10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2021

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 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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý

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  ý    No  ¨

1

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  ý    No  ¨

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

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

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

Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

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

The aggregate market value of common stock held by non-affiliates of the registrant, computed by reference to the closing price as of June 30, 2021, was approximately $138.8 million.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

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

At March 2, 2022 there were 10,536,544 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2022 Annual Meeting of the Stockholders of the Registrant are incorporated by reference into Part III of this report.

2

CITIZENS COMMUNITY BANCORP, INC.

FORM 10-K

December 31, 2021

TABLE OF CONTENTS

			Page Number
PART I			5
	ITEM 1.	BUSINESS	5
	ITEM 1A.	RISK FACTORS	11
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	19
	ITEM 2.	PROPERTIES	20
	ITEM 3.	LEGAL PROCEEDINGS	20
	ITEM 4.	MINE SAFETY DISCLOSURES	20
PART II			20
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
	ITEM 6.	RESERVED	21
	ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	50
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	53
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	107
	ITEM 9A.	CONTROLS AND PROCEDURES	107
	ITEM 9B.	OTHER INFORMATION	108
	ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION	108
PART III			109
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	109
	ITEM 11.	EXECUTIVE COMPENSATION	109
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	109
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	109
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	110
PART IV			110
	ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	110
		SIGNATURES	113

3

As used in this report, the terms “we,” “us,” “our,” “Citizens Community Bancorp” and the “Company” mean Citizens Community Bancorp, Inc. and its wholly owned subsidiary, Citizens Community Federal N.A., unless the context indicates another meaning. As used in this report, the term “Bank” means our wholly owned subsidiary, Citizens Community Federal N.A.

Forward-Looking Statements

Certain matters discussed in this Annual Report on Form 10-K 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 this report 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;

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

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

•interest rate risk;

•lending risk;

•higher lending risks associated with our commercial and agricultural banking activities;

•the sufficiency of loan allowances;

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

•competitive pressures among depository and other financial institutions;

•disintermediation risk;

•our ability to maintain our reputation;

•our ability to maintain or increase our market share;

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

•our inability to obtain needed liquidity;

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

•our ability to attract and retain key personnel;

•our ability to keep pace with technological change;

•prevalence of fraud and other financial crimes;

•cybersecurity risks;

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

•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;

•restrictions on our ability to pay dividends;

•the potential volatility of our stock price;

•accounting standards for loan losses;

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

•public company reporting obligations;

•changes in federal or state tax laws; and

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

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.

In this Annual Report, the periods presented are the fiscal years ended December 31, 2021 (which we sometimes refer to in this Annual Report as “fiscal 2021”) and December 31, 2020 (which we sometimes refer to in this Annual Report as “fiscal 2020”).

4

PART 1

ITEM 1. BUSINESS

General

Citizens Community Bancorp, Inc. (the “Company”) is a Maryland corporation organized in 2004. The Company is a bank holding company and is subject to regulation by the Office of the Comptroller of the Currency (“OCC”) and by the Federal Reserve Bank. Our primary activities consist of holding the stock of our wholly-owned subsidiary bank, Citizens Community Federal N.A. (the “Bank”), and providing commercial, agricultural and consumer banking activities through the Bank. At December 31, 2021, we had approximately $1.74 billion in total assets, $1.39 billion in deposits, and $170.9 million in equity. Unless otherwise noted herein, all monetary amounts in this report, other than share, per share and capital ratio amounts, are stated in thousands.

Citizens Community Federal N.A.

The Bank is a federally chartered National Bank serving customers in Wisconsin and Minnesota through 25 full-service 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.

Acquisitions

On August 18, 2017, the Company completed its merger with Wells Financial Corporation (“WFC”), pursuant to the merger agreement, dated March 17, 2017. At that time, the separate corporate existence of WFC ceased, and the Company survived the merger. In connection with the merger, the Company caused Wells Federal Bank to merge with and into the Bank, with the Bank surviving the merger. The merger expanded the Bank's market share in Mankato and southern Minnesota, along with expanded services through Wells Insurance Agency, Inc. (“WIA”). WIA provided insurance products to the Bank’s customers and was sold on June 30, 2020.

On October 19, 2018, the Company completed its previously announced acquisition (the “Acquisition”) of United Bank for a total cash consideration of approximately $51.1 million, subject to certain post-closing purchase price adjustments and future indemnity claims. In connection with the acquisition, the Company merged United Bank with and into the Bank, with the Bank surviving the merger.

On December 3, 2018, the Bank entered into a Purchase and Assumption Agreement with Lake Michigan Credit Union providing for the sale of the Bank’s one branch located in Rochester Hills, MI. On May 17, 2019, the Company completed the sale of the Rochester Hills, MI branch for a deposit premium of 7 percent, or approximately $2.3 million, net of selling costs. The branch sale included approximately $34 million in deposits and $300,000 in fixed assets. The Bank retained all loans associated with the branch.

On January 21, 2019, the Company and F&M Merger Sub, Inc., a newly formed Minnesota corporation and wholly-owned subsidiary of the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with F. & M. Bancorp. of Tomah, Inc., a Wisconsin corporation (“F&M”). On July 1, 2019, the Company closed on the acquisition of F&M and completed the related data systems conversion on July 14, 2019. F. & M. Investment Corp. of Tomah was a wholly owned subsidiary of the Bank that was formerly utilized by F&M to manage its municipal bond portfolio and has been dissolved.

Internet Website

We maintain a website at www.ccf.us. We make available through that website, free of charge, copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements for our annual stockholders’ meetings and amendments to those reports or documents, as soon as reasonably practicable after we electronically file those materials with, or furnish them to, the Securities and Exchange Commission (“SEC”). We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Annual Report on Form 10-K. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants.

Yields Earned and Rates Paid

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

5

Rate/Volume Analysis

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

Average Balance, Interest and Average Yields and Rates

This information is included in Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Statement of Operations Analysis” herein.

Lending Activities

We offer a variety of loan products including commercial real estate loans, commercial and industrial (C&I) loans, agricultural real estate loans, agricultural operating loans, residential mortgages, home equity lines-of-credit and consumer loans. We make real estate, consumer, commercial and agricultural loans in accordance with the basic lending policies established by Bank management and approved by our Board of Directors. We focus our lending activities on individual consumers and small commercial borrowers within our market areas. Our lending has been historically concentrated primarily within Wisconsin and Minnesota. Competitive and economic pressures exist in our lending markets, and recent and any future developments in (a) the general economy, (b) real estate lending markets, and (c) the banking regulatory environment could have a material adverse effect on our business and operations. These factors may impact the credit quality of our existing loan portfolio, or adversely impact our ability to originate sufficient high quality loans in the future.

Our total gross outstanding loans, before net deferred loan costs and unamortized discounts on acquired loans, as of December 31, 2021, were $1.32 billion, consisting of $1.04 billion in commercial/agricultural real estate loans, $162.5 million in C&I/agricultural operating loans, $94.9 million in residential mortgage loans and $24.8 million in consumer installment loans. See Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Balance Sheet Analysis” for further analysis of our loan portfolio.

Investment Activities

We maintain a portfolio of investments, consisting primarily of mortgage-backed securities, corporate asset-backed securities, U.S. Government sponsored agency securities, corporate debt securities and trust preferred securities. We attempt to balance our portfolio to manage interest rate risk, regulatory requirements, and liquidity needs while providing an appropriate rate of return commensurate with the risk of the investment. See Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Balance Sheet Analysis Investment Securities” for further analysis of our investment portfolio.

Deposits and Other Sources of Funds

General. The Company’s primary sources of funds are deposits; amortization, prepayments and maturities of outstanding loans; other short- term investments; and funds provided from operations.

Deposits. We offer a broad range of deposit products through our branches, including demand deposits, various savings and money-market accounts and certificates of deposit. Deposits are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”) up to statutory limits. At December 31, 2021, our total deposits were $1.39 billion including interest bearing deposits of $1.11 billion and non-interest bearing deposits of $0.28 billion.

Borrowings. In addition to our primary sources of funds, we maintain access to additional sources of funds through borrowing, including FHLB borrowings, lines of credit with the Federal Reserve Bank, our Revolving Loan and our Note. See Item 7; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Balance Sheet Analysis Federal Home Loan Bank (FHLB) advances and other borrowings” for further analysis of our borrowings.

Competition

We compete with other financial institutions and businesses both in attracting and retaining deposits and making loans in all of our principal markets. We believe the primary factors in competing for deposits are interest rates, personalized services, the quality and range of financial services, technology, convenient locations and office hours, and alternative delivery systems. One such delivery system is remote deposit capture for those commercial customers that are not conveniently located near one of our branches or mobile banking for retail customers. Competition for deposit products comes primarily from other banks, credit unions and non-bank competitors, including insurance companies, money market and mutual funds, and other investment alternatives. We believe the primary factors in competing for loans are interest rates, loan origination fees, and the quality and the range of lending services. Successful loan originations tend to depend not only on interest rate and terms of the loan but also on being responsive and flexible to the customer’s needs. Competition for loans comes primarily from other banks, mortgage banking firms, credit unions, finance companies, leasing companies and other financial intermediaries. Some of our competitors

6

are not subject to the same degree of regulation as that imposed on national banks or federally insured institutions, and these other institutions may be able to price loans and deposits more aggressively. We also face direct competition from other banks and their holding companies that have greater assets and resources than ours. However, we have been able to compete effectively with other financial institutions by building customer relationships with a focus on small-business solutions, including internet and mobile banking, electronic bill pay and remote deposit capture.

 Regulation and Supervision

The banking industry is highly regulated, and the Company and the Bank are subject to numerous laws and regulations. As a bank holding company, the Company is subject to regulation, supervision and examination by the Board of Governors of the Federal Reserve System (the “FRB”). The Bank is also subject to regulation, supervision and examination by the OCC. The Bank is a member of the Federal Reserve System and the Federal Home Loan Bank System. In addition, the Bank’s deposit accounts are insured by the FDIC to the maximum extent permitted by law, and the FDIC has certain enforcement powers over the Bank.

The following is a brief summary of material statutes and regulations that affect the Company and the Bank. The following summary is not a complete discussion or analysis and is qualified in its entirety by reference to the statutes and regulations summarized below. The laws and regulations applicable to the Company and the Bank are subject to change.

The likelihood and timing of any changes, and the impact such changes may have on the Company and the Bank, are difficult to predict. In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to the Company or the Bank. All of the foregoing may have a material adverse effect on our business, operations, and earnings.

Securities Regulation and Listing

Our common stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is listed on the NASDAQ Global Market under the symbol “CZWI.” We are subject to the information, proxy solicitation, insider trading, corporate governance, and other disclosure requirements and restrictions of the Exchange Act, as well as the Securities Act of 1933 (the “Securities Act”), both administered by the SEC. As a company listed on the NASDAQ Global Market, we are subject to NASDAQ standards for listed companies.

The Company is currently a “smaller reporting company” which allows us to provide certain simplified and scaled disclosures in our filings with the SEC. We will remain a smaller reporting company for so long as the market value of the Company’s common stock held by non-affiliates as of the end of its most recently completed second fiscal quarter is less than $250 million, or as of the same period the Company’s annual revenues are less than $100 million and its public float is less than $700 million. In addition, we are currently considered a “non-accelerated filer” and will maintain that status for so long as the Company’s annual revenues are less than $100 million, and its public float is more than $75 million but less than $700 million

Sarbanes-Oxley Act.

The Sarbanes-Oxley Act of 2002 (SOX) was enacted to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. SOX and the SEC’s implementing regulations include provisions addressing, among other matters, the duties, functions and qualifications of audit committees for all public companies; certification of financial statements by the chief executive officer and the chief financial officer; the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; disclosure of off-balance sheet transactions; a prohibition on personal loans to directors and officers, except (in the case of banking companies) loans in the normal course of business; expedited filing requirements for reports of beneficial ownership of company stock by insiders; disclosure of a code of ethics for senior officers, and of any change or waiver of such code; the formation of a public accounting oversight board; auditor independence; disclosure of fees paid to the company’s auditors for non-audit services and limitations on the provision of such services; attestation requirements for company management and external auditors, relating to internal controls and procedures; and various increased criminal penalties for violations of federal securities laws.

Section 404 of SOX requires management of the Company to undertake a periodic assessment of the adequacy and effectiveness of the Company’s internal control over financial reporting. If the Company were to be classified as an “accelerated filer” rather than a “non-accelerated filer,” then we would become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act. Section 404(b) requires that an independent registered public accounting firm provide an attestation report on the Company’s internal control over financial reporting and the operating effectiveness of these controls, making the public reporting process more costly.

7

The Dodd-Frank Act

In July 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act has significantly changed the bank regulatory structure and affected the lending, investment, trading and operating activities of financial institutions and their holding companies. Many of the provisions of the Dodd-Frank Act are subject to delayed effective dates and/or require the issuance of implementing regulations, some of which have not yet been issued in final form. The Dodd-Frank Act and implementing regulations have increased the regulatory burden, compliance cost and interest expense for the Company and the Bank.

In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”) was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act. While the Regulatory Relief Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks with assets of more than $50 billion. Many of these changes could result in meaningful regulatory changes for community banks such as the Bank, and their holding companies.

Capital Adequacy

Banks and bank holding companies, as regulated institutions, are required to maintain minimum levels of capital. The FRB and the OCC have adopted minimum risk-based capital requirements (Tier 1 capital, common equity Tier 1 capital (“CET1”) and total capital) and leverage capital requirements, as well as guidelines that define components of the calculation of capital and the level of risk associated with various types of assets. Financial institutions are expected to maintain a level of capital commensurate with the risk profile assigned to their assets in accordance with the guidelines.

In addition to the minimum risk-based capital and leverage ratios, banking organizations must maintain a “capital conservation buffer” consisting of CET1 in an amount equal to 2.5% of risk-weighted assets in order to avoid restrictions on their ability to make capital distributions and to pay certain discretionary bonus payments to executive officers. In order to avoid those restrictions, the capital conservation buffer effectively increases the minimum CET1 capital, Tier 1 capital, and total capital ratios for U.S. banking organizations to 7.0%, 8.5%, and 10.5%, respectively. Banking organizations with capital levels that fall within the buffer will be required to limit dividends, share repurchases or redemptions (unless replaced within the same calendar quarter by capital instruments of equal or higher quality), and discretionary bonus payments.

The Bank’s capital categories are determined solely for the purpose of applying the “prompt corrective action” rules described below and they are not necessarily an accurate representation of its overall financial condition or prospects for other purposes. Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other restrictions on its business. See “Bank Regulation - Prompt Corrective Action” below.

Bank Holding Company Regulation

As a bank holding company, the Company is subject to the Bank Holding Company Act of 1956 (the “BHCA”) and regulation and supervision by the FRB. A bank holding company is required to obtain the approval of the FRB before making certain acquisitions or engaging in certain activities. Bank holding companies and their subsidiaries are also subject to restrictions on transactions with insiders and affiliates.

A bank holding company is required to obtain the approval of the FRB before it may acquire all or substantially all of the assets of any bank, and before it may acquire ownership or control of the voting shares of any bank if, after giving effect to the acquisition, the bank holding company would own or control more than five percent of the voting shares of such bank. The approval of the FRB is also required for the merger or consolidation of bank holding companies.

Pursuant to the BHCA, the FRB has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the FRB has reasonable grounds to believe that continuation of such activity or ownership constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.

The Company is required to file periodic reports with the FRB and provide any additional information the FRB may require. The FRB also has the authority to examine the Company and its subsidiaries, as well as any arrangements between the Company and its subsidiaries, with the cost of any such examinations to be borne by the Company. Banking subsidiaries of bank holding companies are also subject to certain restrictions imposed by federal law in dealings with their holding companies and other affiliates.

Federal law restricts the amount of voting stock of a bank holding company or a bank that a person or group may acquire without the prior approval of banking regulators. Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, such as the Company, and the OCC before acquiring control of any national bank, such as the Bank. The Change in Bank Control

8

Act (“CBCA”) prohibits a person or group of persons from acquiring “control” of a bank holding company unless the Federal Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Company. In addition, the CBCA prohibits any entity from acquiring 25% (the BHC Act has a lower limit for acquirers that are existing bank holding companies) or more of a bank holding company’s or bank’s voting securities, or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the Federal Reserve. The Federal Reserve Board recently issued a final rule (which became effective October 1, 2020) that clarified and codified the Federal Reserve’s standards for determining whether one company has control over another. The final rule established four categories of tiered presumptions of non-control that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of non-control. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.

Bank Regulation

Anti-Money Laundering and OFAC Regulation. The Bank is subject to a number of anti-money laundering laws (“AML”) and regulations. The Bank Secrecy Act of 1970 (“BSA”) and subsequent laws and regulations require the Bank to take steps to prevent the use of the Bank or its systems from facilitating the flow of illegal or illicit money or terrorist funds. Those requirements include ensuring effective board and management oversight, establishing policies and procedures, performing comprehensive risk assessments, developing effective monitoring and reporting capabilities, ensuring adequate training and establishing a comprehensive independent audit of BSA compliance activities.

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“Patriot Act”) significantly expanded the AML and financial transparency laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. Regulations promulgated under the Patriot Act impose various requirements on financial institutions, such as standards for verifying client identification at account opening and maintaining expanded records (including “Know Your Customer” and “Enhanced Due Diligence” practices) and other obligations to maintain appropriate policies, procedures and controls to aid the process of preventing, detecting, and reporting money laundering and terrorist financing. An institution subject to the Patriot Act must provide AML training to employees, designate an AML compliance officer and annually audit the AML program to assess its effectiveness. The FDIC continues to issue regulations and additional guidance with respect to the application and requirements of BSA and AML.

The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. Based on their administration by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), these are typically known as the “OFAC” rules. The OFAC-administered sanctions targeting countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “United States persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to United States jurisdiction (including property in the possession or control of United States persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC.

Failure of a financial institution to maintain and implement adequate BSA, AML and OFAC programs, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution and result in material fines and sanctions. The Bank has implemented policies and procedures to comply with the foregoing requirements.

Privacy Restrictions

The Gramm-Leach-Bliley Act of 1999 (“GLBA”), in addition to making changes to permissible non-banking activities in which banks are permitted to engage, also requires financial institutions in the U.S. to provide certain privacy disclosures to customers and consumers, to comply with certain restrictions on sharing and usage of personally identifiable information, and to implement and maintain commercially reasonable customer information safeguarding standards.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories: well capitalized, adequately capitalized, undercapitalized,

9

significantly undercapitalized, and critically undercapitalized, in which all institutions are placed. The federal banking agencies have also specified by regulation the relevant capital levels for each category.

A “well-capitalized” bank is one that is not required to meet and maintain a specific capital level for any capital measure pursuant to any written agreement, order, capital directive, or prompt corrective action directive, and has a total risk-based capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 8%, a CET1 capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%. Generally, a classification as well capitalized will place a bank outside of the regulatory zone for purposes of prompt corrective action. However, a well-capitalized bank may be reclassified as “adequately capitalized” based on criteria other than capital, if the federal regulator determines that a bank is in an unsafe or unsound condition, or is engaged in unsafe or unsound practices, which requires certain remedial action.

The FRB may also set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. At this time, the bank regulatory agencies are more inclined to impose higher capital requirements to meet well-capitalized standards and future regulatory change could impose higher capital standards as a routine matter. The Bank, as a matter of prudent management, targets as its goal the maintenance of capital ratios which exceed these minimum requirements and that are consistent with the Bank’s risk profile.

Deposit Insurance. The deposits of the Bank are insured by the Deposit Insurance Fund (DIF) of the FDIC up to the limits set forth under applicable law and are subject to the deposit insurance premium assessments of the DIF. Under the Dodd-Frank Act, the maximum per depositor FDIC insurance amount increased from $100,000 to $250,000. The FDIC applies a risk-based system for setting deposit insurance assessments, which was amended by the Dodd-Frank Act. Under this system, the assessment rates for an insured depository institution vary according to the level of risk incurred in its activities. To arrive at an assessment rate for a banking institution, the FDIC places it in one of four risk categories determined by reference to its capital levels and supervisory ratings. In addition, in the case of those institutions in the lowest risk category, the FDIC further determines its assessment rate based on certain specified financial ratios or, if applicable, its long-term debt ratings. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits. In addition to deposit insurance assessments, the FDIC is authorized to collect assessments from FDIC insured depository institutions to service the outstanding obligations of Financing Corporation (FICO).

