan exceeds its fair value; (ii) general portfolio allocation based on historical loan loss experience for significant loan categories; and (iii) general portfolio allocation based on qualitative factors such as economic conditions and other relevant factors specific to the markets in which we operate. We continue to refine our ALL methodology by introducing a greater level of granularity to our loan portfolio. We currently segregate loans into pools based on common risk characteristics for purposes of determining the ALL. The additional segmentation of the portfolio is intended to provide a more effective basis for the determination of qualitative factors affecting our ALL. In addition, management continually evaluates our ALL methodology to assess whether modifications in our methodology are appropriate in light of underwriting practices, market conditions, identifiable trends, regulatory pronouncements or other factors. We

61

believe that any modifications or changes to the ALL methodology would be to enhance the ALL. However, any such modifications could result in materially different ALL levels in future periods.

The specific credit allocation for the ALL is based on a regular analysis of all loans that are considered impaired. In compliance with ASC 310-10, the fair value of the loan is determined based on either the present value of expected cash flows discounted at the loan’s effective interest rate, the market price of the loan, or, if the loan is collateral dependent, the fair value of the underlying collateral less the expected cost of sale for such collateral. At September 30, 2020, the Company had identified impaired loans of $51.7 million, consisting of $19.8 million TDR loans, the carrying amount of purchased credit impaired loans of $23.4 million and $8.5 million of substandard non-TDR loans. The $51.7 million total of impaired loans includes $12.6 million of performing TDR loans. At December 31, 2019, the Company had identified impaired loans of $63.2 million, consisting of $12.6 million TDR loans, the carrying amount of purchased credit impaired loans of $32.0 million and $18.6 million of substandard non-TDR loans. The $63.2 million total of impaired loans includes $5.4 million of performing TDR loans. At September 30, 2020 and December 31, 2019, we had 342 and 389 such impaired loans, respectively, all secured by real estate or personal property. Of the impaired loans, there were 19 individual loans where estimated fair value was less than their book value (i.e. we deemed impairment to exist) totaling $5.3 million for which $1.2 million in specific ALL was recorded as of September 30, 2020.

The allowance for loan and losses increased to $14.8 million at September 30, 2020 representing 1.21% of loans receivable, less the 100% SBA guaranteed PPP loans. A significant portion of the current loan portfolio includes loans purchased through whole bank acquisitions in recent years resulting in purchased credit impairments which are not included in the allowance for loan losses. The Allowance for loan losses was $10.3 million at December 31, 2019, representing 0.88% of loans receivable. The increase in the allowance was due to loan growth, increases in unallocated, increases in specific reserves on impaired loans and continued anticipation of pandemic-related adverse economic impacts, including various “Stay-at-Home Orders” which continued to result in temporary business closures, reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers.

Allowance for Loan Losses to Loans, net of SBA PPP Loans

(in thousands, except ratios)

	September 30, 2020			June 30, 2020			December 31, 2019			September 30, 2019
Loans, end of period	$	1,230,139		$	1,281,175		$	1,177,380		$	1,134,708
SBA PPP loans, net of deferred fees	(135,177)			(132,800)			—			—
Loans, net of SBA PPP loans and deferred fees	$	1,094,962		$	1,148,375		$	1,177,380		$	1,134,708
Allowance for loan losses	$	14,836		$	13,373		$	10,320		$	9,177
ALL to loans net of SBA PPP loans and deferred fees	1.35		%	1.16		%	0.88		%	0.81		%
ALL to loans, end of period	1.21		%	1.04		%	0.88		%	0.81		%

All of the nine factors identified in the FFIEC’s Interagency Policy Statement on the Allowance for Loan and Lease Losses are taken into account in determining the ALL. The impact of the factors in general categories are subject to change; thus, the allocations are management’s estimate of the loan loss categories in which the probable and inherent loss has occurred as of the date of our assessment. Of the nine factors, we believe the following have the greatest impact on our customers’ ability to repay loans and our ability to recover potential losses through collateral sales: (1) lending policies and procedures; (2) economic and business conditions; and (3) the value of the underlying collateral. As loan balances and estimated losses in a particular loan type decrease or increase and as the factors and resulting allocations are monitored by management, changes in the risk profile of the various parts of the loan portfolio may be reflected in the allocated allowance. The general component covers non-impaired loans and is based on historical loss experience adjusted for these and other qualitative factors. In addition, management continues to refine the ALL estimation process as new information becomes available. These refinements could also cause increases or decreases in the ALL. See Provision for loan losses in the Consolidated Statements of Operations (unaudited) for further details. The unallocated portion of the ALL is intended to account for imprecision in the estimation process or relevant current information that may not have been considered in the process.

62

Nonperforming Loans, Potential Problem Loans and Foreclosed Properties. We practice early identification of nonaccrual and problem loans in order to minimize the Bank’s risk of loss. Nonperforming loans are defined as nonaccrual loans and restructured loans that were 90 days or more past due at the time of their restructure, or when management determines that such classification is warranted. The accrual of interest income is discontinued on our loans according to the following schedule:

•Commercial/agricultural real estate loans, past due 90 days or more;

•C&I/Agricultural operating loans, past due 90 days or more;

•Closed ended consumer installment loans past due 120 days or more; and

•Residential mortgage loans and open-ended consumer installment loans past due 180 days or more.

When interest accruals are discontinued, interest credited to income is reversed. If collection is in doubt, cash receipts on non-accrual loans are used to reduce principal rather than being recorded as interest income. A TDR typically involves the granting of some concession to the borrower involving a loan modification, such as modifying the payment schedule or making interest rate changes. TDR loans may involve loans that have had a charge-off taken against the loan to reduce the carrying amount of the loan to fair market value as determined pursuant to ASC 310-10.

63

The following table identifies the various components of nonperforming assets and other balance sheet information as of the dates indicated below and changes in the ALL for the periods then ended:

	September 30, 2020 and Nine Months Then Ended			December 31, 2019 and Twelve Months Then Ended
Nonperforming assets:
Nonaccrual loans
Commercial real estate	$	2,762		$	5,705
Agricultural real estate	5,252			7,568
Commercial and industrial	853			1,850
Agricultural operating	1,651			1,702
Residential mortgage	2,536			2,063
Consumer installment	100			168
Total nonaccrual loans	$	13,154		$	19,056
Accruing loans past due 90 days or more	950			1,104
Total nonperforming loans (“NPLs”)	14,104			20,160
Other real estate owned	756			1,429
Other collateral owned	56			31
Total nonperforming assets (“NPAs”)	$	14,916		$	21,620
Troubled Debt Restructurings (“TDRs”)	$	19,778		$	12,594
Accruing TDR's	$	12,579		$	5,396
Nonaccrual TDRs	$	7,199		$	7,198
Average outstanding loan balance	$	1,232,678		$	1,074,952
Loans, end of period	$	1,230,139		$	1,177,380
Total assets, end of period	$	1,622,593		$	1,531,249
ALL, at beginning of period	$	10,320		$	7,604
Loans charged off:
Commercial/Agricultural real estate	—			(381)
C&I/Agricultural operating	(791)			—
Residential mortgage	(78)			(239)
Consumer installment	(126)			(291)
Total loans charged off	(995)			(911)
Recoveries of loans previously charged off:
Commercial/Agricultural real estate	149			3
C&I/Agricultural operating	33			1
Residential mortgage	20			5
Consumer installment	59			93
Total recoveries of loans previously charged off:	261			102
Net loans charged off (“NCOs”)	(734)			(809)
Additions to ALL via provision for loan losses charged to operations	5,250			3,525
ALL, at end of period	$	14,836		$	10,320
Ratios:
ALL to NCOs (annualized)	1,515.94		%	1,275.65		%
NCOs (annualized) to average loans	0.08		%	0.08		%
ALL to total loans	1.21		%	0.88		%
NPLs to total loans	1.15		%	1.71		%
NPAs to total assets	0.92		%	1.41		%

64

The following table shows the detail of non-performing assets by originated and acquired portfolios.

Nonperforming Originated / Acquired Assets

(in thousands, except ratios)

	September 30, 2020 and Three Months Ended			December 31, 2019 and Three Months Ended			September 30, 2019 and Three Months Ended
Nonperforming assets:
Originated nonperforming assets:
Nonaccrual loans	$	3,255		$	4,285		$	4,816
Accruing loans past due 90 days or more	698			946			842
Total originated nonperforming loans (“NPL”)	3,953			5,231			5,658
Other real estate owned (“OREO”)	352			441			195
Other collateral owned	56			28			25
Total originated nonperforming assets (“NPAs”)	$	4,361		$	5,700		$	5,878
Acquired nonperforming assets:
Nonaccrual loans	$	9,899		$	14,771		$	14,206
Accruing loans past due 90 days or more	252			158			257
Total acquired nonperforming loans (“NPL”)	10,151			14,929			14,463
Other real estate owned (“OREO”)	404			988			1,153
Other collateral owned	—			3			—
Total acquired nonperforming assets (“NPAs”)	$	10,555		$	15,920		$	15,616
Total nonperforming assets (“NPAs”)	$	14,916		$	21,620		$	21,494
Loans, end of period	$	1,230,139		$	1,177,380		$	1,124,378
Total assets, end of period	$	1,622,593		$	1,531,249		$	1,475,364
Ratios:
Originated NPLs to total loans	0.32		%	0.44		%	0.50		%
Acquired NPLs to total loans	0.83		%	1.27		%	1.29		%
Originated NPAs to total assets	0.27		%	0.37		%	0.40		%
Acquired NPAs to total assets	0.65		%	1.04		%	1.06		%

Nonperforming assets decreased by $6.7 million to $14.9 million at September 30, 2020 from December 31, 2019. This decrease is largely due to reductions in acquired non-performing loans. Part of this reduction, included the return to accrual status of nonaccrual acquired loans totaling $1.7 million in the second quarter of 2020, based on their current payment status and history and in accordance with the Bank’s policy. Refer to the “Allowance for Loan Losses” and “Nonperforming Loans, Potential Problem Loans and Foreclosed Properties” sections below for more information related to nonperforming loans.

65

Nonaccrual Loans Roll forward:

	Quarter Ended
	September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019		September 30, 2019
Balance, beginning of period	$	14,787	$	16,090	$	19,056	$	19,022	$	13,612
Additions	716		1,907		1,811		2,641		1,493
Acquired nonaccrual loans	—		—		—		—		5,898
Charge offs	(141)		(175)		(452)		(198)		(134)
Transfers to OREO	(172)		—		(1,100)		(425)		(209)
Return to accrual status	(165)		(1,702)		(120)		(14)		(53)
Payments received	(1,744)		(1,292)		(2,887)		(1,957)		(1,539)
Other, net	(127)		(41)		(218)		(13)		(46)
Balance, end of period	$	13,154	$	14,787	$	16,090	$	19,056	$	19,022

Nonaccrual TDR loans remained at $7.2 million at both September 30, 2020 and December 31, 2019.

	September 30, 2020			December 31, 2019			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings: Accrual Status
Commercial/Agricultural real estate	19	$	5,480	14	$	1,730	14	$	2,202
C&I/Agricultural operating	5	3,868		2	366		4	478
Residential mortgage	42	3,178		40	3,233		39	3,137
Consumer installment	7	53		7	67		11	82
Total loans	73	$	12,579	63	$	5,396	68	$	5,899

Classified assets decreased to $32.9 million at September 30, 2020, from $39.9 million at December 31, 2019 largely due to the reduction in nonperforming assets discussed above, with a modest increase in newly classified assets. Nonperforming assets decreased to $14.9 million or 0.92% of total assets at September 30, 2020 compared to $21.6 million or 1.41% of total assets at December 31, 2019. Included in nonperforming assets at September 30, 2020 are $10.6 million of nonperforming assets acquired during recent whole-bank acquisitions.

The table below shows a summary of the decrease in substandard loans by quarter since the first impact of the F&M acquisition on September 30, 2019 levels. While special mention loans increased in the first quarter of 2020 and more modestly in the second quarter of 2020, the balances decreased in the third quarter of 2020 due to resolution. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for additional information.

	(in thousands)
	September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019		September 30, 2019
Special mention loan balances	$	7,777	$	19,958	$	19,387	$	10,856	$	12,959
Substandard loan balances	32,922		35,911		38,393		39,892		38,527
Criticized loans, end of period	$	40,699	$	55,869	$	57,780	$	50,748	$	51,486

Hotels and restaurants represent our portfolio’s two industry sectors most directly and adversely affected by the recent pandemic and related government actions. These sector loans totaled approximately $102 million and $39 million, respectively at September 30, 2020. The weighted-average loan-to-value percentage and debt service coverage ratio on these hotel industry sector loans was 58% and 2.2 times. Approximately $18 million of restaurant sector loans are to franchise quick-service restaurants.

66

As of September 30, 2020, the Bank had $126.7 million of loan modifications remaining due to pandemic-related borrower requests. Approximately $50 million of modifications are scheduled to resume their regular principal and interest payments in the fourth quarter. Hotel industry sector loans represent approximately $70 million of the approved deferrals projected at December 31, 2020. Of these, $48 million represent a second deferral under the CARES ACT, with the customer making an interest only payment and the Bank generally receives the reserve accounts pledge. While the Company has no indication that any of the modified credits are specifically impaired, additional risk and uncertainty inherent in the current pandemic-affected environment has been considered. See “Allowance for Loan Losses” section above for discussion of pandemic-related qualitative factor, and related provision for loan losses.

The table below shows the changes in the Bank’s non-accretable difference on purchased credit impaired loans. Payoffs of purchased credit impaired loans, including selected nonaccrual loans discussed above resulted in associated non-accretable differences being realized as interest income as shown below. The Bank has transferred non-accretable difference on purchased credit impaired loans to accretable loan discount as collateral coverage improved sufficiently, due to a combination of principal paydowns and/or improving collateral positions. This transferred accretion is accreted over the remaining contractual term of the loan or until payoff, whichever is shorter.

Non-accretable Difference:

	(in thousands)
	September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019		September 30, 2019
Non-accretable difference, beginning of period	$	3,355	$	4,327	$	6,290	$	6,737	$	3,889
Additions to non-accretable difference for acquired purchased credit impaired loans	—		—		—		(170)		2,898
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(130)		(196)		(1,043)		(271)		(50)
Transfers from non-accretable difference to accretable discount.	(1,294)		(741)		(669)		—		—
Non-accretable difference used to reduce loan principal balance	(270)		(35)		—		—		—
Non-accretable difference transferred to OREO due to loan foreclosure	—		—		(251)		(6)		—
Non-accretable difference, end of period	$	1,661	$	3,355	$	4,327	$	6,290	$	6,737

Mortgage Servicing Rights. Mortgage servicing rights (“MSR”) assets are initially measured at fair value; assessed at least quarterly for impairment; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations. The valuation of MSRs and related amortization thereon are based on numerous factors, assumptions and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs. Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

The fair market value of the Company’s MSR asset decreased from $4.3 million at December 31, 2019 to $3.5 million at September 30, 2020, primarily due to $1.4 million of impairment recorded on the MSR asset due to the impact of higher prepayment activity and partially offset by increased capitalized servicing on newly sold mortgage originations. The unpaid balances of one- to four-family residential real estate loans serviced for others as of September 30, 2020 and December 31, 2019 were $555.7 million and $524.7 million, respectively. The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at September 30, 2020 and December 31, 2019 was 0.63% and 0.82%, respectively.

Deposits. Deposits increased $75.0 million to $1.271 billion at September 30, 2020, from $1.196 billion at December 31, 2019. The strong non-maturity deposit growth allowed the Company to reduce reliance on higher cost brokered and institutional deposits. This planned reduction in brokered and institutional deposits resulted in a reduction to $3.3 million at September 30, 2020 from $50.4 million at December 31, 2019. Additionally, retail certificates of deposit decreased by $28 million as the Company chose not to match higher rate local retail certificate competition.

67

The following is a summary of deposits by type at September 30, 2020 and December 31, 2019, respectively:

	September 30, 2020		December 31, 2019
Non-interest bearing demand deposits	$	229,217	$	168,157
Interest bearing demand deposits	279,648		223,102
Savings accounts	191,511		156,599
Money market accounts	246,651		246,430
Certificate accounts	323,751		401,414
Total deposits	$	1,270,778	$	1,195,702

Federal Home Loan Bank (FHLB) advances (borrowings) and Other Borrowings. FHLB advances were $124.5 million as of September 30, 2020 and $131.0 million as of December 31, 2019, as we continue to utilize these advances, as necessary, to supplement core deposits to meet our funding and liquidity needs, and as we evaluate all options to manage the Bank’s cost of funds. The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank. This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest-bearing deposit balances. The Bank’s current unused borrowing capacity, supported by loan collateral as of September 30, 2020 is approximately $105.9 million.

In the quarter ended June 30, the Bank’s origination of SBA PPP loans allowed the Bank to gain access to the Federal Reserve Bank Paycheck Protection Program Liquidity Facility (“PPPLF”), whereby the Bank can pledged SBA PPP loans, by day of origination, up to the contractual maturity of the Bank’s SBA PPP loans with no collateral haircut. The Bank borrowed twice under this facility in the second quarter of 2020. Due to the strong growth in non-maturity deposits discussed above, the Bank had no outstanding borrowings under this facility at June 30, 2020 or at any time during the quarter ending September 30, 2020. The Bank could borrow $139.2 million under this facility in 2020.

During the first quarter of 2020, the Bank added $12.5 million of 10-year maturity advances that can be called or replaced by the FHLB on a quarterly basis, beginning approximately three months from the initial advance. At September 30, 2020 and December 31, 2019, the Bank had $55 million and $42.5 million, respectively, of these 10-year, three-month callable advances.

In the first quarter of 2020, the Bank extended overnight advances with $5 million maturing in each quarter of 2023 and 2024, and $5 million maturing in the first quarter of 2025. See Note 7, “Federal Home Loan Bank and Federal Reserve Bank Advances and Other Borrowings” for more information.

At September 30, 2020, the Bank has pledged $682.0 million of loans to secure the current FHLB outstanding advances, letters of credit and to provide the unused borrowing capacity compared to $792.9 million of loans pledged at December 31, 2019.

In August 2020, the Company issued ten-year, 6% fixed to floating subordinated notes totaling $15 million. The notes have a five-year non-call feature.

Stockholders’ Equity. Total stockholders’ equity increased to $157.3 million at September 30, 2020 from $150.6 million at December 31, 2019, largely due to net income of $9.2 million. This increase was offset by the annual cash dividend paid to common stockholders of $2.4 million during the first quarter of 2020. Additionally, during the first quarter, the Company repurchased 156,000 shares of its common stock at a cost of $1.8 million under the Company’s stock buyback authorization. On March 20, 2020, the Company announced the Board of Directors had suspended this stock buyback authorization and on July 27, 2020, the Board of Directors terminated the stock buyback authorization, which was previously scheduled to expire on September 30, 2020.

Liquidity and Asset / Liability Management. Our primary sources of funds are deposits; amortization, prepayments and maturities of outstanding loans; short-term investments; and borrowings. We use our sources of funds primarily to meet ongoing commitments, to pay non-renewing, maturing certificates of deposit and savings withdrawals, and to fund loan commitments. We have enhanced our liquidity monitoring and updated what we consider to be sources of on-balance sheet cash. We consider our interest-bearing cash and unpledged investment securities to be our sources of on-balance sheet liquidity. At September 30, 2020, our on-balance sheet liquidity ratio was 16.2%. While scheduled payments from the amortization of loans and maturing short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are influenced by factors partially outside of the Bank’s control, including general interest rates, economic conditions and competition. Although $216.9 million of our $323.8 million (67%) CD portfolio as of September 30, 2020 will mature within the next 12 months, we have historically retained a majority of our maturing CD’s. However, due to strategic pricing decisions

68

regarding rate matching and branch closures, our retention rate may decrease in the future. Through new deposit product offerings to our branch and commercial customers, we are currently attempting to strengthen customer relationships to attract additional non-rate sensitive deposits. In our present interest rate environment, and based on maturing yields, this is intended to also reduce our cost of funds.

We maintain access to additional sources of funds including FHLB borrowings and lines of credit with the Federal Reserve Bank and correspondent banks We utilize FHLB borrowings to leverage our capital base, to provide funds for our lending and investment activities, and to manage our interest rate risk. Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate loans and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. As of September 30, 2020, we had approximately $105.9 million available under this arrangement, supported by loan collateral, as compared to $203.9 million at December 31, 2019. In the quarter ended June 30, 2020, the Bank’s origination of SBA PPP loans allowed the Bank to gain access to the Federal Reserve’s PPPLF facility, whereby the Bank can pledge SBA PPP loans, by day of origination, up to the contractual maturity of the Bank’s SBA PPP loans with no collateral haircut. Due to the strong growth in non-maturity deposits discussed above, the Bank had no outstanding borrowing under this facility at June 30, 2020 or at any time during the quarter ended September 30, 2020. The Bank could borrow $139.2 million under this facility at September 30, 2020. As the SBA PPP loans are forgiven, the collateral will reduce and our borrowing capacity under this facility will be reduced.

We maintain a line of credit with the Federal Reserve Bank which has a $1.0 million capacity, based on our current pledged collateral position. Additionally, we have $25.0 million of uncommitted federal funds purchased lines of credit, as well as a $5.0 million revolving line of credit which is available as needed for general liquidity purposes.

In reviewing our adequacy of liquidity, we review and evaluate historical financial information, including information regarding general economic conditions, current ratios, management goals and the resources available to meet our anticipated liquidity needs. Management believes that our liquidity is adequate, and, to management’s knowledge, there are no known events or uncertainties that will result or are likely to reasonably result in a material increase or decrease in our liquidity.

Off-Balance Sheet Liabilities. Some of our financial instruments have off-balance sheet risk. These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit. As of September 30, 2020, the Company had $260.8 million in unused commitments, compared to $246.7 million in unused commitments as of December 31, 2019.

Capital Resources. As of September 30, 2020, as shown in the table below, the Bank’s Tier 1 and Risk-based capital levels exceeded levels necessary to be considered “Well Capitalized” under Prompt Corrective Action provisions.

69

Below are the amounts and ratios for our capital levels as of the dates noted below for the Bank.

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2020 (Unaudited)
Total capital (to risk weighted assets)	$	170,610	15.0	%	$	91,021	> =	8.0	%	$	113,776	> =	10.0	%
Tier 1 capital (to risk weighted assets)	156,388		13.7	%	68,266		> =	6.0	%	91,021		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	156,388		13.7	%	51,199		> =	4.5	%	73,955		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	156,388		9.9	%	63,465		> =	4.0	%	79,331		> =	5.0	%
As of December 31, 2019 (Audited)
Total capital (to risk weighted assets)	$	160,302	13.1	%	$	98,174	> =	8.0	%	$	122,718	> =	10.0	%
Tier 1 capital (to risk weighted assets)	149,982		12.2	%	73,631		> =	6.0	%	98,174		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	149,982		12.2	%	55,223		> =	4.5	%	79,767		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	149,982		10.4	%	57,834		> =	4.0	%	72,293		> =	5.0	%

At September 30, 2020, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.

70

Below are the amounts and ratios for our capital levels as of the dates noted below for the Company.

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount	Ratio
As of September 30, 2020 (Unaudited)
Total capital (to risk weighted assets)	$	163,250	14.3	%	$	91,021	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	119,028		10.5	%	68,266		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	119,028		10.5	%	51,199		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	119,028		7.5	%	63,465		> =	4.0	%	N/A	N/A
As of December 31, 2019 (Audited)
Total capital (to risk weighted assets)	$	137,259	11.2	%	$	98,174	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	111,939		9.1	%	73,631		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	111,939		9.1	%	55,223		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	111,939		7.7	%	57,834		> =	4.0	%	N/A	N/A

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market interest rates change over time and are not predictable or controllable. Accordingly, our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our assets and liabilities. Like other financial institutions, our interest income and interest expense are affected by general economic conditions and policies of regulatory authorities, including the monetary policies of the Federal Reserve. The risk associated with changes in interest rates and our ability to adapt to these changes is known as interest rate risk and is our most significant market risk.

How We Measure Our Risk of Interest Rate Changes. As part of our attempt to manage our exposure to changes in interest rates and comply with applicable regulations, we monitor our interest rate risk through several means including through the use of third party reporting software. In monitoring interest rate risk we continually analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities, and their sensitivity to actual or potential changes in market interest rates.

In order to manage the potential for adverse effects of material and prolonged increases in interest rates on our results of operations, we adopted asset and liability management policies to better align the maturities and re-pricing terms of our interest earning assets and interest bearing liabilities. These policies are implemented by our Asset and Liability Management Committee (ALCO). The ALCO is comprised of members of the Bank’s senior management and Board of Directors. The ALCO establishes guidelines for and monitors the volume and mix of our assets and funding sources, taking into account relative costs and spreads, interest rate sensitivity and liquidity needs. The Committee’s objectives are to manage assets and funding sources to produce results that are consistent with liquidity, cash flow, capital adequacy, growth, risk and profitability goals for the Bank. The ALCO meets on a regularly scheduled basis to review, among other things, economic conditions and interest rate outlook, current and projected liquidity needs and capital position, anticipated changes in the volume and mix of assets and liabilities and interest rate risk exposure limits versus current projections pursuant to net present value of portfolio equity analysis. At each meeting, the Committee recommends strategy changes, as appropriate, based on this review. The Committee is responsible for reviewing and reporting on the effects of the policy implementations and strategies to the Bank’s Board of Directors on a regularly scheduled basis.

71

In order to manage our assets and liabilities and achieve desired levels of liquidity, credit quality, cash flow, interest rate risk, profitability and capital targets, we have focused our strategies on:

•originating shorter-term secured commercial, agricultural and consumer loan maturities;

•originating variable rate commercial and agricultural loans;

•managing our exposure to changes in interest rates, including, but not limited to the sale of longer-term fixed-rate residential loans in the secondary market with retained servicing;

•originating balloon mortgage loans with a term of five years or less to minimize the impact of sudden rate changes;

•managing our funding needs by utilizing core deposits, brokered certificates of deposits and borrowings as appropriate to extend terms and lock in fixed interest rates;

•reducing non-interest expense and managing our efficiency ratio by implementing technologies to enhance customer service and increase employee productivity; and

•realigning supervision and control of our branch network by modifying their configuration, staffing, locations and reporting structure to focus resources on our most productive markets.

At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the ALCO may determine to increase the Bank’s interest rate risk position somewhat in order to maintain or improve its net interest margin.

The following table sets forth, at September 30, 2020 and December 31, 2019 an analysis of our interest rate risk as measured by the estimated changes in Economic Value of Equity (“EVE”) resulting from an immediate and permanent shift in the yield curve (up 300 basis points and down 100 basis points). As of September 30, 2020 and December 31, 2019, due to the current level of interest rates, EVE estimates for decreases in interest rates greater than 100 basis points are not meaningful.

	Percent Change in Economic Value of Equity (EVE)
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	At September 30, 2020		At December 31, 2019
+300 bp	7	%	1	%
+200 bp	4	%	2	%
+100 bp	1	%	1	%
-100 bp	11	%	(2)	%

(1)Assumes an immediate and parallel shift in the yield curve at all maturities.

Our overall interest rate sensitivity is demonstrated by net interest income shock analysis which measures the change in net interest income in the event of hypothetical changes in interest rates. This analysis assesses the risk of change in our net interest income over the next 12 months in the event of an immediate and parallel shift in the yield curve (up 300 basis points and down 100 basis points). The table below presents our projected change in net interest income for the various rate shock levels at September 30, 2020 and December 31, 2019.

	Percent Change in Net Interest Income Over One Year Horizon
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	At September 30, 2020		At December 31, 2019
+300 bp	4	%	(5)	%
+200 bp	3	%	(4)	%
+100 bp	1	%	(2)	%
-100 bp	—	%	1	%

(1)Assumes an immediate and parallel shift in the yield curve at all maturities.

Note: The table above may not be indicative of future results.

The assumptions used to measure and assess interest rate risk include interest rates, loan prepayment rates, deposit decay (runoff) rates, and the market values of certain assets under differing interest rate scenarios. Actual values may differ from those projections set forth above should market conditions vary from the assumptions used in preparing the analysis. Further, the computations do not contemplate any actions we may undertake in response to changes in interest rates.

72

ITEM 4.CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives. We carried out an evaluation as of September 30, 2020, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2020 at reaching a level of reasonable assurance.

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. On July 1, 2019, we completed our acquisition of F&M. In accordance with our integration efforts, we plan to incorporate F&M’s operations into our internal control over financial reporting structure within the time frame provided by applicable SEC rules and regulations.

PART II – OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

In the normal course of business, the Company and/or the Bank occasionally become involved in other various legal proceedings. In our opinion, any liability from such proceedings would not have a material adverse effect on the business or financial condition of the Company.

73

Item 1A.RISK FACTORS

The Company is providing the disclosure below and supplementing the risk factors described in “Risk Factors” in Item 1A of our 2019 10-K and Item 1A of our Forms 10-Q for the quarters ended March 31, 2020 and June 30, 2020 with the risk factors set forth below. The information in this Form 10-Q should be read in conjunction with the risk factors described on our 2019 10-K and the information under “Forward-Looking Statements” in this Form 10-Q and in our 2019 10-K.

Our business may be adversely affected by conditions in the financial markets and economic conditions generally. We operate primarily in the Wisconsin and Minnesota markets. As a result, our financial condition, results of operations and cash flows are significantly impacted by changes in the economic conditions in those areas. In addition, our business is susceptible to broader economic trends within the United States economy. Economic conditions have a significant impact on the demand for our products and services, as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources. A significant decline in general economic conditions caused by inflation, recession, tariffs, unemployment, changes in securities markets, changes in housing market prices, geopolitical uncertainties, natural disasters, pandemics and election outcomes or other factors could impact economic conditions and, in turn, could have a material adverse effect on our financial condition and results of operations.

In particular, the COVID-19 (also referred to as novel coronavirus) outbreak, which has been declared a global pandemic by the World Health Organization, has significantly and negatively impacted financial markets and economic conditions in our markets, the United States and globally. Recently, Minnesota and Wisconsin have been experiencing an increase in COVID-19 cases, which could further impact conditions in our markets. As a result, consumer confidence and consumer credit factors have been, and may be further, negatively impacted. Consequently, our business, financial condition and results of operations has been and could be further significantly and adversely affected. See also “The COVID-19 pandemic could have an adverse impact on our financial condition and our results of operations and other aspects of our business.”