The Dodd-Frank Act changed the assessment formula for determining deposit insurance premiums and modified certain insurance coverage provisions of the FDIA. The FDIC’s implementing rules redefined the base for FDIC insurance assessments from the amount of insured deposits to average consolidated total assets less average tangible equity.

Federal Home Loan Bank (“FHLB”) System. The Bank is a member of the FHLB of Chicago, which is one of the 11 regional Federal Home Loan Banks. The primary purpose of the FHLBs is to provide funding to their saving association members in support of the home financing credit function of the members. Each FHLB serves as a reserve or central bank for its members within its assigned region. FHLBs are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. FHLBs make loans or advances to members in accordance with policies and procedures established by the board of directors of the FHLB. These policies and procedures are subject to the regulation and oversight of the Federal Housing Financing Board. All advances from a FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. Long-term advances are required to be used for residential home financing and small business and agricultural loans.

As a member, the Bank is required to purchase and maintain stock in the FHLB of Chicago based on activity and membership requirements. As of December 31, 2021, the Bank had $7.9 million in FHLB stock, which was in compliance with this requirement. The Bank receives dividends on its FHLB stock.

Community Reinvestment Act. The Community Reinvestment Act (“CRA”) is intended to encourage insured depository institutions, while operating safely and soundly, to help meet the credit needs of their communities. CRA specifically directs the federal bank regulatory agencies, in examining insured depository institutions, to assess their record of helping to meet the credit needs of their entire community, including low- and moderate-income neighborhoods, consistent with safe and sound banking practices. CRA further requires the agencies to take a financial institution’s record of meeting its community credit needs into account when evaluating applications for, among other things, domestic branches, consummating mergers or acquisitions or holding company formations.

The federal banking agencies have adopted regulations which measure a bank’s compliance with its CRA obligations on a performance-based evaluation system. This system bases CRA ratings on an institution’s actual lending service and investment performance rather than the extent to which the institution conducts needs assessments, documents community outreach or complies with other procedural requirements. The ratings range from “outstanding” to a low of “substantial noncompliance.”

10

The Bank had a CRA rating of “Satisfactory” as of its most recent regulatory examination.

Consumer Compliance and Fair Lending Laws. The Bank is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These laws include the Patriot Act, BSA, the Foreign Account Tax Compliance Act, CRA, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, various state law counterparts, and the Consumer Financial Protection Act of 2010, which constitutes part of the Dodd-Frank Act. The enforcement of fair lending laws has been an increasing area of focus for regulators, including the OCC and CFPB.

Effects of Government Monetary Policy

  The earnings of the Company are affected by general and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the FRB regulates money supply, credit conditions and interest rates in order to influence general economic conditions, primarily through open market operations in United States Government Securities, varying the discount rate on member bank borrowings, setting reserve requirements against member and nonmember bank deposits, regulating interest rates payable by member banks on time and savings deposits and expanding or contracting the money supply. FRB monetary policies have had a significant effect on the operating results of commercial banks and their holding companies, including the Bank and the Company, in the past and are expected to continue to do so in the future.

Human Capital

We are focused on the success, health and long-term growth and development of our employees and our objective is to attract and reward individuals with the talent and skills to help support our business objectives. Our employees are integral to the success of our business, particularly because most are customer-facing on behalf of our Company. Our ability to develop and retain our customers depends on the integrity, capabilities and knowledge of our employees.

Therefore, in order to compete effectively and continue to provide best in class service to our customers, we must attract, retain and motivate our employees. We believe our human capital efforts, which include employee training, employee health and benefits packages, and engaging employees in volunteer activities in the communities that we serve, all contribute to our success in attracting, retaining and motivating strong employee talent.

At March 2, 2022, we had 225 full-time employees and 248 total employees, company-wide. We have no unionized employees, and we are not subject to any collective bargaining agreements.

ITEM 1A. RISK FACTORS

The risks described below are not the only risks we face. Additional risks that we do not yet know of or that we currently believe are immaterial may also impair our future business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline.

RISKS RELATED TO ECONOMIC CONDITIONS

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 pandemic, restrictions intended to prevent and mitigate its spread, challenges related to vaccination rollout and new variants of the virus has and is expected to continue to (and the future outbreak of other highly infectious or contagious diseases likely would) significantly and negatively impact financial markets and economic conditions in our markets, the United States and globally. 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 have been and could be further significantly and adversely affected. See also “The COVID-19 pandemic may continue to cause adverse economic conditions and could have an adverse impact on our financial condition and our results of operations and other aspects of our business.”

11

The COVID-19 pandemic may continue to cause adverse economic conditions and 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 may lead to a global recession. These conditions may 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 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 have been working remotely for an extended period of time. 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 $194 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.

Acts or threats of terrorism and political or military actions by the United States or other governments could adversely affect general economic industry conditions. Geopolitical conditions may affect our earnings. Acts or threats of terrorism and political actions taken by the United States or other governments in response to terrorism, or similar activity, could adversely affect general or industry conditions and, as a result, our consolidated financial condition and results of operations.

Deterioration in the markets for residential real estate, including secondary residential mortgage loan markets, could reduce our net income and profitability. During the severe recession that lasted from 2007 to 2009, softened residential housing markets, increased delinquency and default rates, and volatile and constrained secondary credit markets negatively impacted the mortgage industry. Our financial results were adversely affected by these effects including changes in real estate values, primarily in Wisconsin and Minnesota, and our net income declined as a result. Decreases in real estate values adversely affected the value of property used as collateral for loans as well as investments in our portfolio. Continued slow growth in the economy since 2009 resulted in increased competition and lower rates, which has negatively impacted our net income and profits.

The foregoing changes could affect our ability to originate loans and deposits, the fair value of our financial assets and liabilities and the average maturity of our securities portfolio. An increase in the level of interest rates may also adversely affect the ability of certain of our borrowers to repay their obligations. If interest rates paid on deposits or other borrowings were to increase at a faster rate than the interest rates earned on loans and investments, our net income would be adversely affected.

RISKS RELATED TO OUR BUSINESS AND OPERATIONS

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

12

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 may continue to cause adverse economic conditions and 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. Our exposure to lending risk is managed through the use of consistent underwriting standards, and we avoid highly leveraged transactions as well as excessive industry and other concentrations, but there can be no assurance that our risk mitigation measures will be effective in avoiding undue credit risk. 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 December 31, 2021, the Bank had $6.6 million of COVID-19 related modifications under Section 4013 of the CARES Act remaining. 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. In addition, we may purchase real estate, or we may foreclose on and take title to real estate. Although we exercise prudent due diligence when making loans, we could be subject to environmental liabilities with respect to these properties. See also “The COVID-19 pandemic may continue to cause adverse economic conditions and could have an adverse impact on our financial condition and our results of operations and other aspects of our business.”

We are subject to higher lending risks with respect to our commercial and agricultural banking activities which could adversely affect our financial condition and results of operations. Our loans include commercial and agricultural loans, which include loans secured by real estate as well as loans secured by personal property. Commercial real estate lending, including agricultural loans, 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. Agricultural operating loans carry significant risks as they may involve larger balances concentrated with a single borrower or group of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan for which an operating loan is utilized. Farming operations may be affected by factors outside of the borrower’s control, including adverse weather conditions, such as drought, hail or floods that can severely limit crop yields and declines in market prices for agricultural products. Although the Bank manages lending risks through its underwriting and credit administration policies, no assurance can be given that such risks will not materialize, in which event, our financial condition, results of operations, cash flows and business prospects could be materially adversely affected.

Our allowance for loan losses may be insufficient. To address risks inherent in our loan portfolio, we maintain an allowance for loan losses that represents management’s best estimate of probable losses that exist within our loan portfolio. The level of the allowance reflects management’s continuing evaluation of various factors, including specific credit risks, historical loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unidentified losses inherent in the current loan portfolio. Determining the appropriate level of the allowance for loan losses involves a high degree of subjectivity and requires us to make estimates of significant credit risks, which may undergo material changes. In evaluating our impaired loans, we assess repayment expectations and determine collateral values based on all information that is available to us. However, we must often make subjective decisions based on our assumption about the creditworthiness of the borrowers and the values of collateral securing these loans.

Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in our allowance for loan losses. In addition, bank regulatory agencies periodically examine our allowance for loan losses and may require an increase in the allowance or the recognition of further loan charge-offs, based on judgments different from those of our management.

If charge-offs in future periods exceed our allowance for loan losses, we will need to take additional loan loss provisions to increase our allowance for loan losses. Any additional loan loss provision will reduce our net income or increase our net loss, which could have a direct material adverse effect on our financial condition and results of operations.

Changes in the fair value or ratings downgrades of our securities may reduce our stockholders’ equity, net earnings, or regulatory capital ratios. At December 31, 2021, $203.1 million of our securities, were classified as available for sale and $71.1 million were classified as held to maturity. The estimated fair value of our available for sale securities portfolio may increase or decrease depending on market conditions. Our available for sale securities portfolio is comprised of fixed-rate, and

13

to a lesser extent, floating rate securities. We increase or decrease stockholders’ equity by the amount of the change in unrealized gain or loss (the difference between the estimated fair value and amortized cost) of our available for sale securities portfolio, net of the related tax benefit or provision, under the category of accumulated other comprehensive income/loss. Therefore, a decline in the estimated fair value of this portfolio will result in a decline in our reported stockholders’ equity, as well as our book value per common share and tangible book value per common share. This decrease will occur even though the securities are not sold. In the case of debt securities, if these securities are never sold, the decrease may be recovered over the life of the securities.

We conduct a periodic review and evaluation of our securities portfolio to determine if the decline in the fair value of any security below its cost basis is other-than-temporary. Factors which we consider in our analysis include, but are not limited to, the severity and duration of the decline in fair value of the security, the financial condition and near-term prospects of the issuer, whether the decline appears to be related to issuer conditions or general market or industry conditions, our intent and ability to retain the security for a period of time sufficient to allow for any anticipated recovery in fair value and the likelihood of any near-term fair value recovery. We generally view changes in fair value caused by changes in interest rates as temporary, which is consistent with our experience. If we deem such decline to be other-than-temporary related to credit losses, the security is written down to a new cost basis and the resulting loss is charged to earnings as a component of non-interest income in the period in which the decline in value occurs.

We have, in the past, recorded other than temporary impairment (“OTTI”) charges, principally arising from investments in non-agency mortgage-backed securities. We do not currently hold any non-agency mortgage-backed securities. We continue to monitor our securities portfolio as part of our ongoing OTTI evaluation process. No assurance can be given that we will not need to recognize OTTI charges related to securities in the future. Future OTTI charges would cause decreases to both Tier 1 and Risk-based capital levels which may expose the Company and/or the Bank to additional regulatory restrictions.

The capital that we are required to maintain for regulatory purposes is impacted by, among other factors, the securities ratings on our portfolio. Therefore, ratings downgrades on our securities may also have a material adverse effect on our risk-based regulatory capital levels.

Competition may affect our results. Competition in the banking and financial services industry is intense. Our profitability depends upon our continued ability to compete in our primary market area. We face strong competition in originating loans, in seeking deposits and in offering other banking services. We compete with commercial banks, trust companies, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms. Our market area is also served by commercial banks and savings associations that are substantially larger than us in terms of deposits and loans, have greater human and financial resources, and may offer certain services that we do not or cannot provide. This competitive climate can make it difficult to establish, maintain and retain relationships with new and existing customers and can lower the rate we are able to charge on loans, increase the rates we must offer on deposits, and affect our charges for other services. Those factors can, in turn, adversely affect our results of operations and profitability.

Customers may decide not to use banks to complete their financial transactions, which could result in a loss of income to us. Technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. For example, customers can now pay bills and transfer funds directly without going through a bank. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits.

We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. We are a community bank, and our reputation is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results may be materially adversely affected.

Maintaining or increasing our market share may depend on lowering prices and market acceptance of new products and services. Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and customer demands. We face increasing pressure to provide products and services at lower prices, which can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet and mobile banking services, could require us to make substantial expenditures to modify or adapt our existing products and services. Also, these and other capital investments in our business may not produce expected growth in earnings anticipated at the time of the expenditure. We may not be successful in introducing new products and

14

services, achieving market acceptance of our products and services, or developing and maintaining loyal customers, which in turn, could adversely affect our results of operations and profitability.

We may not have sufficient pre-tax net income in future periods to fully realize the benefits of our net deferred tax assets. Assessing the need for, or the sufficiency of, a valuation allowance requires management to evaluate all available evidence. Based on future pre-tax net income projections and the planned execution of existing tax planning strategies, we believe that it is more likely than not that we will fully realize the benefits of our net deferred tax assets. However, our current assessment is based on assumptions and judgments that may or may not reflect actual future results. If a valuation allowance becomes necessary, it could have a material adverse effect on our consolidated results of operations and financial condition.

We could experience an unexpected inability to obtain needed liquidity. Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. We seek to ensure our funding needs are met by maintaining an appropriate level of liquidity through asset/liability management. If we become unable to obtain funds when needed, it could have a material adverse effect on our business and, in turn, our consolidated financial condition and results of operations. Moreover, it could limit our ability to take advantage of what we believe to be good market opportunities for expanding our loan portfolio.

Future growth, operating results or regulatory requirements may require us to raise additional capital but that capital may not be available. We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. To the extent our future operating results erode capital or we elect to expand through loan growth or acquisition, we may be required to raise additional capital.

Our ability to raise capital will depend on conditions in the capital markets, which are outside of our control, and on our financial performance. Accordingly, we cannot be assured of our ability to raise capital when needed or on favorable terms. If we cannot raise additional capital when needed or if we are subject to material unfavorable terms for such capital, we may be subject to increased regulatory supervision and the imposition of restrictions on our growth and business. These actions could negatively impact our ability to operate or further expand our operations and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on our consolidated financial condition and results of operations.

We may not be able to attract or retain key people. Our success depends, in part, on our ability to attract and retain key people. We depend on the talents and leadership of our executive team, including Stephen M. Bianchi, our Chief Executive Officer, and James S. Broucek, our Chief Financial Officer. Competition for the best people in most activities engaged in by us can be intense, and we may not be able to hire people or retain them. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our local markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel.

We continually encounter technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology driven by new or modified products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes. As a bank, we are susceptible to fraudulent activity that may be committed against us or our customers which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customers' information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Consistent with industry trends, we have also experienced an increase in attempted electronic fraudulent activity in recent periods. Given such increase in electronic fraudulent activity and the growing level of use of electronic, internet-based and networked systems to conduct business directly or indirectly with our clients, certain fraud losses may not be avoidable regardless of the preventative and detection systems in place. Nationally, reported incidents of fraud and other financial crimes have increased. While we have policies and procedures designed to prevent such losses, there can be no assurance that such losses will not occur.

We rely on network and information systems and other technologies, and, as a result, we are subject to various Cybersecurity risks. Cybersecurity refers to the combination of technologies, processes and procedures established to protect

15

information technology systems and data from unauthorized access, attack, or damage. Our business involves the storage and transmission of customers’ personal information. While we have internal policies and procedures designed to prevent or limit the effect of a failure, interruption or security breach of our information systems, as well as contracts and service agreements with applicable outside vendors, we cannot be assured that any such failures, interruptions or security breaches will not occur or, if they do, that they will be addressed adequately. Any failure or interruption of these systems could result in failures or disruptions in our loan, deposit, general ledger and other systems. We rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business. Although we have implemented measures to prevent security breaches, cyber incidents and other security threats, our facilities and systems, and those of third party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human error, or other similar events that could have a material adverse effect on our business.

Although, to date, we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the outsourcing of some of our business operations and the continued uncertain global economic environment. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Furthermore, the storage and transmission of such data is regulated at the federal and state level. Privacy information security laws and regulation changes, and compliance therewith, may result in cost increases due to system changes and the development of new administrative processes. If we fail to comply with applicable laws and regulations or experience a data security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or our vendors, our reputation could be damaged, possibly resulting in lost future business, and we could be subject to fines, penalties, administrative orders and other legal risks as a result of a breach or non-compliance.

Our internal controls and procedures may fail or be circumvented. Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well-designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the objectives of the system are met. Any (a) failure or circumvention of our controls and procedures, (b) failure to adequately address any internal control deficiencies, or (c) failure to comply with regulations related to controls and procedures could have a material effect on our business, consolidated financial condition and results of operations. See Item 9A “Controls and Procedures” for further discussion of our internal controls.

Our growth strategy includes selectively acquiring businesses through acquisitions of other banks, and our ability to consummate these acquisitions on economically advantageous terms acceptable to us in the future is unknown. Our growth strategy includes acquisitions of other banks that serve customers or markets we find desirable, including our recent acquisitions of Community Bank of Northern Wisconsin (“CBN”), WFC, United Bank and F&M. The market for acquisitions remains highly competitive, and we may be unable to find satisfactory acquisition candidates in the future that fit our acquisition and growth strategy. This competition could increase prices for potential acquisitions that we believe are attractive. Any such acquisitions could be funded through cash from operations, the issuance of equity and/or the incurrence of additional indebtedness, which amount may be material, or a combination thereof. Any acquisition could be dilutive to our earnings and stockholders’ equity per share of our common stock. Also, acquisitions are subject to various regulatory approvals. If we fail to receive the appropriate regulatory approvals, we will not be able to consummate an acquisition that we believe is in our best interests. Among other things, our regulators consider our capital, liquidity, profitability, regulatory compliance and levels of goodwill and intangibles when considering acquisition and expansion proposals. To the extent that we are unable to find suitable acquisition candidates, an important component of our growth strategy may be lost.

Acquisition and expansion activities may disrupt our business, dilute existing stockholders and adversely affect our operating results. We acquired F&M in July 2019, United Bank in October 2018, WFC in August 2017 and CBN in May 2016. We intend to continue to evaluate potential acquisitions and expansion opportunities in the normal course of our business. Although the integration of F&M, United Bank, WFC and CBN have been successfully completed, we cannot assure you that we will be able to adequately or profitably manage the ongoing integration of any such future acquisitions. Acquiring other banks or financial service companies, as well as other geographic and product expansion activities, involve various risks including:

•risks of unknown or contingent liabilities;

•unanticipated costs and delays;

•risks that acquired new businesses do not perform consistent with our growth and profitability expectations;

•risks of entering new markets or product areas where we have limited experience;

•risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures;

16

•exposure to potential asset quality issues with acquired institutions;

•difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, and start-up delays and costs of other expansion activities;

•potential disruptions to our business;

•possible loss of key employees and customers of acquired institutions;

•potential short-term decreases in profitability; and

•diversion of our management’s time and attention from our existing operations and business.

Our failure to execute our acquisition strategy could adversely affect our business, results of operations, financial condition and future prospects.

Our ability to pay dividends depends primarily on dividends from our banking subsidiary, the Bank, which is subject to regulatory and other limitations. We are a bank holding company and our operations are conducted primarily by our banking subsidiary, the Bank. Since we receive substantially all of our revenue from dividends from the Bank, our ability to pay dividends on our common stock depends on our receipt of dividends from the Bank.

The Company is a legal entity separate and distinct from the Bank. As a bank holding company, the Company is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations. Federal bank regulators are authorized to determine under certain circumstances relating to the financial condition of a bank holding company or a bank that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In particular, federal bank regulators have stated that paying dividends that deplete a banking organization’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. In addition, in the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The ability of the Bank to pay dividends to us is also subject to its profitability, financial condition, capital expenditures and other cash flow requirements. The Bank may not be able to generate adequate cash flow to pay us dividends in the future. The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreement dated August 27, 2020 and Business Note Agreement dated August 1, 2018, each of which prohibits the Company from declaring or paying dividends while an event of default has occurred and is continuing under each respective agreement. The Company has pledged 100% of Bank stock as collateral for the loan and credit facilities provided for by the Business Note Agreement. The inability to receive dividends from the Bank could have an adverse effect on our business and financial condition.

Furthermore, holders of our common stock are only entitled to receive the dividends as our Board of Directors may declare out of funds legally available for such payments. Although we have historically paid cash dividends on our common stock, we are not required to do so and our Board of Directors could reduce or eliminate our common stock dividend in the future. This could adversely affect the market price of our common stock.

Our shares of common stock are thinly traded and our stock price may be more volatile. Because our common stock is thinly traded, its market price may fluctuate significantly more than the stock market in general or the stock prices of similar companies, which are exchanged, listed or quoted on the NASDAQ Stock Market. We believe there are 9,957,783 shares of our common stock held by nonaffiliates as of March 2, 2022. Thus, our common stock will be less liquid than the stock of companies with broader public ownership, and as a result, the trading prices for our shares of common stock may be more volatile, which may make it difficult for investors to resell shares at the volume, prices and times desired. Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger.

REGULATORY AND COMPLIANCE RISKS

A new accounting standard may require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations. The Financial Accounting Standards Board (“FASB”) has adopted a new accounting standard referred to as Current Expected Credit Loss, or CECL, which will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for loan losses. The FASB extended the effective date of CECL from January 2021 to January 2023 for smaller reporting companies such as the Company. Once effective, this will change the current method of providing allowances for loan losses that are probable, which may require us to increase our allowance for loan losses, and to greatly increase the types of data we will need to collect and review to determine the appropriate level of the allowance for loan losses. Banking regulators expect the new accounting standard will increase the allowance for loan losses. Any change in the allowance for loan losses at the time of adoption will be an adjustment to retained earnings and would change the Bank’s capital levels. Any increase in our allowance for loan losses or expenses incurred to determine the appropriate level of the allowance for loan losses may have a material adverse effect on our financial condition and results of operations.

17

We operate in a highly regulated environment, and are subject to changes, which could increase our cost structure or have other negative impacts on our operations. The banking industry is extensively regulated at the federal and state levels. Insured depository institutions and their holding companies are subject to comprehensive regulation and supervision by financial regulatory authorities covering all aspects of their organization, management and operations. We are also subject to regulation by the SEC. Our compliance with these regulations, including compliance with regulatory commitments, is costly. Regulation includes, among other things, capital and reserve requirements, the level of deposit insurance premiums assessed, permissible investments and lines of business, mergers and acquisitions, restrictions on transactions with insiders and affiliates, anti-money laundering regulations, dividend limitations, community reinvestment requirements, limitations on products and services offered, loan limits, geographical limits, and consumer credit regulations. The system of supervision and regulation applicable to us establishes a comprehensive framework for our operations and is intended primarily for the protection of the Deposit Insurance Fund, our depositors and the public, rather than our stockholders. Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations or legislation, or additional deposit insurance premiums could have a material impact on our operations. Failure to comply with applicable laws, regulations or policies could result in sanction by regulatory agencies, civil monetary penalties, and/or damage to our reputation, which could have a material adverse effect on our business, consolidated financial condition and results of operations. In addition, any change in government regulation could have a material adverse effect on our business or our ability to pay dividends.

Federal law restricts the amount of voting stock of a bank holding company or a bank, that a person or group may acquire, without the prior approval of banking regulators. Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, such as the Company, and the OCC before acquiring control of any national bank, such as the Bank. Under the BHCA and Federal Reserve guidance thereunder, a person or group will be presumed to control a bank holding company if they acquire a certain percentage of the bank holding company or if one or more other control factors are present. On January 31, 2020, the Federal Reserve Board approved the issuance of a final rule (which became effective October 1, 2020) that clarified and codified the Federal Reserve’s standards for determining whether one company has control over another. The final rule established four categories of tiered presumptions of noncontrol that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. The overall effect of the BHCA is to make it more difficult to acquire a bank holding company and a bank by tender offer or similar means than it might be to acquire control of another type of corporation. Consequently, shareholders of the Company may be less likely to benefit from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other non-bank companies. Investors should be aware of these requirements when acquiring shares of our stock.

Our reporting obligations as a public company are costly. Reporting requirements of a public company change depending on the reporting classification in which the Company falls as of the end of its second quarter of each fiscal year. The Company is currently a “smaller reporting company” which allows us to provide certain simplified and scaled disclosures in our filings. We will remain a smaller reporting company for so long as the market value of the Company’s common stock held by non-affiliates as of the end of its most recently completed second fiscal quarter is less than $250 million, or as of the same period the Company’s annual revenues are less than $100 million and its public float is less than $700 million. In addition, the Company is currently considered a “non-accelerated filer” and will maintain that status for so long as the Company’s annual revenues are less than $100 million, and its public float is more than $75 million but less than $700 million. If the Company were to be classified as an “accelerated filer” rather than a “non-accelerated filer,” then we would become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act. Section 404(b) requires that an independent registered public accounting firm provide an attestation report on the Company’s internal control over financial reporting and the operating effectiveness of these controls, making the public reporting process more costly.

Changes in federal or state tax laws could adversely affect our business, financial condition and results of operations. Our business, financial condition and results of operations are impacted by tax policy implemented at the federal and state level. We cannot predict whether any other tax legislation will be enacted in the future or whether any such changes to existing federal or state tax law would have a material adverse effect on our business, financial condition and results of operations.

We are subject to changes in accounting principles, policies or guidelines. Our financial performance is impacted by accounting principles, policies and guidelines. Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Some of our accounting policies are critical because they require management to make subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

18

From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. These changes are beyond our control, can be difficult to predict and could materially impact how we report our financial condition and results of operations. Changes in these standards are continuously occurring, and given recent economic conditions, more drastic changes may occur. The implementation of such changes could have a material adverse effect on our financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

19

ITEM 2. PROPERTIES

The Company leases its main administrative offices located at 2174 EastRidge Center, Eau Claire, WI 54701. At December 31, 2021, the Bank had a total of 25 full-service branch offices located in the Wisconsin cities of Altoona, Barron, Eau Claire, Ellsworth, Ettrick, Ladysmith, Lake Hallie, Mondovi, Osseo, Rice Lake (2), Spooner, Strum and

Tomah (2); and the Minnesota cities of Albert Lea, Blue Earth, Fairmont, Faribault, Mankato, Oakdale, Red Wing, St. James, St. Peter and Wells. Of these, the Bank owns 20 and leases the remaining 5 branch offices. Management believes that our current facilities are adequate to meet our present and immediately foreseeable needs. For more information on our properties and equipment, see Note 5, Office Properties and Equipment of Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K. For more information on our leases, see Note 7, Leases of Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. MINE SAFETY DISCLOSURES

None

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Historically, trading in shares of our common stock has been limited. Citizens Community Bancorp, Inc. common stock is traded on the NASDAQ Global Market under the symbol “CZWI”.

We had approximately 601 stockholders of record at March 2, 2022. The number of stockholders does not separately reflect persons or entities that hold their stock in nominee or “street” name through various brokerage firms. We believe that the number of beneficial owners of our common stock on that date was substantially greater.

Dividends

The holders of our common stock are entitled to receive such dividends when and as declared by our Board of Directors and approved by our regulators. During the continuance of an event of default under its Subordinated Note Purchase Agreement entered into with certain accredited purchasers in August 2020, the Company would be restricted from declaring or paying any dividends on its capital stock. In determining the payment of cash dividends, our Board of Directors considers our earnings, capital and debt servicing requirements, the financial ratio guidelines of our regulators, our financial condition and other relevant factors.

The Company’s ability to pay dividends on its common stock is dependent on the dividend payments it receives from the Bank, since the Company receives substantially all of its revenue in the form of dividends from the Bank. Future dividends are not guaranteed and will depend on the Company’s ability to pay them. For more information on dividends, see Note 10, Capital Matters of Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Securities Authorized for Issuance Under Equity Compensation Plans

For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12.

20

Purchases of Equity Securities by the Issuer

On November 30, 2020, the Board of Directors adopted a stock repurchase program. Under this program the Company was authorized to repurchase up to approximately 5% of the outstanding shares of its common stock as of November 30, 2020, or 557,728 shares, from time to time. The 36 thousand shares remaining under this authorization as of the beginning of the quarter ended September 30, 2021 were repurchased during the quarter.

On July 23, 2021, the Board of Directors adopted a new share repurchase program. Under this new share repurchase program, the Company may repurchase up to approximately 5% of the outstanding shares of its common stock as of July 23, 2021, or 532,962 shares, from time to time. During the quarter ended December 31, 2021, approximately 16 thousand shares were repurchased under this authorization. The table below shows information about our repurchases of our common stock during the three months ended December 31, 2021.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2021 - October 31, 2021	16,300	$	13.87	16,300	372,728
November 1, 2021 - November 30, 2021	—	$	—	—	372,728
December 1, 2021 - December 31, 2021	—	$	—	—	372,728
Total	16,300	$	—	16,300

ITEM 6. RESERVED

21

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion sets forth management’s discussion and analysis of our results of operations for the year ended December 31, 2021 and December 31, 2020, and our financial position as of December 31, 2021 and December 31, 2020, respectively. The MD&A should be read in conjunction with our consolidated financial statements, related notes, the selected financial data and the statistical information presented elsewhere in this Annual Report on Form 10-K for a more complete understanding of the following discussion and analysis. Unless otherwise noted, years refer to the Company’s fiscal years ended December 31, 2021 and December 31, 2020.

PERFORMANCE SUMMARY

The following is a brief summary of some of the significant factors that affected our operating results for the twelve months ended December 31, 2021 and 2020. In 2021, net interest income was favorably impacted by the following: (1) income realized from the origination of the Small Business Administration Paycheck Protection Program (“SBA PPP”) loans; (2) loan growth and related growth in loan interest income; (3) growth in the investment securities portfolio; (4) lower deposit costs due to the lower interest rate environment, and partially offset by; (5) lower accretion of discounts associated with the paydown of purchased credit impaired loans; and (6) lower interest income on loans and cash and cash equivalents due to the lower interest rate environment. The Company recorded no provision for loan losses in 2021 largely due to qualitative factor decreases to reflect greater certainty and improvement in current general economic conditions, offsetting the impact of organic loan growth. In 2021’s higher interest rate and tight housing supply environment, the Company experienced fewer mortgage loans originated for sale, which decreased gain on sale and income recorded in loan servicing income from the capitalization of mortgage servicing rights, partially offset by a reversal of mortgage servicing rights impairment and a decrease in variable compensation tied to mortgage loan production.

When comparing, year over year results, changes in net interest income, provision for loan losses, non-interest income and non-interest expense are primarily due to the items discussed above. See the remainder of this section for a more thorough discussion. 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.

We reported net income of $21.27 million for the twelve months ended December 31, 2021, compared to net income of $12.73 million for the twelve months ended December 31, 2020. Diluted earnings per share were $1.98 for the twelve months ended December 31, 2021, compared to $1.14 for the twelve months ended December 31, 2020. Return on average assets for the twelve months ended December 31, 2021, was 1.23%, compared to 0.80% for the twelve months ended December 31, 2020. The return on average equity was 12.97% for the twelve months ended December 31, 2021, and 8.29% for the comparable period in 2020.

22

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“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 the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Some of these estimates are more critical than others. Below is a discussion of our critical accounting estimates.    

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 losses, 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

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 reflects only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be collected).

Goodwill and Other Intangible Assets.

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, but reviews goodwill 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, 2021, which is related to its banking activities. The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit. An initial qualitative evaluation is made to assess the likelihood of impairment and determine whether further quantitative testing to calculate the fair value is necessary. When the qualitative evaluation indicates that impairment is more likely than not, quantitative testing is required whereby the fair value of the Company’s reporting unit is calculated and compared to the recorded book value, “step one.” If the calculated fair value of the Company’s reporting unit exceeds its carrying value, goodwill is not considered impaired, and “step two” is not considered necessary. If the carrying value of the company’s reporting unit exceeds its calculated fair value, the impairment test continues (“step two”) by comparing the carrying value of the Company’s reporting unit’s goodwill to the implied fair value of goodwill. An impairment charge is recognized if the carrying value of goodwill exceeds the implied fair value of goodwill.

23

In 2021, the Company performed quarterly reviews to determine if a triggering event had occurred that would require impairment testing. These quarterly reviews determined that no triggering event occurred during 2021. The Company performed its required annual goodwill impairment test as of December 31, 2021, 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 operations. 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, 5, 6, 13 and 14 of 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 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 December 31, 2021, management does not believe a valuation allowance related to the realizability of its deferred tax assets is necessary.

24

STATEMENT OF OPERATIONS ANALYSIS

Twelve months ended December 31, 2021 vs. Twelve months ended December 31, 2020

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 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 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.

Net interest income was $53.7 million for 2021 compared to $50.3 million for 2020. The increase is largely due to an increase in SBA PPP accretion, which increased $4.1 million. The net interest margin for 2021 was 3.34% compared to 3.40% for 2020. The decrease in the net interest margin percentage was due to the following factors: 1) a decrease in the accretion of discounts associated with the paydown of purchased credit impaired loans; 2) a full year of interest expense on the Company’s issuance of 6% subordinated debt in August 2020; 3) the increase in lower yielding cash and investment securities as a percentage of interest-earning assets; and 4) lower interest income on loans, securities and cash and cash equivalents due to the lower interest rate environment.These decreases were partially offset by: 1) higher income SBA PPP accretion and 2) lower deposit costs due to a decrease in interest rates in 2020 and the Company’s action to reduce higher costing certificates of deposits. Accretion on purchased credit impaired loans recognized due to loan payoffs or significant reductions in loan balances was $0.4 million in 2021, which was a decrease of $2.3 million from accretion recognized in 2020 or $2.7 million. In 2021, the Bank recognized $6.2 million of accretion of net origination fees and contractual interest income of $0.7 million in 2021 and $2.1 million of accretion of net origination fees and contractual interest income of $1.0 million in 2020. Remaining deferred SBA PPP fees were approximately $0.3 million at December 31, 2021. Interest expense on liabilities decreased $3.9 million in 2021 due to the lower interest rate environment and actions taken by the Bank to reduce interest rates paid. The Bank has approximately $179 million of certificates of deposit maturing in 2022, at a weighted average cost of approximately 1.35%. Of these, $64 million mature in the first quarter of 2022, with a weighted average cost of 1.50%. $73 million mature in the second quarter of 2022 with a weighted average cost of approximately 1.50%. These favorable items were offset by the negative impacts of a lower interest rate environment resulting in lower yields on loans, investments and cash and cash equivalents.

25

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows 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. Also presented is the weighted average yield on interest earning assets on a tax-equivalent basis, rates paid on interest bearing liabilities and the resultant spread at December 31, 2021 and December 31, 2020. Non-accruing loans average balances are included in the table with the loans carrying a zero yield.

	Twelve months ended December 31, 2021						Twelve months ended December 31, 2020
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Average interest earning assets:
Cash and cash equivalents	$	99,839	$	122	0.12	%	$	52,016	$	162	0.31	%
Loans	1,216,244		58,172		4.78	%	1,234,732		59,763		4.84	%
Interest-bearing deposits	2,047		45		2.20	%	3,914		96		2.45	%
Investment securities (1)	271,715		5,009		1.84	%	174,396		3,789		2.17	%
Other investments	15,025		687		4.57	%	15,081		717		4.75	%
Total interest earning assets (1)	$	1,604,870	$	64,035	3.99	%	$	1,480,139	$	64,527	4.36	%
Average interest bearing liabilities:
Savings accounts	$	212,867	$	369	0.17	%	$	174,184	$	435	0.25	%
Demand deposits	367,103		1,047		0.29	%	268,311		1,065		0.40	%
Money market	269,620		783		0.29	%	244,632		1,446		0.59	%
CD’s	224,708		3,200		1.42	%	316,264		6,325		2.00	%
IRA’s	39,699		451		1.14	%	42,039		729		1.73	%
Total deposits	$	1,113,997	$	5,850	0.53	%	$	1,045,430	$	10,000	0.96	%
FHLB Advances and other borrowings	173,029		4,518		2.61	%	186,724		4,272		2.29	%
Total interest bearing liabilities	$	1,287,026	$	10,368	0.81	%	$	1,232,154	$	14,272	1.16	%
Net interest income			$	53,667					$	50,255
Interest rate spread					3.18	%					3.20	%
Net interest margin (1)					3.34	%					3.40	%
Average interest earning assets to average interest bearing liabilities					1.25	%					1.20	%

(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% for the twelve months ended December 31, 2021 and 2020. The FTE adjustment to net interest income included in the rate calculations totaled $3 thousand and $1 thousand for the twelve month periods ended December 31, 2021 and 2020, respectively.

26

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).

	Twelve months ended December 31, 2021 v. 2020 increase (decrease) due to
	Volume (1)		Rate (1)		Total Increase / (Decrease)
Interest income:
Cash and cash equivalents	$	109	$	(149)	$	(40)
Loans	(889)		(702)		(1,591)
Interest-bearing deposits	(42)		(9)		(51)
Investment securities	1,889		(669)		1,220
Other investments	(3)		(27)		(30)
Total interest earning assets	$	1,064	$	(1,556)	$	(492)
Interest expense:
Savings accounts	$	86	$	(152)	$	(66)
Demand deposits	338		(356)		(18)
Money market accounts	136		(799)		(663)
CD’s	(1,522)		(1,603)		(3,125)
IRA’s	(39)		(239)		(278)
Total deposits	(1,001)		(3,149)		(4,150)
FHLB Advances and other borrowings	(329)		575		246
Total interest bearing liabilities	(1,330)		(2,574)		(3,904)
Net interest income	$	2,394	$	1,018	$	3,412

(1)the change in interest due to both rate and volume has been allocated in proportion to the relationship to the dollar amounts of the change in each.

Provision for Loan Losses. We determine our provision for loan losses (“provision”, or “PLL”) to provide an adequate allowance for loan losses (“ALL”) to reflect probable and inherent credit losses in our loan portfolio.

There was no provision for loan losses recorded in 2021 compared to $7.8 million for 2020. In 2021, the impact of growth in the originated loan portfolio and modest charge-offs were offset by a reduction in Q-Factors related to economic qualitative factor decreases to reflect reduced uncertainty in current general economic conditions and a modest reduction in the unallocated reserve. In 2020, the provision allocated for originated loan growth was approximately $1.2 million for 2020 and provision related to charge-offs and changes in specific reserves was approximately $1.2 million. The remaining provision in 2020 related to qualitative factor increases to reflect uncertainty in current general economic conditions and a modest increase in unallocated ALL.

Management believes that the provisions for the year ended December 31, 2021 and 2020, are both adequate in view of the present condition of the Bank’s loan portfolio and the sufficiency of collateral supporting non-performing loans. We are continually monitoring non-performing loan relationships and will make provisions, as necessary, if the facts and circumstances change. 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 other factors 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 PLL in the future. See Note 1, “Nature of Business and Summary of Significant Accounting Policies - Allowance for Loan Losses” of “Notes to Consolidated Financial Statements and Supplementary Data” to this Form 10-K, for further analysis of the provision for loan losses.

27

Non-Interest Income. The following table reflects the various components of non-interest income for 2021 and 2020, respectively.

	Twelve months ended December 31,				Change from prior year
	2021		2020		2021 over 2020
Non-interest Income:
Service charges on deposit accounts	$	1,726	$	1,832	(5.79)%
Interchange income	2,354		2,029		16.02%
Loan servicing income	3,322		4,158		(20.11)%
Gain on sale of loans	5,399		6,693		(19.33)%
Loan fees and service charges	705		1,383		(49.02)%
Insurance commission income	—		475		N/M
Net gains on investment securities	1,224		110		1,012.73%
Net gain on sale of acquired business lines	—		432		N/M
Settlement proceeds	—		131		N/M
Other	1,094		1,205		(9.21)%
Total non-interest income	$	15,824	$	18,448	(14.22)%

    N/M means not meaningful

Service charges on deposit accounts decreased $106 thousand due to fewer overdrafts attributable to the impact of higher average balances in retail checking accounts.

Interchange income increased due to an increase in our customer spending utilizing debit cards.

Loan servicing income decreased largely due to decreased capitalized mortgage servicing rights as a result of lower mortgage loan origination sold volumes.

The decrease in gain on sale of loans in 2021 is due to lower mortgage loan origination and sale volumes, partially offset by an increase in SBA loans sold.

Net gains on investment securities increased in 2021 due to the $573 thousand net gain on sale of primarily senior debt of large bank holding companies and lower yielding trust preferred securities, which helped fund loan growth and decrease 100% risk weighted AFS securities compared to a $156 thousand gain on sale of high premium mortgage-backed certificates in 2020. The net gains on investment securities remaining increase was due to the increase in the market value of our investment in Farmer Mac and Bankers’ Bank stock.

The net gain on sale of acquired business lines reflects the sale of Wells Insurance Agency in June 2020 at a net gain of $252 thousand and the Bank’s acquired wealth management business partner exercising their contractual call, which originated prior to the acquisition, resulting in the sale of the Bank’s right to receive income from the wealth management business.

The Company recognized $131 thousand of non-interest income related to a cash receipt related to a private mortgage-backed security claim. The cash received represents a supplement to the proceeds received in fiscal 2015 from the private mortgage-backed security, previously owned by the Bank and sold in 2011.

28

Non-Interest Expense. The following table reflects the various components of non-interest expense for 2021 and 2020.