We are subject to interest rate risk. Through our banking subsidiary, the Bank, our profitability depends in large part on our net interest income, which is the difference between interest earned from interest-earning assets, such as loans and mortgage-backed securities, and interest paid on interest-bearing liabilities, such as deposits and borrowings. Our net interest income will be adversely affected if market interest rates change such that the interest we pay on deposits and borrowings increase faster than the interest earned on loans and investments. As a result of the economic impacts of the COVID-19 pandemic, interest rates in the United States have been reduced, and may be even further reduced. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market interest rates change over time due to many factors that are beyond our control, including but not limited to: general economic conditions and government policy decisions, especially policies of the Federal Reserve Bank. Accordingly, our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our assets and liabilities. The risk associated with changes in interest rates and our ability to adapt to these changes is known as interest rate risk. In particular, reduced interest rates negatively impact our results of operations. See also “The COVID-19 pandemic could have an adverse impact on our financial condition and our results of operations and other aspects of our business.”

We are subject to lending risk. There are inherent risks associated with our lending activities. These risks include the impact of changes in interest rates and changes in the economic conditions in the markets we serve, as well as those across the United States. An increase in interest rates or weakening economic conditions (such as high levels of unemployment), including weakening economic conditions as a result of the COVID-19 pandemic, has and could further adversely impact the ability of borrowers to repay outstanding loans, or could substantially weaken the value of collateral securing those loans. As of September 30, 2020, the Bank had $126.7 million of loan modifications remaining due to pandemic-related borrower requests. See “Allowance for Loan Losses” for discussion of COVID-19 qualitative factors, and related provision for loan losses. Downward pressure on real estate values could increase the potential for problem loans and thus have a direct impact on our consolidated results of operations. See also “The COVID-19 pandemic could have an adverse impact on our financial condition and our results of operations and other aspects of our business.”

The COVID-19 pandemic could have an adverse impact on our financial condition and our results of operations and other aspects of our business.

We are closely monitoring developments related to the COVID-19 pandemic to assess its impact on our business. While still evolving, the COVID-19 pandemic has caused significant economic and financial turmoil both in the U.S. and around the world, and has fueled concerns that it will lead to a global recession. These conditions are expected to continue and worsen in the near term. At this time, it is not possible to estimate how long it will take to halt the spread of the virus or the long term effects that the COVID-19 pandemic could have on our business. The extent to which the COVID-19 pandemic impacts our business, results of operations, financial condition, liquidity or prospects will depend on future developments which are highly

74

uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and the actions taken to contain or address its impact.

While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with respect to the COVID-19 pandemic and such measures may not adequately predict the impact on our business from such events. Currently, many of our employees are working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

Increased economic uncertainty and increased unemployment resulting from the economic impacts of the spread of COVID-19 may also adversely impact the ability of borrowers to repay outstanding loans, or could substantially weaken the value of collateral securing those loans. In addition, any resulting downward pressure on real estate values could increase the potential for problem loans and thus have a direct impact on our consolidated results of operations.

We participate as an approved lender pursuant to the Paycheck Protection Program, which was established under the congressionally-approved Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”). The Paycheck Protection Program gives small businesses and self-employed individuals guaranteed loans and loan forgiveness to stay in business during the COVID-19 pandemic, subject to certain requirements. As an SBA-approved lender, we secured more than $139 million in authorized funding for our customers under the Paycheck Protection Program. As a result of factors including the fact that the Paycheck Protection Program is a new program that was created urgently in response to the COVID-19 outbreak, lenders and customers have experienced, and may experience further, challenges in the administration and debt forgiveness process.

While governmental and non-governmental organizations are engaging in efforts to combat the spread and severity of the COVID-19 pandemic and related public health issues, these measures may not be effective. We also cannot predict how legal and regulatory responses to concerns about the COVID-19 pandemic and related public health issues will impact our business. Such events or conditions could result in regulation or restrictions affecting the conduct of our business in the future.

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

(a)Not applicable.

(b)Not applicable.

(c)Not applicable.

Item 3.DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4.MINE SAFETY DISCLOSURES

Not applicable.

Item 5.OTHER INFORMATION

Not applicable.

75

Item 6.EXHIBITS

(a) Exhibits

4.1	Form of Subordinated Note Purchase Agreement (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed on August 27, 2020 (File No. 001-33003)).
4.2	Form of Subordinated Note (incorporated by reference to Exhibit 4.2 to the Company’s current report on Form 8-K filed on August 27, 2020 (File No. 001-33003)).
10.1	Business Note, dated October 22, 2020, issued by Citizens Community Bancorp, Inc. to Chippewa Valley Bank (filed herewith).
31.1	Rule 13a-14(a) Certification of the Company’s Chief Executive Officer
31.2	Rule 13a-14(a) Certification of the Company’s Chief Financial Officer
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

76

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.

	CITIZENS COMMUNITY BANCORP, INC.
Date: November 6, 2020	By:	/s/ Stephen M. Bianchi
		Stephen M. Bianchi
		Chief Executive Officer
Date: November 6, 2020	By:	/s/ James S. Broucek
		James S. Broucek
		Chief Financial Officer

77

EX-10.1

Loan Number: 52496 Exhibit 10.1 BUSINESS eFIPCO W. B. A. 451 (4/20/20) 11221 BUSINESS NOTE Boxes checked are applicable. © 2020 Wisconsin Bankers Association/Distributed by FIPCO® (Use only for business purpose loans) Boxes not checked are inapplicable. Citizens Community Bancorp, Inc. October 22, 2020 $ 28,856,388.88 (MAKER) (DATE) 1. Promise to Pay and Payment Schedule. The undersigned ("Maker," whether one or more) promises to pay to the order of Chippewa Valley Bank ("Lender") at 607 Main Street Bruce , Wisconsin, the sum of $ 28,856,388.88 , plus interest as set forth below, according to the following schedule: 35 equal payments of principal of $801,566.36 are due on September 26, 2022 and on the same day(s) of each third month thereafter. Interest payments are due on December 26, 2020 and on the same day(s) of each third month thereafter. A final payment of the unpaid principal and interest is due on June 26, 2031. 2. Interest. Interest shall accrue before maturity (whether by acceleration or lapse of time) at the stated interest rate(s) identified in section 2(a), (b) or (c) below (each a "stated interest rate"), as applicable, on the unpaid principal balance, calculated as provided in section 2(g) or (h), as applicable, below: [Check (a), (b) or (c); only one shall apply.] (a) Fixed Interest Rate. n/a % (b) Stepped Fixed Interest Rate. n a/ % until a/n and a/n % thereafter. (c) X Variable Interest Rate. The stated interest rate is variable and will adjust to equal the Index Rate (as defined below), plus X minus 0.750 percentage points. However, the stated interest rate shall not exceed n/a % and shall not be less than 3.250 %. The minimum stated interest rate shall not be applicable until the first rate change date. Until the first change date described below, the stated interest rate shall be 3.250 %. The stated interest rate shall be adjusted on the change dates provided below. The "Index Rate" is: The highest U.S. Prime Rate as published in the Wall Street Journal "Money Table" as and when the index rate changes and becomes effective. . The Index Rate may or may not be the lowest rate charged by Lender. The stated interest rate shall be adjusted on the following change dates: as and when the index rate changes and becomes effective . If the Index Rate ceases to be made available to Lender during the term of this Note, Lender may substitute a comparable Index. (d) Payment Modification. If section 2(b) or (c) above is checked, an adjustment in the stated interest rate will result in an increase or decrease in (1) X the amount of each payment of interest, (2) the amount of the final payment, (3) the number of scheduled periodic payments sufficient to repay this Note in substantially equal payments, (4) the amount of each remaining payment of principal and interest so that those remaining payments will be substantially equal and sufficient to repay this Note by its scheduled maturity date, (5) the amount of each remaining payment of principal and interest (other than the final payment) so that those remaining payments will be substantially equal and sufficient to repay this Note by its scheduled maturity date based on the original amortization schedule used by Lender, plus the final payment of principal and interest, or (6 ) n/a . . In addition, Lender is authorized to change the amount of periodic payments if and to the extent necessary to pay in full all accrued interest owing on this Note. Maker agrees to pay any resulting payments or amounts. (e) Interest After Maturity and Application of All Payments. Interest shall accrue on unpaid principal and interest after maturity (whether by acceleration or lapse of time) until paid X at the stated interest rate(s) under section 2(a), (b) or (c) above, as applicable, plus 5.000 percentage points at the stated interest rate of n/a %, calculated as provided in section 2(g) or (h), as applicable, below. All payments applied to this Note shall be applied in such order as Lender determines to interest, principal and payments due under this Note or any agreement securing this Note. (f) Compounding. Prior to maturity (whether by acceleration or lapse of time), unpaid and past due interest shall bear interest from its due date at the stated interest rate then in effect for this Note under Section 2(a), (b) or (c) above, as applicable, calculated as provided in section 2(g) or (h), as applicable, below. (g) X Interest Calculation (Actual Days). Interest will be calculated by applying a daily interest rate for the actual number of days interest is owing, up to 365 days in a full year or 366 days in a full leap year. The daily interest rate will be calculated as follows: [Check (1) or (2); only one shall apply.] (1) X 360 Day Rate Calculation. The daily interest rate will be calculated on the basis of a 360 day year, which means that it is calculated by dividing the applicable stated interest rate in section 2(a), (b) or (c), above, as applicable, and in section 2(e), above, by 360. Maker understands and agrees that calculating the daily interest rate using a 360 day year means the actual annual interest rate in a 365 day year and in a 366 day leap year is higher than the stated interest rate in section 2(a), (b) or (c), above, as applicable, and in section 2(e), above. (2) 365 Day Rate Calculation. The daily interest rate will be calculated on the basis of a 365 day year, which means that it is calculated by dividing the applicable stated interest rate in section 2(a), (b) or (c), above, as applicable, and in section 2(e), above, by 365. Maker understands and agrees that calculating the daily interest rate using a 365 day year means the actual annual interest rate in a 366 day leap year is higher than the stated interest rate in section 2(a), (b) or (c), above, as applicable, and in section 2(e), above. (h) Interest Calculation (30/360). Interest will be calculated by applying the applicable stated interest rate based on a 360 day year, counting each day as one thirtieth of a month and disregarding differences in lengths of months and years. 3. Other Charges. If any payment (other than the final payment) is not made on or before the 10th day after its due date, Lender may collect a delinquency charge of X 5.000 % of the unpaid amount n/a . Maker agrees to pay a charge of $ 15.00 for each check or electronic debit presented for payment under this Note which is returned unsatisfied. 4. Collateral Disclaimer. Lender disclaims as collateral security for this Note (i) any real estate mortgage or security agreement covering real property on which any building is located in a special flood hazard area, and (ii) any mobile home located in a special flood hazard area, when such collateral security arises under a mortgage or agreement between Lender and Maker and any indorser or guarantor of this Note or any other person providing collateral security for Maker’s obligations; provided, however, Lender does not disclaim any such collateral security arising under a real estate mortgage or security agreement taken contemporaneously with this Note or real estate mortgage(s) or security agreement(s) in favor of Lender, whenever taken, from ________________________________________________________________________________________________________________,n/a dated ____________________________________.n/a A special flood hazard area is an area designated as such under the National Flood Insurance Program. 5. Renewal. X This Note renews and does not satisfy or discharge a note Maker executed to Lender dated June 26, 2019 . 6. Prepayment. Full or partial prepayment of this Note X is permitted at any time without penalty n/a . THIS NOTE INCLUDES ADDITIONAL PROVISIONS ON PAGE 2. Citizens Community Bancorp, Inc. (SEAL) A Maryland Corporation (Type of Organization) By (SEAL) Stephen Bianchi, President & CEO By (SEAL) James S Broucek, EVP, CFO, Treasurer & Secretary (SEAL) (SEAL) 2174 Eastridge Center Eau Claire, WI 54701 (ADDRESS) (PHONE) FOR LENDER CLERICAL USE ONLY Rick Gerber, Chief Executive Officer Note #52496 Port #422260 LOAN OFFICER Product #10406 (refinance to lower floor rate) Page 1 of 2

ADDITIONAL PROVISIONS 7. Default and Enforcement. Upon the occurrence of any one or more of the following events of default: (a) Maker fails to pay any amount when due under this Note or under any other instrument evidencing any indebtedness of Maker to Lender, (b) any representation or warranty made under this Note or information provided by Maker or any guarantor of this Note to Lender in connection with this Note is or was false or fraudulent in any material respect, (c) a material adverse change occurs in Maker's financial condition, (d) Maker fails to timely observe or perform any of the covenants or duties contained in this Note, (e) any guarantee of Maker's obligations under this Note is revoked or becomes unenforceable for any reason, (f) Maker, Maker's spouse or a surety or guarantor of this Note dies or ceases to exist, (g) an event of default occurs under any agreement securing this Note, or (h) Lender at any time believes in good faith that the prospect of payment or performance under this Note, under any other instrument evidencing any indebtedness of Maker to Lender or under any agreement securing this Note is impaired, then the unpaid balance shall, at the option of Lender, without notice, mature and become immediately payable. The unpaid balance shall automatically mature and become immediately payable in the event any Maker or any surety, indorser or guarantor for any of Maker's obligations under this Note becomes the subject of bankruptcy or other insolvency proceedings. Lender's receipt of any payment on this Note after the occurrence of an event of default shall not constitute a waiver of the default or the Lender's rights and remedies upon such default. Lender may waive any default without waiving any other subsequent or prior default by Maker. Lender may also fail or delay in exercising any right, power or remedy under this Note without waiving any such right, power or remedy. Lender's single or partial exercise of any right, power or remedy under this Note shall not preclude any other or further exercise of any right, power or remedy. To the extent not prohibited by law, Maker consents that venue for any legal proceeding relating to collection of this Note shall be, at Lender's option, the county in which Lender has its principal office in Wisconsin, the county and state in which any Maker resides or the county and state in which this Note was executed and Maker submits to the jurisdiction of any such court. 8. Security. Except for collateral disclaimed as security for this Note under section 4 on page 1 of this Note, this Note is secured by all existing and future security agreements and mortgages between Lender and Maker, between Lender and any indorser or guarantor of this Note, and between Lender and any other person providing collateral security for Maker's obligations, and payment may be accelerated according to any of them. Unless a lien would be prohibited by law or would render a nontaxable account taxable, Maker grants to Lender a security interest and lien in any deposit account Maker may at any time have with Lender. Lender may, at any time after an occurrence of an event of default, without notice or demand, set-off against any deposit balance or other money now or hereafter owed any Maker by Lender any amount unpaid under this Note. 9. Rights of Lender. All rights and remedies of Lender are cumulative and may be exercised from time to time together, separately, and in any order. Without affecting the liability of any Maker, indorser, surety, or guarantor, Lender may, without notice, accept partial payments, release or impair any collateral security for the payment of this Note or agree not to sue any party liable on it. Lender may apply prepayments, if permitted, to such future installments as it elects. Lender may without notice to Maker apply payments made by or for Maker to any obligations of Maker to Lender. Without affecting the liability of any indorser, surety or guarantor, Lender may from time to time, without notice, renew or extend the time for payment. 10. Obligations and Agreements of Maker. The obligations under this Note of all Makers are joint and several. All Makers, indorsers, sureties, and guarantors agree to pay all costs of collection before and after judgment, including reasonable attorneys' fees (including those incurred in successful defense or settlement of any counterclaim brought by Maker or incident to any action or proceeding involving Maker brought pursuant to the United States Bankruptcy Code) and waive presentment, protest, demand and notice of dishonor. Maker agrees to indemnify and hold harmless Lender, its directors, officers, employees and agents, for, from and against any and all claims, damages, judgments, penalties, and expenses, including reasonable attorneys' fees, arising directly or indirectly from credit extended under this Note or the activities of Maker. This indemnity shall survive payment of this Note. Each Maker acknowledges that Lender has not made any representations or warranties with respect to, and that Lender does not assume any responsibility to Maker for, the collectability or enforceability of this Note or the financial condition of any Maker. Each Maker has independently determined the collectability and enforceability of this Note. Maker represents that the legal name of Maker and the address of Maker's principal residence are as set forth on page 1. Maker shall not change its legal name or address without providing at least 30 days’ prior written notice of the change to Lender. 11. Entire Agreement. THIS NOTE IS INTENDED BY LENDER AND MAKER AS A FINAL EXPRESSION OF THIS NOTE AND AS A COMPLETE AND EXCLUSIVE STATEMENT OF ITS TERMS, THERE BEING NO CONDITIONS TO THE ENFORCEABILITY OF THIS NOTE, AND THIS NOTE MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES TO THIS NOTE. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES TO THIS NOTE. THIS NOTE MAY NOT BE SUPPLEMENTED OR MODIFIED EXCEPT IN WRITING SIGNED BY LENDER AND MAKER. 12. Interpretation. This Note benefits Lender, its successors and assigns, and binds Maker and Maker's heirs, personal representatives, successors and assigns. The validity, construction and enforcement of this Note are governed by the internal laws of Wisconsin except to the extent such laws are preempted by federal law. Invalidity or unenforceability of any provision of this Note shall not affect the validity or enforceability of any other provisions of this Note. 13. Other Provisions. If none stated there are no other provisions. Secured by but not limited to the following collateral: All shares of stock issued by Citizens Community Federal National Association ("CCFNA") and held by Debtor, including without limitation 1,000,000 shares represented by stock Certificate #1 issued by CCFNA which, as of the date hereof, represents 100% of all outstanding stock of CCFNA and any re-issuance or replacement thereof as previously granted under Collateral Pledge Agreement dated August 1, 2018. This Business Note is amended by the General Rider to Business Note, dated as of the date hereof, executed by Maker and Lender. Business Note EWI451 Rev. 4/21/2020 Page 2 of 2

GENERAL RIDER TO BUSINESS NOTE This General Rider to Loan Documents ("Rider") is made and entered into as of October 22, 2020 (the "Effective Date") by and between Citizens Community Bancorp, Inc., a Maryland corporation ("Maker"), and Chippewa Valley Bank ("Lender"). WHEREAS, on the Effective Date, Maker is executing in favor of Lender a Business Note (the "Note") evidencing a loan in the original principal amount of $28,856,388.88 (the "Loan"); WHEREAS, the obligations, liabilities and indebtedness of Maker with respect to the Loan will be secured by a security interest in certain investment property of Maker pursuant to the terms of a Collateral Pledge Agreement; and WHEREAS, Maker and Lender wish to amend the terms and provisions of the Note as set forth herein. NOW, THEREFORE, in consideration of the mutual covenants, agreements and promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by all parties, the parties do hereby agree as follows, notwithstanding any other provisions to the contrary set forth in the Note: 1. Definitions. All capitalized terms used herein shall have the same meaning as defined in the Note, unless otherwise defined in this Rider. 2. Amendments to Note. The Note is hereby amended as follows: (a) The first sentence of Section 7 of the Note is deleted in its entirety and replaced with the following language: Upon the occurrence of any one or more of the following events of default: (a) Maker fails to pay any amount within 10 days after such amount is due under this Note or under any other instrument evidencing any indebtedness of Maker to Lender, (b) any representation or warranty made under this Note or information provided by Maker or any guarantor of this Note to Lender in connection with this Note is or was false or fraudulent in any material respect, (c) a material adverse change occurs in Maker's financial condition, (d) Maker fails to timely observe or perform any of the covenants or duties contained in this Note, (e) any guarantee of Maker's obligations under this Note is revoked or becomes unenforceable for any reason, (f) Maker, Maker's spouse or a surety or guarantor of this Note dies or ceases to exist, or (g) an event of default occurs under any agreement securing this Note, then the unpaid balance shall, at the option of Lender, without notice, mature and become immediately payable. Notwithstanding the foregoing, if an event of default occurs under Section 7(d), Customer shall have 10 days after notice thereof to cure such event of default, provided that Lender, in its reasonable discretion, believes that such event of default is able to be cured. (b) The fourth sentence of Section 9 of the Note is amended in its entirety to read as follows: After an event of default as described in Section 7 above, Lender may, without notice to Maker, apply payments made by or for Maker to any obligations of Maker to Lender under this Note. (c) The Note is amended by inserting the following sentence at the end of Section 10: Notwithstanding the foregoing, Maker shall have no obligation to indemnify or hold harmless Lender, its directors, officers, employees or agents for events caused by any of their fraud or willful misconduct.

(d) The first sentence of Section 11 of the Note is amended in its entirety to read as follows: THIS NOTE IS INTENDED BY LENDER AND MAKER AS A FINAL EXPRESSION OF THIS NOTE AND AS A COMPLETE AND EXCLUSIVE STATEMENT OF ITS TERMS, THERE BEING NO CONDITIONS TO THE ENFORCEABILITY OR EFFECTIVENESS OF THIS NOTE EXCEPT AS SET FORTH HEREIN, AND THIS NOTE MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES TO THIS NOTE. (e) The following provisions are added to the end of Section 13 of the Note: Notice. Except as otherwise provided in this Note, all notices required or provided for under this Note shall be in writing and mailed, sent or delivered, if to Maker, at Maker's last known address or email address as shown on the records of Lender, and if to Lender, at its address shown on page 1, or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices shall be deemed duly given when delivered by hand or courier, or three business days after being deposited in the mail (including any private mail service), postage prepaid. Waiver of Jury Trial. MAKER AND LENDER HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THE RIGHT EACH OF THEM MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM BASED ON OR ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ANY OTHER ACTION OF ANY PARTY. 3. Inconsistency. To the extent there is any inconsistency between the Note and this Rider, this Rider shall control. [Signature Page Follows] 2

IN WITNESS WHEREOF, the parties have executed this Rider as of the Effective Date and agree to be bound by all provisions of this Rider. MAKER: CITIZENS COMMUNITY BANCORP, INC. By: ______________________________ Stephen Bianchi, President & Chief Executive Officer LENDER: CHIPPEWA VALLEY BANK By: ______________________________ Rick Gerber, Chief Executive Officer 3

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen M. Bianchi, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Citizens Community 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(s) 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

(e)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(s) 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: November 6, 2020	By:	/s/ Stephen M. Bianchi
		Stephen M. Bianchi
		President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James S. Broucek, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Citizens Community 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(s) 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(s) 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: November 6, 2020	By:	/s/ James S. Broucek
		James S. Broucek
		Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Citizens Community Bancorp, Inc. (the “Company”) certifies that the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2020, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date:  November 6, 2020	By:	/s/ Stephen M. Bianchi
		Stephen M. Bianchi
		President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)

Date:  November 6, 2020	By:	/s/ James S. Broucek
		James S. Broucek
		Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

The above certifications are made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 06, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-33003
Entity Registrant Name	CITIZENS COMMUNITY BANCORP, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	20-5120010
Entity Address, Address Line One	2174 EastRidge Center
Entity Address, City or Town	Eau Claire
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	54701
City Area Code	715
Local Phone Number	836-9994
Title of 12(b) Security	Common Stock, $.01 par value per share
Trading Symbol	CZWI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,154,563
Entity Central Index Key	0001367859
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 115,474	$ 55,840
Other interest-bearing deposits	3,752	4,744
Securities available for sale "AFS"	150,908	180,119
Securities held to maturity "HTM"	16,927	2,851
Equity securities with readily determinable fair value	187	246
Other investments	15,075	15,005
Loans receivable	1,230,139	1,177,380
Allowance for loan losses	(14,836)	(10,320)
Loans receivable, net	1,215,303	1,167,060
Loans held for sale	4,938	5,893
Mortgage servicing rights	3,498	4,282
Office properties and equipment, net	21,607	21,106
Accrued interest receivable	5,829	4,738
Intangible assets	5,893	7,587
Goodwill	31,498	31,498
Foreclosed and repossessed assets, net	812	1,460
Bank owned life insurance ("BOLI")	23,514	23,063
Other assets	7,378	5,757
TOTAL ASSETS	1,622,593	1,531,249
Liabilities:
Deposits	1,270,778	1,195,702
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) advances	124,491	130,971
Other borrowings	58,297	43,560
Other liabilities	11,704	10,463
Total liabilities	1,465,270	1,380,696
Stockholders’ Equity:
Common stock—$0.01 par value, authorized 30,000,000; 11,154,645 and 11,266,954 shares issued and outstanding, respectively	112	113
Additional paid-in capital	127,778	128,856
Retained earnings	29,239	22,517
Unearned deferred compensation	(710)	(462)
Accumulated other comprehensive income (loss)	904	(471)
Total stockholders’ equity	157,323	150,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,622,593	$ 1,531,249

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock authorized (shares)	30,000,000	30,000,000
Common stock issued (shares)	11,154,645	11,266,954
Common stock outstanding (shares)	11,154,645	11,266,954

XML

Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest and dividend income:
Interest and fees on loans	$ 14,154	$ 14,646	$ 44,300	$ 40,036
Interest on investments	1,064	1,577	3,712	4,241
Total interest and dividend income	15,218	16,223	48,012	44,277
Interest expense:
Interest on deposits	2,255	3,371	8,042	8,890
Interest on FHLB and FRB borrowed funds	430	639	1,386	2,213
Interest on other borrowed funds	624	620	1,701	1,436
Total interest expense	3,309	4,630	11,129	12,539
Net interest income before provision for loan losses	11,909	11,593	36,883	31,738
Provision for loan losses	1,500	575	5,250	2,125
Net interest income after provision for loan losses	10,409	11,018	31,633	29,613
Non-interest income:
Service charges on deposit accounts	431	625	1,336	1,756
Interchange income	556	476	1,509	1,267
Loan servicing income	1,144	714	3,144	1,902
Gain on sale of loans	1,987	679	4,585	1,560
Loan fees and service charges	320	471	1,041	860
Insurance commission income	0	197	474	573
Net gains (losses) on investment securities	(1)	96	97	151
Net gain (loss) on sale of branch	0	0	0	2,295
Net gain (loss) on sale of acquired business lines	180	0	432	0
Settlement proceeds	0	0	131	0
Other	445	363	929	827
Total non-interest income	5,062	3,621	13,678	11,191
Non-interest expense:
Compensation and related benefits	5,538	5,295	16,881	14,605
Occupancy	993	905	2,898	2,725
Office	532	599	1,650	1,649
Data processing	1,145	1,092	3,165	2,953
Amortization of intangible assets	399	412	1,223	1,085
Mortgage servicing rights expense	603	325	2,330	822
Advertising, marketing and public relations	260	315	802	974
FDIC premium assessment	188	78	436	318
Professional services	434	561	1,391	1,961
Gain on repossessed assets, net	(105)	(16)	(195)	(143)
Other	737	3,409	2,266	5,309
Total non-interest expense	10,724	12,975	32,847	32,258
Income before provision for income tax	4,747	1,664	12,464	8,546
Provision for income taxes	1,267	430	3,309	2,252
Net income attributable to common stockholders	$ 3,480	$ 1,234	$ 9,155	$ 6,294
Per share information:
Basic earnings (USD per share)	$ 0.31	$ 0.11	$ 0.82	$ 0.57
Diluted earnings (USD per share)	0.31	0.11	0.82	0.57
Cash dividends paid (USD per share)	$ 0	$ 0	$ 0.21	$ 0.20

XML

Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income attributable to common stockholders	$ 3,480	$ 1,234	$ 9,155	$ 6,294
Securities available for sale
Net unrealized gains arising during period	885	319	1,488	2,177
Reclassification adjustment for net gains included in net income	0	0	(113)	(19)
Other comprehensive income	885	319	1,375	2,158
Comprehensive income	$ 4,365	$ 1,553	$ 10,530	$ 8,452