	Twelve months ended December 31,						% Change From prior year
	2021			2020			2021 over 2020
Non-interest Expense:
Compensation and related benefits	$	22,723		$	22,256		2.10%
Occupancy	5,327			5,523			(3.55)%
Data processing	5,560			5,193			7.07%
Amortization of intangible assets	1,596			1,622			(1.60)%
Mortgage servicing rights expense, net	191			3,050			(93.74)%
Advertising, marketing and public relations	986			967			1.96%
FDIC premium assessment	551			584			(5.65)%
Professional services	1,542			1,757			(12.24)%
Gains on repossessed assets, net	(199)			(259)			(23.17)%
Other	2,255			2,980			(24.33)%
Total non-interest expense	$	40,532		$	43,673		(7.19)%
Non-interest expense (annualized) / Average assets	2.35		%	2.74		%

Compensation expense increased in 2021 primarily due to an increase in incentives based on performance, such as commercial loan growth origination.

Data processing increases were due to higher loan balances and larger deposit balances.

Mortgage servicing rights expense, net benefited from the reversal of previously recorded impairment charges of $1.4 million in 2021 compared to impairment charges of $1.8 million in 2020. This decrease is due to the impact of lower actual and forecasted prepayment rates. The remaining increase is due to higher amortization based on the current interest rate environment and a modestly larger mortgage servicing portfolio.

Professional fees decreased in 2021 largely due to less utilization of third parties in completing one-time and ongoing projects.

Other non-interest expense decreased in 2021 due to lower origination and branch closure costs in 2020 of $165 thousand.

Income Taxes. Income tax provision was $7.7 million in 2021 compared to $4.6 million for 2020 primarily due to the impact of higher pre-tax income. The tax rate remained nearly flat at 26.6% in 2021 and 26.4% in 2020.

Income tax expense recorded in the accompanying Consolidated Statements of Operations involves interpretation and application of certain accounting pronouncements and federal and state tax codes and is, therefore, considered a critical accounting policy. We undergo examination by various taxing authorities. Such taxing authorities may require that changes in the amount of tax expense or the amount of the valuation allowance be recognized when their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations.

29

BALANCE SHEET ANALYSIS

Total assets increased $90.5 million to $1.74 billion at December 31, 2021, from $1.65 billion at December 31, 2020. Strong originated loan growth and net purchases in the Bank’s investment portfolio were funded by strong deposit growth and a reduction in cash and cash equivalents.

Cash and Cash Equivalents. Cash and cash equivalents decreased from $119.4 million at December 31, 2020, to $47.7 million at December 31, 2021. As noted above, this decrease, along with deposit growth, funded loan and investment portfolio growth.

Investment Securities. We manage our securities portfolio to provide liquidity, in an effort to improve interest rate risk, and enhance income. Our investment portfolio is comprised of securities available for sale (“AFS”) and securities held to maturity (“HTM”).

Securities AFS (recorded at fair value), which represent the majority of our investment portfolio, increased to $203.1 million at December 31, 2021, compared with $144.2 million at December 31, 2020. This increase was primarily due to purchases of $99 million of agency mortgage-backed securities and purchases of debt issued by bank holding companies, largely subordinated debt of $27 million. In 2021, the sale of trust preferred securities issued by bank holding companies with an amortized cost of $17.4 million and $10.6 million of non-CDFI bank holding company senior debt, reduced the portfolio of these securities to zero. The weighted average coupon of these sales was 2.2%. The sale of these 100% risk-weighted assets partially offset the impact of loan growth on risk-weighted assets and increased the overall yield of interest-earning assets. In addition, the bank sold $9.7 million of other AFS securities, largely U.S. agency mortgage-backed securities. These 2021 sales resulted in net realized gains of $573 thousand, which is included in net gains on investment securities in the Consolidated Statements of Operations

During the year ended December 31, 2020, the Bank sold approximately $10.8 million of fixed rate mortgage-backed certificates with a net realized gain of $156 thousand, which is included in net gain on investment securities in the Consolidated Statement of Operations.

In 2021, the Bank purchased $39 million of HTM securities, consisting largely of U.S. agency mortgage-backed securities. This growth was offset by principal repayments.

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

Available for sale securities	Amortized Cost		Fair Value
December 31, 2021
U.S. government agency obligations	$	25,826	$	26,265
Obligations of states and political subdivisions	140		140
Mortgage-backed securities	107,636		107,167
Corporate debt securities	35,342		35,588
Corporate asset-backed securities	33,902		33,908
Trust preferred securities	—		—
Total available for sale securities	$	202,846	$	203,068
December 31, 2020
U.S. government agency obligations	$	33,048	$	33,365
Obligations of states and political subdivisions	140		140
Mortgage-backed securities	39,454		40,991
Corporate debt securities	17,199		17,462
Corporate asset-backed securities	36,039		35,827
Trust preferred securities	16,297		16,448
Total available for sale securities	$	142,177	$	144,233

30

Held to maturity securities	Amortized Cost		Fair Value
December 31, 2021
Obligations of states and political subdivisions	$	4,600	$	4,593
Mortgage-backed securities	66,541		64,584
Total held to maturity securities	$	71,141	$	69,177
December 31, 2020
Obligations of states and political subdivisions	$	600	$	602
Mortgage-backed securities	42,951		43,182
Total held to maturity securities	$	43,551	$	43,784

The amortized cost and fair values of our investment securities by maturity, as of December 31, 2021 were as follows:

Available for sale securities	Amortized Cost		Estimated Fair Value
Due in one year or less	$	140	$	140
Due after one year through five years	4,903		4,971
Due after five years through ten years	40,410		40,818
Due after ten years	49,757		49,972
Total securities with contractual maturities	95,210		95,901
Mortgage-backed securities	107,636		107,167
Total available for sale securities	$	202,846	$	203,068

Held to maturity securities	Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	4,300		4,298
Due after five years through ten years	300		295
Total securities with contractual maturities	4,600		4,593
Mortgage-backed securities	66,541		64,584
Total held to maturity securities	$	71,141	$	69,177

The amortized cost and fair values of our investment securities by maturity, as of December 31, 2020 were as follows:

Available for sale securities	Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	3,833		4,095
Due after five years through ten years	44,405		44,880
Due after ten years	54,485		54,267
Total securities with contractual maturities	102,723		103,242
Mortgage-backed securities	39,454		40,991
Total available for sale securities	$	142,177	$	144,233

31

Held to maturity securities	Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	200		200
Due after five years through ten years	400		402
Total securities with contractual maturities	600		602
Mortgage-backed securities	42,951		43,182
Total held to maturity securities	$	43,551	$	43,784

The following tables show the fair value and gross unrealized losses of securities with unrealized losses, as of the dates indicated below, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position: 

	Less than 12 Months				12 Months or More				Total
Available for sale securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
U.S. government agency obligations	$	1,169	$	1	$	—	$	—	$	1,169	$	1
Corporate debt securities	17,240		142		735		15		17,975		157
Corporate asset-backed securities	19,296		127		—		—		19,296		127
Trust preferred securities	—		—		—		—		—		—
Total available for sale securities	$	126,715	$	1,148	$	735	$	15	$	127,450	$	1,163
December 31, 2020
U.S. government agency obligations	$	7,654	$	17	$	6,834	$	53	$	14,488	$	70
Corporate debt securities	3,447		27		1,418		82		4,865		109
Corporate asset-backed securities	—		—		24,310		316		24,310		316
Trust preferred securities	5,612		38		—		—		5,612		38
Total available for sale securities	$	16,713	$	82	$	32,562	$	451	$	49,275	$	533

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
Obligations of states and political subdivisions	$	593	$	7	$	—	$	—	$	593	$	7
Mortgage-backed securities	46,969		1,346		14,716		715		61,685		2,061
Total held to maturity securities	$	47,562	$	1,353	$	14,716	$	715	$	62,278	$	2,068
December 31, 2020
Mortgage-backed securities	$	16,538	$	34	$	—	$	—	$	16,538	$	34
Total held to maturity securities	$	16,538	$	34	$	—	$	—	$	16,538	$	34

Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur.

32

The composition of our investment securities portfolio by credit rating as of the periods indicated below was as follows:

	December 31,				December 31,
	2021				2020
Available for sale securities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. government agency	$	131,115	$	131,008	$	72,502	$	74,356
AAA	9,662		9,710		11,142		11,088
AA	26,727		26,762		25,037		24,879
A	5,700		5,720		8,713		8,925
BBB	29,642		29,868		24,783		24,985
Below investment grade	—		—		—		—
Non-rated	—		—		—		—
Total available for sale securities	$	202,846	$	203,068	$	142,177	$	144,233

	December 31,				December 31,
	2021				2020
Held to maturity securities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. government agency	$	66,541	$	64,584	$	42,951	$	43,182
AAA	—		—		—		—
AA	4,000		4,000		—		—
A	600		593		600		602
BBB	—		—		—		—
Below investment grade	—		—		—		—
Non-rated	—		—		—		—
Total	$	71,141	$	69,177	$	43,551	$	43,784

At December 31, 2021, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $3.9 million and mortgage-backed securities with a carrying value of $2.9 million as collateral against specific municipal deposits. At December 31, 2021, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.9 million as collateral against a borrowing line of credit with the Federal Reserve Bank of Minneapolis. However, at December 31, 2021, there were no borrowings outstanding on this Federal Reserve Bank line of credit. At December 31, 2021, the Bank also has mortgage-backed securities with a carrying value of $0.3 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

Loans. Total loans outstanding, net of deferred loan fees and costs, increased to $1.31 billion at December 31, 2021, from $1.24 billion at December 31, 2020.

Gross loan growth consisted largely of $191 million in commercial real estate loans and, $56 million of multi-family real estate loans. The portfolio shrinkage in construction and development was largely offset by agricultural and commercial and industrial growth. We also experienced net forgiveness of $115 million of SBA PPP loans. The planned runoff of the residential mortgage portfolio of $43 million and indirect loans of $10 million contributed to reduced growth in the loan portfolio.

33

The following table reflects the composition, or mix, of our loan portfolio at December 31, 2021 and December 31, 2020:

	December 31, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Real Estate Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	698,465	53.3	%	$	507,675	40.9	%
Agricultural real estate	78,495		6.0	%	68,795		5.6	%
Multi-family real estate	178,349		13.6	%	122,152		9.9	%
Construction and land development	79,520		6.1	%	98,517		8.0	%
Residential mortgage:
Residential mortgage	90,990		6.9	%	131,386		10.6	%
Purchased HELOC loans	3,871		0.3	%	6,260		0.5	%
Total real estate loans	1,129,690		86.2	%	934,785		75.5	%
C&I/Agricultural operating and Consumer installment loans:
C&I/Agricultural operating:
Commercial and industrial ("C&I)	122,167		9.3	%	116,553		9.4	%
Agricultural operating	31,588		2.4	%	32,785		2.6	%
Consumer installment:
Originated indirect paper	15,971		1.2	%	25,851		2.1	%
Other consumer	8,874		0.7	%	13,213		1.1	%
Total C&I/Agricultural operating and Consumer installment loans	178,600		13.6	%	188,402		15.2	%
Gross loans before SBA PPP loans	1,308,290		99.8	%	1,123,187		90.7	%
SBA PPP Loans	8,755		0.7	%	123,702		10.0	%
Gross loans	1,317,045		100.5	%	1,246,889		100.7	%
Unearned net deferred fees and costs and loans in process	(2,482)		(0.2)	%	(4,245)		(0.3)	%
Unamortized discount on acquired loans	(3,600)		(0.3)	%	(5,063)		(0.4)	%
Total loans (net of unearned income and deferred expense)	1,310,963		100.0	%	1,237,581		100.0	%
Allowance for Loan losses	(16,913)				(17,043)
Total loans receivable, net	$	1,294,050			$	1,220,538

Our loan portfolio is diversified by types of borrowers and industry groups within the market areas that we serve. Significant loan concentrations are considered to exist for a financial entity when the amounts of loans to multiple borrowers engaged in similar activities cause them to be similarly impacted by economic or other conditions. As illustrated above, at December 31, 2021, the largest loan concentration we identified was commercial real estate loans which comprised 53% of our total loan portfolio. Approximately 86% of our total gross loans are secured by real estate.

34

The following table sets forth, as of December 31, 2021 and December 31, 2020 respectively the fixed and adjustable-rate loans in our loan portfolio:

	December 31, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Fixed rate loans:
Real estate loans:
Commercial/Agricultural real estate	$	412,797	31.5	%	$	347,617	28.1	%
Residential mortgage	61,964		4.7	%	90,105		7.3	%
Total fixed rate real estate loans	474,761		36.2	%	437,722		35.4	%
Non-real estate loans:
C&I/Agricultural Operating	117,770		9.0	%	237,062		19.2	%
Consumer installment	24,828		1.9	%	38,998		3.2	%
Total fixed rate non-real estate loans	142,598		10.9	%	276,060		22.3	%
Total fixed rate loans	617,359		47.1	%	713,782		57.7	%
Adjustable-rate loans:
Real estate loans:
Commercial/Agricultural real estate	622,032		47.5	%	449,523		36.3	%
Residential mortgage	32,897		2.5	%	47,540		3.8	%
Total adjustable-rate real estate loans	654,929		50.0	%	497,063		40.2	%
Non-real estate loans:
C&I/Agricultural operating	44,740		3.4	%	35,978		2.9	%
Consumer installment	17		—	%	66		—	%
Total adjustable-rate non-real estate loans	44,757		3.4	%	36,044		2.9	%
Total adjustable-rate loans	699,686		53.4	%	533,107		43.1	%
Gross loans	1,317,045				1,246,889
Unearned net deferred fees and costs and loans in process	(2,482)		(0.2)	%	(4,245)		(0.3)	%
Unamortized discount on acquired loans	(3,600)		(0.3)	%	(5,063)		(0.9)	%
Total loans (net of unearned income)	1,310,963		100.0	%	1,237,581		100.0	%
Allowance for loan losses	(16,913)				(17,043)
Total loans receivable, net	$	1,294,050			$	1,220,538

35

Loan amounts, their contractual maturities and weighted average interest rates at December 31, 2021 are shown below. SBA PPP loans at an interest rate of 1% are included in the C&I/agricultural operating segment amounts as follows: (1) $2.1 million is included in the one year or less amounts and (2) $6.7 million is included in the one year to five-year amounts.

	Real estate								Non-real estate
	Commercial/Agricultural real estate				Residential mortgage				C&I/Agricultural operating				Consumer installment				Total
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
Due in one year or less (1)	$	60,102	4.42	%	$	5,234	4.50	%	$	50,573	3.71	%	$	871	6.98	%	$	116,780	4.13	%
Due after one year through five years	223,257		3.85	%	10,259		4.52	%	65,031		3.69	%	10,774		5.80	%	$	309,321	3.91	%
Due after five years	751,470		3.88	%	79,368		4.69	%	46,906		3.93	%	13,200		5.36	%	$	890,944	3.98	%
	$	1,034,829	3.91	%	$	94,861	4.66	%	$	162,510	3.76	%	$	24,845	5.61	%	$	1,317,045	3.98	%

(1)Includes loans having no stated maturity and overdraft loans.

Loan amounts, their contractual maturities and interest rates at December 31, 2020 are shown below. SBA PPP loans of $123.7 million at an interest rate of 1% are included in the one year to five-year amounts in the C&I/agricultural operating segment.

	Real estate								Non-real estate
	Commercial/Agricultural real estate				Residential mortgage				C&I/Agricultural operating				Consumer installment				Total
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
Due in one year or less (1)	$	90,573	4.31	%	$	13,216	4.40	%	$	65,008	3.82	%	$	1,083	8.54	%	$	169,880	4.16	%
Due after one year through five years	209,017		4.41	%	23,152		4.91	%	168,185		1.93	%	14,520		5.79	%	$	414,874	3.48	%
Due after five years	497,549		4.28	%	101,278		4.71	%	39,847		4.31	%	23,461		5.34	%	$	662,135	4.39	%
	$	797,139	4.32	%	$	137,646	4.71	%	$	273,040	2.73	%	$	39,064	5.60	%	$	1,246,889	4.05	%

(1)Includes loans having no stated maturity and overdraft loans.

We believe that the critical factors in the overall management of credit or loan quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, recording an adequate allowance to provide for incurred loan losses, and reasonable non-accrual and charge-off policies.

36

The following table summarizes SBA PPP loans by origination year as of December 31, 2021 and December 31, 2020, respectively.

	2020 Originations				2021 Originations				Total
	Balance		Net Deferred Fee Income		Balance		Net Deferred Fee Income		Balance		Net Deferred Fee Income
SBA PPP loans, December 31, 2019	$	—	$	—	$	—	$	—	$	—	$	—
2020 SBA PPP loan originations	139,310		5,119		—		—		139,310		5,119
Less: 2020 SBA PPP loan forgiveness and fee accretion	(15,608)		(2,128)		—		—		(15,608)		(2,128)
SBA PPP loans, December 31, 2020	123,702		2,991		—		—		123,702		2,991
2021 SBA PPP loan originations	—		—		55,854		3,494		55,854		3,494
Less: 2021 SBA PPP loan forgiveness and fee accretion	(121,574)		(2,987)		(49,227)		(3,201)		(170,801)		(6,188)
SBA PPP loans, December 31, 2021	$	2,128	$	4	$	6,627	$	293	$	8,755	$	297

Risk Management and the 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 accompanying Consolidated Statements of Operations as Provision for Loan Losses. See “Statement of Operations Analysis - Provision for Loan Losses” above. 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 on the affected loan.

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 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.

37

Changes in the ALL by loan portfolio segment for the periods presented were as follows:

	Commercial/Agricultural Real Estate		C&I/Agricultural Operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Year ended December 31, 2021:
Allowance for Loan Losses:
Beginning balance, January 1, 2021	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Charge-offs	(51)		—		—		(54)		—		(105)
Recoveries	14		110		9		41		—		174
Provision	2,120		(263)		(532)		(251)		(132)		942
Total Allowance on originated loans	$	12,354	$	1,959	$	518	$	225	$	774	$	15,830
Other acquired loans:
Beginning balance, January 1, 2021	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Charge-offs	(200)		(7)		—		(27)		—		(234)
Recoveries	14		13		4		4		—		35
Provision	(642)		(78)		(209)		(13)		—		(942)
Total allowance on other acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Total allowance on acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Ending balance, December 31, 2021	$	13,210	$	2,028	$	648	$	253	$	774	$	16,913

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Year ended December 31, 2020:
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(932)		(5)		(145)		—		(1,082)
Recoveries	75		8		7		69		—		159
Provision	3,991		1,393		160		98		549		6,191
Total Allowance on originated loans	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Other acquired loans:
Beginning balance, January 1, 2020	$	526	$	27	$	163	$	53	$	—	$	769
Charge-offs	—		(159)		(74)		(3)		—		(236)
Recoveries	77		33		15		7		—		132
Provision	1,081		240		231		7		—		1,559
Total Allowance on other acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Total Allowance on acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Ending balance, December 31, 2020	$	11,955	$	2,253	$	1,376	$	553	$	906	$	17,043

The specific credit allocation for the ALL is based on a regular analysis of all originated 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 December 31, 2021, the Company had evaluated loans for impairment with a recorded investment of $31.7 million, consisting of $11.2 million PCI loans, with a carrying amount of $10.5 million, $9.9 million of TDR loans, net of TDR PCI loans and $11.3 million of substandard non-TDR non-PCI loans. The $31.7 million total of loans individually evaluated for impairment includes $8.0 million of performing TDR loans. At December 31, 2020, the Company had evaluated loans for impairment with a recorded investment of $42.3 million, consisting of $17.9 million of PCI loans with a carrying amount of $16.9 million, $15.6 million TDR loans, net of TDR PCI loans and $9.8 million of substandard non-TDR, non-PCI loans. The $42.3 million total of loans individually evaluated for impairment includes $11.7 million of performing TDR loans.

38

At December 31, 2021, the allowance for loan losses was $16.9 million or 1.29% of total loans compared to $17.0 million or 1.38% of our total loan portfolio at December 31, 2020. This level was based on our analysis of the loan portfolio risk at each of December 31, 2021, and December 31, 2020, as discussed above. The decrease in allowance dollars is due to modest net charge-offs in 2021. The slight decrease in the allowance for loan losses to total loan portfolio percentage was primarily due to the impact of growth in the originated loan portfolio, largely offset by a reduction in Q-Factors related to economic qualitative factor decreases to reflect reduced uncertainty in current general economic conditions. The percentage of allowance for loan losses was also helped by a decrease in gross acquired loans. The percentage of gross acquired loans to gross loans, excluding SBA PPP loans, decreased to 15% at December 31, 2021, compared to 25% at December 31, 2020. At December 31, 2021, the Bank had $198.6 million in gross acquired loans, which were recorded at fair market value at acquisition. The Bank had $286.2 million in gross acquired loans at December 31, 2020, which were recorded at fair market value at acquisition.