XML

Consolidated Statement of Changes in Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Unearned Deferred Compensation	Accumulated Other Comprehensive Income (Loss)
Balance at beginning of period (shares) at Dec. 31, 2018		10,953,512
Balance at beginning of period at Dec. 31, 2018	$ 138,187	$ 109	$ 125,512	$ 15,264	$ (857)	$ (1,841)
Balance at beginning of period (Adoption of ASU 2016-01; Equity securities) at Dec. 31, 2018	0			45		(45)
Balance at beginning of period (Adoption of ASU 2016-02; Leases) at Dec. 31, 2018	(56)			(56)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	953			953
Other comprehensive income, net of tax	1,164					1,164
Forfeiture of unvested shares (shares)		(958)
Forfeiture of unvested shares	0		(13)		13
Surrender of restricted shares of common stock (shares)		(798)
Surrender of restricted shares of common stock	(9)		(9)
Common stock awarded under the equity incentive plan (shares)		10,847
Common stock awarded under the equity incentive plan	0		252		(252)
Common stock options exercised (shares)		27,430
Common stock options exercised	195	$ 1	194
Stock option expense	4		4
Amortization of restricted stock	140				140
Cash dividends	(2,198)			(2,198)
Balance at end of period (shares) at Mar. 31, 2019		10,990,033
Balance at end of period at Mar. 31, 2019	138,380	$ 110	125,940	14,008	(956)	(722)
Balance at end of period (Adoption of ASU 2016-02; Leases) at Mar. 31, 2019	(1)			(1)
Balance at beginning of period (shares) at Dec. 31, 2018		10,953,512
Balance at beginning of period at Dec. 31, 2018	138,187	$ 109	125,512	15,264	(857)	(1,841)
Balance at beginning of period (Adoption of ASU 2016-01; Equity securities) at Dec. 31, 2018	0			45		(45)
Balance at beginning of period (Adoption of ASU 2016-02; Leases) at Dec. 31, 2018	(56)			(56)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	6,294
Other comprehensive income, net of tax	2,158
Balance at end of period (shares) at Sep. 30, 2019		11,270,710
Balance at end of period at Sep. 30, 2019	148,029	$ 113	128,926	19,348	(630)	272
Balance at beginning of period (shares) at Dec. 31, 2018		10,953,512
Balance at beginning of period at Dec. 31, 2018	138,187	$ 109	125,512	15,264	(857)	(1,841)
Balance at beginning of period (Adoption of ASU 2016-01; Equity securities) at Dec. 31, 2018	0			45		(45)
Balance at beginning of period (Adoption of ASU 2016-02; Leases) at Dec. 31, 2018	$ (56)			(56)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock options exercised (shares)	28,430
Balance at end of period (shares) at Dec. 31, 2019		11,266,954
Balance at end of period at Dec. 31, 2019	$ 150,553	$ 113	128,856	22,517	(462)	(471)
Balance at beginning of period (shares) at Mar. 31, 2019		10,990,033
Balance at beginning of period at Mar. 31, 2019	138,380	$ 110	125,940	14,008	(956)	(722)
Balance at beginning of period (Adoption of ASU 2016-02; Leases) at Mar. 31, 2019	(1)			(1)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	4,107			4,107
Other comprehensive income, net of tax	675					675
Forfeiture of unvested shares (shares)		(7,958)
Forfeiture of unvested shares	0		(118)		118
Surrender of restricted shares of common stock (shares)		(3,067)
Surrender of restricted shares of common stock	(35)		(35)
Common stock awarded under the equity incentive plan (shares)		2,000
Common stock awarded under the equity incentive plan	0		22		(22)
Common stock options exercised (shares)		1,000
Common stock options exercised	8		8
Stock option expense	5		5
Amortization of restricted stock	103				103
Balance at end of period (shares) at Jun. 30, 2019		10,982,008
Balance at end of period at Jun. 30, 2019	143,242	$ 110	125,822	18,114	(757)	(47)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	1,234			1,234
Other comprehensive income, net of tax	319					319
Surrender of restricted shares of common stock (shares)		(297)
Surrender of restricted shares of common stock	(3)		(3)
Common stock issued to F&M shareholders (shares)		(288,999)
Common stock issued to F&M shareholders	3,105	$ 3	3,102
Stock option expense	5		5
Amortization of restricted stock	127				127
Balance at end of period (shares) at Sep. 30, 2019		11,270,710
Balance at end of period at Sep. 30, 2019	148,029	$ 113	128,926	19,348	(630)	272
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	3,169			3,169
Other comprehensive income, net of tax	(743)					(743)
Forfeiture of unvested shares (shares)		(3,251)
Forfeiture of unvested shares	0		(68)		68
Surrender of restricted shares of common stock (shares)		(505)
Surrender of restricted shares of common stock	(6)		(6)
Stock option expense	4		4
Amortization of restricted stock	100				100
Balance at end of period (shares) at Dec. 31, 2019		11,266,954
Balance at end of period at Dec. 31, 2019	150,553	$ 113	128,856	22,517	(462)	(471)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	2,606			2,606
Other comprehensive income, net of tax	(1,138)					(1,138)
Surrender of restricted shares of common stock (shares)		(1,746)
Surrender of restricted shares of common stock	(21)		(21)
Common stock awarded under the equity incentive plan (shares)		41,507
Common stock awarded under the equity incentive plan	0		669		(669)
Common stock issued to F&M shareholders (shares)		(40)
Common stock repurchased (shares)		(155,666)
Common stock repurchased	(1,838)	$ (1)	(1,776)	(61)
Stock option expense	4		4
Amortization of restricted stock	139				139
Cash dividends	(2,372)			(2,372)
Balance at end of period (shares) at Mar. 31, 2020		11,151,009
Balance at end of period at Mar. 31, 2020	147,933	$ 112	127,732	22,690	(992)	(1,609)
Balance at beginning of period (shares) at Dec. 31, 2019		11,266,954
Balance at beginning of period at Dec. 31, 2019	150,553	$ 113	128,856	22,517	(462)	(471)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	9,155
Other comprehensive income, net of tax	1,375
Balance at end of period (shares) at Sep. 30, 2020		11,154,645
Balance at end of period at Sep. 30, 2020	157,323	$ 112	127,778	29,239	(710)	904
Balance at beginning of period (shares) at Mar. 31, 2020		11,151,009
Balance at beginning of period at Mar. 31, 2020	147,933	$ 112	127,732	22,690	(992)	(1,609)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	3,069			3,069
Other comprehensive income, net of tax	1,628					1,628
Surrender of restricted shares of common stock (shares)		(314)
Surrender of restricted shares of common stock	(2)		(2)
Stock option expense	4		4
Amortization of restricted stock	158				158
Balance at end of period (shares) at Jun. 30, 2020		11,150,695
Balance at end of period at Jun. 30, 2020	152,790	$ 112	127,734	25,759	(834)	19
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	3,480			3,480
Other comprehensive income, net of tax	885					885
Surrender of restricted shares of common stock (shares)		(50)
Surrender of restricted shares of common stock	0
Common stock awarded under the equity incentive plan (shares)		4,000
Common stock awarded under the equity incentive plan	0		41		(41)
Stock option expense	3		3
Amortization of restricted stock	165				165
Balance at end of period (shares) at Sep. 30, 2020		11,154,645
Balance at end of period at Sep. 30, 2020	$ 157,323	$ 112	$ 127,778	$ 29,239	$ (710)	$ 904

XML

Consolidated Statement of Changes in Stockholders' Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash dividends declared (USD per share)	$ 0.21	$ 0.20
Adoption of ASU 2016-01; Equity securities
Accounting Standards Update [Extensible List]		us-gaap:AccountingStandardsUpdate201601Member
Adoption of ASU 2016-02; Leases
Accounting Standards Update [Extensible List]		us-gaap:AccountingStandardsUpdate201602Member

XML

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended					9 Months Ended		12 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cash flows from operating activities:
Net income attributable to common stockholders	$ 3,480	$ 2,606	$ 3,169	$ 1,234	$ 953	$ 9,155	$ 6,294
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization, net of discount accretion on investment securities						156	762
Depreciation expense						1,436	1,110
Provision for loan losses						5,250	2,125
Net realized loss (gain) on equity securities						59	(125)
Net realized gain on debt securities						(156)	(26)
Increase in MSR assets resulting from transfers of financial assets						(1,546)	(581)
Mortgage servicing rights expense						2,330	822
Amortization of intangible assets	399			412		1,223	1,085
Amortization of restricted stock						462	370
Net stock based compensation expense						11	14
Loss (gain) on sale of office properties and equipment						30	(32)
Deferred income taxes						(1,299)	0
Increase in cash surrender value of life insurance						(451)	(384)
Net (gain) loss from disposals of foreclosed and repossessed assets						(195)	(143)
Gain on sale of loans held for sale, net						(4,585)	(1,560)
Net change in loans held for sale						5,540	225
Decrease in accrued interest receivable and other assets						(1,934)	3,009
Increase (decrease) in other liabilities						836	(6,482)
Net gain on sale of insurance agency						(252)	0
Total adjustments						6,915	189
Net cash provided by operating activities						16,070	6,483
Cash flows from investing activities:
Net decrease in other interest-bearing deposits						992	3,207
Purchase of available for sale securities						(20,956)	(23,457)
Purchase of held to maturity securities						(15,147)	0
Proceeds from principal payments and sale of available for sale securities						52,083	26,370
Proceeds from principal payments and maturities of held to maturity securities						1,051	1,185
Net sales of other investments						(70)	1,084
Proceeds from sale of foreclosed and repossessed assets						2,098	2,238
Net increase in loans						(54,748)	(6,710)
Net capital expenditures						(1,975)	(6,149)
Net cash (disbursed) acquired in business combinations						0
Net cash (disbursed) acquired in business combinations							(8,137)
Proceeds from disposal of office properties and equipment						8	300
Net proceeds from sale of insurance agency						1,128	0
Net cash used in investing activities						(35,536)	(10,069)
Cash flows from financing activities:
Net (decrease) increase in short-term Federal Home Loan Bank advances						(40,980)	(16,469)
Long-term Federal Home Loan Bank advances						66,500	0
Long-term Federal Home Loan Bank maturities						(32,000)	0
Amortization of debt issuance costs						60	0
Proceeds from other borrowings, net of origination costs						14,677	0
Proceeds from other borrowings to fund business combination, net of origination costs						0	29,889
Principal payment reduction to other borrowings						0	(10,000)
Net increase in deposits						75,076	5,601
Common stock issued in F&M acquisition less capitalized equity costs						0	3,105
Repurchase shares of common stock						(1,838)	0
Surrender of restricted shares of common stock						(23)	(47)
Common stock options exercised						0	203	$ 203
Cash dividends paid						(2,372)	(2,198)
Net cash provided by financing activities						79,100	10,084
Net (decrease) increase in cash and cash equivalents						59,634	6,498
Cash and cash equivalents at beginning of period		$ 55,840	52,276		$ 45,778	55,840	45,778	45,778
Cash and cash equivalents at end of period	$ 115,474		$ 55,840	$ 52,276		115,474	52,276	$ 55,840
Cash paid during the period for:
Interest on deposits						8,066	8,775
Interest on borrowings						2,999	3,966
Income taxes						4,820	3,847
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets						1,057	898
Fair value of assets acquired, net of cash and cash equivalents						0	177,494
Fair value of liabilities assumed, net of cash and cash equivalents						$ 0	$ 169,724

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Citizens Community Federal N.A. (the “Bank”), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. As used in this quarterly report, the terms “we”, “us”, “our”, and “Citizens Community Bancorp, Inc.” mean the Company and its wholly owned subsidiary, the Bank, unless the context indicates other meaning.

The Bank is a national banking association (a “National Bank”) and operates under the title of Citizens Community Federal National Association (“Citizens Community Federal N.A.” or “Bank” or “CCFBank”). The Company is a bank holding company, supervised by the Federal Reserve Bank of Minneapolis (the “FRB”), and operates under the title of Citizens Community Bancorp, Inc. Wells Insurance Agency (“WIA”) was a wholly owned subsidiary of the Bank, providing insurance products to the Bank’s customers and was sold on June 30, 2020. F&M Investment Corp. of Tomah was a wholly owned subsidiary of the Bank that was formerly utilized by F. & M. Bancorp. of Tomah, Inc. (“F & M”) to manage its municipal bond portfolio, and has been dissolved. The U.S. Office of the Comptroller of the Currency (the “OCC”), is the primary federal regulator for the Bank.

The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary, serving customers in Wisconsin and Minnesota through 28 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, agricultural operators and consumers, including one-to-four family residential mortgages.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the September 30, 2020 balance sheet date and through the date the financial statements were available to be issued for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated herein, and except for shares and per share amounts, all amounts are in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany accounts and transactions have been eliminated.

Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, mortgage servicing rights, foreclosed and repossessed assets, valuation of intangible assets arising from acquisitions, useful lives for depreciation and amortization, valuation of goodwill and long-lived assets, stock based compensation, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020; the matters described in “Risk Factors” in Item 1A of our Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and in Item 1A of this Form 10-Q; external market factors such as market interest rates and unemployment rates; changes to operating policies and procedures and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

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

are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to: the Company’s intent and ability to sell the debt security prior to recovery, that it is more likely than not that the Company will not sell the security prior to recovery, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded in other comprehensive income or loss as separate components of stockholders’ equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company’s consolidated statement of operations. Non-credit components of the unrealized losses on available for sale securities will continue to be recognized in other comprehensive income (loss), net of tax.

Equity securities with readily determinable fair value - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities. Farmer Mac equity securities are carried at their fair market value, which is readily determinable. Changes in fair value are recognized as net gains (losses) on investment securities in the consolidated Statement of Operations.

Other Investments - As a member of the Federal Reserve Bank (“FRB”) System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. These securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other exchange traded equity securities. As no ready market exists for these stocks, and they have no quoted market value, these investments are carried at cost and periodically evaluated for impairment based on the ultimate recovery of par value. Cash dividends are reported as other income in the consolidated statement of operations.

Also included in other investments is stock of our correspondent bank, Bankers’ Bank, without readily determinable fair value. This stock is carried at cost plus or minus changes resulting from observable price changes in orderly transactions for this stock, less other-than-temporary impairment charges, if any.

Management’s evaluation for impairment of these other investments, includes consideration of the financial condition and other available relevant information of the issuer. Based on management’s quarterly evaluation, no impairment has been recorded on these securities. Other investments totaling $15,075 at September 30, 2020 consisted of $8,231 of FHLB stock, $5,169 of Federal Reserve Bank stock and $1,675 of Bankers’ Bank stock. Other investments totaling $15,005 at December 31, 2019 consisted of $8,196 of FHLB stock and $5,162 of Federal Reserve Bank stock and $1,647 of Bankers’ Bank stock.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of: deferred loan fees and costs, accretable yield on acquired loans and non-accretable discount on purchased credit impaired loans. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Late charge fees are recognized into income when collected.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial/agricultural real estate loans past due 90 days or more;

•Commercial and industrial/agricultural operating loans past due 90 days or more;

•Closed end consumer installment loans past due 120 days or more; and

•Residential mortgage loans and open ended consumer installment loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash

basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a six month payment history has been established. Interest on accruing troubled debt restructured (“TDR”) loans is recognized as income as it accrues, based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed ended consumer installment loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial/agricultural real estate, commercial and industrial and agricultural operating loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan’s contractual terms is not expected. Impaired loans consist of all TDRs, as well as individual loans not considered a TDR, that are either (1) rated substandard or worse, (2) on nonaccrual status or (3) PCI loans which were deemed impaired at the time of acquisition. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. For TDR’s or substandard loans deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) its outstanding principal balance; (b) the present value of the loan’s estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any loan collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain substandard loans that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for ALL purposes, and accordingly, are not separately identified for ALL disclosures.

Acquired Loans— Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value with no carryover of related allowance for loan losses. Any allowance for loan loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that no longer are expected to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including: the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans. As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

Loans acquired with deteriorated credit quality are accounted for in accordance with Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, the Company considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality. These factors include, but are not limited to: loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring.

Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable discount is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect.

Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable discount to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life.

Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool.

For all acquired loans, the outstanding loan balances less any related accretable discount and/or non-accretable difference is referred to as the loans’ carrying amount.

Loans Held for Sale — Loans held for sale are those loans the Company has the intent to sell in the foreseeable future. They are carried at the lower of aggregate cost or fair value. Gains and losses on sales of loans are recognized at settlement dates, and are determined by the difference between the sales proceeds and the carrying value of the loans after allocating costs to servicing rights retained. Such gains and losses are included in non-interest income in the consolidated statements of operations. All sales are made without recourse. Interest rate lock commitments on mortgage loans to be funded and sold are valued at fair value, and are included in other assets or liabilities, if material.

Mortgage Servicing Rights— Mortgage servicing rights (“MSR”) assets result as the Company sells loans to investors in the secondary market and retains the rights to service mortgage loans sold to others. MSR assets are initially measured at fair value; assessed at least annually for impairment; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.

The valuation of MSRs and related amortization, included in amortization of mortgage servicing rights in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs. Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary, if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a write-down is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other in the consolidated statements of operations.

Transfers of financial assets—Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the entity, (2) the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and (3) the entity does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity.

Goodwill and other intangible assets-The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, “Intangibles - Goodwill and Other.”  The Company records the excess of the cost of acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill.  The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives utilizing the straight-line method.  On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amounts of the intangible assets may be impaired.  The Company does not amortize goodwill and any acquired intangible asset with an indefinite useful economic life, but reviews them for impairment at a reporting unit level on an annual basis, or when

events or changes in circumstances indicate that the carrying amounts may be impaired.  A reporting unit is defined as any distinct, separately identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management.  The Company has one reporting unit as of December 31, 2019 which is related to its banking activities. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2019. The Company performed a goodwill impairment analysis as of September 30, 2020, due to triggering events being identified, and determined that goodwill was not impaired.

Leases - We determine if an arrangement is a lease at inception. All of our existing leases have been determined to be operating leases under ASC 842. Right-of-use (“ROU”) assets are included in other assets in our consolidated balance sheets. Operating lease liabilities are included in other liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date, based on the present value of lease payments over the lease term. As none of our existing leases provide an implicit rate, we use our incremental borrowing rate, based on information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease, when it is reasonably certain that we will exercise that option. Lease expense is recognized based on the total contractually required lease payments, over the term of the lease, on a straight-line basis.

Debt and equity issuance costs—Debt issuance costs, which consist primarily of fees paid to note lenders, are deferred and included in other borrowings in the consolidated balance sheet. Debt issuance costs are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statement of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheet, in the period of the share issuance.

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

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Revenue Recognition - The Company recognizes revenue in the consolidated statements of operations as it is earned and when collectability is reasonably assured. The primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts. Non-interest income is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income includes fees from deposit accounts, ATM and debit card fees, mortgage banking activities, and other miscellaneous services and transactions. Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later.  The Company also receives contingent commissions from insurance companies which are based on the overall profitability of their relationship based primarily on the loss experience of the insurance placed by the

Company.  Contingent commissions from insurance companies are recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company’s stock price on the reporting date.

Operating Segments—While our executive officers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

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

Recent Accounting Pronouncements—The Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have potentially significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

Recent Accounting Pronouncements—Adopted

ASU 2014-09; Revenue from Contracts with Customers (Topic 606)—Under the ASU, as modified by subsequent ASUs, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration the entity expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company applied the five-step method outlined in the ASU to all revenue streams scoped-in by the ASU and elected the modified retrospective implementation method. Substantially all of the Company’s interest income and certain non-interest income items were not impacted by the adoption of this ASU because the revenue from those contracts with customers is covered by other guidance in U.S. GAAP. The Company’s largest sources of non-interest revenue which are subject to the guidance include fees and service charges on loan and deposit accounts and interchange revenue from debit card transactions. ASU 2014-09, as amended, became effective for the Company’s annual and interim periods beginning in the first quarter 2019. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as the change in the timing and pattern of the Company’s revenue recognition related to scoped-in non-interest income recognized under the newly issued ASU is consistent with the current applicable accounting guidance. The Company has made all required additional disclosures related to non-interest income in the consolidated financial statements, primarily in Revenue Recognition policy included herein in Note 1.

ASU 2016-01; Recognition and Measurement of Financial Assets and Liabilities—The guidance requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. The Company’s adoption of ASU 2016-01 as of January 1, 2019, constitutes a change in accounting principle. The Company recorded a cumulative effect adjustment to retained earnings of $45 as of January 1, 2019, as a result of implementing this new accounting standard.

ASU 2016-02; Leases (Topic 842)—The ASU changed current GAAP by requiring that lease assets and liabilities arising from operating leases be recognized on the balance sheet. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, Codification Improvements to Topic 842, Leases, amending various aspects of Topic 842. Topic 842 does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee from current U.S. GAAP. For leases with a term of 12 months or less, a lessee would be permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and liabilities. Topic 842 became effective for the Company for annual and interim periods beginning in the first quarter 2019.

The Company leased (1) 9 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases that resulted in the recognition of right-of-use assets and corresponding lease liabilities of approximately $5,000 on the consolidated balance sheet under Topic 842. Adoption of Topic 842 did not have a material impact on the Company’s consolidated statement of operations. Management adopted the guidance on January 1, 2019, and elected certain practical expedients offered by the FASB, including foregoing the restatement of comparative periods upon adoption. Management also excluded short-term leases from the recognition of right-of-use asset and lease liabilities. Additionally, the Company elected the transition relief allowed by FASB in foregoing reassessment of the following: whether any existing contracts were or contained leases, the classification of existing leases, and the determination of initial direct costs for existing leases. As of September 30, 2020, the Company leases (1) 6 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases. See Note 5 for additional detail.

ASU 2017-04; Intangibles - Goodwill and Other (Topic 350)—The ASU simplifies the accounting for goodwill impairment. This guidance, among other things, removes step two of the goodwill impairment test thus eliminating the need to determine the fair value of individual assets and liabilities of the reporting unit. Upon adoption of this ASU, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This may result in either greater or less impairment being recognized than under current guidance. The Company adopted this Update for the Company’s annual goodwill impairment tests beginning in the year ended December 31, 2019. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2018-13, Fair Value Measurement (Topic 820)—The ASU modifies disclosure requirements on fair value measurements. This ASU removes requirements to disclose, (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and (2) the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. ASU 2018-13 clarifies that, disclosure regarding measurement uncertainty, is intended to communicate information about the uncertainty in measurement, as of the reporting date. ASU 2018-13 adds certain disclosure requirements, including (1) disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this ASU, in the first quarter of 2020. The amendments on (1) changes in unrealized gains and losses, (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and (3) the narrative description of measurement uncertainty, are being applied prospectively. All other amendments have been applied retrospectively for all periods presented. Adoption of this ASU had no material impact on its consolidated financial position or results of operations.

ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)—The ASU was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement), by providing guidance for determining when the arrangement includes a software license. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract, with similar costs to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments. This guidance became effective for the Company beginning in the first quarter of 2020. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting--The ASU provides optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contacts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. ASU 2020-04 is effective for the Company immediately and through December 31, 2022. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting variable rate loans. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 2016-13; Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments--The ASU changes accounting for credit losses on loans receivable and debt securities from an incurred loss methodology to an expected credit loss methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Accordingly, ASU 2016-13 requires the use of forward-looking information to form credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, though the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU 2019-10, extending the effective date to fiscal years beginning after December 15, 2022, which is the Company’s fiscal year ending December 31, 2023. Earlier adoption is permitted; however, the Company does not currently plan to adopt the ASU early. Management is assessing alternative loss estimation methodologies and the Company’s data and system needs in order to evaluate the impact that adoption of this standard will have on the Company’s financial condition and results of operations. The Company anticipates recording the effect of implementing this ASU through a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU is effective, which will be January 1, 2023.

XML

INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2020 and December 31, 2019, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
U.S. government agency obligations	$	34,059	$	391	$	71	$	34,379
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	49,870		1,888		—		51,758
Corporate debt securities	15,211		277		124		15,364
Corporate asset-based securities	36,443		38		938		35,543
Trust preferred securities	13,938		69		283		13,724
Total available for sale securities	$	149,661	$	2,663	$	1,416	$	150,908
December 31, 2019
U.S. government agency obligations	$	52,020	$	132	$	347	$	51,805
Obligations of states and political subdivisions	281		—		—		281
Mortgage-backed securities	70,806		635		110		71,331
Corporate debt securities	18,776		66		117		18,725
Corporate asset-based securities	27,718		—		864		26,854
Trust preferred securities	11,167		35		79		11,123
Total available for sale securities	$	180,768	$	868	$	1,517	$	180,119

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Obligations of states and political subdivisions	$	300	$	—	$	—	$	300
Mortgage-backed securities	16,627		306		—		16,933
Total held to maturity securities	$	16,927	$	306	$	—	$	17,233
December 31, 2019
Obligations of states and political subdivisions	$	300	$	2	$	—	$	302
Mortgage-backed securities	2,551		104		—		2,655
Total held to maturity securities	$	2,851	$	106	$	—	$	2,957

As of September 30, 2020, the Bank has pledged U.S. Government Agency securities with a carrying value of $595 and mortgage-backed securities with a carrying value of $3,855 as collateral against specific municipal deposits. At September 30, 2020, the Bank has pledged mortgage-backed securities with a carrying value of $1,299 as collateral against a borrowing line of credit with the Federal Reserve Bank. However, as of September 30, 2020, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of September 30, 2020, the Bank also has mortgage-backed securities with a carrying value of $530 pledged as collateral to the Federal Home Loan Bank of Des Moines.

The estimated fair value of securities at September 30, 2020 and December 31, 2019, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

	September 30, 2020				December 31, 2019
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—	$	141	$	141
Due after one year through five years	3,850		4,064		5,900		5,959
Due after five years through ten years	39,417		39,461		43,269		43,180
Due after ten years	56,524		55,625		60,652		59,508
Total securities with contractual maturities	$	99,791	$	99,150	$	109,962	$	108,788
Mortgage backed securities	49,870		51,758		70,806		71,331
Securities without contractual maturities	—		—		—		—
Total available for sale securities	$	149,661	$	150,908	$	180,768	$	180,119

	September 30, 2020				December 31, 2019
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	300	$	300	$	300	$	302
Total securities with contractual maturities	300		300		300		302
Mortgage backed securities	16,627		16,933		2,551		2,655
Total held to maturity securities	$	16,927	$	17,233	$	2,851	$	2,957

Securities with unrealized losses at September 30, 2020 and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2020
U.S. government agency obligations	$	9,596	$	24	$	5,364	$	47	$	14,960	$	71
Corporate debt securities	2,009		17		1,393		107		3,402		124
Corporate asset-based securities	—		—		33,603		938		33,603		938
Trust preferred securities	10,963		283		—		—		10,963		283
Total	$	22,568	$	324	$	40,360	$	1,092	$	62,928	$	1,416
December 31, 2019
U.S. government agency obligations	$	14,593	$	156	$	10,540	$	191	$	25,133	$	347
Mortgage backed securities	22,537		62		5,883		48		28,420		110
Corporate debt securities	7,001		15		1,398		102		8,399		117
Corporate asset-based securities	8,683		285		18,171		579		26,854		864
Trust preferred securities	7,420		79		—		—		7,420		79
Total	$	60,234	$	597	$	35,992	$	920	$	96,226	$	1,517

There were no held to maturity securities in a net loss position at either September 30, 2020 or December 31, 2019.

The Company evaluates AFS securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. In making this evaluation, management considers the extent to which the fair value

has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

As of September 30, 2020, the Company does not consider its AFS securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration; thus, no other-than-temporary impairment on AFS securities was recorded. There were no other-than-temporary impairments charged to earnings during the three or nine months ended September 30, 2020 or the three or nine months ended September 30, 2019.

During the three and nine months ended September 30, 2020, the Bank sold approximately $0 and $10,700 of fixed-rate mortgage-backed certificates with a realized gain of $0 and $156, respectively, which is included in net gains on investment securities in the Consolidated Statements of Operations. During the three and nine months ended September 30, 2019, the Bank sold approximately $7,950 of fixed rate securities with a realized gain of $26, which is included in net gains on investment securities in the Consolidated Statements of Operations.

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

Portfolio Segments:

    Commercial and agricultural real estate loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business. Management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The level of owner-occupied property versus non-owner-occupied property are tracked and monitored on a regular basis. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 75%.

Commercial and industrial (“C&I”) loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Agricultural operating loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines. Operating lines are typically written for one year and secured by the crop and other farm assets or other business assets, as considered necessary. Agricultural loans carry significant credit risks as they may involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields.

Residential mortgage loans are collateralized by primary and secondary positions on real estate and are underwritten primarily based on borrower’s documented income, credit scores, and collateral values. Under consumer home equity loan guidelines, the borrower will be approved for a loan based on a percentage of their home’s appraised value less the balance owed on the existing first mortgage. Credit risk is minimized within the residential mortgage portfolio due to relatively small loan account balances spread across many individual borrowers. Management evaluates trends in past due loans and current economic factors such as the housing price index on a regular basis.

Consumer installment loans are comprised of originated indirect paper loans secured primarily by boats and recreational vehicles and other consumer loans secured primarily by automobiles and other personal assets. The Bank ceased new originations of indirect paper loans in early fiscal 2017. Consumer loan underwriting terms often depend on the collateral type, debt to income ratio and the borrower’s creditworthiness as evidenced by their credit score. In the event of a consumer installment loan default, collateral value alone may not provide an adequate source of repayment of the outstanding loan balance. This shortage is a result of the greater likelihood of damage, loss and depreciation for consumer based collateral.

Credit Quality/Risk Ratings:

    Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant.

Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio ratings are presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows:

1 through 4 - Pass. A “Pass” loan means that the condition of the borrower and the performance of the loan is satisfactory or better.

5 - Watch. A “Watch” loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future.

6 - Special Mention. A “Special Mention” loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future.

7 - Substandard. A “Substandard” loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

8 - Doubtful. A “Doubtful” loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

9 - Loss. Loans classified as “Loss” are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future.

Below is a summary of originated and acquired loans by type and risk rating as of September 30, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	318,915	$	1,947	$	1,166	$	—	$	—	$	322,028
Agricultural real estate	30,807		454		1,269		—		—		32,530
Multi-family real estate	100,148		—		—		—		—		100,148
Construction and land development	77,514		—		3,478		—		—		80,992
C&I/Agricultural operating:
Commercial and industrial	75,338		802		3,819		—		—		79,959
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	23,040		28		1,256		—		—		24,324
Residential mortgage:
Residential mortgage	85,922		7		4,171		—		—		90,100
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other consumer	13,135		—		86		—		—		13,221
Total originated loans	$	898,517	$	3,238	$	15,795	$	—	$	—	$	917,550
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	168,360	$	4,237	$	6,048	$	—	$	—	$	178,645
Agricultural real estate	33,765		—		6,848		—		—		40,613
Multi-family real estate	9,372		—		148		—		—		9,520
Construction and land development	8,264		—		82		—		—		8,346
C&I/Agricultural operating:
Commercial and industrial	23,572		59		782		—		—		24,413
Agricultural operating	8,688		—		946		—		—		9,634
Residential mortgage:
Residential mortgage	49,243		243		2,268		—		—		51,754
Consumer installment:
Other consumer	1,404		—		5		—		—		1,409
Total acquired loans	$	302,668	$	4,539	$	17,127	$	—	$	—	$	324,334
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	487,275	$	6,184	$	7,214	$	—	$	—	$	500,673
Agricultural real estate	64,572		454		8,117		—		—		73,143
Multi-family real estate	109,520		—		148		—		—		109,668
Construction and land development	85,778		—		3,560		—		—		89,338
Commercial/Agricultural non-real estate:
Commercial and industrial	98,910		861		4,601		—		—		104,372
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	31,728		28		2,202		—		—		33,958
Residential mortgage:
Residential mortgage	135,165		250		6,439		—		—		141,854
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other Consumer	14,539		—		91		—		—		14,630
Gross loans	$	1,201,185	$	7,777	$	32,922	$	—	$	—	$	1,241,884
Less:
Unearned net deferred fees and costs and loans in process											(5,033)
Unamortized discount on acquired loans											(6,712)
Allowance for loan losses											(14,836)
Loans receivable, net											$	1,215,303

Below is a summary of originated loans by type and risk rating as of December 31, 2019:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	301,381	$	266	$	899	$	—	$	—	$	302,546
Agricultural real estate	31,129		829		2,068		—		—		34,026
Multi-family real estate	71,877		—		—		—		—		71,877
Construction and land development	67,989		—		3,478		—		—		71,467
C&I/Agricultural operating:
Commercial and industrial	85,248		1,023		3,459		—		—		89,730
Agricultural operating	19,545		402		770		—		—		20,717
Residential mortgage:
Residential mortgage	104,428		—		4,191		—		—		108,619
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:					—
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	15,425		—		121		—		—		15,546
Total originated loans	$	744,768	$	2,520	$	15,232	$	—	$	—	$	762,520
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	196,692	$	6,084	$	9,137	$	—	$	—	$	211,913
Agricultural real estate	42,381		534		8,422		—		—		51,337
Multi-family real estate	13,533		—		1,598		—		—		15,131
Construction and land development	14,181		—		762		—		—		14,943
C&I/Agricultural operating:
Commercial and industrial	41,587		932		1,485		—		—		44,004
Agricultural operating	15,621		350		1,092		—		—		17,063
Residential mortgage:
Residential mortgage	65,125		436		2,152		—		—		67,713
Consumer installment:
Other Consumer	2,628		—		12		—		—		2,640
Total acquired loans	$	391,748	$	8,336	$	24,660	$	—	$	—	$	424,744
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	498,073	$	6,350	$	10,036	$	—	$	—	514,459
Agricultural real estate	73,510		1,363		10,490		—		—		85,363
Multi-family real estate	85,410		—		1,598		—		—		87,008
Construction and land development	82,170		—		4,240		—		—		86,410
C&I/Agricultural operating:
Commercial and industrial	126,835		1,955		4,944		—		—		133,734
Agricultural operating	35,166		752		1,862		—		—		37,780
Residential mortgage:
Residential mortgage	169,553		436		6,343		—		—		176,332
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	18,053		—		133		—		—		18,186
Gross loans	$	1,136,516	$	10,856	$	39,892	$	—	$	—	$	1,187,264
Less:
Unearned net deferred fees and costs and loans in process											(393)
Unamortized discount on acquired loans											(9,491)
Allowance for loan losses											(10,320)
Loans receivable, net											$	1,167,060

Allowance for Loan Losses - The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

As an integral part of their examination process, various regulatory agencies also review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.

Changes in the ALL by loan type for the periods presented below were as follows:

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, July 1, 2020	$	8,297	$	1,778	$	980	$	480	$	574	$	12,109
Charge-offs	—		(103)		(4)		(10)		—		(117)
Recoveries	74		—		2		18		—		94
Provision	430		188		(15)		64		56		723
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2020	746		334		112		72		—		1,264
Charge-offs	—		—		(47)		—		—		(47)
Recoveries	1		30		—		2		—		33
Provision	623		(58)		199		13		—		777
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(632)		(4)		(124)		—		(760)
Recoveries	74		—		7		55		—		136
Provision	2,522		852		81		154		273		3,882
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, January 1, 2020	526		27		163		53		—		769
Charge-offs	—		(159)		(74)		(2)		—		(235)
Recoveries	77		30		14		4		—		125
Provision	767		408		161		32		—		1,368
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836
Allowance for Loan Losses at September 30, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	772	$	159	$	249	$	1	$	—	$	1,181
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	9,399	$	2,010	$	978	$	638	$	630	$	13,655
Loans Receivable as of September 30, 2020:											—
Ending balance of originated loans	$	535,698	$	243,449	$	96,647	$	41,756	$	—	$	917,550
Ending balance of purchased credit-impaired loans	21,453		2,077		1,553		—		—		25,083
Ending balance of other acquired loans	215,671		31,970		50,201		1,409		—		299,251
Ending balance of loans	$	772,822	$	277,496	$	148,401	$	43,165	$	—	$	1,241,884
Ending balance: individually evaluated for impairment	$	13,190	$	6,275	$	8,436	$	367	$	—	$	28,268
Ending balance: collectively evaluated for impairment	$	759,632	$	271,221	$	139,965	$	42,798	$	—	$	1,213,616

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, July 1, 2019	$	5,010	$	1,470	$	977	$	528	$	299	$	8,284
Charge-offs	—		—		(89)		(36)		—		(125)
Recoveries	—		—		—		17		—		17
Provision	281		130		117		(12)		2		518
Total Allowance on originated loans	5,291		1,600		1,005		497		301		8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2019	181		85		153		56		—		475
Charge-offs	—		—		(45)		(9)		—		(54)
Recoveries	—		—		1		4		—		5
Provision	(10)		2		61		4		—		57
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, January 1, 2019	$	4,019	$	1,258	$	1,048	$	641	$	214	$	7,180
Charge-offs	(225)		—		(119)		(142)		—		(486)
Recoveries	—		—		—		53		—		53
Provision	1,497		342		76		(55)		87		1,947
Total Allowance on originated loans	$	5,291	$	1,600	$	1,005	$	497	$	301	$	8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans
Beginning balance, January 1, 2019	183		32		205		65		(61)		424
Charge-offs	—		—		(105)		(29)		—		(134)
Recoveries	3		—		2		10		—		15
Provision	(15)		55		68		9		61		178
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177
Allowance for Loan Losses at September 30, 2019:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	205	$	252	$	191	$	15	$	—	$	663
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	5,257	$	1,435	$	984	$	537	$	301	$	8,514
Loans Receivable as of September 30, 2019:
Ending balance of originated loans	$	401,211	$	102,998	$	124,627	$	58,612	$	—	$	687,448
Ending balance of purchased credit-impaired loans	33,840		5,320		2,273		—		—		41,433
Ending balance of other acquired loans	272,744		58,741		71,290		3,052		—		405,827
Ending balance of loans	$	707,795	$	167,059	$	198,190	$	61,664	$	—	$	1,134,708
Ending balance: individually evaluated for impairment	$	16,458	$	7,215	$	8,626	$	419	$	—	$	32,718
Ending balance: collectively evaluated for impairment	$	691,337	$	159,844	$	189,564	$	61,245	$	—	$	1,101,990

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Commercial/Agriculture Real Estate Loans				C&I/Agricultural Operating				Residential Mortgage				Consumer Installment				Totals
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Performing loans
Performing TDR loans	$	5,480	$	1,730	$	3,868	$	366	$	3,178	$	3,206	$	53	$	68	$	12,579	$	5,370
Performing loans other	759,328		758,237		271,124		167,596		141,755		178,415		42,994		57,486		1,215,201		1,161,734
Total performing loans	764,808		759,967		274,992		167,962		144,933		181,621		43,047		57,554		1,227,780		1,167,104
Nonperforming loans (1)
Nonperforming TDR loans	5,037		4,868		1,490		1,973		672		383		—		—		7,199		7,224
Nonperforming loans other	2,977		8,405		1,014		1,579		2,796		2,735		118		217		6,905		12,936
Total nonperforming loans	8,014		13,273		2,504		3,552		3,468		3,118		118		217		14,104		20,160
Total loans	$	772,822	$	773,240	$	277,496	$	171,514	$	148,401	$	184,739	$	43,165	$	57,771	$	1,241,884	$	1,187,264

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

As of September 30, 2020, the Company had $260.8 million in unused commitments, compared to $246.7 million in unused commitments as of December 31, 2019.

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2020 and December 31, 2019, respectively, was as follows:

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 89 Days Past Due and Accruing		Total Past Due and Accruing		Nonaccrual Loans		Total Past Due Accruing and Nonaccrual Loans		Current		Total Loans
September 30, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	247	$	99	$	—	$	346	$	2,614	$	2,960	$	497,713	$	500,673
Agricultural real estate	179		—		—		179		5,252		5,431		67,712		73,143
Multi-family real estate	—		—		—		—		148		148		109,520		109,668
Construction and land development	224		379		—		603		—		603		88,735		89,338
C&I/Agricultural operating:
Commercial and industrial	163		—		—		163		853		1,016		103,355		104,371
C&I SBA PPP loans	—		—		—		—		—		—		139,166		139,166
Agricultural operating	451		600		—		1,051		1,651		2,702		31,256		33,958
Residential mortgage:
Residential mortgage	2,256		960		838		4,054		2,302		6,356		135,498		141,854
Purchased HELOC loans	—		67		94		161		234		395		6,152		6,547
Consumer installment:
Originated indirect paper	111		41		17		169		74		243		28,293		28,536
Other Consumer	63		15		1		79		26		105		14,525		14,630
Total	$	3,694	$	2,161	$	950	$	6,805	$	13,154	$	19,959	$	1,221,925	$	1,241,884
December 31, 2019
Commercial/Agricultural real estate:
Commercial real estate	$	2,804	$	847	$	—	$	3,651	$	4,214	$	7,865	$	506,594	$	514,459
Agricultural real estate	509		—		—		509		7,568		8,077		77,286		85,363
Multi-family real estate	—		—		—		—		1,449		1,449		85,559		87,008
Construction and land development	436		—		—		436		42		478		85,932		86,410
C&I/Agricultural operating:
Commercial and industrial	1,024		—		—		1,024		1,850		2,874		130,860		133,734
Agricultural operating	73		49		—		122		1,702		1,824		35,956		37,780
Residential mortgage:
Residential mortgage	4,929		1,597		649		7,175		2,063		9,238		167,094		176,332
Purchased HELOC loans	293		378		407		1,078		—		1,078		7,329		8,407
Consumer installment:
Originated indirect paper	168		52		20		240		137		377		39,208		39,585
Other Consumer	204		43		28		275		31		306		17,880		18,186
Total	$	10,440	$	2,966	$	1,104	$	14,510	$	19,056	$	33,566	$	1,153,698	$	1,187,264

At September 30, 2020, the Company has identified impaired loans of $51,689, consisting of $19,778 TDR loans, the carrying amount of purchased credit impaired loans of $23,422 and $8,489 of substandard non-TDR loans. The $51,689 total of impaired loans includes $12,579 of performing TDR loans. At December 31, 2019, the Company has identified impaired loans of $63,196, consisting of $12,594 TDR loans, the carrying amount of purchased credit impaired loans of $31,978 and $18,624 of substandard non-TDR loans. The $63,196 total of impaired loans includes $5,370 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis.

A summary of the Company’s impaired loans as of September 30, 2020, December 31, 2019 and September 30, 2019 was as follows:

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2020
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	30,419	$	30,419	$	—	$	30,344	$	454	$	35,467	$	1,374
C&I/Agricultural operating	6,860		6,860		—		7,070		35		8,169		188
Residential mortgage	8,715		8,715		—		8,668		107		8,705		356
Consumer installment	363		363		—		363		6		371		23
Total	$	46,357	$	46,357	$	—	$	46,445	$	602	$	52,712	$	1,941
With An Allowance Recorded:
Commercial/agriculture real estate	$	3,177	$	3,177	$	772	$	3,597	$	48	$	2,660	$	73
C&I/Agricultural operating	1,034		1,034		159		669		—		762		12
Residential mortgage	1,118		1,118		249		970		7		1,275		36
Consumer installment	3		3		1		9		—		35		—
Total	$	5,332	$	5,332	$	1,181	$	5,245	$	55	$	4,732	$	121
September 30, 2020 Totals:
Commercial/agriculture real estate	$	33,596	$	33,596	$	772	$	33,941	$	502	$	38,127	$	1,447
C&I/Agricultural operating	7,894		7,894		159		7,739		35		8,931		200
Residential mortgage	9,833		9,833		249		9,638		114		9,980		392
Consumer installment	366		366		1		372		6		406		23
Total	$	51,689	$	51,689	$	1,181	$	51,690	$	657	$	57,444	$	2,062

	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	40,514	$	40,514	$	—
C&I/Agricultural operating	9,477		9,477		—
Residential mortgage	8,695		8,695		—
Consumer installment	379		379		—
Total	$	59,065	$	59,065	$	—
With An Allowance Recorded:
Commercial/agriculture real estate	$	2,143	$	2,143	$	495
C&I/Agricultural operating	490		490		312
Residential mortgage	1,431		1,431		136
Consumer installment	67		67		13
Total	$	4,131	$	4,131	$	956
December 31, 2019 Totals
Commercial/agriculture real estate	$	42,657	$	42,657	$	495
C&I/Agricultural operating	9,967		9,967		312
Residential mortgage	10,126		10,126		136
Consumer installment	446		446		13
Total	$	63,196	$	63,196	$	956

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	43,907	$	43,907	$	—	$	36,724	$	721	$	36,379	$	2,212
C&I/Agricultural operating	10,298		10,298		—		9,417		166		8,599		543
Residential mortgage	9,016		9,016		—		8,593		141		8,945		370
Consumer installment	358		358		—		300		7		292		24
Total	$	63,579	$	63,579	$	—	$	55,034	$	1,035	$	54,215	$	3,149
With An Allowance Recorded:
Commercial/agriculture real estate	$	1,634	$	1,634	$	205	$	1,384	$	—	$	1,307	$	—
C&I/Agricultural operating	541		541		252		576		—		284		11
Residential mortgage	1,598		1,598		191		1,340		24		1,465		62
Consumer installment	62		62		15		85		—		104		2
Total	$	3,835	$	3,835	$	663	$	3,385	$	24	$	3,160	$	75
September 30, 2019 Totals:
Commercial/agriculture real estate	$	45,541	$	45,541	$	205	$	38,108	$	721	$	37,686	$	2,212
C&I/Agricultural operating	10,839		10,839		252		9,993		166		8,883		554
Residential mortgage	10,614		10,614		191		9,933		165		10,410		432
Consumer installment	420		420		15		385		7		396		26
Total	$	67,414	$	67,414	$	663	$	58,419	$	1,059	$	57,375	$	3,224

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty, and the Bank grants a concession to that borrower that the Bank would not otherwise consider, except for the borrower’s financial difficulties. Concessions may include: extension of the loan’s term, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were three delinquent accruing TDRs greater than 60 days past due with a recorded investment of $310 at September 30, 2020, compared to two such loans with a recorded investment of $101 at December 31, 2019.

Following is a summary of TDR loans by accrual status as of September 30, 2020 and December 31, 2019.

	September 30, 2020		December 31, 2019
Troubled debt restructure loans:
Accrual status	$	12,579	$	5,396
Non-accrual status	7,199		7,198
Total	$	19,778	$	12,594

There was one loan commitment meeting our TDR criteria as of September 30, 2020 totaling $17 and no loan commitments meeting our TDR criteria as of December 31, 2019. There were unused lines of credit totaling $85 and $12 meeting our TDR criteria as of September 30, 2020 and December 31, 2019, respectively.

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and nine months ended September 30, 2020 and September 30, 2019:     

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	3	$	3,550	$	—	$	276	$	—	$	3,826	$	3,826	$	—
C&I/Agricultural operating	2	3,000		—		—		—		3,000		3,000		—
Residential mortgage	8	59		500		32		—		591		591		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	13	$	6,609	$	500	$	308	$	—	$	7,417	$	7,417	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	12	$	4,442	$	198	$	293	$	—	$	4,933	$	4,933	$	—
C&I/Agricultural operating	5	3,295		78		—		—		3,373		3,373		—
Residential mortgage	13	148		858		117		—		1,123		1,123		—
Consumer installment	2	3		—		4		—		7		7		—
Totals	32	$	7,888	$	1,134	$	414	$	—	$	9,436	$	9,436	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	7	$	1,987	$	—	$	25	$	—	$	2,012	$	2,012	$	—
C&I/Agricultural operating	1	—		—		60		—		60		60		—
Residential mortgage	2	106		—		—		—		106		106		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	10	$	2,093	$	—	$	85	$	—	$	2,178	$	2,178	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	14	$	2,005	$	78	$	1,215	$	—	$	3,298	$	3,298	$	—
C&I/Agricultural operating	7	165		364		469		—		998		998		—
Residential mortgage	9	431		—		171		—		602		602		—
Consumer installment	1	2		—		—		—		2		2		—
Totals	31	$	2,603	$	442	$	1,855	$	—	$	4,900	$	4,900	$	—

A summary of loans by loan segment modified in a troubled debt restructuring as of September 30, 2020 and September 30, 2019, was as follows:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	34	$	10,517	27	$	5,917
C&I/Agricultural operating	17	5,358		16	2,366
Residential mortgage	50	3,850		42	3,438
Consumer installment	7	53		8	74
Total troubled debt restructurings	108	$	19,778	93	$	11,795

The following table provides information related to restructured loans that were considered in default as of September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	15	$	5,037	9	$	2,343
C&I/Agricultural operating	12	1,490		12	1,914
Residential mortgage	8	672		3	344
Total troubled debt restructurings	35	$	7,199	24	$	4,601

The following table provides information related to restructured loans that became in default during the three months ended September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	—	$	—	2	$	120
Residential mortgage	2	234		—	—
Total troubled debt restructurings	2	$	234	2	$	120

The following table provides information related to restructured loans that became in default during the nine months ended September 30, 2020 and September 30, 2019:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	2	$	140	7	$	227
C&I/Agricultural operating	1	78		4	857
Residential mortgage	3	279		—	—
Total troubled debt restructurings	6	$	497	11	$	1,084

All acquired loans were initially recorded at fair value at the acquisition date. The outstanding balance and the carrying amount of acquired loans included in the consolidated balance sheet are as follows:

	September 30, 2020		December 31, 2019
Accountable for under ASC 310-30 (Purchased Credit Impaired “PCI” loans)
Outstanding balance	$	25,083	$	38,268
Carrying amount	$	23,422	$	31,978
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	299,251	$	386,476
Carrying amount	$	294,201	$	383,275
Total acquired loans
Outstanding balance	$	324,334	$	424,744
Carrying amount	$	317,623	$	415,253

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

	September 30, 2020		September 30, 2019
Accretable discount, beginning of period	$	3,201	$	3,163
Additions to accretable discount for acquired performing loans	—		814
Accelerated accretion from payoff of certain PCI loans with transferred non-accretable difference	(99)		—
Transfers from non-accretable difference to accretable discount	2,704		80
Scheduled accretion	(756)		(622)
Accretable discounts, end of period	$	5,050	$	3,435

Non-accretable difference on purchase credit impaired loans was $1,661 and $6,290 at September 30, 2020 and December 31, 2019, respectively.

XML

MORTGAGE SERVICING RIGHTS

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

MORTGAGE SERVICING RIGHTS

MORTGAGE SERVICING RIGHTS

Mortgage servicing rights--Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of these loans as of September 30, 2020 and December 31, 2019 were $555,700 and $524,715, respectively, and consisted of one to four family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and the Federal National Mortgage Association. The current period valuation allowance is included as amortization of mortgage servicing rights in non-interest expense on the consolidated statement of operations.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $6,753 and $2,868, at September 30, 2020 and December 31, 2019, respectively. Mortgage servicing rights activity for the nine month period ended September 30, 2020 and twelve months ended December 31, 2019 were as follows:

	As of and for the Nine Months Ended			As of and for the Twelve Months Ended
Mortgage servicing rights:	September 30, 2020			December 31, 2019
Mortgage servicing assets, net; beginning of period	$	4,541		$	4,486
MSR asset acquired	—			—
Increase in MSR assets resulting from transfers of financial assets	1,546			904
Amortization during the period	(908)			(849)
	5,179			4,541
Valuation Allowances:
Balance at beginning of period	(259)			—
Additions	(1,422)			(259)
Recoveries	—			—
Write-downs	—			—
Balance at end of period	(1,681)			(259)
Mortgage servicing assets, net; end of period	$	3,498		$	4,282
Fair value of MSR asset; end of period	$	3,509		$	4,309
Residential mortgage loans serviced for others	$	555,700		$	524,715
Net book value of MSR asset to loans serviced for others	0.63		%	0.82		%

XML

LEASES

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

LEASES

We have operating leases for our corporate offices (1), bank branch offices (6), other production offices (1) and certain office equipment. Our leases have remaining lease terms ranging from approximately 3 months to 8 years, some of which include options to extend the leases for up to 5 additional years. As of September 30, 2020, we have no additional lease commitments that have not yet commenced.

	Nine Months Ended
	September 30, 2020			September 30, 2019
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	477		$	665
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—		$	158
	September 30, 2020			December 31, 2019
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,803		$	2,787
Operating lease liabilities	$	2,910		$	2,845
Weighted average remaining lease term in years; operating leases	6.1			6.63
Weighted average discount rate; operating leases	2.63		%	3.07		%

Cash obligations under lease contracts are as follows:

Fiscal years ending December 31,
2020	$	161
2021	592
2022	558
2023	505
2024	419
Thereafter	1,229
Total	3,464
Less: effects of discounting	(554)
Lease liability recognized	$	2,910

XML

DEPOSITS

9 Months Ended

Sep. 30, 2020

Deposits [Abstract]

DEPOSITS

DEPOSITS

The following is a summary of deposits by type at September 30, 2020 and December 31, 2019, respectively: 

	September 30, 2020		December 31, 2019
Non-interest bearing demand deposits	$	229,217	$	168,157
Interest bearing demand deposits	279,648		223,102
Savings accounts	191,511		156,599
Money market accounts	246,651		246,430
Certificate accounts	323,751		401,414
Total deposits	$	1,270,778	$	1,195,702
Brokered deposits included above:	$	3,250	$	50,377

At September 30, 2020, the scheduled maturities of time deposits were as follows:

September 30, 2021	$	216,854
September 30, 2022	96,391
September 30, 2023	6,669
September 30, 2024	2,976
September 30, 2025	861
After September 30, 2025	—
Total	$	323,751

XML

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS

9 Months Ended

Sep. 30, 2020

Federal Home Loan Banks [Abstract]

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2020 and December 31, 2019 is as follows:

		September 30, 2020						December 31, 2019
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4), (5)	2020	$	1,000	1.76	%	1.76	%	$	69,000	1.67	%	2.05	%
	2021	8,000		—	%	2.16	%	4,000		1.85	%	2.16	%
	2022	15,000		2.34	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	—		—	%	—	%
	2024	20,530		—	%	1.45	%	530		—	%	—	%
	2025	5,000		1.45	%	1.45	%	—		—	%	—	%
	2029	42,500		1.00	%	1.13	%	42,500		1.00	%	1.13	%
	2030	12,500		0.52	%	0.86	%	—		—	%	—	%
Subtotal		124,530						131,030
Unamortized discount on acquired notes		(39)						(59)
Federal Home Loan Bank advances, net		$	124,491					$	130,971
Senior Notes (6)	2031	$	28,856	3.50	%	3.50	%	$	28,856	4.00	%	4.75	%
Subordinated Notes (7)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%
		$	30,000
Unamortized debt issuance costs		$	(559)					$	(296)
Total other borrowings		$	58,297					$	43,560
Totals		$	182,788					$	174,531

(1)    The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $681,951 and $792,909 at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $105,858 compared to $203,935 as of December 31, 2019.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $162,530 and $151,530, during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019, respectively.

(3) The weighted-average interest rates on FHLB borrowings maturing within twelve months as of September 30, 2020 and December 31, 2019 were 0.82% and 1.74%, respectively.

(4) Six of the FHLB notes with remaining balances totaling $9,530 were acquired as a result of the F&M acquisition. These notes mature on various dates through 2024 with a weighted average rate of 2.02% and weighted average maturity of 14 months.

(5)    FHLB term notes totaling $55,000, with various maturity dates in 2029 and 2030, can be called or replaced by the FHLB on a quarterly basis, beginning approximately three months after the initial advance.

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

(a) A term note, requiring quarterly interest-only payments through June 2022, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate with a floor rate of 3.50%.

(b) A $5,000 line of credit, maturing in August 2021, that remains undrawn upon.

(7)    Subordinated notes resulted from the following:

(a) The Company’s private sale in August 2017, which bears a fixed interest rate of 6.75% for five years. In August 2022, they convert to a three-month LIBOR plus 4.90% rate, and the interest rate will reset quarterly thereafter. Interest-only payments are due quarterly.

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bears a fixed interest rate of 6.00% for five years. In September 2025, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 591 basis points. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

Federal Home Loan Bank Letters of Credit

The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank. This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest bearing deposit balances. These balances were $180,325 and $147,991 at September 30, 2020 and December 31, 2019, respectively.

Federal Reserve Bank Paycheck Protection Program Liquidity Facility (“FRB PPPLF”) Program

The Bank has originated Small Business Association’s Paycheck Protection Program (“SBA PPP”) loans and has complied with the requirements to pledge these loans to the FRB PPPLF program which provides 100% funding for SBA PPP loans upon request. The Bank has no outstanding loan balances under this facility at September 30, 2020 and December 31, 2019. Maximum month-end borrowed amounts outstanding under this agreement were $25,136 and $0, during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019, respectively.

XML

CAPITAL MATTERS

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

CAPITAL MATTERS

CAPITAL MATTERS

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.

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. At September 30, 2020, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	170,610	15.0	%	$	91,021	> =	8.0	%	$	113,776	> =	10.0	%
Tier 1 capital (to risk weighted assets)	156,388		13.7	%	68,266		> =	6.0	%	91,021		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	156,388		13.7	%	51,199		> =	4.5	%	73,955		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	156,388		9.9	%	63,465		> =	4.0	%	79,331		> =	5.0	%
As of December 31, 2019
Total capital (to risk weighted assets)	$	160,302	13.1	%	$	98,174	> =	8.0	%	$	122,718	> =	10.0	%
Tier 1 capital (to risk weighted assets)	149,982		12.2	%	73,631		> =	6.0	%	98,174		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	149,982		12.2	%	55,223		> =	4.5	%	79,767		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	149,982		10.4	%	57,834		> =	4.0	%	72,293		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount	Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	163,250	14.3	%	$	91,021	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	119,028		10.5	%	68,266		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	119,028		10.5	%	51,199		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	119,028		7.5	%	63,465		> =	4.0	%	N/A	N/A
As of December 31, 2019
Total capital (to risk weighted assets)	$	137,259	11.2	%	$	98,174	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	111,939		9.1	%	73,631		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	111,939		9.1	%	55,223		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	111,939		7.7	%	57,834		> =	4.0	%	N/A	N/A

XML

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s 2004 Recognition and Retention Plan and 2004 Stock Option and Incentive Plan. These plans were terminated on January 18, 2018.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years. As of September 30, 2020, 89,183 restricted shares and 181,000 options had been granted to eligible participants. Due to the plan’s expiration, no new awards can be granted under this plan. Restricted shares granted under the 2008 Equity Incentive Plan were awarded at no cost to the employee and vest pro rata over a two to five-year period from the grant date. Options granted to date under this plan vest pro rata over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date.

On March 27, 2018, the stockholders of Citizens Community Bancorp, Inc. approved the 2018 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2018 Equity Incentive Plan is 350,000 shares. As of September 30, 2020, 99,575 restricted shares had been granted under this plan. As of September 30, 2020, no stock options had been granted under this plan.

Net compensation expense related to restricted stock awards from these plans was $165 and $462 for the three and nine months ended September 30, 2020, compared to $127 and $370 for the three and nine months ended September 30, 2019.

Restricted Common Stock Award

	September 30, 2020			December 31, 2019
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	43,457	$	12.76	75,407	$	13.24
Granted	45,507	11.79		12,847	11.50
Vested	(14,545)	12.78		(32,630)	12.89
Forfeited	—	—		(12,167)	13.28
Unvested and outstanding at end of year	74,419	$	12.16	43,457	$	12.76

The Company accounts for stock-based employee compensation related to the Company’s 2008 Equity Incentive Plan and 2018 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation related to these plans for the three and nine month periods ended September 30, 2020 was $3 and $11, respectively. The compensation cost recognized for stock-based employee compensation related to these plans for the three and nine month periods ended September 30, 2019 was $5 and $14, respectively.

Common Stock Option Awards

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
September 30, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,000)	12.77
Outstanding at end of year	73,100	$	11.08	5.75
Exercisable at end of year	52,900	$	10.76	5.59	$	—
Fully vested and expected to vest	73,100	$	11.08	5.75	$	—
December 31, 2019
Outstanding at beginning of year	108,930	$	10.15
Exercised	(28,430)	7.12
Forfeited or expired	(2,400)	12.38
Outstanding at end of year	78,100	$	11.18	6.55
Exercisable at end of year	44,700	$	10.73	6.30	$	67
Fully vested and expected to vest	78,100	$	11.18	6.55	$	81

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan for the respective periods follows:

	Nine months ended September 30, 2020		Twelve months ended December 31, 2019
Intrinsic value of options exercised	$	—	$	130
Cash received from options exercised	$	—	$	203
Tax benefit realized from options exercised	$	—	$	—

XML

FAIR VALUE ACCOUNTING

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE ACCOUNTING

FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The topic describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company 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 the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value (Level 3 inputs).

Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

	Fair Value			Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Investment securities:
U.S. government agency obligations	$	34,379		$	—	$	34,379	$	—
Obligations of states and political subdivisions	140			—		140		—
Mortgage-backed securities	51,758			—		51,758		—
Corporate debt securities	15,364			—		15,364		—
Corporate asset-based securities	35,543			—		35,543		—
Trust preferred securities	13,724			—		13,724		—
Total	$	150,908	150908000	$	—	$	150,908	$	—
December 31, 2019
Investment securities:
U.S. government agency obligations	$	51,805		$	—	$	51,805	$	—
Obligations of states and political subdivisions	281			—		281		—
Mortgage-backed securities	71,331			—		71,331		—
Corporate debt securities	18,725			—		18,725		—
Corporate asset backed securities	26,854			—		26,854		—
Trust preferred securities	11,123			—		11,123		—
Total	$	180,119		$	—	$	180,119	$	—

Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2020 and December 31, 2019:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Foreclosed and repossessed assets, net	$	812	$	—	$	—	$	812
Impaired loans with allocated allowances	4,151		—		—		4,151
Mortgage servicing rights	3,498		—		—		3,509
Total	$	8,461	$	—	$	—	$	8,472
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	$	—	$	—	$	1,460
Impaired loans with allocated allowances	3,175		—		—		3,175
Mortgage servicing rights	4,282		—		—		4,309
Total	$	8,917	$	—	$	—	$	8,944

The fair value of impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans.

The fair value of foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned. The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned.

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

The following table represents additional quantitative information about assets measured at fair value on a

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

September 30, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
September 30, 2020
Foreclosed and repossessed assets, net	$	812	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	4,151	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	3,509	Discounted cash flows	Discounted rates	9 - 12%
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	3,175	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	4,309	Discounted cash flows	Discounted rates	9.5% - 12.5%

(1)     Fair value is generally determined through independent third-party appraisals of the underlying

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

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

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

    and delinquent property taxes.

The table below represents what we would receive to sell an asset or what we would have to pay to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount and estimated fair value of the Company’s financial instruments as of the dates indicated below were as follows:

		September 30, 2020				December 31, 2019
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	115,474	$	115,474	$	55,840	$	55,840
Other interest-bearing deposits	(Level II)	3,752		3,838		4,744		4,792
Securities available for sale “AFS”	(Level II)	150,908		150,908		180,119		180,119
Securities held to maturity “HTM”	(Level II)	16,927		17,233		2,851		2,957
Equity securities with readily determinable fair value	(Level I)	187		187		246		246
Other investments	(Level II)	15,075		15,075		15,005		15,005
Loans receivable, net	(Level III)	1,215,303		1,204,923		1,167,060		1,161,660
Loans held for sale	(Level II)	4,938		4,938		5,893		5,893
Mortgage servicing rights	(Level III)	3,498		3,509		4,282		4,309
Accrued interest receivable	(Level 1)	5,829		5,829		4,738		4,738
Financial liabilities:
Deposits	(Level III)	$	1,270,778	$	1,275,000	$	1,195,702	$	1,192,777
FHLB advances	(Level II)	124,491		129,798		130,971		131,593
Other borrowings	(Level I)	58,297		58,297		43,560		43,560
Accrued interest payable	(Level I)	517		517		453		453

XML

OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

OTHER COMPREHENSIVE INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the tax effects allocated to each component of other comprehensive income for the three and

nine months ended September 30, 2020 and 2019:

	Three months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319
Reclassification adjustment for gains included in net income	—		—		—		—		—		—
Other comprehensive income	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319

	Nine months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	2,052	$	(564)	$	1,488	$	3,003	$	(826)	$	2,177
Reclassification adjustment for gains included in net income	(156)		43		(113)		(26)		7		(19)
Other comprehensive income	$	1,896	$	(521)	$	1,375	$	2,977	$	(819)	$	2,158

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2019 and the nine months ended September 30, 2020 were as follows:

	Unrealized Gains (Losses) on Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2019	$	(2,540)	$	(1,841)
Current year-to-date other comprehensive income	1,953		1,415
Adoption of ASU 2016-01; Equity securities (1)	(62)		(45)
Ending balance, December 31, 2019	$	(649)	$	(471)
Current year-to-date other comprehensive income	1,896		1,375
Ending balance, September 30, 2020	$	1,247	$	904

(1) Amounts reclassified to retained earnings due to January 1, 2019 adoption of ASU 2016-02. For further information, refer to Note 1, “Nature of Business and Summary of Significant Policies; Recent Pronouncements-Adopted”.