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

	December 31, 2021			December 31, 2020
Loans, end of period	$	1,310,963		$	1,237,581
SBA PPP loans, net of deferred fees	(8,457)			(120,711)
Loans, net of SBA PPP loans and deferred fees	$	1,302,506		$	1,116,870
Allowance for loan losses	$	16,913		$	17,043
ALL to loans net of SBA PPP loans and deferred fees	1.30		%	1.53		%
ALL to loans, end of period	1.29		%	1.38		%

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 of our ALL-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. 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.

Loans 30-89 days or more past due decreased $16.7 million at December 31, 2021, compared to December 31, 2020, largely related to decreases in commercial real estate and construction and land development loans 30-59 days delinquent. Nonaccrual loans increased modestly to $11.7 million at December 31, 2021, from $10.7 million at December 31, 2020, primarily due to an increase in commercial real estate due to a $4.5 million loan. Nonaccrual loans related to acquisitions decreased to $5.2 million at December 31, from $7.3 million at December 31, 2020. We believe our credit and underwriting policies continue to support more effective lending decisions by the Bank, which increases the likelihood of maintaining loan quality going forward. Refer to the “Risk Management and the Allowance for Loan Losses” section below for more information related to non-performing loans.

For the year ended December 31, 2021, loan charge-offs were $0.339 million compared to $1.318 million for the year ended December 31, 2020, largely due to a decrease in commercial and industrial loans.

Certain external factors may result in higher future losses but are not readily determinable at this time, including, but not limited to: unemployment rates, increased taxes and continuing increased regulatory expectations with respect to ALL levels. As a result, our analysis may show a need to increase our ALL as a percentage of total loans and nonperforming loans for the near future. Loans charged-off are subject to periodic review and specific efforts are taken to achieve maximum recovery of principal, accrued interest and related expenses on the loans charged off.

COVID-19 Loan Modifications. In response to COVID-19, our banking regulator issued an Interagency Statement encouraging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual

39

obligations due to COVID-19. Additionally, Section 4013 of the CARES Act provides that a qualified loan modification is exempt by law from classification as a TDR as defined by GAAP, from the period beginning March 1, 2020, until the earlier of December 31, 2020, or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak declared by the President of the United States under the National Emergencies Act is terminated. Section 541 of the Consolidated Appropriations Act, 2021 extends this relief to the earlier of January 1, 2022, or 60 days after the national emergency termination date. The Interagency Statement was subsequently revised in April 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act. In accordance with this guidance, the Bank instituted a plan to offer modifications to impacted borrowers. The Bank continues to work with borrowers as the pandemic persists and is requiring additional support in exchange for additional modifications beyond the original term. As of December 31, 2021, the Bank’s COVID-19 related modifications under Section 4013 of the CARES Act, totaled $6.6 million, or 0.5% of gross loans versus $61 million, or 5.0% of gross loans at December 31, 2020. At December 31, 2021, hotel industry sector loans represented $6.0 million of the approved deferrals, compared to $51.6 million at December 31, 2020. The Bank has approximately $6.0 million of total payment deferrals expiring in the first quarter of 2022.

 Nonperforming Loans, Potential Problem Loans and Foreclosed Properties. We employ early identification of non-accrual and problem loans in order to minimize the risk of loss. Non-performing loans are defined as either 90 days or more past due or non-accrual. The accrual of interest income 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 ended consumer installment loans past due 120 days or more; and

•Residential mortgage 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 recorded as interest income. Restructuring a loan 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. Restructured 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. Restructured loans that comply with the restructured terms are considered performing loans.

40

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

	December 31, 2021 and twelve months ended			December 31, 2020 and twelve months ended
Nonperforming assets:
Nonaccrual loans
Commercial real estate	$	5,374		$	827
Agricultural real estate	3,490			5,084
Commercial and industrial (“C&I”)	298			357
Agricultural operating	993			1,872
Residential mortgage	1,433			2,451
Consumer installment	77			156
Total nonaccrual loans	$	11,665		$	10,747
Accruing loans past due 90 days or more	160			586
Total nonperforming loans (“NPLs”)	11,825			11,333
Other real estate owned	1,406			156
Other collateral owned	2			41
Total nonperforming assets (“NPAs”)	$	13,233		$	11,530
Troubled Debt Restructurings (“TDRs”)	$	12,523		$	18,477
Nonaccrual TDRs	$	4,539		$	6,735
Average outstanding loan balance	$	1,216,244		$	1,234,732
Loans, end of period	$	1,310,963		$	1,237,581
Total assets, end of period	$	1,739,628		$	1,649,095
ALL, at beginning of period	$	17,043		$	10,320
Loans charged off:
Commercial/Agricultural real estate	(251)			—
C&I/Agricultural operating	(7)			(1,091)
Residential mortgage	—			(78)
Consumer installment	(81)			(149)
Total loans charged off	(339)			(1,318)
Recoveries of loans previously charged off:
Commercial/Agricultural real estate	28			150
C&I/Agricultural operating	123			44
Residential mortgage	13			20
Consumer installment	45			77
Total recoveries of loans previously charged off:	209			291
Net loans charged off (“NCOs”)	(130)			(1,027)
Additions to ALL via provision for loan losses charged to operations	—			7,750
ALL, at end of period	$	16,913		$	17,043
Ratios:
ALL to NCOs (annualized)	13,010.00		%	1,659.49		%
NCOs (annualized) to average loans	0.01		%	0.08		%
ALL to total loans	1.29		%	1.38		%
NPLs to total loans	0.90		%	0.92		%
NPAs to total assets	0.76		%	0.70		%

41

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

Nonperforming Originated and Acquired Assets

	December 31, 2021			December 31, 2020
Nonperforming assets:
Originated nonperforming assets:
Nonaccrual loans	$	6,448		$	3,649
Accruing loans past due 90 days or more	63			415
Total originated nonperforming loans (“NPL”)	6,511			4,064
Other real estate owned (“OREO”)	—			63
Other collateral owned	2			41
Total originated nonperforming assets (“NPAs”)	$	6,513		$	4,168
Acquired nonperforming assets:
Nonaccrual loans	$	5,217		$	7,098
Accruing loans past due 90 days or more	97			171
Total acquired nonperforming loans (“NPL”)	5,314			7,269
Other real estate owned (“OREO”)	1,406			93
Other collateral owned	—			—
Total acquired nonperforming assets (“NPAs”)	$	6,720		$	7,362
Total nonperforming assets (“NPAs”)	$	13,233		$	11,530
Loans, end of period	$	1,310,963		$	1,237,581
Total assets, end of period	$	1,739,628		$	1,649,095
Ratios:
Originated NPLs to total loans	0.50		%	0.33		%
Acquired NPLs to total loans	0.41		%	0.59		%
Originated NPAs to total assets	0.37		%	0.25		%
Acquired NPAs to total assets	0.39		%	0.45		%

Non-performing assets include non-performing loans, other real estate owned, and other collateral owned. Our non-performing assets were $13.2 million, or 0.76% of total assets, at December 31, 2021, compared to $11.5 million, or 0.70% of total assets, at December 31, 2020. The increase was largely due to an increase in originated nonaccrual loans and the transfer of $1.4 million of a former branch asset to OREO, partially offset by a decrease in acquired nonaccrual loans.

Nonaccrual Loans Roll forward

	Year Ended
	December 31, 2021		December 31, 2020
Balance, beginning of period	$	10,747	$	19,056
Additions	6,580		5,346
Charge offs	(288)		(770)
Transfers to OREO	(64)		(1,057)
Return to accrual status	(1,017)		(1,987)
Payments received	(4,271)		(9,240)
Other, net	(22)		(601)
Balance, end of period	$	11,665	$	10,747

The table below shows the totals of accruing troubled debt restructurings as of December 31, 2021, and December 31, 2020. The 2021 decrease in troubled debt restructurings in dollars was largely due to one C&I loan of $3.0 million that paid in full in 2021.

42

Troubled Debt Restructurings in Accrual Status

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings: Accrual Status
Commercial/Agricultural real estate	11	$	4,618	16	$	4,695
C&I/Agricultural Operating	3	649		4	3,836
Residential mortgage	36	2,681		43	3,162
Consumer installment	6	36		8	49
Total loans	56	$	7,984	71	$	11,742

The table below shows the totals of special mention, substandard and the total of these, known as criticized loans as of December 31, 2021, and 2020. The decrease in criticized loans in 2021 was largely due to decreases in acquired substandard loans and a reduction in originated accruing TDR loans, nonperforming and other substandard loans.

	December 31, 2021		December 31, 2020
Special mention loan balances	$	4,536	$	6,672
Substandard loan balances	22,817		28,541
Criticized loans, end of period	$	27,353	$	35,213

The table below shows the changes in the Bank’s non-accretable difference on purchased credit impaired loans. The Bank has transferred the non-accretable difference on purchased credit impaired loans to accretable discount as collateral coverage improved sufficiently, due to a combination of principal paydowns and/or improving collateral positions. This transferred non-accretable difference to accretable discount is accreted over the remaining maturity of the loan or until payoff, whichever is shorter.

Non-accretable difference:

	Year Ended
	December 31, 2021		December 31, 2020
Non-accretable difference, beginning of period	$	1,087	$	6,290
Additions to non-accretable difference for acquired purchased credit impaired loans	—		—
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(105)		(1,693)
Transfers from non-accretable difference to accretable discount.	(329)		(2,754)
Non-accretable difference used to reduce loan principal balance	—		(505)
Non-accretable difference transferred to OREO due to loan foreclosure	—		(251)
Non-accretable difference, end of period	$	653	$	1,087

Accretable difference:

43

The table below shows scheduled accretion by year for the accretable difference recognized due to fair value purchase accounting on recent whole bank acquisitions. In addition, the Company has $1.61 million of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount. The scheduled accretion on this balance is estimated to be $100 per year; however, large balance payoffs, as seen in 2021 and 2020, would accelerate this accretion.

Fiscal years ending December 31,	Purchase Accounting Accretable Discount
2022	$	828
2023	279
2024	131
2025	96
Total	1,334

Mortgage Servicing Rights. The Company continues to sell loans to investors in the secondary market and generally retains the rights to service mortgage loans sold to others. MSR assets are initially measured at fair value by a third party; 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 increased to $4.3 million at December 31, 2021, from $3.3 million at December 31, 2020. This increase was primarily due to $1.4 million of impairment reversal recorded in 2021 on the MSR impairment which reduced the impairment to $0.6 million at December 31, 2021. This was partially offset by a reduction in the gross MSR balance of $0.5 million, which was due to amortization of $1.6 million and additions from originations of $1.1 million. The unpaid balances of one- to four-family residential real estate loans serviced for others as of December 31, 2021, and December 31, 2020, were $556.1 million and $553.7 million, respectively. The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at December 31, 2021 and December 31, 2020 was 0.78% and 0.59%, respectively.

Intangible Assets. We have intangible assets of $3.9 million at December 31, 2021, compared to $5.5 million at December 31, 2020. The intangible assets are comprised of core deposit intangible assets arising from various acquisitions from 2016 through 2019. Amortization of these intangibles was $1.6 million in 2021.

Foreclosed and repossessed assets. Included in foreclosed and repossessed assets, net is a closed branch location that is being held for sale. The excess property was created when the Bank constructed a new, smaller facility on a portion of the site that better supports the Bank’s needs. The property is being held at $1,360, which was its carrying value prior to its reclassification as held for sale, as the bank has a signed purchase agreement from a non-financial institution in excess of its carrying value. As such, no gain or loss was recognized on the reclassification. The Bank expects to complete the sale in the first half of 2022.

Deposits. Deposits are our largest source of funds. Total deposits increased to $1.39 billion at December 31, 2021, from $1.30 billion at December 31, 2020. The increase in deposits, largely attributable to the growth in non-maturity deposits, allowed the Company to reduce reliance on higher cost certificates of deposit. This non-maturity deposit growth was partially offset by a $110.2 million reduction of retail certificates of deposits, as the Company chose not to match higher rates offered by local retail certificate of deposit competitors. Brokered and institutional deposits decreased to $0.0 million at December 31, 2021, from $2.5 million at December 31, 2020. The Bank believes these markets are available to the Bank if the need arises.

44

The following is a summary of deposits by type at December 31, 2021 and December 31, 2020, respectively: 

	December 31, 2021		December 31, 2020
Non interest bearing demand deposits	$	276,631	$	238,348
Interest bearing demand deposits	396,231		301,764
Savings accounts	222,674		196,348
Money market accounts	288,985		245,549
Certificate accounts	203,014		313,247
Total deposits	$	1,387,535	$	1,295,256

45

Federal Home Loan Bank (FHLB) advances and other borrowings. A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2021 and December 31, 2020 is as follows:

		December 31,
		2021						2020
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4)	2021	$	—	—	%	—	%	$	8,000	—	%	2.16	%
	2022	11,000		2.45	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	20,000		1.43	%	1.44	%
	2024	20,530		0.00	%	1.45	%	20,530		0.00	%	1.45	%
	2025	5,000		1.45	%	1.45	%	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	%	12,500		0.52	%	0.86	%
Subtotal		111,530						123,530
Unamortized discount on acquired notes		(3)						(32)
Federal Home Loan Bank advances, net		$	111,527					$	123,498
Other borrowings:
Senior notes (5)	2031	$	28,856	3.00	%	3.50	%	$	28,856	3.25	%	3.50	%
Subordinated notes (6)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%	15,000		6.00	%	6.00	%
		$	30,000					$	30,000
Unamortized debt issuance costs		(430)						(528)
Total other borrowings		$	58,426					$	58,328
Totals		$	169,953					$	181,826

(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 pledged balances of $861,900 and $723,862 at December 31, 2021 and 2020, respectively. At December 31, 2021, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $204,271 compared to $118,391 as of December 31, 2020.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $123,530 and $162,530, during the twelve months ended December 31, 2021 and December 31, 2020, respectively.

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2021 and December 31, 2020 were 2.45% and 1.02%, respectively.

(4)    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.

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

(a) A term note which was subsequently refinanced in October 2020 and modified in 2021, 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 3.00%, due to the modification in October 2021.

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

(6)    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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. Interest-only payments are due quarterly.

46

(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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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 (FHLB) advances and other borrowings

We utilize advances and other borrowings, as necessary, to supplement core deposits to meet our funding and liquidity needs and we evaluate all options for funding securities.

FHLB advances decreased to $111.5 million at December 31, 2021, from $123.5 million at December 31, 2020. An $11 million advance matures in 2022, with additional fixed-rate advances of $45.5 million maturing in 2023 through 2025. There are $55 million of advances with a stated maturity in 2029 and 2030, that are callable quarterly by the Federal Home Loan Bank. In the first quarter of 2021, the Bank terminated $8 million of advances at a pre-tax cost of approximately $100 thousand.

Stockholders’ Equity. Total stockholders’ equity was $170.9 million at December 30, 2021, compared to $160.6 million at December 31, 2020. The increase in stockholders’ equity was due to the Company’s net income of $21.3 million and restricted stock amortization of $0.8 million. This increase was partially offset by 1) the repurchase of approximately 620 thousand shares of its common stock, which reduced equity by $8.0 million; 2) the payment of the annual cash dividend, paid in February 2021, to common stockholders of $0.23 per share or $2.5 million; and 3) a decrease in the unrealized gain on available for sale securities of $1.3 million.

In November 2020, the Board of Directors authorized a 5% or 557 thousand share repurchase program. The Company repurchased all remaining authorized shares of the Company’s stock under the November 2020 share repurchase program not previously repurchased in 2020 during the year ended December 31, 2021. On July 23, 2021, the Board of Directors adopted a new share repurchase program. Under this new share repurchase program, approximately 160 thousand shares, were repurchased during the year ended December 31, 2021. The Company is authorized to repurchase an additional 373 thousand shares under this July 2021 share repurchase program

Liquidity and Asset / Liability Management. Liquidity management refers to our ability to ensure cash is available in a timely manner to meet loan demand, depositors’ needs, and meet other financial obligations as they become due without undue cost, risk or disruption to normal operating activities. We manage and monitor our short-term and long-term liquidity positions and needs through a regular review of maturity profiles, funding sources, and loan and deposit forecasts to minimize funding risk. A key metric we monitor is our liquidity ratio, calculated as cash and investments with maturities less than one-year divided by deposits with maturities less than or equal to one-year. At December 31, 2021, our liquidity ratio increased to 17.0% percent from 16.5% at December 31, 2020. This was largely due to the growth in AFS and HTM securities portfolio, which was mostly offset by a reduction in interest-bearing cash.

Our primary sources of funds are deposits; amortization, prepayments and maturities of outstanding loans; other short-term investments; and funds provided from operations. We use our sources of funds primarily to meet ongoing commitments, to pay maturing certificates of deposit and savings withdrawals, and to fund loan commitments. 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 greatly influenced by general interest rates, economic conditions and competition. Although $178.8 million of our $203.0 million (88%) CD portfolio will mature within the next 12 months, we have historically retained a majority of our maturing CD’s. However, due to strategic pricing decisions regarding rate matching and branch closures, our retention rate decreased in 2021 and may remain at lower than historical levels in 2022 based on management’s current pricing strategy, which reflects the Bank’s current strong on-balance sheet liquidity ratio. 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. Based on interest rates on scheduled maturities and lower current market interest rates, this should also improve 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 our 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, commercial and industrial loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. Currently, we have approximately $204.2 million available to borrow under this arrangement, supported by loan collateral as of December 31, 2021. At December 31, 2021, the Bank had no borrowing capacity under the Federal Reserve SAB PPP Liquidity Facility, as the program expired on July 30, 2021. We also maintain lines of credit of $0.9 million with the Federal Reserve Bank and $25 million of uncommitted federal funds purchased lines

47

with correspondent banks as part of our contingency funding plan. In addition, the Company maintains a $5.0 million revolving line of credit which is available as needed for general liquidity purposes. While the Bank does not have formal brokered certificate lines of credit with counter parties at December 31, 2021, we believe that the Bank could access this market, which provides an additional potential source of liquidity. See Note 9, “Federal Home Loan Bank and Other Borrowings” of “Notes to Consolidated Financial Statements” which are included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K, for further detail.

In reviewing the adequacy of our 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 Arrangements. In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable. 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 December 31, 2021, the Company had approximately $271.0 million in unused loan commitments, compared to approximately $247.3 million in unused commitments as of December 31, 2020. In addition, there are $5.0 million in contribution of capital for SBIC and an investment company at December 31, 2021, with no such commitments at December 31, 2020. See Note 11, “Commitments and Contingencies”; “Financial Instruments with Off-Balance Sheet Risk” of “Notes to Consolidated Financial Statements” which are included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K, for further detail.

Capital Resources. As of the dates indicated below, our Tier 1 and Risk-based capital levels exceeded levels necessary to be considered “Well Capitalized” under Prompt Corrective Action provisions for the Bank.

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 December 31, 2021
Total capital (to risk weighted assets)	$	187,783	13.4	%	$	111,694	> =	8.0	%	$	139,618	> =	10.0	%
Tier 1 capital (to risk weighted assets)	170,870		12.2	%	83,771		> =	6.0	%	111,694		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	170,870		12.2	%	62,828		> =	4.5	%	90,752		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	170,870		10.0	%	68,323		> =	4.0	%	85,403		> =	5.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	171,702	14.7	%	$	93,381	> =	8.0	%	$	116,726	> =	10.0	%
Tier 1 capital (to risk weighted assets)	157,081		13.5	%	70,035		> =	6.0	%	93,381		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	157,081		13.5	%	52,527		> =	4.5	%	75,872		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	157,081		9.9	%	63,718		> =	4.0	%	79,647		> =	5.0	%

At December 31, 2021, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.