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2020 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2020		Nine months ended September 30, 2020		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	156		Net gains on investment securities
Tax Effect	—		(43)			Provision for income taxes
Total reclassifications for the period	$	—	$	113		Net gain attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2019		Nine months ended September 30, 2019		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	26		Net gains on investment securities
Tax Effect	—		(7)			Provision for income taxes
Total reclassifications for the period	$	—	$	19		Net gain attributable to common shareholders

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

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, mortgage servicing rights, foreclosed and repossessed assets, valuation of intangible assets arising from acquisitions, useful lives for depreciation and amortization, valuation of goodwill and long-lived assets, stock based compensation, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: those items described under the caption “Risk Factors” in Item 1A of the annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020; the matters described in “Risk Factors” in Item 1A of our Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and in Item 1A of this Form 10-Q; external market factors such as market interest rates and unemployment rates; changes to operating policies and procedures and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Investment Securities; Held to Maturity and Available for Sale

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

are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to: the Company’s intent and ability to sell the debt security prior to recovery, that it is more likely than not that the Company will not sell the security prior to recovery, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded in other comprehensive income or loss as separate components of stockholders’ equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company’s consolidated statement of operations. Non-credit components of the unrealized losses on available for sale securities will continue to be recognized in other comprehensive income (loss), net of tax.

Other Investments

Other Investments - As a member of the Federal Reserve Bank (“FRB”) System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. These securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other exchange traded equity securities. As no ready market exists for these stocks, and they have no quoted market value, these investments are carried at cost and periodically evaluated for impairment based on the ultimate recovery of par value. Cash dividends are reported as other income in the consolidated statement of operations.

Also included in other investments is stock of our correspondent bank, Bankers’ Bank, without readily determinable fair value. This stock is carried at cost plus or minus changes resulting from observable price changes in orderly transactions for this stock, less other-than-temporary impairment charges, if any.

Management’s evaluation for impairment of these other investments, includes consideration of the financial condition and other available relevant information of the issuer. Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

Loans

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of: deferred loan fees and costs, accretable yield on acquired loans and non-accretable discount on purchased credit impaired loans. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Late charge fees are recognized into income when collected.

Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:

•Commercial/agricultural real estate loans past due 90 days or more;

•Commercial and industrial/agricultural operating loans past due 90 days or more;

•Closed end consumer installment loans past due 120 days or more; and

•Residential mortgage loans and open ended consumer installment loans past due 180 days or more.

Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash

basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a six month payment history has been established. Interest on accruing troubled debt restructured (“TDR”) loans is recognized as income as it accrues, based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed ended consumer installment loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial/agricultural real estate, commercial and industrial and agricultural operating loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.

Allowance for Loan Losses

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan’s contractual terms is not expected. Impaired loans consist of all TDRs, as well as individual loans not considered a TDR, that are either (1) rated substandard or worse, (2) on nonaccrual status or (3) PCI loans which were deemed impaired at the time of acquisition. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. For TDR’s or substandard loans deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) its outstanding principal balance; (b) the present value of the loan’s estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any loan collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90+ days past due, and certain substandard loans that are less than 90+ days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for ALL purposes, and accordingly, are not separately identified for ALL disclosures.

Acquired Loans

Acquired Loans— Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value with no carryover of related allowance for loan losses. Any allowance for loan loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that no longer are expected to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including: the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans. As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

Loans acquired with deteriorated credit quality are accounted for in accordance with Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, the Company considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality. These factors include, but are not limited to: loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring.

Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable discount is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect.

Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable discount to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life.

Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool.

For all acquired loans, the outstanding loan balances less any related accretable discount and/or non-accretable difference is referred to as the loans’ carrying amount.

Loans Held for Sale

Loans Held for Sale — Loans held for sale are those loans the Company has the intent to sell in the foreseeable future. They are carried at the lower of aggregate cost or fair value. Gains and losses on sales of loans are recognized at settlement dates, and are determined by the difference between the sales proceeds and the carrying value of the loans after allocating costs to servicing rights retained. Such gains and losses are included in non-interest income in the consolidated statements of operations. All sales are made without recourse. Interest rate lock commitments on mortgage loans to be funded and sold are valued at fair value, and are included in other assets or liabilities, if material.

Mortgage Servicing Rights

Mortgage Servicing Rights— Mortgage servicing rights (“MSR”) assets result as the Company sells loans to investors in the secondary market and retains the rights to service mortgage loans sold to others. MSR assets are initially measured at fair value; assessed at least annually for impairment; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.The valuation of MSRs and related amortization, included in amortization of mortgage servicing rights in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs. Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary, if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

Foreclosed and Repossessed Assets, net

Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a write-down is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other in the consolidated statements of operations.

Transfers of financial assets

Transfers of financial assets—Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the entity, (2) the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and (3) the entity does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity.

Goodwill and other intangible assets

Goodwill and other intangible assets-The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, “Intangibles - Goodwill and Other.”  The Company records the excess of the cost of acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill.  The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives utilizing the straight-line method.  On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amounts of the intangible assets may be impaired.  The Company does not amortize goodwill and any acquired intangible asset with an indefinite useful economic life, but reviews them for impairment at a reporting unit level on an annual basis, or when events or changes in circumstances indicate that the carrying amounts may be impaired.  A reporting unit is defined as any distinct, separately identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management.  The Company has one reporting unit as of December 31, 2019 which is related to its banking activities. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2019. The Company performed a goodwill impairment analysis as of September 30, 2020, due to triggering events being identified, and determined that goodwill was not impaired.

Leases

Leases - We determine if an arrangement is a lease at inception. All of our existing leases have been determined to be operating leases under ASC 842. Right-of-use (“ROU”) assets are included in other assets in our consolidated balance sheets. Operating lease liabilities are included in other liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date, based on the present value of lease payments over the lease term. As none of our existing leases provide an implicit rate, we use our incremental borrowing rate, based on information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease, when it is reasonably certain that we will exercise that option. Lease expense is recognized based on the total contractually required lease payments, over the term of the lease, on a straight-line basis.

Debt and equity issuance cost

Debt and equity issuance costs—Debt issuance costs, which consist primarily of fees paid to note lenders, are deferred and included in other borrowings in the consolidated balance sheet. Debt issuance costs are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statement of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheet, in the period of the share issuance.

Advertising, Marketing and Public Relations Expense

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

Income Taxes

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Revenue Recognition

Revenue Recognition - The Company recognizes revenue in the consolidated statements of operations as it is earned and when collectability is reasonably assured. The primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts. Non-interest income is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income includes fees from deposit accounts, ATM and debit card fees, mortgage banking activities, and other miscellaneous services and transactions. Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later.  The Company also receives contingent commissions from insurance companies which are based on the overall profitability of their relationship based primarily on the loss experience of the insurance placed by the Company.  Contingent commissions from insurance companies are recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations.

Earnings Per Share

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company’s stock price on the reporting date.

Operating Segments

Operating Segments—While our executive officers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications

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

Recent Accounting Pronouncements

Recent Accounting Pronouncements—The Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have potentially significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

Recent Accounting Pronouncements—Adopted

ASU 2014-09; Revenue from Contracts with Customers (Topic 606)—Under the ASU, as modified by subsequent ASUs, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration the entity expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company applied the five-step method outlined in the ASU to all revenue streams scoped-in by the ASU and elected the modified retrospective implementation method. Substantially all of the Company’s interest income and certain non-interest income items were not impacted by the adoption of this ASU because the revenue from those contracts with customers is covered by other guidance in U.S. GAAP. The Company’s largest sources of non-interest revenue which are subject to the guidance include fees and service charges on loan and deposit accounts and interchange revenue from debit card transactions. ASU 2014-09, as amended, became effective for the Company’s annual and interim periods beginning in the first quarter 2019. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as the change in the timing and pattern of the Company’s revenue recognition related to scoped-in non-interest income recognized under the newly issued ASU is consistent with the current applicable accounting guidance. The Company has made all required additional disclosures related to non-interest income in the consolidated financial statements, primarily in Revenue Recognition policy included herein in Note 1.

ASU 2016-01; Recognition and Measurement of Financial Assets and Liabilities—The guidance requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. The Company’s adoption of ASU 2016-01 as of January 1, 2019, constitutes a change in accounting principle. The Company recorded a cumulative effect adjustment to retained earnings of $45 as of January 1, 2019, as a result of implementing this new accounting standard.

ASU 2016-02; Leases (Topic 842)—The ASU changed current GAAP by requiring that lease assets and liabilities arising from operating leases be recognized on the balance sheet. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, Codification Improvements to Topic 842, Leases, amending various aspects of Topic 842. Topic 842 does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee from current U.S. GAAP. For leases with a term of 12 months or less, a lessee would be permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and liabilities. Topic 842 became effective for the Company for annual and interim periods beginning in the first quarter 2019.

The Company leased (1) 9 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases that resulted in the recognition of right-of-use assets and corresponding lease liabilities of approximately $5,000 on the consolidated balance sheet under Topic 842. Adoption of Topic 842 did not have a material impact on the Company’s consolidated statement of operations. Management adopted the guidance on January 1, 2019, and elected certain practical expedients offered by the FASB, including foregoing the restatement of comparative periods upon adoption. Management also excluded short-term leases from the recognition of right-of-use asset and lease liabilities. Additionally, the Company elected the transition relief allowed by FASB in foregoing reassessment of the following: whether any existing contracts were or contained leases, the classification of existing leases, and the determination of initial direct costs for existing leases. As of September 30, 2020, the Company leases (1) 6 branch locations, (2) its corporate offices (3) 1 production office and (4) office equipment under operating leases. See Note 5 for additional detail.

ASU 2017-04; Intangibles - Goodwill and Other (Topic 350)—The ASU simplifies the accounting for goodwill impairment. This guidance, among other things, removes step two of the goodwill impairment test thus eliminating the need to determine the fair value of individual assets and liabilities of the reporting unit. Upon adoption of this ASU, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This may result in either greater or less impairment being recognized than under current guidance. The Company adopted this Update for the Company’s annual goodwill impairment tests beginning in the year ended December 31, 2019. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2018-13, Fair Value Measurement (Topic 820)—The ASU modifies disclosure requirements on fair value measurements. This ASU removes requirements to disclose, (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and (2) the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. ASU 2018-13 clarifies that, disclosure regarding measurement uncertainty, is intended to communicate information about the uncertainty in measurement, as of the reporting date. ASU 2018-13 adds certain disclosure requirements, including (1) disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this ASU, in the first quarter of 2020. The amendments on (1) changes in unrealized gains and losses, (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and (3) the narrative description of measurement uncertainty, are being applied prospectively. All other amendments have been applied retrospectively for all periods presented. Adoption of this ASU had no material impact on its consolidated financial position or results of operations.

ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)—The ASU was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement), by providing guidance for determining when the arrangement includes a software license. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract, with similar costs to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments. This guidance became effective for the Company beginning in the first quarter of 2020. Adoption of this ASU had no material impact on its consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting--The ASU provides optional and temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contacts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. ASU 2020-04 is effective for the Company immediately and through December 31, 2022. The Company utilizes LIBOR, among other indexes, as a reference rate for underwriting variable rate loans. Reference rate reform has not had, nor does the Company expect it to have, a material effect on the Company’s consolidated balance sheet, operations or cash flows.

Recently Issued, But Not Yet Effective Accounting Pronouncements

ASU 2016-13; Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments--The ASU changes accounting for credit losses on loans receivable and debt securities from an incurred loss methodology to an expected credit loss methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Accordingly, ASU 2016-13 requires the use of forward-looking information to form credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, though the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU 2019-10, extending the effective date to fiscal years beginning after December 15, 2022, which is the Company’s fiscal year ending December 31, 2023. Earlier adoption is permitted; however, the Company does not currently plan to adopt the ASU early. Management is assessing alternative loss estimation methodologies and the Company’s data and system needs in order to evaluate the impact that adoption of this standard will have on the Company’s financial condition and results of operations. The Company anticipates recording the effect of implementing this ASU through a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU is effective, which will be January 1, 2023.

Fair Value Measurement

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The topic describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company 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 the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value (Level 3 inputs).

XML

INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of September 30, 2020 and December 31, 2019, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
U.S. government agency obligations	$	34,059	$	391	$	71	$	34,379
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	49,870		1,888		—		51,758
Corporate debt securities	15,211		277		124		15,364
Corporate asset-based securities	36,443		38		938		35,543
Trust preferred securities	13,938		69		283		13,724
Total available for sale securities	$	149,661	$	2,663	$	1,416	$	150,908
December 31, 2019
U.S. government agency obligations	$	52,020	$	132	$	347	$	51,805
Obligations of states and political subdivisions	281		—		—		281
Mortgage-backed securities	70,806		635		110		71,331
Corporate debt securities	18,776		66		117		18,725
Corporate asset-based securities	27,718		—		864		26,854
Trust preferred securities	11,167		35		79		11,123
Total available for sale securities	$	180,768	$	868	$	1,517	$	180,119

Schedule of Held-to-Maturity Securities

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Obligations of states and political subdivisions	$	300	$	—	$	—	$	300
Mortgage-backed securities	16,627		306		—		16,933
Total held to maturity securities	$	16,927	$	306	$	—	$	17,233
December 31, 2019
Obligations of states and political subdivisions	$	300	$	2	$	—	$	302
Mortgage-backed securities	2,551		104		—		2,655
Total held to maturity securities	$	2,851	$	106	$	—	$	2,957

Schedule of Maturity of Securities

The estimated fair value of securities at September 30, 2020 and December 31, 2019, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and municipal securities due to the call feature.

	September 30, 2020				December 31, 2019
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—	$	141	$	141
Due after one year through five years	3,850		4,064		5,900		5,959
Due after five years through ten years	39,417		39,461		43,269		43,180
Due after ten years	56,524		55,625		60,652		59,508
Total securities with contractual maturities	$	99,791	$	99,150	$	109,962	$	108,788
Mortgage backed securities	49,870		51,758		70,806		71,331
Securities without contractual maturities	—		—		—		—
Total available for sale securities	$	149,661	$	150,908	$	180,768	$	180,119

	September 30, 2020				December 31, 2019
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	300	$	300	$	300	$	302
Total securities with contractual maturities	300		300		300		302
Mortgage backed securities	16,627		16,933		2,551		2,655
Total held to maturity securities	$	16,927	$	17,233	$	2,851	$	2,957

Schedule of Available-for-Sale Securities with Unrealized Losses

Securities with unrealized losses at September 30, 2020 and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2020
U.S. government agency obligations	$	9,596	$	24	$	5,364	$	47	$	14,960	$	71
Corporate debt securities	2,009		17		1,393		107		3,402		124
Corporate asset-based securities	—		—		33,603		938		33,603		938
Trust preferred securities	10,963		283		—		—		10,963		283
Total	$	22,568	$	324	$	40,360	$	1,092	$	62,928	$	1,416
December 31, 2019
U.S. government agency obligations	$	14,593	$	156	$	10,540	$	191	$	25,133	$	347
Mortgage backed securities	22,537		62		5,883		48		28,420		110
Corporate debt securities	7,001		15		1,398		102		8,399		117
Corporate asset-based securities	8,683		285		18,171		579		26,854		864
Trust preferred securities	7,420		79		—		—		7,420		79
Total	$	60,234	$	597	$	35,992	$	920	$	96,226	$	1,517

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of Loans by Risk Rating

Below is a summary of originated and acquired loans by type and risk rating as of September 30, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	318,915	$	1,947	$	1,166	$	—	$	—	$	322,028
Agricultural real estate	30,807		454		1,269		—		—		32,530
Multi-family real estate	100,148		—		—		—		—		100,148
Construction and land development	77,514		—		3,478		—		—		80,992
C&I/Agricultural operating:
Commercial and industrial	75,338		802		3,819		—		—		79,959
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	23,040		28		1,256		—		—		24,324
Residential mortgage:
Residential mortgage	85,922		7		4,171		—		—		90,100
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other consumer	13,135		—		86		—		—		13,221
Total originated loans	$	898,517	$	3,238	$	15,795	$	—	$	—	$	917,550
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	168,360	$	4,237	$	6,048	$	—	$	—	$	178,645
Agricultural real estate	33,765		—		6,848		—		—		40,613
Multi-family real estate	9,372		—		148		—		—		9,520
Construction and land development	8,264		—		82		—		—		8,346
C&I/Agricultural operating:
Commercial and industrial	23,572		59		782		—		—		24,413
Agricultural operating	8,688		—		946		—		—		9,634
Residential mortgage:
Residential mortgage	49,243		243		2,268		—		—		51,754
Consumer installment:
Other consumer	1,404		—		5		—		—		1,409
Total acquired loans	$	302,668	$	4,539	$	17,127	$	—	$	—	$	324,334
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	487,275	$	6,184	$	7,214	$	—	$	—	$	500,673
Agricultural real estate	64,572		454		8,117		—		—		73,143
Multi-family real estate	109,520		—		148		—		—		109,668
Construction and land development	85,778		—		3,560		—		—		89,338
Commercial/Agricultural non-real estate:
Commercial and industrial	98,910		861		4,601		—		—		104,372
C&I SBA PPP loans	139,166		—		—		—		—		139,166
Agricultural operating	31,728		28		2,202		—		—		33,958
Residential mortgage:
Residential mortgage	135,165		250		6,439		—		—		141,854
Purchased HELOC loans	6,220		—		327		—		—		6,547
Consumer installment:
Originated indirect paper	28,312		—		223		—		—		28,535
Other Consumer	14,539		—		91		—		—		14,630
Gross loans	$	1,201,185	$	7,777	$	32,922	$	—	$	—	$	1,241,884
Less:
Unearned net deferred fees and costs and loans in process											(5,033)
Unamortized discount on acquired loans											(6,712)
Allowance for loan losses											(14,836)
Loans receivable, net											$	1,215,303

Below is a summary of originated loans by type and risk rating as of December 31, 2019:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	301,381	$	266	$	899	$	—	$	—	$	302,546
Agricultural real estate	31,129		829		2,068		—		—		34,026
Multi-family real estate	71,877		—		—		—		—		71,877
Construction and land development	67,989		—		3,478		—		—		71,467
C&I/Agricultural operating:
Commercial and industrial	85,248		1,023		3,459		—		—		89,730
Agricultural operating	19,545		402		770		—		—		20,717
Residential mortgage:
Residential mortgage	104,428		—		4,191		—		—		108,619
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:					—
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	15,425		—		121		—		—		15,546
Total originated loans	$	744,768	$	2,520	$	15,232	$	—	$	—	$	762,520
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	196,692	$	6,084	$	9,137	$	—	$	—	$	211,913
Agricultural real estate	42,381		534		8,422		—		—		51,337
Multi-family real estate	13,533		—		1,598		—		—		15,131
Construction and land development	14,181		—		762		—		—		14,943
C&I/Agricultural operating:
Commercial and industrial	41,587		932		1,485		—		—		44,004
Agricultural operating	15,621		350		1,092		—		—		17,063
Residential mortgage:
Residential mortgage	65,125		436		2,152		—		—		67,713
Consumer installment:
Other Consumer	2,628		—		12		—		—		2,640
Total acquired loans	$	391,748	$	8,336	$	24,660	$	—	$	—	$	424,744
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	498,073	$	6,350	$	10,036	$	—	$	—	514,459
Agricultural real estate	73,510		1,363		10,490		—		—		85,363
Multi-family real estate	85,410		—		1,598		—		—		87,008
Construction and land development	82,170		—		4,240		—		—		86,410
C&I/Agricultural operating:
Commercial and industrial	126,835		1,955		4,944		—		—		133,734
Agricultural operating	35,166		752		1,862		—		—		37,780
Residential mortgage:
Residential mortgage	169,553		436		6,343		—		—		176,332
Purchased HELOC loans	8,407		—		—		—		—		8,407
Consumer installment:
Originated indirect paper	39,339		—		246		—		—		39,585
Other Consumer	18,053		—		133		—		—		18,186
Gross loans	$	1,136,516	$	10,856	$	39,892	$	—	$	—	$	1,187,264
Less:
Unearned net deferred fees and costs and loans in process											(393)
Unamortized discount on acquired loans											(9,491)
Allowance for loan losses											(10,320)
Loans receivable, net											$	1,167,060

Schedule of Changes of Impaired Loans and Non-Impaired Loans

Changes in the ALL by loan type for the periods presented below were as follows:

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, July 1, 2020	$	8,297	$	1,778	$	980	$	480	$	574	$	12,109
Charge-offs	—		(103)		(4)		(10)		—		(117)
Recoveries	74		—		2		18		—		94
Provision	430		188		(15)		64		56		723
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2020	746		334		112		72		—		1,264
Charge-offs	—		—		(47)		—		—		(47)
Recoveries	1		30		—		2		—		33
Provision	623		(58)		199		13		—		777
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2020
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(632)		(4)		(124)		—		(760)
Recoveries	74		—		7		55		—		136
Provision	2,522		852		81		154		273		3,882
Total Allowance on originated loans	8,801		1,863		963		552		630		12,809
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, January 1, 2020	526		27		163		53		—		769
Charge-offs	—		(159)		(74)		(2)		—		(235)
Recoveries	77		30		14		4		—		125
Provision	767		408		161		32		—		1,368
Total Allowance on other acquired loans	1,370		306		264		87		—		2,027
Total Allowance on acquired loans	1,370		306		264		87		—		2,027
Ending balance, September 30, 2020	$	10,171	$	2,169	$	1,227	$	639	$	630	$	14,836
Allowance for Loan Losses at September 30, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	772	$	159	$	249	$	1	$	—	$	1,181
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	9,399	$	2,010	$	978	$	638	$	630	$	13,655
Loans Receivable as of September 30, 2020:											—
Ending balance of originated loans	$	535,698	$	243,449	$	96,647	$	41,756	$	—	$	917,550
Ending balance of purchased credit-impaired loans	21,453		2,077		1,553		—		—		25,083
Ending balance of other acquired loans	215,671		31,970		50,201		1,409		—		299,251
Ending balance of loans	$	772,822	$	277,496	$	148,401	$	43,165	$	—	$	1,241,884
Ending balance: individually evaluated for impairment	$	13,190	$	6,275	$	8,436	$	367	$	—	$	28,268
Ending balance: collectively evaluated for impairment	$	759,632	$	271,221	$	139,965	$	42,798	$	—	$	1,213,616

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Three months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, July 1, 2019	$	5,010	$	1,470	$	977	$	528	$	299	$	8,284
Charge-offs	—		—		(89)		(36)		—		(125)
Recoveries	—		—		—		17		—		17
Provision	281		130		117		(12)		2		518
Total Allowance on originated loans	5,291		1,600		1,005		497		301		8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans:
Beginning balance, July 1, 2019	181		85		153		56		—		475
Charge-offs	—		—		(45)		(9)		—		(54)
Recoveries	—		—		1		4		—		5
Provision	(10)		2		61		4		—		57
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177

	Commercial/Agriculture Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Nine months ended September 30, 2019
Allowance for Loan Losses:
Beginning balance, January 1, 2019	$	4,019	$	1,258	$	1,048	$	641	$	214	$	7,180
Charge-offs	(225)		—		(119)		(142)		—		(486)
Recoveries	—		—		—		53		—		53
Provision	1,497		342		76		(55)		87		1,947
Total Allowance on originated loans	$	5,291	$	1,600	$	1,005	$	497	$	301	$	8,694
Purchased credit impaired loans	—		—		—		—		—		—
Other acquired loans
Beginning balance, January 1, 2019	183		32		205		65		(61)		424
Charge-offs	—		—		(105)		(29)		—		(134)
Recoveries	3		—		2		10		—		15
Provision	(15)		55		68		9		61		178
Total Allowance on other acquired loans	171		87		170		55		—		483
Total Allowance on acquired loans	171		87		170		55		—		483
Ending balance, September 30, 2019	$	5,462	$	1,687	$	1,175	$	552	$	301	$	9,177
Allowance for Loan Losses at September 30, 2019:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	205	$	252	$	191	$	15	$	—	$	663
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	5,257	$	1,435	$	984	$	537	$	301	$	8,514
Loans Receivable as of September 30, 2019:
Ending balance of originated loans	$	401,211	$	102,998	$	124,627	$	58,612	$	—	$	687,448
Ending balance of purchased credit-impaired loans	33,840		5,320		2,273		—		—		41,433
Ending balance of other acquired loans	272,744		58,741		71,290		3,052		—		405,827
Ending balance of loans	$	707,795	$	167,059	$	198,190	$	61,664	$	—	$	1,134,708
Ending balance: individually evaluated for impairment	$	16,458	$	7,215	$	8,626	$	419	$	—	$	32,718
Ending balance: collectively evaluated for impairment	$	691,337	$	159,844	$	189,564	$	61,245	$	—	$	1,101,990

Schedule of Loans Receivable

Loans receivable by loan type as of the end of the periods shown below were as follows:

	Commercial/Agriculture Real Estate Loans				C&I/Agricultural Operating				Residential Mortgage				Consumer Installment				Totals
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Performing loans
Performing TDR loans	$	5,480	$	1,730	$	3,868	$	366	$	3,178	$	3,206	$	53	$	68	$	12,579	$	5,370
Performing loans other	759,328		758,237		271,124		167,596		141,755		178,415		42,994		57,486		1,215,201		1,161,734
Total performing loans	764,808		759,967		274,992		167,962		144,933		181,621		43,047		57,554		1,227,780		1,167,104
Nonperforming loans (1)
Nonperforming TDR loans	5,037		4,868		1,490		1,973		672		383		—		—		7,199		7,224
Nonperforming loans other	2,977		8,405		1,014		1,579		2,796		2,735		118		217		6,905		12,936
Total nonperforming loans	8,014		13,273		2,504		3,552		3,468		3,118		118		217		14,104		20,160
Total loans	$	772,822	$	773,240	$	277,496	$	171,514	$	148,401	$	184,739	$	43,165	$	57,771	$	1,241,884	$	1,187,264

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

Schedule of Aging Analysis of the Bank Real Estate and Consumer Loans

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2020 and December 31, 2019, respectively, was as follows:

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 89 Days Past Due and Accruing		Total Past Due and Accruing		Nonaccrual Loans		Total Past Due Accruing and Nonaccrual Loans		Current		Total Loans
September 30, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	247	$	99	$	—	$	346	$	2,614	$	2,960	$	497,713	$	500,673
Agricultural real estate	179		—		—		179		5,252		5,431		67,712		73,143
Multi-family real estate	—		—		—		—		148		148		109,520		109,668
Construction and land development	224		379		—		603		—		603		88,735		89,338
C&I/Agricultural operating:
Commercial and industrial	163		—		—		163		853		1,016		103,355		104,371
C&I SBA PPP loans	—		—		—		—		—		—		139,166		139,166
Agricultural operating	451		600		—		1,051		1,651		2,702		31,256		33,958
Residential mortgage:
Residential mortgage	2,256		960		838		4,054		2,302		6,356		135,498		141,854
Purchased HELOC loans	—		67		94		161		234		395		6,152		6,547
Consumer installment:
Originated indirect paper	111		41		17		169		74		243		28,293		28,536
Other Consumer	63		15		1		79		26		105		14,525		14,630
Total	$	3,694	$	2,161	$	950	$	6,805	$	13,154	$	19,959	$	1,221,925	$	1,241,884
December 31, 2019
Commercial/Agricultural real estate:
Commercial real estate	$	2,804	$	847	$	—	$	3,651	$	4,214	$	7,865	$	506,594	$	514,459
Agricultural real estate	509		—		—		509		7,568		8,077		77,286		85,363
Multi-family real estate	—		—		—		—		1,449		1,449		85,559		87,008
Construction and land development	436		—		—		436		42		478		85,932		86,410
C&I/Agricultural operating:
Commercial and industrial	1,024		—		—		1,024		1,850		2,874		130,860		133,734
Agricultural operating	73		49		—		122		1,702		1,824		35,956		37,780
Residential mortgage:
Residential mortgage	4,929		1,597		649		7,175		2,063		9,238		167,094		176,332
Purchased HELOC loans	293		378		407		1,078		—		1,078		7,329		8,407
Consumer installment:
Originated indirect paper	168		52		20		240		137		377		39,208		39,585
Other Consumer	204		43		28		275		31		306		17,880		18,186
Total	$	10,440	$	2,966	$	1,104	$	14,510	$	19,056	$	33,566	$	1,153,698	$	1,187,264

Schedule of Bank Impaired Loans

A summary of the Company’s impaired loans as of September 30, 2020, December 31, 2019 and September 30, 2019 was as follows:

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2020
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	30,419	$	30,419	$	—	$	30,344	$	454	$	35,467	$	1,374
C&I/Agricultural operating	6,860		6,860		—		7,070		35		8,169		188
Residential mortgage	8,715		8,715		—		8,668		107		8,705		356
Consumer installment	363		363		—		363		6		371		23
Total	$	46,357	$	46,357	$	—	$	46,445	$	602	$	52,712	$	1,941
With An Allowance Recorded:
Commercial/agriculture real estate	$	3,177	$	3,177	$	772	$	3,597	$	48	$	2,660	$	73
C&I/Agricultural operating	1,034		1,034		159		669		—		762		12
Residential mortgage	1,118		1,118		249		970		7		1,275		36
Consumer installment	3		3		1		9		—		35		—
Total	$	5,332	$	5,332	$	1,181	$	5,245	$	55	$	4,732	$	121
September 30, 2020 Totals:
Commercial/agriculture real estate	$	33,596	$	33,596	$	772	$	33,941	$	502	$	38,127	$	1,447
C&I/Agricultural operating	7,894		7,894		159		7,739		35		8,931		200
Residential mortgage	9,833		9,833		249		9,638		114		9,980		392
Consumer installment	366		366		1		372		6		406		23
Total	$	51,689	$	51,689	$	1,181	$	51,690	$	657	$	57,444	$	2,062

	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	40,514	$	40,514	$	—
C&I/Agricultural operating	9,477		9,477		—
Residential mortgage	8,695		8,695		—
Consumer installment	379		379		—
Total	$	59,065	$	59,065	$	—
With An Allowance Recorded:
Commercial/agriculture real estate	$	2,143	$	2,143	$	495
C&I/Agricultural operating	490		490		312
Residential mortgage	1,431		1,431		136
Consumer installment	67		67		13
Total	$	4,131	$	4,131	$	956
December 31, 2019 Totals
Commercial/agriculture real estate	$	42,657	$	42,657	$	495
C&I/Agricultural operating	9,967		9,967		312
Residential mortgage	10,126		10,126		136
Consumer installment	446		446		13
Total	$	63,196	$	63,196	$	956

							Three Months Ended				Nine Months Ended
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2019
With No Related Allowance Recorded:
Commercial/agriculture real estate	$	43,907	$	43,907	$	—	$	36,724	$	721	$	36,379	$	2,212
C&I/Agricultural operating	10,298		10,298		—		9,417		166		8,599		543
Residential mortgage	9,016		9,016		—		8,593		141		8,945		370
Consumer installment	358		358		—		300		7		292		24
Total	$	63,579	$	63,579	$	—	$	55,034	$	1,035	$	54,215	$	3,149
With An Allowance Recorded:
Commercial/agriculture real estate	$	1,634	$	1,634	$	205	$	1,384	$	—	$	1,307	$	—
C&I/Agricultural operating	541		541		252		576		—		284		11
Residential mortgage	1,598		1,598		191		1,340		24		1,465		62
Consumer installment	62		62		15		85		—		104		2
Total	$	3,835	$	3,835	$	663	$	3,385	$	24	$	3,160	$	75
September 30, 2019 Totals:
Commercial/agriculture real estate	$	45,541	$	45,541	$	205	$	38,108	$	721	$	37,686	$	2,212
C&I/Agricultural operating	10,839		10,839		252		9,993		166		8,883		554
Residential mortgage	10,614		10,614		191		9,933		165		10,410		432
Consumer installment	420		420		15		385		7		396		26
Total	$	67,414	$	67,414	$	663	$	58,419	$	1,059	$	57,375	$	3,224

Schedule of Troubled Debt Restructuring

Following is a summary of TDR loans by accrual status as of September 30, 2020 and December 31, 2019.