48

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

	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Amount			Ratio
As of December 31, 2021
Total capital (to risk weighted assets)	$	182,242	13.1	%	$	111,694	> =	8.0	%
Tier 1 capital (to risk weighted assets)	135,329		9.7	%	83,771		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	135,329		9.7	%	62,828		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	135,329		7.9	%	68,323		> =	4.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	166,703	14.3	%	$	93,381	> =	8.0	%
Tier 1 capital (to risk weighted assets)	122,082		10.5	%	70,035		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	122,082		10.5	%	52,527		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	122,082		7.7	%	63,718		> =	4.0	%

49

Selected Quarterly Financial Data

The following is selected financial data summarizing the results of operations for each quarter as of the periods indicated below:

Year ended December 31, 2021: 

	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021
Interest income	$	15,620	$	15,478	$	16,175	$	16,762
Interest expense	2,856		2,647		2,487		2,378
Net interest income	12,764		12,831		13,688		14,384
Provision for loan losses	—		—		—		—
Net interest income after provision for loan losses	12,764		12,831		13,688		14,384
Non-interest income	4,176		3,793		3,448		4,407
Non-interest expense	9,489		10,198		10,320		10,525
Income before income tax expense	7,451		6,426		6,816		8,266
Provision (benefit) for income tax	1,945		1,720		1,819		2,209
Net income	$	5,506	$	4,706	$	4,997	$	6,057
Basic earnings per share	$	0.50	$	0.44	$	0.47	$	0.58
Diluted earnings per share	$	0.50	$	0.44	$	0.47	$	0.58
Dividends paid	$	0.23	$	—	$	—	$	—

Year ended December 31, 2020: 

	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020
Interest income	$	16,908	$	15,886	$	15,218	$	16,515
Interest expense	4,237		3,583		3,309		3,143
Net interest income	12,671		12,303		11,909		13,372
Provision for loan losses	2,000		1,750		1,500		2,500
Net interest income after provision for loan losses	10,671		10,553		10,409		10,872
Non-interest income	3,603		5,013		5,062		4,770
Non-interest expense	10,731		11,392		10,724		10,826
Income before income tax expense	3,543		4,174		4,747		4,816
Provision (benefit) for income tax	937		1,105		1,267		1,246
Net income	$	2,606	$	3,069	$	3,480	$	3,570
Basic earnings per share	$	0.23	$	0.28	$	0.31	$	0.32
Diluted earnings per share	$	0.23	$	0.28	$	0.31	$	0.32
Dividends paid	$	0.21	$	—	$	—	$	—

ITEM 7A. 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

50

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 a member from the 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.

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;

•the sale of a vast majority of longer-term fixed-rate residential loans in the secondary market with retained servicing;

•managing our funding needs by growing core deposits;

•utilizing brokered certificate of deposits and borrowings as appropriate, which may have fixed rates with varying maturities;

•purchasing investment securities to modify our interest rate risk profile

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.

51

The following table sets forth, at December 31, 2021 and December 31, 2020, 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 December 31, 2021, and December 31, 2020, due to the current level of interest rates, EVE estimates for decreases in interest rates greater than 100 basis points are not meaningful. The increase in changes in economic value of equity as a percentage of equity is due to the growth in non-maturity deposits, and the net reduction in longer-term fixed rate loans.

	Percent Change in Economic Value of Equity (EVE)
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	At December 31, 2021	At December 31, 2020
+300 bp	(5)%	15%
+200 bp	(3)%	11%
+100 bp	(1)%	7%
-100 bp	(1)%	—%

(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 December 31, 2021 and December 31, 2020. The growth in percent change in net interest income in the various rate shock environments is due to the growth in assumed variable-rate Federal Reserve overnight balances and variable-rate loan assets.

	Percent Change in Net Interest Income Over One Year Horizon
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	At December 31, 2021	At December 31, 2020
+300 bp	(11)%	3%
+200 bp	(7)%	3%
+100 bp	(4)%	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.

52

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA        

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (Eide Bailly LLP; Phoenix, Arizona; PCAOB ID 286)

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

53

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Citizens Community Bancorp, Inc. and Subsidiary

Eau Claire, Wisconsin

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Citizens Community Bancorp, Inc. and Subsidiary (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with auditing standards generally accepted in the United States of America, the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 2, 2022, expressed an unmodified opinion.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

54

Allowance for Loan Losses

As discussed in Notes 1 and 3 to the Company’s consolidated financial statements, the Company has a gross loan portfolio of $1.3 billion and related allowance for loan losses of $16.9 million as of December 31, 2021. The Company’s allowance for loan losses is a material and complex estimate requiring significant management’s judgment in the evaluation of the credit quality and the estimation of inherent losses within the loan portfolio. The allowance for loan losses includes a general reserve which is determined based on the results of a quantitative and a qualitative analysis of all loans not measured for impairment at the reporting date.

The Company’s general reserves cover non-impaired loans and is based on historical loss rates and qualitative loss factors for each portfolio. In calculating the allowance for loan losses, the Company considers relevant credit quality indicators for each loan segment, and estimates losses for each loan type based upon their nature and risk profile. This process requires significant management judgment in the review of the loan portfolio and assignment of risk ratings based upon the characteristics of loans. In addition, estimation of losses inherent within the portfolio requires significant management judgment, particularly where the Company has not incurred sufficient historical losses and has utilized industry data in forming its estimate.

Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters, including the extent of specialized skill or knowledge needed.

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

•Obtaining an understanding of the Company’s process for determining the allowance for loan losses, which includes management’s determination of and changes to qualitative adjustments as of the balance sheet date.

•Evaluating the design and testing the operating effectiveness of controls relating to the development and approval of the allowance for loan loss methodology, controls around the reliability and accuracy of the information used in the calculation and management’s review and approval of the allowance for loan losses.

•Evaluating the reasonableness of assumptions and reasonableness, accuracy and completeness of data used by management in forming the loss factors by performing retrospective review of historic loan loss experience and analyzing historical data used in developing the assumptions.

•Evaluating the appropriateness of inputs and factors that the Company used in forming the qualitative loss factors and assessing whether such inputs and factors were relevant, reliable, and reasonable for the purpose used..

•Testing the mathematical accuracy and computation of the allowance for loan losses.

•Evaluated the period to period consistency with which qualitative loss factors are determined and applied. Evaluate the qualitative adjustments year over year for directional consistency and testing the reasonableness, including the qualitative adjustments attributed to the estimated impact of the COVID-19 pandemic on the Company’s loan portfolio.

/s/ Eide Bailly, LLP

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

Phoenix, Arizona

March 2, 2022

55

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Balance Sheets

(in thousands, except share data)

	December 31, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	47,691	$	119,440
Other interest bearing deposits	1,511		3,752
Securities available for sale "AFS"	203,068		144,233
Securities held to maturity "HTM"	71,141		43,551
Equity investments	1,328		200
Other investments	15,305		14,948
Loans receivable	1,310,963		1,237,581
Allowance for loan losses	(16,913)		(17,043)
Loans receivable, net	1,294,050		1,220,538
Loans held for sale	6,670		3,075
Mortgage servicing rights, net	4,161		3,252
Office properties and equipment, net	21,169		21,165
Accrued interest receivable	3,916		5,652
Intangible assets	3,898		5,494
Goodwill	31,498		31,498
Foreclosed and repossessed assets, net	1,408		197
Bank owned life insurance ("BOLI")	24,312		23,684
Other assets	8,502		8,416
TOTAL ASSETS	$	1,739,628	$	1,649,095
Liabilities and Stockholders’ Equity
Liabilities:
Deposits	$	1,387,535	$	1,295,256
Federal Home Loan Bank ("FHLB") advances	111,527		123,498
Other borrowings	58,426		58,328
Other liabilities	11,274		11,449
Total liabilities	1,568,762		1,488,531
Stockholders’ Equity:
Common stock— $0.01 par value, authorized 30,000,000; 10,502,442 and 11,056,349 shares issued and outstanding, respectively	105		111
Additional paid-in capital	119,925		126,154
Retained earnings	50,675		32,809
Accumulated other comprehensive income	161		1,490
Total stockholders’ equity	170,866		160,564
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,739,628	$	1,649,095

See accompanying notes to audited consolidated financial statements.

56

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Operations

(in thousands, except per share data)

	For the year ended December 31, 2021		For the year ended December 31, 2020
Interest and dividend income:
Interest and fees on loans	$	58,172	$	59,763
Interest on investments	5,863		4,764
Total interest and dividend income	64,035		64,527
Interest expense:
Interest on deposits	5,850		10,000
Interest on FHLB and FRB borrowed funds	1,572		1,814
Interest on other borrowed funds	2,946		2,458
Total interest expense	10,368		14,272
Net interest income before provision for loan losses	53,667		50,255
Provision for loan losses	—		7,750
Net interest income after provision for loan losses	53,667		42,505
Non-interest income:
Service charges on deposit accounts	1,726		1,832
Interchange income	2,354		2,029
Loan servicing income	3,322		4,158
Gain on sale of loans	5,399		6,693
Loan fees and service charges	705		1,383
Insurance commission income	—		475
Net gains (losses) on investment securities	1,224		110
Net gain on sale of acquired business lines	—		432
Settlement proceeds	—		131
Other	1,094		1,205
Total non-interest income	15,824		18,448
Non-interest expense:
Compensation and related benefits	22,723		22,256
Occupancy	5,327		5,523
Data processing	5,560		5,193
Amortization of intangible assets	1,596		1,622
Mortgage servicing rights expense, net	191		3,050
Advertising, marketing and public relations	986		967
FDIC premium assessment	551		584
Professional services	1,542		1,757
Gain on repossessed assets, net	(199)		(259)
Other	2,255		2,980
Total non-interest expense	40,532		43,673
Income before provision for income tax	28,959		17,280
Provision for income taxes	7,693		4,555
Net income attributable to common stockholders	$	21,266	$	12,725
Per share information:
Basic earnings	$	1.98	$	1.14
Diluted earnings	$	1.98	$	1.14
Cash dividends paid	$	0.23	$	0.21

See accompanying notes to audited consolidated financial statements.

57

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Comprehensive Income

(in thousands)

	For the year ended December 31, 2021		For the year ended December 31, 2020
Net income attributable to common stockholders	$	21,266	$	12,725
Other comprehensive (loss) income, net of tax:
Securities available for sale
Net unrealized (losses) gains arising during period, net of tax	(909)		2,074
Reclassification adjustment for net gains included in net income, net of tax	(420)		(113)
Other comprehensive (loss) income, net of tax	(1,329)		1,961
Comprehensive income	$	19,937	$	14,686

See accompanying notes to audited consolidated financial statements.

58

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except Shares)

	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2019	11,266,954	$	113	$	128,394	$	22,517	$	(471)	$	150,553
Net income	—	—		—		12,725		—		12,725
Other comprehensive income, net of tax	—	—		—		—		1,961		1,961
Surrender of restricted shares of common stock	(2,641)	—		(27)		—		—		(27)
Restricted common stock awarded under the equity incentive plan	45,507	—		—		—		—		—
Common stock fractional share adjustment on acquisitions	(40)	—		—		—		—		—
Common stock repurchased	(253,431)	(2)		(2,757)		(61)		—		(2,820)
Stock option expense	—	—		14		—		—		14
Amortization of restricted stock	—	—		530		—		—		530
Cash dividends ($0.21 per share)	—	—		—		(2,372)		—		(2,372)
Balance, December 31, 2020	11,056,349	$	111	$	126,154	$	32,809	$	1,490	$	160,564
Net income	—	—		—		21,266		—		21,266
Other comprehensive income, net of tax	—	—		—		—		(1,329)		(1,329)
Forfeiture of unvested shares	(1,500)	—		—		—		—		—
Surrender of restricted shares of common stock	(2,409)	—		(30)		—		—		(30)
Restricted common stock awarded under the equity incentive plan	64,399	—		—		—		—		—
Common stock options exercised	5,800	—		52		—		—		52
Common stock repurchased	(620,197)	(6)		(7,056)		(889)		—		(7,951)
Stock option expense	—	—		8		—		—		8
Amortization of restricted stock	—	—		797		—		—		797
Cash dividends ($0.23 per share)	—	—		—		(2,511)		—		(2,511)
Balance, December 31, 2021	10,502,442	$	105	$	119,925	$	50,675	$	161	$	170,866

See accompanying notes to audited consolidated financial statements.

59

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Cash Flows

(in thousands)

	For the year ended December 31, 2021		For the year ended December 31, 2020
Cash flows from operating activities:
Net income attributable to common stockholders	$	21,266	$	12,725
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization, net of discount accretion on investment securities	103		142
Depreciation expense	2,255		1,954
Provision for loan losses	—		7,750
Net realized (gain) loss on equity securities	(651)		46
Net realized gain on debt securities	(573)		(156)
Increase in mortgage servicing rights resulting from transfers of financial assets	(1,100)		(2,020)
Mortgage servicing rights amortization and impairment, net	191		3,050
Amortization of intangible assets	1,596		1,622
Amortization of restricted stock	797		530
Net stock based compensation expense	8		14
Loss on sale of office properties and equipment	31		178
Decrease (increase) deferred income taxes	930		(2,526)
Increase in cash surrender value of life insurance	(628)		(621)
Net gain from disposals of foreclosed and repossessed assets	(199)		(259)
Gain on sale of loans held for sale, net	(5,399)		(6,693)
Net gain on sale of insurance agency	—		(252)
Net change in:
Loans held for sale	1,804		9,511
Accrued interest receivable and other assets	1,241		(1,791)
Other liabilities	(73)		581
Total adjustments	333		11,060
Net cash provided by operating activities	21,599		23,785
Cash flows from investing activities:
Net decrease in other interest bearing deposits	2,241		992
Purchase of available for sale securities	(130,545)		(28,218)
Purchase of held to maturity securities	(39,784)		(44,441)
Proceeds from sales of available for sale securities	38,239		12,091
Proceeds from principal payments of available for sale securities	32,218		54,781
Proceeds from principal payments and maturities of held to maturity securities	8,583		3,692
Proceeds from calls of held to maturity securities	3,500		—
Purchase of equity investments	(960)		—
Net purchases of other investments	126		57
Proceeds from sales of foreclosed and repossessed assets	557		2,780
Net increase in loans	(73,636)		(62,486)
Net capital expenditures	(3,778)		(2,573)
Proceeds from disposal of office properties and equipment	38		382
Net proceeds from sale of insurance agency	—		1,128
Net cash used in investing activities	(163,201)		(61,815)
Cash flows from financing activities:
Net decrease in short-term Federal Home Loan Bank advances	—		(41,000)
Amortization of fair value adjustments for acquired Federal Home Loan Bank advances	29		27
Long-term Federal Home Loan Bank advances	—		66,500
Long-term Federal Home Loan Bank maturities	(4,000)		(33,000)
Federal Home Loan Bank advance termination payments	(8,113)		—
Amortization of debt issuance costs	98		91
Proceeds from other borrowings, net of origination costs	—		14,677
Net increase in deposits	92,279		99,554
Repurchase shares of common stock	(7,951)		(2,820)

60

Surrender of restricted shares of common stock	(30)		(27)
Common stock options exercised	52		—
Cash dividends paid	(2,511)		(2,372)
Net cash provided by financing activities	69,853		101,630
Net (decrease) increase in cash and cash equivalents	(71,749)		63,600
Cash and cash equivalents at beginning of period	119,440		55,840
Cash and cash equivalents at end of period	$	47,691	$	119,440
Supplemental cash flow information:
Cash paid during the period for:
Interest on deposits	$	6,026	$	9,980
Interest on borrowings	$	4,552	$	3,950
Income taxes	$	6,825	$	7,870
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$	84	$	1,057
Transfers from office properties and equipment to foreclosed and repossessed assets	$	1,434	$	—

See accompanying notes to audited consolidated financial statements. 

61

CITIZENS COMMUNITY BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share data)

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

The consolidated financial statements of Citizens Community Federal N.A. (the “Bank”) included herein have been included by its parent company, Citizens Community Bancorp, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As used in this annual 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”). 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 to manage its municipal bond portfolio, and was dissolved in February 2020. The 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 primarily in Wisconsin and Minnesota through 25 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, Mankato and Twin Cities 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 occurring subsequent to the balance sheet date of December 31, 2021 through the date on which the consolidated financial statements were available to be issued on March 2, 2022, for items that should potentially be recognized or disclosed in these consolidated financial statements.

Unless otherwise stated herein, and except for share 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 inter-company 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 accompanying transition report on Form 10-K for the year ended December 31, 2021 and 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.

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

Other Interest Bearing Deposits—Other interest bearing deposits are certificate of deposit investments made by the Bank with other financial institutions that are carried at cost. The weighted average months to maturity of the interest bearing deposits is 8.97 months. Balances over $250 in those institutions are not insured by the FDIC and therefore pose a potential

62

risk in the event the institution were to fail. As of December 31, 2021 and December 31, 2020, there were no certificate of deposit accounts with a balance greater than $250.

Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet. 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. Realized gains or losses on sales of available for sale securities are calculated with the specific identification method and are included in the consolidated statements of operations under net gains on investment securities. 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 investments - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities. Farmer Mac equity securities are carried at their fair market value, which is readily determinable. Changes in fair value are recognized as net gains (losses) on investment securities in the consolidated Statement of Operations.

Also included in equity investments are the Company’s investments in a Volker Rule-compliant Small Business Investment Company ("SBIC") and an investment fund. The SBIC and investment fund meet the definition of investment companies, as defined in ASC 946, Financial Services - Investment Companies. These investments seek returns by investing in various small businesses and do not have redemption rights. Distributions from the investments will be received as the underlying investments, which generally have a life of 10 years, are liquidated. We elected the practical expedient available in Topic 820, Fair Value Measurements, which permits the use of net asset value ("NAV") per share or equivalent to value investments in entities that are or are similar to investment companies. SBICs and investment funds report their investments at estimated fair value. We record the unrealized gains and losses resulting from changes in the fair value of these investments as gains or losses on equity securities in our consolidated statements of operations. The carrying value of these investments is equal to the capital account balance per each entities' quarterly financial statements.

Other investments - As a member of the Federal Reserve Bank System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. 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 non-interest 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 $15,305 at December 31, 2021 consisted of $7,877 of FHLB stock, $5,200 of Federal Reserve Bank stock and $2,228 of Bankers’ Bank stock. Other investments totaling $14,948 at December 31, 2020 consisted of $8,103 of FHLB stock, $5,170 of Federal Reserve Bank stock, and $1,675 of Bankers’ Bank stock.

63

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 (PCI) 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 over the contractual life of the loan with no prepayments assumed. If the loan is prepaid, any amortized net fee is recognized at that time. 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”), less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. 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 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 are 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 credit 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 ultimately are not to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be

64

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 as non-interest income in the consolidated statement 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.

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.

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 for impairment at least annually; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.

65

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

Servicing fee income, which is reported on the consolidated statements of operations in non-interest income as loan servicing fee income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Office Properties and Equipment—Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement. Depreciation expense is included in non-interest expense on the consolidated statements of operations.

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, primarily Core Deposit Intangibles (CDI) with definite useful economic lives over their useful economic lives ranging from 48 to 111 months 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. Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. 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, 2021 which is related to its banking activities. The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit. An initial qualitative evaluation is made to assess the likelihood of impairment and determine whether further quantitative testing to calculate the fair value is necessary. When the qualitative evaluation indicates that impairment is more likely than not, quantitative testing is required whereby the fair value of the Company’s reporting unit is calculated and compared to the recorded book value, “step one.” If the calculated fair value of the Company’s reporting unit exceeds its carrying value, goodwill is not considered impaired and “step two” is not considered necessary. If the carrying value of the company’s reporting unit exceeds its calculated fair value, the impairment test continues (“step two”) by comparing the carrying value of the Company’s reporting unit’s goodwill to the implied fair value of goodwill. An impairment charge is recognized if the carrying value of goodwill exceeds the implied fair value of goodwill. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2021. See Note 6 for additional information on goodwill and other intangible assets.

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.

Bank Owned Life Insurance (BOLI)—The Bank invests in bank-owned life insurance (BOLI) as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Bank on a select group of employees. The Bank is the owner and beneficiary of the policies. Income from the increase in cash surrender value of the policies as well as the receipt of death benefits is included in non-interest income on the consolidated statements of operations.

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. Lease expense is included in non-interest expense, occupancy in the consolidated statements of operations.

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,

66

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 sheets. Debt issuance costs with a Company call option that originated prior to 2020 and senior note debt issuance costs, are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Debt issuance costs that originated in 2020 and thereafter, are amortized through the first Company call option date of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheets, in the period of the share issuance.

    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. See Note 14, “Income Taxes” for details on the Company’s income taxes.

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’s primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts.

The company accounts for revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Topic 606 provides that revenue from contracts with customers be recognized when performance obligations under the terms of a contract are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing service. The company does not have any materially significant payment terms as payment is received shortly after the satisfaction of the performance obligation. The non-interest income line items recognized under the scope of Topic 606 are as follows:

Service charges on deposit accounts - Service charges on accounts consist of monthly service fees, transaction-based fees, overdraft services and other deposit account related fees. The Company’s performance obligation for monthly services fees is generally satisfied over the period in which the service is provided. Revenue for these monthly fees is recognized during the service period. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied at the time the service is provided. Payment for service charges on deposit accounts are primarily received immediately or in the following month through a direct charge to a customer’s account.

Interchange income - The Company earns interchange fees when cardholder debit card transaction are processed through card association networks. The interchange rates are generally set by the card association based upon purchase volumes and other factors. Interchange fees represent a percentage of the underlying transaction value. The Company has a continuous contract, based on customary business practices, with the card association networks to make funds

67

available for settlement of card transactions. The Company’s performance obligation is satisfied over time as it makes funds available, and the related income is recognized when received.

Insurance commission income - Commission revenue from WIA was recognized as of the effective date of the insurance policy or the date the customer was billed, whichever was later. The Company also received contingent commissions from insurance companies which were 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 were recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations and has been discontinued due to the sale of WIA on June 30, 2020.

Non-interest income outside of the scope of Revenue from Contracts with Customers, Topic 606 is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income outside of the scope of Topic 606 includes mortgage banking activities, loan fees and service charges, net gains (losses) on investment securities, Net gain on sale of acquired business lines, settlement proceeds, and other, which is primarily made up of BOLI related income.

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.

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

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable. See Note 11, “Commitments and Contingencies” in Notes to Consolidated Financial Statements.

Derivatives--Rate-lock Commitments and Forward Sale Agreements —The Company enters into commitments to originate loans, whereby the interest rate on the loan is determined prior to funding (rate-lock commitment). Rate-lock commitments on mortgage loans held for sale are derivative instruments. If material, derivative instruments are carried on the consolidated balance sheets at fair value, and changes in the fair value thereof are recognized in the consolidated statements of operations. The Company originates single-family residential loans for sale, pursuant to programs primarily with the Federal Home Loan Mortgage Corporation (FHLMC) and other similar third parties. In connection with these programs, at the time the Company initially issues a loan commitment, it does not lock in a specific interest rate. At the time the interest rate is locked in by the borrower, the Company concurrently enters into a forward loan sale agreement with the prospective loan purchaser, at a specific price, in order to manage the interest rate risk inherent to the rate-lock commitment. The forward sale agreement also meets the definition of a derivative instrument. Any change in the fair value of the loan commitment after the borrower locks in the interest rate is substantially offset by the corresponding change in the fair value of the forward loan sale agreement related to such loan. The period from the time the borrower locks in the interest rate, to the time the Company funds the loan and sells the loan to a third party varies, and could be up to 90 days. The fair value of each instrument will rise and fall in response to changes in market interest rates, subsequent to the dates the interest rate locks and forward sale agreements are entered into. In the event that interest rates rise after the Company enters into an interest rate lock, the fair value of the loan commitment will decline. However, the fair value of the forward loan sale agreement related to such loan commitment should increase by substantially the same amount, effectively eliminating the Company’s interest rate and price risks.

At December 31, 2021, the Company had $5,685 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above. The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of December 31, 2021.

Other Comprehensive Income —Accumulated and other comprehensive income or loss is comprised of the unrealized and realized gains and losses on securities available for sale, net of tax, and is shown on the accompanying consolidated statements of comprehensive income.

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

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

68

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 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 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 contracts, 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, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13 becoming effective in the first quarter of 2023 for the Company. Earlier adoption 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.

69

NOTE 2 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of December 31, 2021 and December 31, 2020, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
U.S. government agency obligations	$	25,826	$	440	$	1	$	26,265
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	107,636		409		878		107,167
Corporate debt securities	35,342		403		157		35,588
Corporate asset-backed securities	33,902		133		127		33,908
Total available for sale securities	$	202,846	$	1,385	$	1,163	$	203,068
December 31, 2020
U.S. government agency obligations	$	33,048	$	387	$	70	$	33,365
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	39,454		1,537		—		40,991
Corporate debt securities	17,199		372		109		17,462
Corporate asset-backed securities	36,039		104		316		35,827
Trust preferred securities	16,297		189		38		16,448
Total available for sale securities	$	142,177	$	2,589	$	533	$	144,233

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
Obligations of states and political subdivisions	$	4,600	$	—	$	7	$	4,593
Mortgage-backed securities	66,541		104		2,061		64,584
Total held to maturity securities	$	71,141	$	104	$	2,068	$	69,177
December 31, 2020
Obligations of states and political subdivisions	$	600	$	2	$	—	$	602
Mortgage-backed securities	42,951		265		34		43,182
Total held to maturity securities	$	43,551	$	267	$	34	$	43,784

At December 31, 2021, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $863 as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2021, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2021, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $3,934 and mortgage-backed securities with a carrying value of $2,879 as collateral against specific municipal deposits. As of December 31, 2021, the Bank also has mortgage-backed securities with a carrying value of $267 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2020, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $1,209 as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2020, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2020, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $576 and mortgage-backed securities with a carrying value of $3,028 as collateral against specific municipal deposits. As of December 31, 2020, the Bank also has mortgage-backed securities with a carrying value of $468 pledged as collateral to the Federal Home Loan Bank of Des Moines.

For the twelve months ended December 31, 2021, gross sales of available for sale securities were $38,239, gross gains on sale of available for sale securities were $646, and gross losses on sale of available for sale securities were $73.

For the twelve months ended December 31, 2020, gross sales of available for sale securities were $12,091, gross gains on sale of available for sale securities were $157, and gross losses on sale of available for sale securities were $1.

70

The estimated fair value of available for sale securities at December 31, 2021 and December 31, 2020, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and securities due to the call feature.

	December 31, 2021				December 31, 2020
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	140	$	140	$	—	$	—
Due after one year through five years	4,903		4,971		3,833		4,095
Due after five years through ten years	40,410		40,818		44,405		44,880
Due after ten years	49,757		49,972		54,485		54,267
Total securities with contractual maturities	95,210		95,901		102,723		103,242
Mortgage-backed securities	107,636		107,167		39,454		40,991
Total available for sale securities	$	202,846	$	203,068	$	142,177	$	144,233

	December 31, 2021				December 31, 2020
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due after one year through five years	$	4,300	$	4,298	$	200	$	200
Due after five years through ten years	300		295		400		402
Total securities with contractual maturities	4,600		4,593		600		602
Mortgage-backed securities	66,541		64,584		42,951		43,182
Total held to maturity securities	$	71,141	$	69,177	$	43,551	$	43,784

Securities with unrealized losses at December 31, 2021 and December 31, 2020, 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
December 31, 2021
U.S. government agency obligations	$	1,169	$	1	$	—	$	—	$	1,169	$	1
Mortgage-backed securities	89,010		878		—		—		89,010		878
Corporate debt securities	17,240		142		735		15		17,975		157
Corporate asset-backed securities	19,296		127		—		—		19,296		127
Total	$	126,715	$	1,148	$	735	$	15	$	127,450	$	1,163
December 31, 2020
U.S. government agency obligations	$	7,654	$	17	$	6,834	$	53	$	14,488	$	70
Corporate debt securities	3,447		27		1,418		82		4,865		109
Corporate asset-backed securities	—		—		24,310		316		24,310		316
Trust preferred securities	5,612		38		—		—		5,612		38
Total	$	16,713	$	82	$	32,562	$	451	$	49,275	$	533

71

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
December 31, 2021
Obligations of states and political subdivisions	$	593	$	7	$	—	$	—	$	593	$	7
Mortgage-backed securities	46,969		1,346		14,716		715		61,685		2,061
Total	$	47,562	$	1,353	$	14,716	$	715	$	62,278	$	2,068
December 31, 2020
Mortgage-backed securities	$	16,538	$	34	$	—	$	—	$	16,538	$	34
Total	$	16,538	$	34	$	—	$	—	$	16,538	$	34

    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 as separate components of shareholders’ 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. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur.

72

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. SBA PPP loan balances are 100% guaranteed under the Small Business Association’s Paycheck Protection Program and may be forgiven in full, depending on use of funds and eligibility. These SBA-backed loans helped businesses keep their workforce employed during the COVID-19 crisis. Eligible borrowers, who qualify for full loan forgiveness during the eight to twenty four week period following loan disbursement, can apply for forgiveness, once all proceeds for which the borrower requested forgiveness has been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan.

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. 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.

73

Loans by classes within portfolio segments were as follows:

	December 31, 2021		December 31, 2020
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	578,395	$	351,113
Agricultural real estate	52,372		31,741
Multi-family real estate	174,050		112,731
Construction and land development	78,613		91,241
C&I/Agricultural operating:
Commercial and industrial	107,937		95,290
Agricultural operating	26,202		24,457
Residential mortgage:
Residential mortgage	63,855		86,283
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,473		12,056
Total originated loans before SBA PPP loans	$	1,109,739	$	837,023
SBA PPP loans	8,755		123,702
Total originated loans	$	1,118,494	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	120,070	$	156,562
Agricultural real estate	26,123		37,054
Multi-family real estate	4,299		9,421
Construction and land development	907		7,276
C&I/Agricultural operating:
Commercial and industrial	14,230		21,263
Agricultural operating	5,386		8,328
Residential mortgage:
Residential mortgage	27,135		45,103
Consumer installment:
Other Consumer	401		1,157
Total acquired loans	$	198,551	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	698,465	$	507,675
Agricultural real estate	78,495		68,795
Multi-family real estate	178,349		122,152
Construction and land development	79,520		98,517
C&I/Agricultural operating:
Commercial and industrial	122,167		116,553
Agricultural operating	31,588		32,785
Residential mortgage:
Residential mortgage	90,990		131,386
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,874		13,213
Total loans before SBA PPP loans	$	1,308,290	$	1,123,187
SBA PPP loans	8,755		123,702
Gross loans	$	1,317,045	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process	(2,482)		(4,245)
Unamortized discount on acquired loans	(3,600)		(5,063)
Allowance for loan losses	(16,913)		(17,043)
Loans receivable, net	$	1,294,050	$	1,220,538

74

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 weaknesses 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.

75

Below is a breakdown of loans by risk rating as of December 31, 2021:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	572,724	$	667	$	5,004	$	—	$	—	$	578,395
Agricultural real estate	50,834		1,267		271		—		—		52,372
Multi-family real estate	173,760		290		—		—		—		174,050
Construction and land development	75,146		—		3,467		—		—		78,613
C&I/Agricultural operating:
Commercial and industrial	107,798		57		82		—		—		107,937
Agricultural operating	23,935		764		1,503		—		—		26,202
Residential mortgage:
Residential mortgage	60,754		—		3,101		—		—		63,855
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,404		—		69		—		—		8,473
Total originated loans before SBA PPP loans	1,092,879		3,045		13,815		—		—		1,109,739
SBA PPP loans	8,755		—		—		—		—		8,755
Total originated loans	$	1,101,634	$	3,045	$	13,815	$	—	$	—	$	1,118,494
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	116,839	$	1,314	$	1,917	$	—	$	—	$	120,070
Agricultural real estate	21,051		—		5,072		—		—		26,123
Multi-family real estate	4,299		—		—		—		—		4,299
Construction and land development	735		172		—		—		—		907
C&I/Agricultural operating:
Commercial and industrial	13,931		5		294		—		—		14,230
Agricultural operating	4,936		—		450		—		—		5,386
Residential mortgage:
Residential mortgage	25,869		—		1,266		—		—		27,135
Consumer installment:
Other Consumer	398		—		3		—		—		401
Total acquired loans	$	188,058	$	1,491	$	9,002	$	—	$	—	$	198,551
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	689,563	$	1,981	$	6,921	$	—	$	—	$	698,465
Agricultural real estate	71,885		1,267		5,343		—		—		78,495
Multi-family real estate	178,059		290		—		—		—		178,349
Construction and land development	75,881		172		3,467		—		—		79,520
C&I/Agricultural operating:
Commercial and industrial	121,729		62		376		—		—		122,167
Agricultural operating	28,871		764		1,953		—		—		31,588
Residential mortgage:
Residential mortgage	86,623		—		4,367		—		—		90,990
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,802		—		72		—		—		8,874
Gross loans before SBA PPP loans	$	1,280,937	$	4,536	$	22,817	$	—	$	—	$	1,308,290
SBA PPP loans	8,755		—		—		—		—		8,755
Gross loans	$	1,289,692	$	4,536	$	22,817	$	—	$	—	1,317,045
Less:
Unearned net deferred fees and costs and loans in process											(2,482)
Unamortized discount on acquired loans											(3,600)
Allowance for loan losses											(16,913)
Loans receivable, net											$	1,294,050

76

Below is a breakdown of loans by risk rating as of December 31, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	349,482	$	543	$	1,088	$	—	$	—	$	351,113
Agricultural real estate	30,041		446		1,254		—		—		31,741
Multi-family real estate	112,423		308		—		—		—		112,731
Construction and land development	87,763		—		3,478		—		—		91,241
C&I/Agricultural operating:
Commercial and industrial	91,474		20		3,796		—		—		95,290
Agricultural operating	22,462		934		1,061		—		—		24,457
Residential mortgage:
Residential mortgage	82,097		7		4,179		—		—		86,283
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:					—
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	11,986		—		70		—		—		12,056
Total originated loans before SBA PPP loans	$	819,303	$	2,258	$	15,462	$	—	$	—	$	837,023
SBA PPP loans	123,702		—		—		—		—		123,702
Total originated loans	$	943,005	$	2,258	$	15,462	$	—	$	—	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	148,303	$	4,274	$	3,985	$	—	$	—	$	156,562
Agricultural real estate	31,147		—		5,907		—		—		37,054
Multi-family real estate	9,273		—		148		—		—		9,421
Construction and land development	7,237		—		39		—		—		7,276
C&I/Agricultural operating:
Commercial and industrial	20,918		9		336		—		—		21,263
Agricultural operating	7,838		—		490		—		—		8,328
Residential mortgage:
Residential mortgage	42,805		131		2,167		—		—		45,103
Consumer installment:
Other Consumer	1,150		—		7		—		—		1,157
Total acquired loans	$	268,671	$	4,414	$	13,079	$	—	$	—	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	497,785	$	4,817	$	5,073	$	—	$	—	$	507,675
Agricultural real estate	61,188		446		7,161		—		—		68,795
Multi-family real estate	121,696		308		148		—		—		122,152
Construction and land development	95,000		—		3,517		—		—		98,517
C&I/Agricultural operating:
Commercial and industrial	112,392		29		4,132		—		—		116,553
Agricultural operating	30,300		934		1,551		—		—		32,785
Residential mortgage:
Residential mortgage	124,902		138		6,346		—		—		131,386
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	13,136		—		77		—		—		13,213
Gross loans before SBA PPP loans	$	1,087,974	$	6,672	$	28,541	$	—	$	—	$	1,123,187
SBA PPP loans	123,702		—		—		—		—		123,702
Gross loans	$	1,211,676	$	6,672	$	28,541	$	—	$	—	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process											(4,245)
Unamortized discount on acquired loans											(5,063)
Allowance for loan losses											(17,043)
Loans receivable, net											$	1,220,538

77

     Certain directors and executive officers of the Company are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during the twelve months ended December 31, 2021 and December 31, 2020. A summary of the changes in those loans is as follows:

	Twelve months ended		Twelve months ended
	December 31, 2021		December 31, 2020
Balance—beginning of period	$	26,483	$	20,367
New loan originations	14,992		7,230
Repayments	(9,052)		(1,114)
Balance—end of period	$	32,423	$	26,483
Available and unused lines of credit	$	75	$	187

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.

78

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

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2021:
Allowance for Loan Losses:
Beginning balance, January 1, 2021	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Charge-offs	(51)		—		—		(54)		—		(105)
Recoveries	14		110		9		41		—		174
Provision	2,120		(263)		(532)		(251)		(132)		942
Total Allowance on originated loans	$	12,354	$	1,959	$	518	$	225	$	774	$	15,830
Other acquired loans:
Beginning balance, January 1, 2021	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Charge-offs	(200)		(7)		—		(27)		—		(234)
Recoveries	14		13		4		4		—		35
Provision	(642)		(78)		(209)		(13)		—		(942)
Total allowance on other acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Total allowance on acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Ending Balance, December 31, 2021	$	13,210	$	2,028	$	648	$	253	$	774	$	16,913
Allowance for Loan Losses at December 31, 2021:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	797	$	99	$	113	$	—	$	—	$	1,009
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	12,413	$	1,929	$	535	$	253	$	774	$	15,904
Loans Receivable as of December 31, 2021:
Ending balance of originated loans	$	883,430	$	142,894	$	67,726	$	24,444	$	—	$	1,118,494
Ending balance of purchased credit-impaired loans	9,060		1,101		1,044		—		—		11,205
Ending balance of other acquired loans	142,339		18,515		26,091		401		—		187,346
Ending balance of loans	$	1,034,829	$	162,510	$	94,861	$	24,845	$	—	$	1,317,045
Ending balance: individually evaluated for impairment	$	21,792	$	3,337	$	7,007	$	257	$	—	$	32,393
Ending balance: collectively evaluated for impairment	$	1,013,037	$	159,173	$	87,854	$	24,588	$	—	$	1,284,652

79

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2020:
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(932)		(5)		(145)		—		(1,082)
Recoveries	75		8		7		69		—		159
Provision	3,991		1,393		160		98		549		6,191
Total Allowance on originated loans	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Other acquired loans:
Beginning balance, January 1, 2020	$	526	$	27	$	163	$	53	$	—	$	769
Charge-offs	—		(159)		(74)		(3)		—		(236)
Recoveries	77		33		15		7		—		132
Provision	1,081		240		231		7		—		1,559
Total Allowance on other acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Total Allowance on acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Ending balance, December 31, 2020	$	11,955	$	2,253	$	1,376	$	553	$	906	$	17,043
Allowance for Loan Losses at December 31, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	698	$	190	$	226	$	1	$	—	$	1,115
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	11,257	$	2,063	$	1,150	$	552	$	906	$	15,928
Loans Receivable as of December 31, 2020:
Ending balance of originated loans	$	586,826	$	243,449	$	92,543	$	37,907	$	—	$	960,725
Ending balance of purchased credit-impaired loans	15,100		1,534		1,312		—		—		17,946
Ending balance of other acquired loans	195,213		28,057		43,791		1,157		—		268,218
Ending balance of loans	$	797,139	$	273,040	$	137,646	$	39,064	$	—	$	1,246,889
Ending balance: individually evaluated for impairment	$	26,303	$	7,115	$	9,621	$	358	$	—	$	43,397
Ending balance: collectively evaluated for impairment	$	770,836	$	265,925	$	128,025	$	38,706	$	—	$	1,203,492

80

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

	Commercial/Agricultural Real Estate Loans				C&I/Agricultural operating				Residential Mortgage				Consumer Installment				Totals
	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
	2021		2020		2021		2020		2021		202		2021		202		2021		2020
Performing loans
Performing TDR loans	$	4,618	$	4,695	$	649	$	3,836	$	2,681	$	3,142	$	36	$	49	$	7,984	$	11,722
Performing loans other	1,021,346		786,533		160,570		266,975		90,591		131,470		24,729		38,856		1,297,236		1,223,834
Total performing loans	1,025,964		791,228		161,219		270,811		93,272		134,612		24,765		38,905		1,305,220		1,235,556
Nonperforming loans (1)
Nonperforming TDR loans	3,389		4,691		554		1,287		593		777		3		—		4,539		6,755
Nonperforming loans other	5,476		1,220		737		942		996		2,257		77		159		7,286		4,578
Total nonperforming loans	8,865		5,911		1,291		2,229		1,589		3,034		80		159		11,825		11,333
Total loans	$	1,034,829	$	797,139	$	162,510	$	273,040	$	94,861	$	137,646	$	24,845	$	39,064	$	1,317,045	$	1,246,889