	September 30, 2020		December 31, 2019
Troubled debt restructure loans:
Accrual status	$	12,579	$	5,396
Non-accrual status	7,199		7,198
Total	$	19,778	$	12,594

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the three and nine months ended September 30, 2020 and September 30, 2019:     

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	3	$	3,550	$	—	$	276	$	—	$	3,826	$	3,826	$	—
C&I/Agricultural operating	2	3,000		—		—		—		3,000		3,000		—
Residential mortgage	8	59		500		32		—		591		591		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	13	$	6,609	$	500	$	308	$	—	$	7,417	$	7,417	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2020
TDRs:
Commercial/agriculture real estate	12	$	4,442	$	198	$	293	$	—	$	4,933	$	4,933	$	—
C&I/Agricultural operating	5	3,295		78		—		—		3,373		3,373		—
Residential mortgage	13	148		858		117		—		1,123		1,123		—
Consumer installment	2	3		—		4		—		7		7		—
Totals	32	$	7,888	$	1,134	$	414	$	—	$	9,436	$	9,436	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Three months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	7	$	1,987	$	—	$	25	$	—	$	2,012	$	2,012	$	—
C&I/Agricultural operating	1	—		—		60		—		60		60		—
Residential mortgage	2	106		—		—		—		106		106		—
Consumer installment	—	—		—		—		—		—		—		—
Totals	10	$	2,093	$	—	$	85	$	—	$	2,178	$	2,178	$	—

	Number of Contracts	Maturity Extension		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Nine months ended September 30, 2019
TDRs:
Commercial/agriculture real estate	14	$	2,005	$	78	$	1,215	$	—	$	3,298	$	3,298	$	—
C&I/Agricultural operating	7	165		364		469		—		998		998		—
Residential mortgage	9	431		—		171		—		602		602		—
Consumer installment	1	2		—		—		—		2		2		—
Totals	31	$	2,603	$	442	$	1,855	$	—	$	4,900	$	4,900	$	—

A summary of loans by loan segment modified in a troubled debt restructuring as of September 30, 2020 and September 30, 2019, was as follows:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	34	$	10,517	27	$	5,917
C&I/Agricultural operating	17	5,358		16	2,366
Residential mortgage	50	3,850		42	3,438
Consumer installment	7	53		8	74
Total troubled debt restructurings	108	$	19,778	93	$	11,795

The following table provides information related to restructured loans that were considered in default as of September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	15	$	5,037	9	$	2,343
C&I/Agricultural operating	12	1,490		12	1,914
Residential mortgage	8	672		3	344
Total troubled debt restructurings	35	$	7,199	24	$	4,601

The following table provides information related to restructured loans that became in default during the three months ended September 30, 2020 and September 30, 2019:    

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	—	$	—	2	$	120
Residential mortgage	2	234		—	—
Total troubled debt restructurings	2	$	234	2	$	120

The following table provides information related to restructured loans that became in default during the nine months ended September 30, 2020 and September 30, 2019:

	September 30, 2020			September 30, 2019
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/agriculture real estate	2	$	140	7	$	227
C&I/Agricultural operating	1	78		4	857
Residential mortgage	3	279		—	—
Total troubled debt restructurings	6	$	497	11	$	1,084

Schedule of Acquired Loans

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

	September 30, 2020		December 31, 2019
Accountable for under ASC 310-30 (Purchased Credit Impaired “PCI” loans)
Outstanding balance	$	25,083	$	38,268
Carrying amount	$	23,422	$	31,978
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	299,251	$	386,476
Carrying amount	$	294,201	$	383,275
Total acquired loans
Outstanding balance	$	324,334	$	424,744
Carrying amount	$	317,623	$	415,253

Schedule of Accretable Yield

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

	September 30, 2020		September 30, 2019
Accretable discount, beginning of period	$	3,201	$	3,163
Additions to accretable discount for acquired performing loans	—		814
Accelerated accretion from payoff of certain PCI loans with transferred non-accretable difference	(99)		—
Transfers from non-accretable difference to accretable discount	2,704		80
Scheduled accretion	(756)		(622)
Accretable discounts, end of period	$	5,050	$	3,435

XML

MORTGAGE SERVICING RIGHTS (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Mortgage Servicing Rights Activity

Mortgage servicing rights activity for the nine month period ended September 30, 2020 and twelve months ended December 31, 2019 were as follows:

	As of and for the Nine Months Ended			As of and for the Twelve Months Ended
Mortgage servicing rights:	September 30, 2020			December 31, 2019
Mortgage servicing assets, net; beginning of period	$	4,541		$	4,486
MSR asset acquired	—			—
Increase in MSR assets resulting from transfers of financial assets	1,546			904
Amortization during the period	(908)			(849)
	5,179			4,541
Valuation Allowances:
Balance at beginning of period	(259)			—
Additions	(1,422)			(259)
Recoveries	—			—
Write-downs	—			—
Balance at end of period	(1,681)			(259)
Mortgage servicing assets, net; end of period	$	3,498		$	4,282
Fair value of MSR asset; end of period	$	3,509		$	4,309
Residential mortgage loans serviced for others	$	555,700		$	524,715
Net book value of MSR asset to loans serviced for others	0.63		%	0.82		%

XML

LEASES (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of Components of Lease Expense

	Nine Months Ended
	September 30, 2020			September 30, 2019
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	477		$	665
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—		$	158
	September 30, 2020			December 31, 2019
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,803		$	2,787
Operating lease liabilities	$	2,910		$	2,845
Weighted average remaining lease term in years; operating leases	6.1			6.63
Weighted average discount rate; operating leases	2.63		%	3.07		%

Schedule of Maturities of Operating Lease Liabilities

Cash obligations under lease contracts are as follows:

Fiscal years ending December 31,
2020	$	161
2021	592
2022	558
2023	505
2024	419
Thereafter	1,229
Total	3,464
Less: effects of discounting	(554)
Lease liability recognized	$	2,910

XML

DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2020

Deposits [Abstract]

Schedule of Deposits by Type

The following is a summary of deposits by type at September 30, 2020 and December 31, 2019, respectively: 

	September 30, 2020		December 31, 2019
Non-interest bearing demand deposits	$	229,217	$	168,157
Interest bearing demand deposits	279,648		223,102
Savings accounts	191,511		156,599
Money market accounts	246,651		246,430
Certificate accounts	323,751		401,414
Total deposits	$	1,270,778	$	1,195,702
Brokered deposits included above:	$	3,250	$	50,377

Schedule of Maturities of Time Deposits

At September 30, 2020, the scheduled maturities of time deposits were as follows:

September 30, 2021	$	216,854
September 30, 2022	96,391
September 30, 2023	6,669
September 30, 2024	2,976
September 30, 2025	861
After September 30, 2025	—
Total	$	323,751

XML

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2020

Federal Home Loan Banks [Abstract]

Schedule of Federal Home Loan Bank Advances

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2020 and December 31, 2019 is as follows:

		September 30, 2020						December 31, 2019
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4), (5)	2020	$	1,000	1.76	%	1.76	%	$	69,000	1.67	%	2.05	%
	2021	8,000		—	%	2.16	%	4,000		1.85	%	2.16	%
	2022	15,000		2.34	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	—		—	%	—	%
	2024	20,530		—	%	1.45	%	530		—	%	—	%
	2025	5,000		1.45	%	1.45	%	—		—	%	—	%
	2029	42,500		1.00	%	1.13	%	42,500		1.00	%	1.13	%
	2030	12,500		0.52	%	0.86	%	—		—	%	—	%
Subtotal		124,530						131,030
Unamortized discount on acquired notes		(39)						(59)
Federal Home Loan Bank advances, net		$	124,491					$	130,971
Senior Notes (6)	2031	$	28,856	3.50	%	3.50	%	$	28,856	4.00	%	4.75	%
Subordinated Notes (7)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%
		$	30,000
Unamortized debt issuance costs		$	(559)					$	(296)
Total other borrowings		$	58,297					$	43,560
Totals		$	182,788					$	174,531

(1)    The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $681,951 and $792,909 at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $105,858 compared to $203,935 as of December 31, 2019.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $162,530 and $151,530, during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019, respectively.

(3) The weighted-average interest rates on FHLB borrowings maturing within twelve months as of September 30, 2020 and December 31, 2019 were 0.82% and 1.74%, respectively.

(4) Six of the FHLB notes with remaining balances totaling $9,530 were acquired as a result of the F&M acquisition. These notes mature on various dates through 2024 with a weighted average rate of 2.02% and weighted average maturity of 14 months.

(5)    FHLB term notes totaling $55,000, with various maturity dates in 2029 and 2030, can be called or replaced by the FHLB on a quarterly basis, beginning approximately three months after the initial advance.

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

(a) A term note, requiring quarterly interest-only payments through June 2022, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate with a floor rate of 3.50%.

(b) A $5,000 line of credit, maturing in August 2021, that remains undrawn upon.

(7)    Subordinated notes resulted from the following:

(a) The Company’s private sale in August 2017, which bears a fixed interest rate of 6.75% for five years. In August 2022, they convert to a three-month LIBOR plus 4.90% rate, and the interest rate will reset quarterly thereafter. Interest-only payments are due quarterly.

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bears a fixed interest rate of 6.00% for five years. In September 2025, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 591 basis points. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

XML

CAPITAL MATTERS (Tables)

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Bank’s Tier 1 (Leverage) and Risk-Based Capital Ratios

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	170,610	15.0	%	$	91,021	> =	8.0	%	$	113,776	> =	10.0	%
Tier 1 capital (to risk weighted assets)	156,388		13.7	%	68,266		> =	6.0	%	91,021		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	156,388		13.7	%	51,199		> =	4.5	%	73,955		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	156,388		9.9	%	63,465		> =	4.0	%	79,331		> =	5.0	%
As of December 31, 2019
Total capital (to risk weighted assets)	$	160,302	13.1	%	$	98,174	> =	8.0	%	$	122,718	> =	10.0	%
Tier 1 capital (to risk weighted assets)	149,982		12.2	%	73,631		> =	6.0	%	98,174		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	149,982		12.2	%	55,223		> =	4.5	%	79,767		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	149,982		10.4	%	57,834		> =	4.0	%	72,293		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2020 and December 31, 2019, respectively, are presented below:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action  Provisions
	Amount		Ratio		Amount			Ratio		Amount	Ratio
As of September 30, 2020
Total capital (to risk weighted assets)	$	163,250	14.3	%	$	91,021	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	119,028		10.5	%	68,266		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	119,028		10.5	%	51,199		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	119,028		7.5	%	63,465		> =	4.0	%	N/A	N/A
As of December 31, 2019
Total capital (to risk weighted assets)	$	137,259	11.2	%	$	98,174	> =	8.0	%	N/A	N/A
Tier 1 capital (to risk weighted assets)	111,939		9.1	%	73,631		> =	6.0	%	N/A	N/A
Common equity tier 1 capital (to risk weighted assets)	111,939		9.1	%	55,223		> =	4.5	%	N/A	N/A
Tier 1 leverage ratio (to adjusted total assets)	111,939		7.7	%	57,834		> =	4.0	%	N/A	N/A

XML

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Restricted Stock Awards

	September 30, 2020			December 31, 2019
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	43,457	$	12.76	75,407	$	13.24
Granted	45,507	11.79		12,847	11.50
Vested	(14,545)	12.78		(32,630)	12.89
Forfeited	—	—		(12,167)	13.28
Unvested and outstanding at end of year	74,419	$	12.16	43,457	$	12.76

Schedule of Stock Option Activity

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
September 30, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,000)	12.77
Outstanding at end of year	73,100	$	11.08	5.75
Exercisable at end of year	52,900	$	10.76	5.59	$	—
Fully vested and expected to vest	73,100	$	11.08	5.75	$	—
December 31, 2019
Outstanding at beginning of year	108,930	$	10.15
Exercised	(28,430)	7.12
Forfeited or expired	(2,400)	12.38
Outstanding at end of year	78,100	$	11.18	6.55
Exercisable at end of year	44,700	$	10.73	6.30	$	67
Fully vested and expected to vest	78,100	$	11.18	6.55	$	81

Schedule of Information related to Stock Option Plan

Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan for the respective periods follows:

	Nine months ended September 30, 2020		Twelve months ended December 31, 2019
Intrinsic value of options exercised	$	—	$	130
Cash received from options exercised	$	—	$	203
Tax benefit realized from options exercised	$	—	$	—

XML

FAIR VALUE ACCOUNTING (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Assets Measured on Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

	Fair Value			Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Investment securities:
U.S. government agency obligations	$	34,379		$	—	$	34,379	$	—
Obligations of states and political subdivisions	140			—		140		—
Mortgage-backed securities	51,758			—		51,758		—
Corporate debt securities	15,364			—		15,364		—
Corporate asset-based securities	35,543			—		35,543		—
Trust preferred securities	13,724			—		13,724		—
Total	$	150,908	150908000	$	—	$	150,908	$	—
December 31, 2019
Investment securities:
U.S. government agency obligations	$	51,805		$	—	$	51,805	$	—
Obligations of states and political subdivisions	281			—		281		—
Mortgage-backed securities	71,331			—		71,331		—
Corporate debt securities	18,725			—		18,725		—
Corporate asset backed securities	26,854			—		26,854		—
Trust preferred securities	11,123			—		11,123		—
Total	$	180,119		$	—	$	180,119	$	—

Schedule of Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2020 and December 31, 2019:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020
Foreclosed and repossessed assets, net	$	812	$	—	$	—	$	812
Impaired loans with allocated allowances	4,151		—		—		4,151
Mortgage servicing rights	3,498		—		—		3,509
Total	$	8,461	$	—	$	—	$	8,472
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	$	—	$	—	$	1,460
Impaired loans with allocated allowances	3,175		—		—		3,175
Mortgage servicing rights	4,282		—		—		4,309
Total	$	8,917	$	—	$	—	$	8,944

Schedule of Fair Value of Assets

The following table represents additional quantitative information about assets measured at fair value on a

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

September 30, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
September 30, 2020
Foreclosed and repossessed assets, net	$	812	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	4,151	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	3,509	Discounted cash flows	Discounted rates	9 - 12%
December 31, 2019
Foreclosed and repossessed assets, net	$	1,460	Appraisal value	Estimated costs to sell	10 - 15%
Impaired loans with allocated allowances	$	3,175	Appraisal value	Estimated costs to sell	10 - 15%
Mortgage servicing rights	$	4,309	Discounted cash flows	Discounted rates	9.5% - 12.5%

(1)     Fair value is generally determined through independent third-party appraisals of the underlying

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

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

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

    and delinquent property taxes.

Schedule of Carrying Amount and Estimated Fair Value of Financial Instruments

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

		September 30, 2020				December 31, 2019
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	115,474	$	115,474	$	55,840	$	55,840
Other interest-bearing deposits	(Level II)	3,752		3,838		4,744		4,792
Securities available for sale “AFS”	(Level II)	150,908		150,908		180,119		180,119
Securities held to maturity “HTM”	(Level II)	16,927		17,233		2,851		2,957
Equity securities with readily determinable fair value	(Level I)	187		187		246		246
Other investments	(Level II)	15,075		15,075		15,005		15,005
Loans receivable, net	(Level III)	1,215,303		1,204,923		1,167,060		1,161,660
Loans held for sale	(Level II)	4,938		4,938		5,893		5,893
Mortgage servicing rights	(Level III)	3,498		3,509		4,282		4,309
Accrued interest receivable	(Level 1)	5,829		5,829		4,738		4,738
Financial liabilities:
Deposits	(Level III)	$	1,270,778	$	1,275,000	$	1,195,702	$	1,192,777
FHLB advances	(Level II)	124,491		129,798		130,971		131,593
Other borrowings	(Level I)	58,297		58,297		43,560		43,560
Accrued interest payable	(Level I)	517		517		453		453

XML

OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)

The following tables show the tax effects allocated to each component of other comprehensive income for the three and

nine months ended September 30, 2020 and 2019:

	Three months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319
Reclassification adjustment for gains included in net income	—		—		—		—		—		—
Other comprehensive income	$	1,220	$	(335)	$	885	$	440	$	(121)	$	319

	Nine months ended
	September 30, 2020						September 30, 2019
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Unrealized gains on securities:
Net unrealized gains arising during the period	$	2,052	$	(564)	$	1,488	$	3,003	$	(826)	$	2,177
Reclassification adjustment for gains included in net income	(156)		43		(113)		(26)		7		(19)
Other comprehensive income	$	1,896	$	(521)	$	1,375	$	2,977	$	(819)	$	2,158

Schedule of Changes in Accumulated Balances for Each Component of Other Comprehensive Income (Loss)

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2019 and the nine months ended September 30, 2020 were as follows:

	Unrealized Gains (Losses) on Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2019	$	(2,540)	$	(1,841)
Current year-to-date other comprehensive income	1,953		1,415
Adoption of ASU 2016-01; Equity securities (1)	(62)		(45)
Ending balance, December 31, 2019	$	(649)	$	(471)
Current year-to-date other comprehensive income	1,896		1,375
Ending balance, September 30, 2020	$	1,247	$	904

(1) Amounts reclassified to retained earnings due to January 1, 2019 adoption of ASU 2016-02. For further information, refer to Note 1, “Nature of Business and Summary of Significant Policies; Recent Pronouncements-Adopted”.

Schedule of Reclassifications out of Accumulated Other Comprehensive Income (Loss)

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2020 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2020		Nine months ended September 30, 2020		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	156		Net gains on investment securities
Tax Effect	—		(43)			Provision for income taxes
Total reclassifications for the period	$	—	$	113		Net gain attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 were as follows:

	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Three months ended September 30, 2019		Nine months ended September 30, 2019		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	—	$	26		Net gains on investment securities
Tax Effect	—		(7)			Provision for income taxes
Total reclassifications for the period	$	—	$	19		Net gain attributable to common shareholders

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

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands		3 Months Ended	9 Months Ended
	Jan. 01, 2019 USD ($) lease	Jun. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) lease reporting_unit branch segment	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other investments			$ 15,075			$ 15,005
Loans charged off past due more than days			180 days
Closed end loan charged off past due more than days			120 days
Number of operating segments | segment			1
Number of reporting units | reporting_unit			1
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201601Member	us-gaap:AccountingStandardsUpdate201602Member
Stockholders' equity		$ 143,242	$ 157,323	$ 152,790	$ 147,933	150,553	$ 148,029	$ 138,380	$ 138,187
Operating lease right-of-use assets	$ 5,000		2,803			2,787
Operating lease liabilities	$ 5,000		$ 2,910			2,845
Bank Branch
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of properties subject to operating leases (in leases) | lease	9		6
Other Production
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of properties subject to operating leases (in leases) | lease	1		1
Equipment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of properties subject to operating leases (in leases) | lease	4		4
Retained Earnings
Accounts, Notes, Loans and Financing Receivable [Line Items]
Stockholders' equity		18,114	$ 29,239	25,759	22,690	22,517	19,348	14,008	15,264
Accumulated Other Comprehensive Income (Loss)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Stockholders' equity		$ (47)	904	$ 19	$ (1,609)	(471)	$ 272	$ (722)	(1,841)
FHLB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other investments			8,231			8,196
Federal Reserve Bank
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other investments			5,169			5,162
Bankers Bank Stock
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other investments			$ 1,675			$ 1,647
Commercial Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest income discontinued over delinquent days			90 days
Closed End Consumer Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest income discontinued over delinquent days			120 days
Real Estate and Open Ended Consumer Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest income discontinued over delinquent days			180 days
Wisconsin and Minnesota
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of branch locations | branch			28
Adjustment | Retained Earnings
Accounts, Notes, Loans and Financing Receivable [Line Items]
Stockholders' equity									45
Adjustment | Accumulated Other Comprehensive Income (Loss)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Stockholders' equity									$ (45)

XML

INVESTMENT SECURITIES - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	$ 149,661	$ 180,768
Gross Unrealized Gains	2,663	868
Gross Unrealized Losses	1,416	1,517
Estimated Fair Value	150,908	180,119
U.S. government agency obligations
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	34,059	52,020
Gross Unrealized Gains	391	132
Gross Unrealized Losses	71	347
Estimated Fair Value	34,379	51,805
Obligations of states and political subdivisions
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	140	281
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	140	281
Mortgage-backed securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	49,870	70,806
Gross Unrealized Gains	1,888	635
Gross Unrealized Losses	0	110
Estimated Fair Value	51,758	71,331
Corporate debt securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	15,211	18,776
Gross Unrealized Gains	277	66
Gross Unrealized Losses	124	117
Estimated Fair Value	15,364	18,725
Corporate asset-based securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	36,443	27,718
Gross Unrealized Gains	38	0
Gross Unrealized Losses	938	864
Estimated Fair Value	35,543	26,854
Trust preferred securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	13,938	11,167
Gross Unrealized Gains	69	35
Gross Unrealized Losses	283	79
Estimated Fair Value	$ 13,724	$ 11,123

XML

INVESTMENT SECURITIES - Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 16,927	$ 2,851
Gross Unrealized Gains	306	106
Gross Unrealized Losses	0	0
Estimated Fair Value	17,233	2,957
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	300	300
Gross Unrealized Gains	0	2
Gross Unrealized Losses	0	0
Estimated Fair Value	300	302
Mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	16,627	2,551
Gross Unrealized Gains	306	104
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 16,933	$ 2,655

XML

INVESTMENT SECURITIES - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Debt Securities, Available-for-sale [Line Items]
Other-than-temporary impairment charges	$ 0	$ 0	$ 0	$ 0
Proceeds from principal payments and sale of available for sale securities			52,083,000	26,370,000
Federal Reserve Bank
Debt Securities, Available-for-sale [Line Items]
Borrowings outstanding under line of credit facility	0		0
U.S. government agency obligations | Asset Pledged as Collateral | Specific Municipal Deposits
Debt Securities, Available-for-sale [Line Items]
Securities pledged as collateral	595,000		595,000
U.S. government agency obligations | Asset Pledged as Collateral | Federal Reserve Bank
Debt Securities, Available-for-sale [Line Items]
Securities pledged as collateral	1,299,000		1,299,000
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Proceeds from principal payments and sale of available for sale securities	0	7,950,000	10,700,000	7,950,000
Gain on sale	0	$ 26,000	156,000	$ 26,000
Mortgage-backed securities | MPF Credit Enhancement Fee
Debt Securities, Available-for-sale [Line Items]
Securities pledged as collateral	530,000		530,000
Mortgage-backed securities | Asset Pledged as Collateral | Specific Municipal Deposits
Debt Securities, Available-for-sale [Line Items]
Securities pledged as collateral	$ 3,855,000		$ 3,855,000

XML

INVESTMENT SECURITIES - Maturity of Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized Cost
Due in one year or less	$ 0	$ 141
Due after one year through five years	3,850	5,900
Due after five years through ten years	39,417	43,269
Due after ten years	56,524	60,652
Total securities with contractual maturities	99,791	109,962
Mortgage backed securities	0	0
Amortized Cost	149,661	180,768
Estimated Fair Value
Due in one year or less	0	141
Due after one year through five years	4,064	5,959
Due after five years through ten years	39,461	43,180
Due after ten years	55,625	59,508
Total securities with contractual maturities	99,150	108,788
Mortgage backed securities	0	0
Total available for sale securities	150,908	180,119
Mortgage backed securities
Amortized Cost
Mortgage backed securities	49,870	70,806
Estimated Fair Value
Mortgage backed securities	$ 51,758	$ 71,331

XML

INVESTMENT SECURITIES - Maturity of Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized Cost
Due in one year or less	$ 300	$ 300
Total securities with contractual maturities	300	300
Mortgage backed securities	16,627	2,551
Total held to maturity securities	16,927	2,851
Estimated Fair Value
Due in one year or less	300	302
Total securities with contractual maturities	300	302
Mortgage backed securities	16,933	2,655
Total held to maturity securities	$ 17,233	$ 2,957

XML

INVESTMENT SECURITIES - Investment Category of Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value
Less than 12 Months	$ 22,568	$ 60,234
12 Months or More	40,360	35,992
Total	62,928	96,226
Unrealized Loss
Less than 12 Months	324	597
12 Months or More	1,092	920
Total	1,416	1,517
U.S. government agency obligations
Fair Value
Less than 12 Months	9,596	14,593
12 Months or More	5,364	10,540
Total	14,960	25,133
Unrealized Loss
Less than 12 Months	24	156
12 Months or More	47	191
Total	71	347
Mortgage-backed securities
Fair Value
Less than 12 Months		22,537
12 Months or More		5,883
Total		28,420
Unrealized Loss
Less than 12 Months		62
12 Months or More		48
Total		110
Corporate debt securities
Fair Value
Less than 12 Months	2,009	7,001
12 Months or More	1,393	1,398
Total	3,402	8,399
Unrealized Loss
Less than 12 Months	17	15
12 Months or More	107	102
Total	124	117
Corporate asset-based securities
Fair Value
Less than 12 Months	0	8,683
12 Months or More	33,603	18,171
Total	33,603	26,854
Unrealized Loss
Less than 12 Months	0	285
12 Months or More	938	579
Total	938	864
Trust preferred securities
Fair Value
Less than 12 Months	10,963	7,420
12 Months or More	0	0
Total	10,963	7,420
Unrealized Loss
Less than 12 Months	283	79
12 Months or More	0	0
Total	$ 283	$ 79

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended				12 Months Ended
	Sep. 30, 2020 USD ($) Contract TDR	Sep. 30, 2019 USD ($) Contract	Sep. 30, 2020 USD ($) TDR	Sep. 30, 2020 USD ($) TDR	Sep. 30, 2020 USD ($) Contract TDR	Sep. 30, 2019 USD ($) Contract	Dec. 31, 2019 USD ($) TDR
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unused commitments	$ 260,800		$ 260,800	$ 260,800	$ 260,800		$ 246,700
Impaired financing receivable, recorded investment	51,689	$ 67,414	51,689	51,689	51,689	$ 67,414	63,196
Recorded Investment	$ 19,778		$ 19,778	$ 19,778	$ 19,778		$ 12,594
Number of delinquent TDR | TDR	3		3	3	3		2
Recorded investment in delinquent TDR	$ 310		$ 310	$ 310	$ 310		$ 101
Number of Contracts	13	10		1	32	31	0
Total amount of TDR commitments meeting TDR criteria			17
Outstanding balance	$ 85		85	$ 85	$ 85		$ 12
Number of Modifications | Contract	2	2			6	11
TDR Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 19,778		19,778	19,778	$ 19,778		12,594
Substandard non-TDR loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	8,489		8,489	8,489	8,489		18,624
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	23,422		23,422	23,422	23,422		31,978
Certain loans acquired in transfer	1,661		1,661	1,661	1,661		6,290
Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	19,778	$ 11,795	19,778	19,778	$ 19,778	$ 11,795
Number of Contracts | Contract					108	93
Originated Loans | Performing loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	12,579		12,579	12,579	$ 12,579		5,370
Commercial/agriculture real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired financing receivable, recorded investment	$ 33,596	$ 45,541	33,596	33,596	$ 33,596	$ 45,541	$ 42,657
Number of Contracts | Contract	3	7			12	14
Number of Modifications | Contract	0	2			2	7
Commercial/agriculture real estate | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 10,517	$ 5,917	$ 10,517	$ 10,517	$ 10,517	$ 5,917
Number of Contracts | Contract					34	27
Commercial/agriculture real estate | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan-to-value ratio (as a percent)	75.00%		75.00%	75.00%	75.00%

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Originated and Acquired Loans by Type and Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	$ 1,241,884		$ 1,187,264
Unearned net deferred fees and costs and loans in process	(5,033)		(393)
Unamortized discount on acquired loans	(6,712)		(9,491)
Allowance for loan losses	(14,836)		(10,320)	$ (9,177)
Loans receivable, net	1,215,303		1,167,060
1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,201,185		1,136,516
6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	7,777		10,856
7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	32,922		39,892
8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	917,550		762,520
Allowance for loan losses	(12,809)	$ (12,109)	(9,551)	(8,694)	$ (8,284)	$ (7,180)
Originated Loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	898,517		744,768
Originated Loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	3,238		2,520
Originated Loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	15,795		15,232
Originated Loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Originated Loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	324,334		424,744
Allowance for loan losses	(2,027)			(483)
Acquired Loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	302,668		391,748
Acquired Loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	4,539		8,336
Acquired Loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	17,127		24,660
Acquired Loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Acquired Loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(10,171)			(5,462)
Commercial/agriculture real estate | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	500,673		514,459
Commercial/agriculture real estate | Commercial real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	487,275		498,073
Commercial/agriculture real estate | Commercial real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,184		6,350
Commercial/agriculture real estate | Commercial real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	7,214		10,036
Commercial/agriculture real estate | Commercial real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Commercial real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	73,143		85,363
Commercial/agriculture real estate | Agricultural real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	64,572		73,510
Commercial/agriculture real estate | Agricultural real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	454		1,363
Commercial/agriculture real estate | Agricultural real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	8,117		10,490
Commercial/agriculture real estate | Agricultural real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Agricultural real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	109,668		87,008
Commercial/agriculture real estate | Multi-family real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	109,520		85,410
Commercial/agriculture real estate | Multi-family real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Multi-family real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	148		1,598
Commercial/agriculture real estate | Multi-family real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Multi-family real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	89,338		86,410
Commercial/agriculture real estate | Construction and land development | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	85,778		82,170
Commercial/agriculture real estate | Construction and land development | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Construction and land development | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	3,560		4,240
Commercial/agriculture real estate | Construction and land development | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Construction and land development | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(8,801)	(8,297)	(6,205)	(5,291)	(5,010)	(4,019)
Commercial/agriculture real estate | Originated Loans | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	322,028		302,546
Commercial/agriculture real estate | Originated Loans | Commercial real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	318,915		301,381
Commercial/agriculture real estate | Originated Loans | Commercial real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,947		266
Commercial/agriculture real estate | Originated Loans | Commercial real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,166		899
Commercial/agriculture real estate | Originated Loans | Commercial real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Commercial real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	32,530		34,026
Commercial/agriculture real estate | Originated Loans | Agricultural real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	30,807		31,129
Commercial/agriculture real estate | Originated Loans | Agricultural real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	454		829
Commercial/agriculture real estate | Originated Loans | Agricultural real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,269		2,068
Commercial/agriculture real estate | Originated Loans | Agricultural real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Agricultural real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	100,148		71,877
Commercial/agriculture real estate | Originated Loans | Multi-family real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	100,148		71,877
Commercial/agriculture real estate | Originated Loans | Multi-family real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Multi-family real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Multi-family real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Multi-family real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	80,992		71,467
Commercial/agriculture real estate | Originated Loans | Construction and land development | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	77,514		67,989
Commercial/agriculture real estate | Originated Loans | Construction and land development | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Construction and land development | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	3,478		3,478
Commercial/agriculture real estate | Originated Loans | Construction and land development | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Originated Loans | Construction and land development | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(1,370)			(171)
Commercial/agriculture real estate | Acquired Loans | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	178,645		211,913
Commercial/agriculture real estate | Acquired Loans | Commercial real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	168,360		196,692
Commercial/agriculture real estate | Acquired Loans | Commercial real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	4,237		6,084
Commercial/agriculture real estate | Acquired Loans | Commercial real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,048		9,137
Commercial/agriculture real estate | Acquired Loans | Commercial real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Commercial real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	40,613		51,337
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	33,765		42,381
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		534
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,848		8,422
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Agricultural real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	9,520		15,131
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	9,372		13,533
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	148		1,598
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Multi-family real estate | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	8,346		14,943
Commercial/agriculture real estate | Acquired Loans | Construction and land development | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	8,264		14,181
Commercial/agriculture real estate | Acquired Loans | Construction and land development | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Construction and land development | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	82		762
Commercial/agriculture real estate | Acquired Loans | Construction and land development | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Commercial/agriculture real estate | Acquired Loans | Construction and land development | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(2,169)			(1,687)
C&I/Agricultural operating | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	104,372		133,734
C&I/Agricultural operating | Commercial and industrial | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	98,910		126,835
C&I/Agricultural operating | Commercial and industrial | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	861		1,955
C&I/Agricultural operating | Commercial and industrial | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	4,601		4,944
C&I/Agricultural operating | Commercial and industrial | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Commercial and industrial | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | C&I SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	139,166
C&I/Agricultural operating | C&I SBA PPP loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	139,166
C&I/Agricultural operating | C&I SBA PPP loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | C&I SBA PPP loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | C&I SBA PPP loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | C&I SBA PPP loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	33,958		37,780
C&I/Agricultural operating | Agricultural operating | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	31,728		35,166
C&I/Agricultural operating | Agricultural operating | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28		752
C&I/Agricultural operating | Agricultural operating | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	2,202		1,862
C&I/Agricultural operating | Agricultural operating | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Agricultural operating | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(1,863)	(1,778)	(1,643)	(1,600)	(1,470)	(1,258)
C&I/Agricultural operating | Originated Loans | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	79,959		89,730
C&I/Agricultural operating | Originated Loans | Commercial and industrial | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	75,338		85,248
C&I/Agricultural operating | Originated Loans | Commercial and industrial | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	802		1,023
C&I/Agricultural operating | Originated Loans | Commercial and industrial | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	3,819		3,459
C&I/Agricultural operating | Originated Loans | Commercial and industrial | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Originated Loans | Commercial and industrial | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	139,166
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	139,166
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | Originated Loans | C&I SBA PPP loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0
C&I/Agricultural operating | Originated Loans | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	24,324		20,717
C&I/Agricultural operating | Originated Loans | Agricultural operating | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	23,040		19,545
C&I/Agricultural operating | Originated Loans | Agricultural operating | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28		402
C&I/Agricultural operating | Originated Loans | Agricultural operating | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,256		770
C&I/Agricultural operating | Originated Loans | Agricultural operating | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Originated Loans | Agricultural operating | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(306)			(87)
C&I/Agricultural operating | Acquired Loans | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	24,413		44,004
C&I/Agricultural operating | Acquired Loans | Commercial and industrial | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	23,572		41,587
C&I/Agricultural operating | Acquired Loans | Commercial and industrial | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	59		932
C&I/Agricultural operating | Acquired Loans | Commercial and industrial | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	782		1,485
C&I/Agricultural operating | Acquired Loans | Commercial and industrial | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Acquired Loans | Commercial and industrial | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Acquired Loans | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	9,634		17,063
C&I/Agricultural operating | Acquired Loans | Agricultural operating | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	8,688		15,621
C&I/Agricultural operating | Acquired Loans | Agricultural operating | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		350
C&I/Agricultural operating | Acquired Loans | Agricultural operating | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	946		1,092
C&I/Agricultural operating | Acquired Loans | Agricultural operating | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
C&I/Agricultural operating | Acquired Loans | Agricultural operating | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(1,227)			(1,175)
Residential mortgage | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	141,854		176,332
Residential mortgage | Residential mortgage | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	135,165		169,553
Residential mortgage | Residential mortgage | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	250		436
Residential mortgage | Residential mortgage | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,439		6,343
Residential mortgage | Residential mortgage | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Residential mortgage | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Purchased HELOC loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,547		8,407
Residential mortgage | Purchased HELOC loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,220		8,407
Residential mortgage | Purchased HELOC loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Purchased HELOC loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	327		0
Residential mortgage | Purchased HELOC loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Purchased HELOC loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(963)	(980)	(879)	(1,005)	(977)	(1,048)
Residential mortgage | Originated Loans | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	90,100		108,619
Residential mortgage | Originated Loans | Residential mortgage | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	85,922		104,428
Residential mortgage | Originated Loans | Residential mortgage | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	7		0
Residential mortgage | Originated Loans | Residential mortgage | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	4,171		4,191
Residential mortgage | Originated Loans | Residential mortgage | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Originated Loans | Residential mortgage | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Originated Loans | Purchased HELOC loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,547		8,407
Residential mortgage | Originated Loans | Purchased HELOC loans | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	6,220		8,407
Residential mortgage | Originated Loans | Purchased HELOC loans | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Originated Loans | Purchased HELOC loans | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	327		0
Residential mortgage | Originated Loans | Purchased HELOC loans | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Originated Loans | Purchased HELOC loans | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(264)			(170)
Residential mortgage | Acquired Loans | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	51,754		67,713
Residential mortgage | Acquired Loans | Residential mortgage | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	49,243		65,125
Residential mortgage | Acquired Loans | Residential mortgage | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	243		436
Residential mortgage | Acquired Loans | Residential mortgage | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	2,268		2,152
Residential mortgage | Acquired Loans | Residential mortgage | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Residential mortgage | Acquired Loans | Residential mortgage | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(639)			(552)
Consumer installment | Originated indirect paper
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28,535		39,585
Consumer installment | Originated indirect paper | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28,312		39,339
Consumer installment | Originated indirect paper | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated indirect paper | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	223		246
Consumer installment | Originated indirect paper | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated indirect paper | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Other consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	14,630		18,186
Consumer installment | Other consumer | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	14,539		18,053
Consumer installment | Other consumer | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Other consumer | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	91		133
Consumer installment | Other consumer | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Other consumer | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(552)	$ (480)	(467)	(497)	$ (528)	$ (641)
Consumer installment | Originated Loans | Originated indirect paper
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28,535		39,585
Consumer installment | Originated Loans | Originated indirect paper | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	28,312		39,339
Consumer installment | Originated Loans | Originated indirect paper | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans | Originated indirect paper | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	223		246
Consumer installment | Originated Loans | Originated indirect paper | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans | Originated indirect paper | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans | Other consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	13,221		15,546
Consumer installment | Originated Loans | Other consumer | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	13,135		15,425
Consumer installment | Originated Loans | Other consumer | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans | Other consumer | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	86		121
Consumer installment | Originated Loans | Other consumer | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Originated Loans | Other consumer | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(87)			$ (55)
Consumer installment | Acquired Loans | Other consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,409		2,640
Consumer installment | Acquired Loans | Other consumer | 1 to 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	1,404		2,628
Consumer installment | Acquired Loans | Other consumer | 6
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Acquired Loans | Other consumer | 7
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	5		12
Consumer installment | Acquired Loans | Other consumer | 8
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	0		0
Consumer installment | Acquired Loans | Other consumer | 9
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Gross loans	$ 0		$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Changes in the ALL by Loan Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Allowance for Loan Losses:
Beginning balance			$ 10,320
Provision			5,250	$ 2,125
Ending balance	$ 14,836	$ 9,177	14,836	9,177
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	1,181	663	1,181	663
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	13,655	8,514	13,655	8,514
Loans Receivable:
Total loans	1,241,884	1,134,708	1,241,884	1,134,708	$ 1,187,264
Ending balance: individually evaluated for impairment	28,268	32,718	28,268	32,718
Ending balance: collectively evaluated for impairment	1,213,616	1,101,990	1,213,616	1,101,990
Originated Loans
Allowance for Loan Losses:
Beginning balance	12,109	8,284	9,551	7,180
Charge-offs	(117)	(125)	(760)	(486)
Recoveries	94	17	136	53
Provision	723	518	3,882	1,947
Ending balance	12,809	8,694	12,809	8,694
Loans Receivable:
Total loans	917,550	687,448	917,550	687,448
Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	25,083	41,433	25,083	41,433
Other acquired loans
Allowance for Loan Losses:
Beginning balance	1,264	475	769	424
Charge-offs	(47)	(54)	(235)	(134)
Recoveries	33	5	125	15
Provision	777	57	1,368	178
Ending balance	2,027		2,027
Loans Receivable:
Total loans	299,251	405,827	299,251	405,827
Acquired Loans
Allowance for Loan Losses:
Ending balance	2,027	483	2,027	483
Commercial/agriculture real estate
Allowance for Loan Losses:
Ending balance	10,171	5,462	10,171	5,462
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	772	205	772	205
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	9,399	5,257	9,399	5,257
Loans Receivable:
Total loans	772,822	707,795	772,822	707,795	773,240
Ending balance: individually evaluated for impairment	13,190	16,458	13,190	16,458
Ending balance: collectively evaluated for impairment	759,632	691,337	759,632	691,337
Commercial/agriculture real estate | Originated Loans
Allowance for Loan Losses:
Beginning balance	8,297	5,010	6,205	4,019
Charge-offs	0	0	0	(225)
Recoveries	74	0	74	0
Provision	430	281	2,522	1,497
Ending balance	8,801	5,291	8,801	5,291
Loans Receivable:
Total loans	535,698	401,211	535,698	401,211
Commercial/agriculture real estate | Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	21,453	33,840	21,453	33,840
Commercial/agriculture real estate | Other acquired loans
Allowance for Loan Losses:
Beginning balance	746	181	526	183
Charge-offs	0	0	0	0
Recoveries	1	0	77	3
Provision	623	(10)	767	(15)
Ending balance	1,370		1,370
Loans Receivable:
Total loans	215,671	272,744	215,671	272,744
Commercial/agriculture real estate | Acquired Loans
Allowance for Loan Losses:
Ending balance	1,370	171	1,370	171
C&I/Agricultural operating
Allowance for Loan Losses:
Ending balance	2,169	1,687	2,169	1,687
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	159	252	159	252
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	2,010	1,435	2,010	1,435
Loans Receivable:
Total loans	277,496	167,059	277,496	167,059	171,514
Ending balance: individually evaluated for impairment	6,275	7,215	6,275	7,215
Ending balance: collectively evaluated for impairment	271,221	159,844	271,221	159,844
C&I/Agricultural operating | Originated Loans
Allowance for Loan Losses:
Beginning balance	1,778	1,470	1,643	1,258
Charge-offs	(103)	0	(632)	0
Recoveries	0	0	0	0
Provision	188	130	852	342
Ending balance	1,863	1,600	1,863	1,600
Loans Receivable:
Total loans	243,449	102,998	243,449	102,998
C&I/Agricultural operating | Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	2,077	5,320	2,077	5,320
C&I/Agricultural operating | Other acquired loans
Allowance for Loan Losses:
Beginning balance	334	85	27	32
Charge-offs	0	0	(159)	0
Recoveries	30	0	30	0
Provision	(58)	2	408	55
Ending balance	306		306
Loans Receivable:
Total loans	31,970	58,741	31,970	58,741
C&I/Agricultural operating | Acquired Loans
Allowance for Loan Losses:
Ending balance	306	87	306	87
Residential mortgage
Allowance for Loan Losses:
Ending balance	1,227	1,175	1,227	1,175
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	249	191	249	191
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	978	984	978	984
Loans Receivable:
Total loans	148,401	198,190	148,401	198,190	184,739
Ending balance: individually evaluated for impairment	8,436	8,626	8,436	8,626
Ending balance: collectively evaluated for impairment	139,965	189,564	139,965	189,564
Residential mortgage | Originated Loans
Allowance for Loan Losses:
Beginning balance	980	977	879	1,048
Charge-offs	(4)	(89)	(4)	(119)
Recoveries	2	0	7	0
Provision	(15)	117	81	76
Ending balance	963	1,005	963	1,005
Loans Receivable:
Total loans	96,647	124,627	96,647	124,627
Residential mortgage | Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	1,553	2,273	1,553	2,273
Residential mortgage | Other acquired loans
Allowance for Loan Losses:
Beginning balance	112	153	163	205
Charge-offs	(47)	(45)	(74)	(105)
Recoveries	0	1	14	2
Provision	199	61	161	68
Ending balance	264		264
Loans Receivable:
Total loans	50,201	71,290	50,201	71,290
Residential mortgage | Acquired Loans
Allowance for Loan Losses:
Ending balance	264	170	264	170
Consumer installment
Allowance for Loan Losses:
Ending balance	639	552	639	552
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	1	15	1	15
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	638	537	638	537
Loans Receivable:
Total loans	43,165	61,664	43,165	61,664	$ 57,771
Ending balance: individually evaluated for impairment	367	419	367	419
Ending balance: collectively evaluated for impairment	42,798	61,245	42,798	61,245
Consumer installment | Originated Loans
Allowance for Loan Losses:
Beginning balance	480	528	467	641
Charge-offs	(10)	(36)	(124)	(142)
Recoveries	18	17	55	53
Provision	64	(12)	154	(55)
Ending balance	552	497	552	497
Loans Receivable:
Total loans	41,756	58,612	41,756	58,612
Consumer installment | Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	0	0	0	0
Consumer installment | Other acquired loans
Allowance for Loan Losses:
Beginning balance	72	56	53	65
Charge-offs	0	(9)	(2)	(29)
Recoveries	2	4	4	10
Provision	13	4	32	9
Ending balance	87		87
Loans Receivable:
Total loans	1,409	3,052	1,409	3,052
Consumer installment | Acquired Loans
Allowance for Loan Losses:
Ending balance	87	55	87	55
Unallocated
Allowance for Loan Losses:
Ending balance	630	301	630	301
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	0	0	0	0
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	630	301	630	301
Loans Receivable:
Total loans	0	0	0	0
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	0	0	0	0
Unallocated | Originated Loans
Allowance for Loan Losses:
Beginning balance	574	299	357	214
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	56	2	273	87
Ending balance	630	301	630	301
Loans Receivable:
Total loans	0	0	0	0
Unallocated | Purchased credit impaired loans
Allowance for Loan Losses:
Ending balance	0	0	0	0
Loans Receivable:
Total loans	0	0	0	0
Unallocated | Other acquired loans
Allowance for Loan Losses:
Beginning balance	0	0	0	(61)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	0	0	0	61
Ending balance	0		0
Loans Receivable:
Total loans	0	0	0	0
Unallocated | Acquired Loans
Allowance for Loan Losses:
Ending balance	$ 0	$ 0	$ 0	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Loans Receivable by Loan Type (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019
Loans receivable
Total loans	$ 1,241,884	$ 1,187,264	$ 1,134,708
Performing loans
Loans receivable
TDR loans	12,579	5,370
Loans other	1,215,201	1,161,734
Total loans	1,227,780	1,167,104
Nonperforming loans
Loans receivable
TDR loans	7,199	7,224
Loans other	6,905	12,936
Total loans	14,104	20,160
Commercial/agriculture real estate
Loans receivable
Total loans	772,822	773,240	707,795
Commercial/agriculture real estate | Performing loans
Loans receivable
TDR loans	5,480	1,730
Loans other	759,328	758,237
Total loans	764,808	759,967
Commercial/agriculture real estate | Nonperforming loans
Loans receivable
TDR loans	5,037	4,868
Loans other	2,977	8,405
Total loans	8,014	13,273
C&I/Agricultural operating
Loans receivable
Total loans	277,496	171,514	167,059
C&I/Agricultural operating | Performing loans
Loans receivable
TDR loans	3,868	366
Loans other	271,124	167,596
Total loans	274,992	167,962
C&I/Agricultural operating | Nonperforming loans
Loans receivable
TDR loans	1,490	1,973
Loans other	1,014	1,579
Total loans	2,504	3,552
Residential mortgage
Loans receivable
Total loans	148,401	184,739	198,190
Residential mortgage | Performing loans
Loans receivable
TDR loans	3,178	3,206
Loans other	141,755	178,415
Total loans	144,933	181,621
Residential mortgage | Nonperforming loans
Loans receivable
TDR loans	672	383
Loans other	2,796	2,735
Total loans	3,468	3,118
Consumer installment
Loans receivable
Total loans	43,165	57,771	$ 61,664
Consumer installment | Performing loans
Loans receivable
TDR loans	53	68
Loans other	42,994	57,486
Total loans	43,047	57,554
Consumer installment | Nonperforming loans
Loans receivable
TDR loans	0	0
Loans other	118	217
Total loans	$ 118	$ 217

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Aging Analysis (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	$ 6,805	$ 14,510
Nonaccrual Loans	13,154	19,056
Total Past Due Accruing and Nonaccrual Loans	19,959	33,566
Current	1,221,925	1,153,698
Total Loans	1,241,884	1,187,264
30-59 Days Past Due
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	3,694	10,440
60-89 Days Past Due
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	2,161	2,966
Greater Than 89 Days
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	950	1,104
Commercial/agriculture real estate | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	346	3,651
Nonaccrual Loans	2,614	4,214
Total Past Due Accruing and Nonaccrual Loans	2,960	7,865
Current	497,713	506,594
Total Loans	500,673	514,459
Commercial/agriculture real estate | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	179	509
Nonaccrual Loans	5,252	7,568
Total Past Due Accruing and Nonaccrual Loans	5,431	8,077
Current	67,712	77,286
Total Loans	73,143	85,363
Commercial/agriculture real estate | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Nonaccrual Loans	148	1,449
Total Past Due Accruing and Nonaccrual Loans	148	1,449
Current	109,520	85,559
Total Loans	109,668	87,008
Commercial/agriculture real estate | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	603	436
Nonaccrual Loans	0	42
Total Past Due Accruing and Nonaccrual Loans	603	478
Current	88,735	85,932
Total Loans	89,338	86,410
Commercial/agriculture real estate | 30-59 Days Past Due | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	247	2,804
Commercial/agriculture real estate | 30-59 Days Past Due | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	179	509
Commercial/agriculture real estate | 30-59 Days Past Due | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | 30-59 Days Past Due | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	224	436
Commercial/agriculture real estate | 60-89 Days Past Due | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	99	847
Commercial/agriculture real estate | 60-89 Days Past Due | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | 60-89 Days Past Due | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | 60-89 Days Past Due | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	379	0
Commercial/agriculture real estate | Greater Than 89 Days | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | Greater Than 89 Days | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | Greater Than 89 Days | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Commercial/agriculture real estate | Greater Than 89 Days | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
C&I/Agricultural operating | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	163	1,024
Nonaccrual Loans	853	1,850
Total Past Due Accruing and Nonaccrual Loans	1,016	2,874
Current	103,355	130,860
Total Loans	104,371	133,734
C&I/Agricultural operating | C&I SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0
Nonaccrual Loans	0
Total Past Due Accruing and Nonaccrual Loans	0
Current	139,166
Total Loans	139,166
C&I/Agricultural operating | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	1,051	122
Nonaccrual Loans	1,651	1,702
Total Past Due Accruing and Nonaccrual Loans	2,702	1,824
Current	31,256	35,956
Total Loans	33,958	37,780
C&I/Agricultural operating | 30-59 Days Past Due | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	163	1,024
C&I/Agricultural operating | 30-59 Days Past Due | C&I SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0
C&I/Agricultural operating | 30-59 Days Past Due | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	451	73
C&I/Agricultural operating | 60-89 Days Past Due | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
C&I/Agricultural operating | 60-89 Days Past Due | C&I SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0
C&I/Agricultural operating | 60-89 Days Past Due | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	600	49
C&I/Agricultural operating | Greater Than 89 Days | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
C&I/Agricultural operating | Greater Than 89 Days | C&I SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0
C&I/Agricultural operating | Greater Than 89 Days | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	0
Residential mortgage | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	4,054	7,175
Nonaccrual Loans	2,302	2,063
Total Past Due Accruing and Nonaccrual Loans	6,356	9,238
Current	135,498	167,094
Total Loans	141,854	176,332
Residential mortgage | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	161	1,078
Nonaccrual Loans	234	0
Total Past Due Accruing and Nonaccrual Loans	395	1,078
Current	6,152	7,329
Total Loans	6,547	8,407
Residential mortgage | 30-59 Days Past Due | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	2,256	4,929
Residential mortgage | 30-59 Days Past Due | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	0	293
Residential mortgage | 60-89 Days Past Due | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	960	1,597
Residential mortgage | 60-89 Days Past Due | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	67	378
Residential mortgage | Greater Than 89 Days | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	838	649
Residential mortgage | Greater Than 89 Days | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	94	407
Consumer installment | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	169	240
Nonaccrual Loans	74	137
Total Past Due Accruing and Nonaccrual Loans	243	377
Current	28,293	39,208
Total Loans	28,536	39,585
Consumer installment | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	79	275
Nonaccrual Loans	26	31
Total Past Due Accruing and Nonaccrual Loans	105	306
Current	14,525	17,880
Total Loans	14,630	18,186
Consumer installment | 30-59 Days Past Due | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	111	168
Consumer installment | 30-59 Days Past Due | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	63	204
Consumer installment | 60-89 Days Past Due | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	41	52
Consumer installment | 60-89 Days Past Due | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	15	43
Consumer installment | Greater Than 89 Days | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	17	20
Consumer installment | Greater Than 89 Days | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Total Past Due and Accruing	$ 1	$ 28

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Bank impaired loans
With no related allowance recorded, Recorded investment	$ 46,357	$ 63,579	$ 46,357	$ 63,579	$ 59,065
With an allowance recorded, Recorded investment	5,332	3,835	5,332	3,835	4,131
Recorded investment, Total	51,689	67,414	51,689	67,414	63,196
With no related allowance recorded, unpaid principal balance	46,357	63,579	46,357	63,579	59,065
With an allowance recorded, unpaid principal balance	5,332	3,835	5,332	3,835	4,131
Unpaid principal balance, Total	51,689	67,414	51,689	67,414	63,196
With an allowance recorded, Related allowance	1,181	663	1,181	663	956
With no related allowance recorded, Average recorded investment	46,445	55,034	52,712	54,215
With an allowance recorded, Average recorded investment	5,245	3,385	4,732	3,160
Average recorded investment, Total	51,690	58,419	57,444	57,375
With no related allowance recorded, Interest income recognized	602	1,035	1,941	3,149
With an allowance recorded, Interest income recognized	55	24	121	75
Interest income recognized, Total	657	1,059	2,062	3,224
Commercial/agriculture real estate
Bank impaired loans
With no related allowance recorded, Recorded investment	30,419	43,907	30,419	43,907	40,514
With an allowance recorded, Recorded investment	3,177	1,634	3,177	1,634	2,143
Recorded investment, Total	33,596	45,541	33,596	45,541	42,657
With no related allowance recorded, unpaid principal balance	30,419	43,907	30,419	43,907	40,514
With an allowance recorded, unpaid principal balance	3,177	1,634	3,177	1,634	2,143
Unpaid principal balance, Total	33,596	45,541	33,596	45,541	42,657
With an allowance recorded, Related allowance	772	205	772	205	495
With no related allowance recorded, Average recorded investment	30,344	36,724	35,467	36,379
With an allowance recorded, Average recorded investment	3,597	1,384	2,660	1,307
Average recorded investment, Total	33,941	38,108	38,127	37,686
With no related allowance recorded, Interest income recognized	454	721	1,374	2,212
With an allowance recorded, Interest income recognized	48	0	73	0
Interest income recognized, Total	502	721	1,447	2,212
C&I/Agricultural operating
Bank impaired loans
With no related allowance recorded, Recorded investment	6,860	10,298	6,860	10,298	9,477
With an allowance recorded, Recorded investment	1,034	541	1,034	541	490
Recorded investment, Total	7,894	10,839	7,894	10,839	9,967
With no related allowance recorded, unpaid principal balance	6,860	10,298	6,860	10,298	9,477
With an allowance recorded, unpaid principal balance	1,034	541	1,034	541	490
Unpaid principal balance, Total	7,894	10,839	7,894	10,839	9,967
With an allowance recorded, Related allowance	159	252	159	252	312
With no related allowance recorded, Average recorded investment	7,070	9,417	8,169	8,599
With an allowance recorded, Average recorded investment	669	576	762	284
Average recorded investment, Total	7,739	9,993	8,931	8,883
With no related allowance recorded, Interest income recognized	35	166	188	543
With an allowance recorded, Interest income recognized	0	0	12	11
Interest income recognized, Total	35	166	200	554
Residential mortgage
Bank impaired loans
With no related allowance recorded, Recorded investment	8,715	9,016	8,715	9,016	8,695
With an allowance recorded, Recorded investment	1,118	1,598	1,118	1,598	1,431
Recorded investment, Total	9,833	10,614	9,833	10,614	10,126
With no related allowance recorded, unpaid principal balance	8,715	9,016	8,715	9,016	8,695
With an allowance recorded, unpaid principal balance	1,118	1,598	1,118	1,598	1,431
Unpaid principal balance, Total	9,833	10,614	9,833	10,614	10,126
With an allowance recorded, Related allowance	249	191	249	191	136
With no related allowance recorded, Average recorded investment	8,668	8,593	8,705	8,945
With an allowance recorded, Average recorded investment	970	1,340	1,275	1,465
Average recorded investment, Total	9,638	9,933	9,980	10,410
With no related allowance recorded, Interest income recognized	107	141	356	370
With an allowance recorded, Interest income recognized	7	24	36	62
Interest income recognized, Total	114	165	392	432
Consumer installment
Bank impaired loans
With no related allowance recorded, Recorded investment	363	358	363	358	379
With an allowance recorded, Recorded investment	3	62	3	62	67
Recorded investment, Total	366	420	366	420	446
With no related allowance recorded, unpaid principal balance	363	358	363	358	379
With an allowance recorded, unpaid principal balance	3	62	3	62	67
Unpaid principal balance, Total	366	420	366	420	446
With an allowance recorded, Related allowance	1	15	1	15	$ 13
With no related allowance recorded, Average recorded investment	363	300	371	292
With an allowance recorded, Average recorded investment	9	85	35	104
Average recorded investment, Total	372	385	406	396
With no related allowance recorded, Interest income recognized	6	7	23	24
With an allowance recorded, Interest income recognized	0	0	0	2
Interest income recognized, Total	$ 6	$ 7	$ 23	$ 26

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - TDR Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Receivables [Abstract]
Accrual status	$ 12,579	$ 5,396
Non-accrual status	7,199	7,198
Total	$ 19,778	$ 12,594

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - TDR Loan Modifications (Details) $ in Thousands	3 Months Ended		9 Months Ended				12 Months Ended
	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2019 USD ($) Contract	Sep. 30, 2020 USD ($) TDR	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($) Contract	Dec. 31, 2019 TDR
Financing Receivable, Allowance for Credit Loss [Line Items]
Number of Contracts	13	10	1	32		31	0
Pre-Modification Outstanding Recorded Investment	$ 7,417	$ 2,178			$ 9,436	$ 4,900
Post-Modification Outstanding Recorded Investment	7,417	2,178			9,436	4,900
Specific Reserve	0	0	$ 0	$ 0	0	0
Maturity Extension
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	6,609	2,093			7,888	2,603
Modified Payment
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	500	0			1,134	442
Modified Underwriting
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	308	85			414	1,855
Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	$ 0	$ 0			0	$ 0
Commercial/agriculture real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Number of Contracts | Contract	3	7		12		14
Pre-Modification Outstanding Recorded Investment	$ 3,826	$ 2,012			4,933	$ 3,298
Post-Modification Outstanding Recorded Investment	3,826	2,012			4,933	3,298
Specific Reserve	0	0	0	$ 0	0	0
Commercial/agriculture real estate | Maturity Extension
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	3,550	1,987			4,442	2,005
Commercial/agriculture real estate | Modified Payment
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	0			198	78
Commercial/agriculture real estate | Modified Underwriting
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	276	25			293	1,215
Commercial/agriculture real estate | Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	$ 0	$ 0			0	$ 0
C&I/Agricultural operating
Financing Receivable, Allowance for Credit Loss [Line Items]
Number of Contracts | Contract	2	1		5		7
Pre-Modification Outstanding Recorded Investment	$ 3,000	$ 60			3,373	$ 998
Post-Modification Outstanding Recorded Investment	3,000	60			3,373	998
Specific Reserve	0	0	0	$ 0	0	0
C&I/Agricultural operating | Maturity Extension
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	3,000	0			3,295	165
C&I/Agricultural operating | Modified Payment
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	0			78	364
C&I/Agricultural operating | Modified Underwriting
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	60			0	469
C&I/Agricultural operating | Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	$ 0	$ 0			0	$ 0
Residential mortgage
Financing Receivable, Allowance for Credit Loss [Line Items]
Number of Contracts | Contract	8	2		13		9
Pre-Modification Outstanding Recorded Investment	$ 591	$ 106			1,123	$ 602
Post-Modification Outstanding Recorded Investment	591	106			1,123	602
Specific Reserve	0	0	0	$ 0	0	0
Residential mortgage | Maturity Extension
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	59	106			148	431
Residential mortgage | Modified Payment
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	500	0			858	0
Residential mortgage | Modified Underwriting
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	32	0			117	171
Residential mortgage | Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	$ 0	$ 0			0	$ 0
Consumer installment
Financing Receivable, Allowance for Credit Loss [Line Items]
Number of Contracts | Contract	0	0		2		1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0			7	$ 2
Post-Modification Outstanding Recorded Investment	0	0			7	2
Specific Reserve	0	0	$ 0	$ 0	0	0
Consumer installment | Maturity Extension
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	0			3	2
Consumer installment | Modified Payment
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	0			0	0
Consumer installment | Modified Underwriting
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	0	0			4	0
Consumer installment | Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Modifications	$ 0	$ 0			$ 0	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Loans by Loan Segment (Details) $ in Thousands	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2019 USD ($) Contract	Sep. 30, 2020 USD ($) TDR	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2019 USD ($) Contract	Dec. 31, 2019 USD ($) TDR
Troubled Debt Restructuring
Number of Modifications	13	10	1	32	31	0
Recorded Investment | $	$ 19,778		$ 19,778	$ 19,778		$ 12,594
Commercial/agriculture real estate
Troubled Debt Restructuring
Number of Modifications	3	7		12	14
C&I/Agricultural operating
Troubled Debt Restructuring
Number of Modifications	2	1		5	7
Residential mortgage
Troubled Debt Restructuring
Number of Modifications	8	2		13	9
Consumer installment
Troubled Debt Restructuring
Number of Modifications	0	0		2	1
Originated Loans
Troubled Debt Restructuring
Number of Modifications				108	93
Recorded Investment | $	$ 19,778	$ 11,795	19,778	$ 19,778	$ 11,795
Originated Loans | Commercial/agriculture real estate
Troubled Debt Restructuring
Number of Modifications				34	27
Recorded Investment | $	10,517	5,917	10,517	$ 10,517	$ 5,917
Originated Loans | C&I/Agricultural operating
Troubled Debt Restructuring
Number of Modifications				17	16
Recorded Investment | $	5,358	2,366	5,358	$ 5,358	$ 2,366
Originated Loans | Residential mortgage
Troubled Debt Restructuring
Number of Modifications				50	42
Recorded Investment | $	3,850	3,438	3,850	$ 3,850	$ 3,438
Originated Loans | Consumer installment
Troubled Debt Restructuring
Number of Modifications				7	8
Recorded Investment | $	$ 53	$ 74	$ 53	$ 53	$ 74

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2019 USD ($) Contract	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2019 USD ($) Contract
Considered in Default at Period End:
Number of Modifications	35	24	35	24
Recorded Investment	7,199,000	4,601,000	7,199,000	4,601,000
Became in Default during Period:
Number of Modifications	2	2	6	11
Recorded Investment | $	$ 234	$ 120	$ 497	$ 1,084
Commercial/agriculture real estate
Considered in Default at Period End:
Number of Modifications	15	9	15	9
Recorded Investment	5,037,000	2,343,000	5,037,000	2,343,000
Became in Default during Period:
Number of Modifications	0	2	2	7
Recorded Investment | $	$ 0	$ 120	$ 140	$ 227
C&I/Agricultural operating
Considered in Default at Period End:
Number of Modifications	12	12	12	12
Recorded Investment	1,490,000	1,914,000	1,490,000	1,914,000
Became in Default during Period:
Number of Modifications			1	4
Recorded Investment | $			$ 78	$ 857
Residential mortgage
Considered in Default at Period End:
Number of Modifications	8	3	8	3
Recorded Investment	672,000	344,000	672,000	344,000
Became in Default during Period:
Number of Modifications	2	0	3	0
Recorded Investment | $	$ 234	$ 0	$ 279	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Acquired Loans Outstanding Balance and the Carrying Amount (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 1,241,884	$ 1,187,264
Carrying amount	1,241,884	1,187,264	$ 1,134,708
Purchased credit impaired loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	25,083	38,268
Carrying amount	23,422	31,978
Non-PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	299,251	386,476
Carrying amount	294,201	383,275
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	324,334	424,744
Carrying amount	$ 317,623	$ 415,253

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Acquired Loans Changes in Accretable Yield (Details) - Acquired Loans - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	$ 3,201	$ 3,163
Additions to accretable discount for acquired performing loans	0	814
Accelerated accretion from payoff of certain PCI loans with transferred non-accretable difference	(99)	0
Transfers from non-accretable difference to accretable discount	2,704	80
Scheduled accretion	(756)	(622)
Balance at end of period	$ 5,050	$ 3,435

XML

MORTGAGE SERVICING RIGHTS - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Deposits	$ 1,270,778	$ 1,195,702
Core Deposits
Finite-Lived Intangible Assets [Line Items]
Deposits	6,753	2,868
Mortgage servicing rights
Finite-Lived Intangible Assets [Line Items]
Residential mortgage loans serviced for others	$ 555,700	$ 524,715

XML

MORTGAGE SERVICING RIGHTS - Servicing Asset at Amortized Cost (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Beginning of period	$ 4,282
Increase in MSR assets resulting from transfers of financial assets	(1,546)	$ (581)
End of period	3,498		$ 4,282
Mortgage servicing rights
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Beginning of period	4,541	4,486	4,486
MSR asset acquired	0		0
Increase in MSR assets resulting from transfers of financial assets	1,546		904
Amortization during the period	(908)		(849)
End of period	5,179		4,541
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward]
Balance at beginning of period	(259)	$ 0	0
Additions	(1,422)		(259)
Recoveries	0		0
Write-downs	0		0
Balance at beginning of period	(1,681)		(259)
Mortgage servicing assets, net; end of period	3,498		4,282
Fair value of MSR asset; end of period	3,509		4,309
Residential mortgage loans serviced for others	$ 555,700		$ 524,715
Net book value of MSR asset to loans serviced for others (as a percent)	0.63%		0.82%

XML

LEASES - Narrative (Details) - lease	Sep. 30, 2020	Jan. 01, 2019
Lessee, Lease, Description [Line Items]
Operating lease renewal term	5 years
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	3 months
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	8 years
Corporate Offices
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases (in leases)	1
Bank Branch
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases (in leases)	6	9
Other Production
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases (in leases)	1	1

XML

LEASES - Operating Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jan. 01, 2019
Leases [Abstract]
Operating cash flows from operating leases	$ 477	$ 665
Operating leases	0	$ 158
Operating lease right-of-use assets	2,803		$ 2,787	$ 5,000
Operating lease liabilities	$ 2,910		$ 2,845	$ 5,000
Weighted average remaining lease term in years; operating leases	6 years 1 month 6 days		6 years 7 months 17 days
Weighted average discount rate; operating leases (as a percent)	2.63%		3.07%

XML

LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Jan. 01, 2019
Operating leases
2020	$ 161
2021	592
2022	558
2023	505
2024	419
Thereafter	1,229
Total	3,464
Less: effects of discounting	(554)
Lease liability recognized	$ 2,910	$ 2,845	$ 5,000

XML

DEPOSITS - Deposits by Type (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deposits [Abstract]
Non-interest bearing demand deposits	$ 229,217	$ 168,157
Interest bearing demand deposits	279,648	223,102
Savings accounts	191,511	156,599
Money market accounts	246,651	246,430
Certificate accounts	323,751	401,414
Total deposits	1,270,778	1,195,702
Brokered deposits included above:	$ 3,250	$ 50,377

XML

DEPOSITS - Maturities of Time Deposits (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Deposits [Abstract]
September 30, 2021	$ 216,854
September 30, 2022	96,391
September 30, 2023	6,669
September 30, 2024	2,976
September 30, 2025	861
After September 30, 2025	0
Total	$ 323,751

XML

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS - Summary (Details)	1 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2025	Aug. 31, 2022	Sep. 30, 2020 USD ($) note	Dec. 31, 2019 USD ($)
Summary of Federal Home Loan Bank advances
Federal Home Loan Bank advances, net			$ 124,491,000	$ 130,971,000
Long-term debt, gross			182,788,000	174,531,000
Letters of credit outstanding, amount			180,325,000	147,991,000
Banks available and unused portion of borrowing agreement			105,858,000	203,935,000
Maximum month-end amounts outstanding			$ 162,530,000	151,530,000
Number of notes acquired | note			6
F. & M. Bancorp. of Tomah, Inc.
Summary of Federal Home Loan Bank advances
FHLB, advances, fixed rate			$ 9,530,000
Weighted-average interest rate over time (as a percent)			2.02%
Maturity Period, fixed rate			14 months
Senior Notes - Variable Rate due June 2031 | Revolving Credit Facility
Summary of Federal Home Loan Bank advances
Maximum borrowing capacity				5,000,000
FHLB
Summary of Federal Home Loan Bank advances
FHLB advances, maturity 2020			$ 1,000,000	69,000,000
FHLB advances, maturity 2021			8,000,000	4,000,000
FHLB advances, maturity 2022			15,000,000	15,000,000
FHLB advances, maturity 2023			20,000,000	0
FHLB advances, maturity 2024			20,530,000	530,000
FHLB advances, maturity 2025			5,000,000	0
FHLB advances, maturity 2029			42,500,000	42,500,000
FHLB advances, maturity 2030			12,500,000	0
FHLB advances, maturities summary			124,530,000	131,030,000
Less: unamortized debt issuance costs			(39,000)	(59,000)
Federal Home Loan Bank advances, net			124,491,000	130,971,000
Letters of credit outstanding, amount			$ 681,951,000	$ 792,909,000
Weighted-average interest rate (as a percent)			0.82%	1.74%
FHLB | Minimum
Summary of Federal Home Loan Bank advances
Range of stated rates, 2020 (as a percent)			1.76%	1.67%
Range of stated rates, 2021 (as a percent)			0.00%	1.85%
Range of stated rates, 2022 (as a percent)			2.34%	2.34%
Range of stated rates, 2023 (as a percent)			1.43%	0.00%
Range of stated rates, 2024 (as a percent)			0.00%	0.00%
Range of stated rates, 2025 (as a percent)			1.45%	0.00%
Range of stated rates, 2029 (as a percent)			1.00%	1.00%
Range of stated rates, 2030 (as a percent)			0.52%	0.00%
FHLB | Maximum
Summary of Federal Home Loan Bank advances
Range of stated rates, 2020 (as a percent)			1.76%	2.05%
Range of stated rates, 2021 (as a percent)			2.16%	2.16%
Range of stated rates, 2022 (as a percent)			2.45%	2.45%
Range of stated rates, 2023 (as a percent)			1.44%	0.00%
Range of stated rates, 2024 (as a percent)			1.45%	0.00%
Range of stated rates, 2025 (as a percent)			1.45%	0.00%
Range of stated rates, 2029 (as a percent)			1.13%	1.13%
Range of stated rates, 2030 (as a percent)			0.86%	0.00%
Senior Notes
Summary of Federal Home Loan Bank advances
Less: unamortized debt issuance costs			$ (559,000)	$ (296,000)
Long-term debt, gross			58,297,000	43,560,000
Senior Notes | Senior Notes
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 28,856,000	$ 28,856,000
Senior Notes | Senior Notes | Minimum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			3.50%	4.00%
Senior Notes | Senior Notes | Maximum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			3.50%	4.75%
Subordinated Notes
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 30,000,000
Subordinated Notes | Subordinated Notes due 2027
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 15,000,000	$ 15,000,000
Stated interest rate (as a percent)			6.75%
Debt instrument, term			5 years
Subordinated Notes | Subordinated Notes due 2027 | LIBOR | Scenario, Forecast
Summary of Federal Home Loan Bank advances
Basis spread on variable rate (as a percent)		4.90%
Subordinated Notes | Subordinated Notes due 2027 | Minimum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			6.75%	6.75%
Subordinated Notes | Subordinated Notes due 2027 | Maximum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			6.75%	6.75%
Subordinated Notes | Subordinated Notes due 2030
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 15,000,000
Stated interest rate (as a percent)			6.00%
Debt instrument, term			5 years
Subordinated Notes | Subordinated Notes due 2030 | Secured Overnight Financing Rate (SOFR) | Scenario, Forecast
Summary of Federal Home Loan Bank advances
Basis spread on variable rate (as a percent)	5.91%
Subordinated Notes | Subordinated Notes due 2030 | Minimum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			6.00%
Subordinated Notes | Subordinated Notes due 2030 | Maximum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			6.00%
Federal Home Loan Bank Advances
Summary of Federal Home Loan Bank advances
FHLB, advances			$ 55,000,000

XML

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES AND OTHER BORROWINGS - Narrative (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Letters of credit outstanding, amount	$ 180,325,000	$ 147,991,000
Line of Credit | Federal Reserve Bank Paycheck Protection Program Liquidity Facility
Debt Instrument [Line Items]
Outstanding balances of debt instrument	0	0
Maximum month-end outstanding amount	$ 25,136,000	$ 0

XML

CAPITAL MATTERS - Summary (Details) $ in Thousands	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual, Amount	$ 170,610	$ 160,302
Total capital (to risk weighted assets), Actual, Ratio	0.150	0.131
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 91,021	$ 98,174
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	0.080	0.080
Total capital (to risk weighted assets), To Be Well Capitalized, Amount	$ 113,776	$ 122,718
Total capital (to risk weighted assets), To Be Well Capitalized, Ratio	0.100	0.100
Tier 1 capital (to risk weighted assets), Actual, Amount	$ 156,388	$ 149,982
Tier 1 capital (to risk weighted assets), Actual, Ratio	0.137	0.122
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 68,266	$ 73,631
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	0.060	0.060
Tier 1 capital (to risk weighted assets), To Be Well Capitalized, Amount	$ 91,021	$ 98,174
Tier 1 capital (to risk weighted assets), To Be Well Capitalized, Ratio	0.080	0.080
Common equity tier 1 (to risk weighted assets), Actual, Amount	$ 156,388	$ 149,982
Common equity tier 1 (to risk weighted assets), Actual, Ratio	13.70%	12.20%
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 51,199	$ 55,223
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Ratio	4.50%	4.50%
Common equity tier 1 (to risk weighted assets), To Be Well Capitalized, Amount	$ 73,955	$ 79,767
Common equity tier 1 (to risk weighted assets), To Be Well Capitalized, Ratio	6.50%	6.50%
Tier 1 leverage ratio (to adjusted total assets), Actual, Amount	$ 156,388	$ 149,982
Tier 1 leverage ratio (to adjusted total assets), Actual, Ratio	0.099	0.104
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Amount	$ 63,465	$ 57,834
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Ratio	0.040	0.040
Tier 1 leverage ratio (to adjusted total assets), To Be Well Capitalized, Amount	$ 79,331	$ 72,293
Tier 1 leverage ratio (to adjusted total assets), To Be Well Capitalized, Ratio	0.050	0.050
Citizens Community Bancorp, Inc.
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual, Amount	$ 163,250	$ 137,259
Total capital (to risk weighted assets), Actual, Ratio	0.143	0.112
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 91,021	$ 98,174
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	0.080	0.080
Tier 1 capital (to risk weighted assets), Actual, Amount	$ 119,028	$ 111,939
Tier 1 capital (to risk weighted assets), Actual, Ratio	0.105	0.091
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 68,266	$ 73,631
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	0.060	0.060
Common equity tier 1 (to risk weighted assets), Actual, Amount	$ 119,028	$ 111,939
Common equity tier 1 (to risk weighted assets), Actual, Ratio	10.50%	9.10%
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 51,199	$ 55,223
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Ratio	4.50%	4.50%
Tier 1 leverage ratio (to adjusted total assets), Actual, Amount	$ 119,028	$ 111,939
Tier 1 leverage ratio (to adjusted total assets), Actual, Ratio	0.075	0.077
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Amount	$ 63,465	$ 57,834
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Ratio	0.040	0.040

XML

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Mar. 27, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (shares)	73,100		73,100		78,100	108,930
2008 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (shares)			181,000
2008 Equity Incentive Plan | Restricted shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-option instruments granted (shares)			89,183
2004 Recognition and Retention Plan and 2008 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiry period of unexercised nonqualified incentive stock options			15 years
Expiry period of unexercised incentive stock options			10 years
Compensation expense related to awards	$ 165	$ 127	$ 462	$ 370
2004 Recognition and Retention Plan and 2008 Equity Incentive Plan | Restricted shares | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares, in years			2 years
2004 Recognition and Retention Plan and 2008 Equity Incentive Plan | Restricted shares | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares, in years			5 years
2004 Recognition and Retention Plan and 2008 Equity Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares, in years			5 years
2018 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock reserved and available for issuance under the 2008 Equity Incentive Plan (shares)							350,000
2018 Equity Incentive Plan | Restricted shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (shares)	99,575		99,575
2018 Equity Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (shares)	0		0
2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related to awards	$ 3	$ 5	$ 11	$ 14

XML

STOCK-BASED COMPENSATION - Restricted Stock Award (Details) - Restricted shares - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Number of Shares
Unvested and outstanding at beginning of year (shares)	43,457	75,407
Granted (shares)	45,507	12,847
Vested (shares)	(14,545)	(32,630)
Forfeited (shares)	0	(12,167)
Unvested and outstanding at end of year (shares)	74,419	43,457
Weighted Average Grant Price
Unvested and outstanding at beginning of year (USD per share)	$ 12.76	$ 13.24
Granted (USD per share)	11.79	11.50
Vested (USD per share)	12.78	12.89
Forfeited (USD per share)	0	13.28
Unvested and outstanding at end of year (USD per share)	$ 12.16	$ 12.76

XML

STOCK-BASED COMPENSATION - Common Stock Options Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Option Shares
Outstanding at beginning of period (shares)	78,100	108,930
Exercised (shares)		(28,430)
Forfeited or expired (shares)	(5,000)	(2,400)
Outstanding at end of period (shares)	73,100	78,100
Exercisable at end of period (shares)	52,900	44,700
Fully vested and expected to vest (shares)	73,100	78,100
Weighted Average Exercise Price
Outstanding at beginning of period (USD per share)	$ 11.18	$ 10.15
Exercised (USD per share)		7.12
Forfeited or expired (USD per share)	12.77	12.38
Outstanding at end of period (USD per share)	11.08	11.18
Weighted Average Exercise Price, Exercisable at end of year (USD per share)	10.76	10.73
Weighted Average Exercise Price, Fully vested and expected to vest (USD per share)	$ 11.08	$ 11.18
Weighted Average Remaining Contractual Term, Outstanding at end of period	5 years 9 months	6 years 6 months 18 days
Weighted Average Remaining Contractual Term, Exercisable at end of period	5 years 7 months 2 days	6 years 3 months 18 days
Weighted Average Remaining Contractual Term, Fully vested and expected to vest	5 years 9 months	6 years 6 months 18 days
Aggregate intrinsic value, exercisable at end of period	$ 0	$ 67
Aggregate intrinsic value, fully vested and expected to vest at end of period	$ 0	$ 81

XML

STOCK-BASED COMPENSATION - 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan Information (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
Intrinsic value of options exercised	$ 0		$ 130
Cash received from options exercised	0	$ 203	203
Tax benefit realized from options exercised	$ 0		$ 0

XML

FAIR VALUE ACCOUNTING - Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets Measured on a Recurring Basis
Total available for sale securities	$ 150,908	$ 180,119
U.S. government agency obligations
Assets Measured on a Recurring Basis
Total available for sale securities	34,379	51,805
Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Total available for sale securities	140	281
Mortgage-backed securities
Assets Measured on a Recurring Basis
Total available for sale securities	51,758	71,331
Corporate debt securities
Assets Measured on a Recurring Basis
Total available for sale securities	15,364	18,725
Trust preferred securities
Assets Measured on a Recurring Basis
Total available for sale securities	13,724	11,123
Fair Value, Measurements, Recurring
Assets Measured on a Recurring Basis
Total available for sale securities	150,908	180,119
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	150,908	180,119
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | U.S. government agency obligations
Assets Measured on a Recurring Basis
Total available for sale securities	34,379	51,805
Fair Value, Measurements, Recurring | U.S. government agency obligations | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | U.S. government agency obligations | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	34,379	51,805
Fair Value, Measurements, Recurring | U.S. government agency obligations | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Total available for sale securities	140	281
Fair Value, Measurements, Recurring | Obligations of states and political subdivisions | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Obligations of states and political subdivisions | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	140	281
Fair Value, Measurements, Recurring | Obligations of states and political subdivisions | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Mortgage-backed securities
Assets Measured on a Recurring Basis
Total available for sale securities	51,758	71,331
Fair Value, Measurements, Recurring | Mortgage-backed securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Mortgage-backed securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	51,758	71,331
Fair Value, Measurements, Recurring | Mortgage-backed securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Corporate debt securities
Assets Measured on a Recurring Basis
Total available for sale securities	15,364	18,725
Fair Value, Measurements, Recurring | Corporate debt securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Corporate debt securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	15,364	18,725
Fair Value, Measurements, Recurring | Corporate debt securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Corporate asset-based securities
Assets Measured on a Recurring Basis
Total available for sale securities	35,543	26,854
Fair Value, Measurements, Recurring | Corporate asset-based securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Corporate asset-based securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	35,543	26,854
Fair Value, Measurements, Recurring | Corporate asset-based securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Trust preferred securities
Assets Measured on a Recurring Basis
Total available for sale securities	13,724	11,123
Fair Value, Measurements, Recurring | Trust preferred securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Total available for sale securities	0	0
Fair Value, Measurements, Recurring | Trust preferred securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Total available for sale securities	13,724	11,123
Fair Value, Measurements, Recurring | Trust preferred securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Total available for sale securities	$ 0	$ 0

XML

FAIR VALUE ACCOUNTING - Assets Measured on a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets Measured on a Nonrecurring Basis
Total	$ 8,461	$ 8,917
Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Nonrecurring Basis
Total	0	0
Significant Other Observable Inputs (Level 2)
Assets Measured on a Nonrecurring Basis
Total	0	0
Significant Unobservable Inputs (Level 3)
Assets Measured on a Nonrecurring Basis
Total	8,472	8,944
Foreclosed and repossessed assets, net
Assets Measured on a Nonrecurring Basis
Total	812	1,460
Foreclosed and repossessed assets, net | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Nonrecurring Basis
Total	0	0
Foreclosed and repossessed assets, net | Significant Other Observable Inputs (Level 2)
Assets Measured on a Nonrecurring Basis
Total	0	0
Foreclosed and repossessed assets, net | Significant Unobservable Inputs (Level 3)
Assets Measured on a Nonrecurring Basis
Total	812	1,460
Impaired loans with allocated allowances
Assets Measured on a Nonrecurring Basis
Total	4,151	3,175
Impaired loans with allocated allowances | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Nonrecurring Basis
Total	0	0
Impaired loans with allocated allowances | Significant Other Observable Inputs (Level 2)
Assets Measured on a Nonrecurring Basis
Total	0	0
Impaired loans with allocated allowances | Significant Unobservable Inputs (Level 3)
Assets Measured on a Nonrecurring Basis
Total	4,151	3,175
Mortgage servicing rights
Assets Measured on a Nonrecurring Basis
Total	3,498	4,282
Mortgage servicing rights | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Nonrecurring Basis
Total	0	0
Mortgage servicing rights | Significant Other Observable Inputs (Level 2)
Assets Measured on a Nonrecurring Basis
Total	0	0
Mortgage servicing rights | Significant Unobservable Inputs (Level 3)
Assets Measured on a Nonrecurring Basis
Total	$ 3,509	$ 4,309

XML

FAIR VALUE ACCOUNTING - Level 3 Fair Value Inputs (Details) - Fair Value, Inputs, Level 3 $ in Thousands	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Foreclosed and repossessed assets, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of loans receivable	$ 812	$ 1,460
Foreclosed and repossessed assets, net | Estimated costs to sell | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed and repossessed assets, impaired loans, measurement input	0.10	0.10
Foreclosed and repossessed assets, net | Estimated costs to sell | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed and repossessed assets, impaired loans, measurement input	0.15	0.15
Impaired loans with allocated allowances
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of loans receivable	$ 4,151	$ 3,175
Impaired loans with allocated allowances | Estimated costs to sell | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed and repossessed assets, impaired loans, measurement input	0.10	0.10
Impaired loans with allocated allowances | Estimated costs to sell | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed and repossessed assets, impaired loans, measurement input	0.15	0.15
Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of MSR asset; end of period	$ 3,509	$ 4,309
Mortgage servicing rights | Discounted rates | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing asset, measurement input	0.09	0.095
Mortgage servicing rights | Discounted rates | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing asset, measurement input	0.12	0.125

XML

FAIR VALUE ACCOUNTING - Carrying Amount and Estimated Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Financial assets:
Securities available for sale "AFS"	$ 150,908	$ 180,119
Securities held to maturity “HTM”	17,233	2,957
Equity securities with readily determinable fair value	187	246
Carrying Amount | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Financial assets:
Cash and cash equivalents	115,474	55,840
Equity securities with readily determinable fair value	187	246
Accrued interest receivable	5,829	4,738
Financial liabilities:
Other borrowings	58,297	43,560
Accrued interest payable	517	453
Carrying Amount | Significant Other Observable Inputs (Level 2)
Financial assets:
Other interest-bearing deposits	3,752	4,744
Securities available for sale "AFS"	150,908	180,119
Securities held to maturity “HTM”	16,927	2,851
Other investments	15,075	15,005
Loans held for sale	4,938	5,893
Financial liabilities:
FHLB advances	124,491	130,971
Carrying Amount | Significant Unobservable Inputs (Level 3)
Financial assets:
Loans receivable, net	1,215,303	1,167,060
Mortgage servicing rights	3,498	4,282
Financial liabilities:
Deposits	1,270,778	1,195,702
Estimated Fair Value | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Financial assets:
Cash and cash equivalents	115,474	55,840
Equity securities with readily determinable fair value	187	246
Accrued interest receivable	5,829	4,738
Financial liabilities:
Other borrowings	58,297	43,560
Accrued interest payable	517	453
Estimated Fair Value | Significant Other Observable Inputs (Level 2)
Financial assets:
Other interest-bearing deposits	3,838	4,792
Securities available for sale "AFS"	150,908	180,119
Securities held to maturity “HTM”	17,233	2,957
Other investments	15,075	15,005
Loans held for sale	4,938	5,893
Financial liabilities:
FHLB advances	129,798	131,593
Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Financial assets:
Loans receivable, net	1,204,923	1,161,660
Mortgage servicing rights	3,509	4,309
Financial liabilities:
Deposits	$ 1,275,000	$ 1,192,777

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Before-Tax Amount
Other comprehensive income	$ 1,220	$ 440	$ 1,896	$ 2,977
Tax Expense
Other comprehensive income (loss)	(335)	(121)	(521)	(819)
Net-of-Tax Amount
Other comprehensive income	885	319	1,375	2,158	$ 1,415
Unrealized Gains (Losses) on Securities
Before-Tax Amount
Net unrealized gains arising during the period	1,220	440	2,052	3,003
Reclassification adjustment for gains included in net income	0	0	(156)	(26)
Tax Expense
Net unrealized gains arising during the period	(335)	(121)	(564)	(826)
Reclassification adjustment for gains included in net income	0	0	43	7
Net-of-Tax Amount
Net unrealized gains arising during the period	885	319	1,488	2,177
Reclassification adjustment for gains included in net income	$ 0	$ 0	$ (113)	$ (19)

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Changes in the Accumulated Balances (Details) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended		12 Months Ended
	Jan. 01, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201601Member			us-gaap:AccountingStandardsUpdate201602Member
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	$ 138,187	$ 152,790	$ 143,242	$ 138,380	$ 138,187	$ 150,553	$ 138,187	$ 138,187
Current year-to-date other comprehensive income		885	319			1,375	2,158	1,415
Balance at end of period		157,323	148,029	143,242	138,380	157,323	148,029	150,553
Unrealized Gains (Losses) on Securities
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	(2,540)				(2,540)	(649)	(2,540)	(2,540)
Current year-to-date other comprehensive income						1,896		1,953
Balance at end of period		1,247				1,247		(649)
Other Accumulated Comprehensive Income (Loss), net of tax
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	(1,841)	19	(47)	(722)	(1,841)	(471)	(1,841)	(1,841)
Balance at end of period		$ 904	$ 272	$ (47)	(722)	$ 904	272	(471)
Adjustment | Unrealized Gains (Losses) on Securities
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	(62)				(62)		(62)	(62)
Adjustment | Other Accumulated Comprehensive Income (Loss), net of tax
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	$ (45)				$ (45)		$ (45)	$ (45)

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended							9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Tax Effect	$ (1,267)				$ (430)			$ (3,309)	$ (2,252)
Net income attributable to common stockholders	3,480	$ 3,069	$ 2,606	$ 3,169	1,234	$ 4,107	$ 953	9,155	6,294
Unrealized Gains (Losses) on Securities | Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Sale of securities	0				0			156	26
Tax Effect	0				0			43	7
Net income attributable to common stockholders	$ 0				$ 0			$ 113	$ 19