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

81

An aging analysis of the Company’s commercial/agricultural real estate and non-real estate, consumer real estate and non-real estate and purchased third party loans as of December 31, 2021 and 2020, 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 Accruing		Nonaccrual Loans		Current		Total Loans
December 31, 2021
Commercial/Agricultural real estate:
Commercial real estate	$	36	$	—	$	—	$	36	$	5,374	$	693,055	$	698,465
Agricultural real estate	498		4		—		502		3,490		74,503		78,495
Multi-family real estate	—		—		—		—		—		178,349		178,349
Construction and land development	—		—		—		—		—		79,520		79,520
C&I/Agricultural operating:
Commercial and industrial	—		32		—		32		298		121,837		122,167
SBA PPP loans	—		—		—		—		—		8,755		8,755
Agricultural operating	1,123		—		—		1,123		993		29,472		31,588
Residential mortgage:
Residential mortgage	1,471		487		156		2,114		1,268		87,608		90,990
Purchased HELOC loans	117		—		—		117		165		3,589		3,871
Consumer installment:
Originated indirect paper	38		27		—		65		55		15,851		15,971
Other Consumer	58		10		4		72		22		8,780		8,874
Total	$	3,341	$	560	$	160	$	4,061	$	11,665	$	1,301,319	$	1,317,045
December 31, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	9,568	$	467	$	—	$	10,035	$	679	$	496,961	$	507,675
Agricultural real estate	411		48		—		459		5,084		63,252		68,795
Multi-family real estate	308		—		—		308		148		121,696		122,152
Construction and land development	3,898		—		—		3,898		—		94,619		98,517
C&I/Agricultural operating:
Commercial and industrial	436		491		—		927		357		115,269		116,553
SBA PPP loans	—		—		—		—		—		123,702		123,702
Agricultural operating	1,499		200		—		1,699		1,872		29,214		32,785
Residential mortgage:
Residential mortgage	2,238		372		516		3,126		2,217		126,043		131,386
Purchased HELOC loans	338		94		67		499		234		5,527		6,260
Consumer installment:
Originated indirect paper	90		37		—		127		133		25,591		25,851
Other Consumer	100		14		3		117		23		13,073		13,213
Total	$	18,886	$	1,723	$	586	$	21,195	$	10,747	$	1,214,947	$	1,246,889

82

At December 31, 2021, the Company individually evaluated loans for impairment with a recorded investment of $31,740, consisting of (1) $11,205 PCI loans, with a carrying amount of $10,552; (2) $9,860 TDR loans, net of TDR PCI loans; and (3) $11,328 of substandard non-TDR loans, non-PCI loans. The $31,740 total of loans individually evaluated for impairment includes $7,984 of performing TDR loans. At December 31, 2020, the Company individually evaluated loans for impairment with a recorded investment of $42,310, consisting of (1) $17,946 PCI loans, with a carrying amount of $16,859; (2) $15,634 TDR loans, net of TDR PCI loans; and (3) $9,817 of substandard non-TDR loans, non-PCI loans. The $42,310 total of loans individually evaluated for impairment includes $11,742 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 loans evaluated for impairment as of December 31, 2021 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2021
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	15,521	$	15,905	$	—	$	19,412	$	964
C&I/Agricultural operating	3,153		3,337		—		4,622		146
Residential mortgage	6,221		6,306		—		7,316		316
Consumer installment	256		256		—		306		85
Total	$	25,151	$	25,804	$	—	$	31,656	$	1,511
With An Allowance Recorded:
Commercial/Agricultural real estate	$	5,887	$	5,887	$	797	$	4,089	$	62
C&I/Agricultural operating	—		—		99		391		84
Residential mortgage	701		701		113		890		17
Consumer installment	1		1		—		2		—
Total	$	6,589	$	6,589	$	1,009	$	5,372	$	163
December 31, 2021 Totals
Commercial/Agricultural real estate	$	21,408	$	21,792	$	797	$	23,501	$	1,026
C&I/Agricultural operating	3,153		3,337		99		5,013		230
Residential mortgage	6,922		7,007		113		8,206		333
Consumer installment	257		257		—		308		85
Total	$	31,740	$	32,393	$	1,009	$	37,028	$	1,674

At December 31, 2021, the Company had two residential real estate loans, secured by residential real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $109. At December 31, 2021, the Company had five commercial real estate loans, secured by commercial and agricultural real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $2,096.

83

A summary of loans evaluated for impairment as of December 31, 2020 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2020
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	23,302	$	24,013	$	—	$	29,657	$	1,894
C&I/Agricultural operating	6,090		6,334		—		7,025		284
Residential mortgage	8,410		8,542		—		8,418		450
Consumer installment	356		356		—		368		30
Total	$	38,158	$	39,245	$	—	$	45,468	$	2,658
With An Allowance Recorded:
Commercial/Agricultural real estate	$	2,290	$	2,290	$	698	$	2,217	$	100
C&I/Agricultural operating	781		781		190		636		22
Residential mortgage	1,079		1,079		226		1,255		54
Consumer installment	2		2		1		35		1
Total	$	4,152	$	4,152	$	1,115	$	4,143	$	177
December 31, 2020 Totals
Commercial/Agricultural real estate	$	25,592	$	26,303	$	698	$	31,874	$	1,994
C&I/Agricultural operating	6,871		7,115		190		7,661		306
Residential mortgage	9,489		9,621		226		9,673		504
Consumer installment	358		358		1		403		31
Total	$	42,310	$	43,397	$	1,115	$	49,611	$	2,835

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty, and the Bank grants a concession to that borrower that the Bank would not otherwise consider, except for the borrower’s financial difficulties. Concessions may include: extension of the loan’s term, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There was one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $4 at December 31, 2021, compared to one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $20 at December 31, 2020.

Following is a summary of TDR loans by accrual status as of December 31, 2021 and December 31, 2020.

	December 31		December 31
	2021		2020
Troubled debt restructure loans:
Accrual status	$	7,984	$	11,742
Non-accrual status	4,539		6,735
Total	$	12,523	$	18,477

There were no TDR commitments meeting our TDR criteria as of December 31, 2021 or as of December 31, 2020. There were unused lines of credit totaling $10 and $14 meeting our TDR criteria as of December 31, 2021 and December 31, 2020, respectively.

84

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the years ended December 31, 2021 and December 31, 2020:

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2021
TDRs:
Commercial/Agricultural real estate	3	$	39	$	81	$	—	$	—	$	120	$	120	$	—
C&I/Agricultural operating	1	—		—		240		—		240		240		—
Residential mortgage	8	252		295		202		—		749		749		—
Consumer installment	3	6		—		18		—		24		24		—
Totals	15	$	297	$	376	$	460	$	—	$	1,133	$	1,133	$	—

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2020
TDRs:
Commercial/Agricultural real estate	12	$	4,441	$	198	$	293	$	—	$	4,932	$	4,932	$	—
C&I/Agricultural operating	6	3,295		78		3,000		—		6,373		6,373		—
Residential mortgage	17	456		858		117		—		1,431		1,431		—
Consumer installment	3	6		—		4		—		10		10		—
Totals	38	$	8,198	$	1,134	$	3,414	$	—	$	12,746	$	12,746	$	—

A summary of loans by loan class modified in a troubled debt restructuring as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	19	$	8,007	31	$	9,386
C&I/Agricultural operating	7	1,203		16	5,123
Residential mortgage	43	3,274		52	3,919
Consumer installment	7	39		8	49
Total loans	76	$	12,523	107	$	18,477

85

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the years ended December 31, 2021 and December 31, 2020, as well as the recorded investment in these restructured loans as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	—	$	—	1	$	100
C&I/Agricultural operating	—	—		1	224
Residential mortgage	—	—		4	404
Consumer installment	1	3		—	—
Total troubled debt restructurings	1	$	3	6	$	728

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

	December 31, 2021		December 31, 2020
Accountable for under ASC 310-30 (PCI loans)
Outstanding balance	$	11,205	$	17,946
Carrying amount	$	10,552	$	16,859
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	187,346	$	268,218
Carrying amount	$	184,399	$	264,242
Total acquired loans
Outstanding balance	$	198,551	$	286,164
Carrying amount	$	194,951	$	281,101

The table below shows scheduled accretion by year for the accretable difference recognized due to fair value purchase accounting on recent whole bank acquisitions. In addition, the Company has $1.61 million of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount. The scheduled accretion on this balance is estimated to be $100 per year; however, large balance payoffs, as seen in 2021 and 2020, would accelerate this accretion.

Fiscal years ending December 31,	Purchase Accounting Accretable Discount
2022	$	828
2023	279
2024	131
2025	96
Total	1,334

86

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

	December 31, 2021		December 31, 2020
Balance at beginning of period	$	1,087	$	6,290
Additions to non-accretable difference for acquired purchased credit impaired loans	—		—
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(105)		(1,693)
Transfers from non-accretable difference to accretable discount	(329)		(2,754)
Non-accretable difference used to reduce loan principal balance	—		(505)
Non-accretable difference transferred to OREO due to loan foreclosure	—		(251)
Balance at end of period	$	653	$	1,087

87

NOTE 4 – MORTGAGE SERVICING RIGHTS

Mortgage servicing rights--Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of the one- to four-family residential mortgage loans as of December 31, 2021 and December 31, 2020 were $556,086 and $553,655, respectively. These residential mortgage loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $2,781 and $2,890, at December 31, 2021 and December 31, 2020, respectively. Mortgage servicing rights activity for the years ended December 31, 2021 and December 31, 2020 was as follows:

	As of and for the twelve months ended		As of and for the twelve months ended
	December 31, 2021		December 31, 2020
Mortgage servicing rights:
Mortgage servicing rights, beginning of period	$	5,266	$	4,541
Increase in mortgage servicing rights resulting from transfers of financial assets	1,100		2,020
Amortization during the period	(1,639)		(1,295)
Mortgage servicing rights, end of period	4,727		5,266
Valuation allowance, beginning of period	(2,014)		(259)
Additions	—		(1,755)
Recoveries	1,448		—
Valuation allowance, end of period	(566)		(2,014)
Mortgage servicing rights, net	$	4,161	$	3,252
Fair value of mortgage servicing rights, end of period	$	4,312	$	3,285
Residential mortgage loans serviced for others	$	556,086	$	553,655

The current period change in valuation allowance is included in expense as mortgage servicing rights expense, net on the consolidated statement of operations. Servicing fees totaled $1,414 and $1,391 for the years ended December 31, 2021 and December 31, 2020, respectively. Late fees and ancillary fees related to loan servicing are not material.

To estimate the fair value of the MSR asset, a valuation model is applied at the loan level to calculate the present value of the expected future cash flows. The valuation model incorporates various assumptions that would impact market participants’ estimations of future servicing income. Central to the valuation model is the discount rate. Fair value at both December 31, 2021 and December 31, 2020 was determined using discount rates ranging from 9% to 12%. Other assumptions utilized in the valuation model include, but are not limited to, prepayment speed, servicing costs, delinquencies, costs of advances, foreclosure costs, ancillary income, and income earned on float and escrow.

At December 31, 2021, the estimated future aggregate amortization expense for the mortgage servicing rights is as follows. The estimated amortization expense is based on existing mortgage servicing asset balances. The timing of amortization expense actually recognized in future periods may differ significantly based on actual prepayment speeds, mortgage interest rates and other factors.

	Amortization Expense
2022	$	1,241
2023	1,040
2024	842
2025	653
2026	464
After 2026	487
Total	$	4,727

88

NOTE 5 - OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment for each of the periods shown below consisted of the following:

	December 31, 2021		December 31, 2020
Land	$	4,215	$	4,298
Buildings	16,781		16,008
Furniture, equipment and vehicles	8,854		7,493
Subtotals	29,850		27,799
Less--Accumulated depreciation	(8,681)		(6,634)
Office properties and equipment, net	$	21,169	$	21,165

Depreciation expense was $2,255 for the year ended December 31, 2021 and $1,954 for the year ended December 31, 2020.

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS    

Goodwill— The beginning and ending balance of goodwill was $31,498 during the periods ended December 31, 2021 and December 31, 2020. There were no changes to goodwill during either period.

Intangible assets--Intangible assets consist of core deposit intangibles arising from various bank acquisitions and the premium on the Wells Insurance Agency customer relationships, until its disposition in June 2020. A summary of intangible assets and related amortization for the periods shown below follows:

	Year ended		Year Ended
	December 31, 2021		December 31, 2020
Gross carrying amount	$	12,180	$	12,180
Accumulated amortization	(8,282)		(6,686)
Net book value	$	3,898	$	5,494
Sales during the period - carrying amount (1)	$	—	$	618
Sales during the period - accumulated amortization (1)	$	—	$	147
Amortization during the period	$	1,596	$	1,622

(1) Intangible asset sales during the year ended December 31, 2020, consisted of Wells Insurance Agency customer relationships included in the sale of the Wells Insurance Agency. Accumulated amortization at disposition was $147. The remaining carrying amount at disposition was $618.

At December 31, 2021, the estimated future aggregate amortization expense for the intangible assets are as follows:

	Intangible Assets
2022	$	1,449
2023	755
2024	715
2025	584
2026	395
Total	$	3,898

89

NOTE 7—LEASES

We have operating leases for our corporate offices (1), five bank branch offices (5) and an ATM location (1). Our leases have remaining lease terms of 1.25 years to 6.50 years, some of which include options to extend the leases for up to 5 years. As of December 31, 2021, we have no additional lease commitments that have not yet commenced. Lease costs are included in non-interest expense/occupancy in the consolidated statement of operations.

	Twelve Months Ended
	December 31, 2021			December 31, 2020
The components of total lease costs were as follows:
Operating lease cost	$	558		$	618
Variable lease cost	47			59
Total lease cost	$	605		$	677
The components of total lease income were as follows:
Operating lease income	$	33		$	32
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	$	415		$	638
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2		$	508
	December, 31 2021			December 31, 2020
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,159		$	2,657
Operating lease liabilities	$	2,228		$	2,762
Weighted average remaining lease term in years; operating leases	5.55			6.32
Weighted average discount rate; operating leases	2.73		%	2.70		%

Cash obligations and receipts under lease contracts as of December 31, 2021 are as follows:

Fiscal years ending December 31,	Payments		Receipts
2022	$	558	$	34
2023	506		27
2024	419		10
2025	403		—
2026	346		—
Thereafter	480		—
Total lease payments	2,712		$	71
Less: effects of discounting	(484)
Lease liability recognized	$	2,228

90

NOTE 8—DEPOSITS

The following is a summary of deposits by type at December 31, 2021 and December 31, 2020, respectively: 

	December 31, 2021		December 31, 2020
Non interest bearing demand deposits	$	276,631	$	238,348
Interest bearing demand deposits	396,231		301,764
Savings accounts	222,674		196,348
Money market accounts	288,985		245,549
Certificate accounts	203,014		313,247
Total deposits	$	1,387,535	$	1,295,256

At December 31, 2021, the scheduled maturities of time deposits were as follows:

2022	$	178,777
2023	13,919
2024	6,590
2025	2,522
2026	1,206
After 2026	—
Total	$	203,014

Time deposits of $250 or more were $22,381 and $46,660 at December 31, 2021 and December 31, 2020, respectively. Brokered deposits were $11 and $2,516 at December 31, 2021 and December 31, 2020, respectively.

Deposits from the Company’s directors, executive officers, principal stockholders and their affiliates held by the Bank at December 31, 2021 and December 31, 2020 amounted to $34,093, and $48,596, respectively.

91

NOTE 9 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

    A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2021 and December 31, 2020 is as follows:

		December 31,
		2021						2020
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4)	2021	$	—	—	%	—	%	$	8,000	—	%	2.16	%
	2022	11,000		2.45	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	20,000		1.43	%	1.44	%
	2024	20,530		0.00	%	1.45	%	20,530		0.00	%	1.45	%
	2025	5,000		1.45	%	1.45	%	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	%	12,500		0.52	%	0.86	%
Subtotal		111,530						123,530
Unamortized discount on acquired notes		(3)						(32)
Federal Home Loan Bank advances, net		$	111,527					$	123,498
Other borrowings:
Senior notes (5)	2031	$	28,856	3.00	%	3.50	%	$	28,856	3.25	%	3.50	%
Subordinated notes (6)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%	15,000		6.00	%	6.00	%
		$	30,000					$	30,000
Unamortized debt issuance costs		(430)						(528)
Total other borrowings		$	58,426					$	58,328
Totals		$	169,953					$	181,826

(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 pledged balances of $861,900 and $723,862 at December 31, 2021 and 2020, respectively. At December 31, 2021, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $204,271 compared to $118,391 as of December 31, 2020.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $123,530 and $162,530, during the twelve months ended December 31, 2021 and December 31, 2020, respectively.

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2021 and December 31, 2020 were 2.45% and 1.02%, respectively.

(4)    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.

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

(a) A term note which was subsequently refinanced in October 2020 and modified in October 2021, 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 3.00%, due to the modification in October 2021.

(b) A $5,000 line of credit, maturing in August 2022, that remains undrawn upon.

(6)    Subordinated notes resulted from the following:

92

(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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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 $176,150 and $179,400 at December 31, 2021 and 2020, respectively.

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

The Bank has originated Small Business Administration’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. This FRB PPPLF program expired on July 30, 2021. The Bank has no outstanding loan balances under this facility at December 31, 2021 and December 31, 2020. Maximum month-end borrowed amounts outstanding under this agreement were $0 and $25,136, during the twelve months ended December 31, 2021 and December 31, 2020, respectively. In July 2021, the bank pledged these SBA PPP loans to the FHLB.

NOTE 10—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. As of December 31, 2021 and 2020, the most recent notifications from our regulatory agency categorized the Bank as “Well Capitalized” under the regulatory framework for Prompt Corrective Action. There are no conditions or events since these notifications that management believes have changed the Bank’s category.

93

The Bank’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2021 and 2020, 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 December 31, 2021
Total capital (to risk weighted assets)	$	187,783	13.4	%	$	111,694	> =	8.0	%	$	139,618	> =	10.0	%
Tier 1 capital (to risk weighted assets)	170,870		12.2	%	83,771		> =	6.0	%	111,694		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	170,870		12.2	%	62,828		> =	4.5	%	90,752		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	170,870		10.0	%	68,323		> =	4.0	%	85,403		> =	5.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	171,702	14.7	%	$	93,381	> =	8.0	%	$	116,726	> =	10.0	%
Tier 1 capital (to risk weighted assets)	157,081		13.5	%	70,035		> =	6.0	%	93,381		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	157,081		13.5	%	52,527		> =	4.5	%	75,872		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	157,081		9.9	%	63,718		> =	4.0	%	79,647		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2021 and 2020, respectively, are presented below:

	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Amount			Ratio
As of December 31, 2021
Total capital (to risk weighted assets)	$	182,242	13.1	%	$	111,694	> =	8.0	%
Tier 1 capital (to risk weighted assets)	135,329		9.7	%	83,771		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	135,329		9.7	%	62,828		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	135,329		7.9	%	68,323		> =	4.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	166,703	14.3	%	$	93,381	> =	8.0	%
Tier 1 capital (to risk weighted assets)	122,082		10.5	%	70,035		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	122,082		10.5	%	52,527		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	122,082		7.7	%	63,718		> =	4.0	%

The Company is a legal entity separate and distinct from its banking subsidiary. As a bank holding company, the Company is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations. Federal bank regulators are authorized to determine, under certain circumstances relating to the financial condition of a bank holding company or a bank, that the payment of dividends would be an unsafe or unsound practice, and to prohibit payment thereof. In particular, federal bank regulators have stated that paying dividends that deplete a banking

94

organization’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. In addition, in the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreement dated August 27, 2020 and Business Note Agreement dated August 1, 2018, which prohibits the Company from making dividend payments while an event of default has occurred and is continuing under the loan agreement or from allowing payment of a dividend which would create an event of default.

The following table reflects the annual cash dividend paid in the years ended December 31, 2021 and 2020, respectively.

	December 31, 2021		December 31, 2020
Cash dividends per share	$	0.23	$	0.21
Stockholder record date	02/11/2021		02/05/2020
Dividend payment date	02/25/2021		02/19/2020

NOTE 11—COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk—The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include off-balance-sheet credit instruments consisting of commitments to make loans. The face amounts for these items represent the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following table presents a summary of commitments described below as of December 31, 2021 and 2020, respectively:

	Contract or Notional Amount at December 31,		Contract or Notional Amount at December 31,
	2021		2020
Commitments to extend credit	$	270,985	$	247,324
Commercial standby letter of credit	$	3,825	$	524
Commitment to contribute capital to SBIC	$	2,400	$	—
Commitment to contribute capital to investment company	$	2,640	$	—

Commitments to extend credit—Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Letters of credit—Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The credit and collateral policy for commitments and letters of credit is comparable to that for granting loans. The Company has recorded no liability associated with standby letters of credit as of December 31, 2021 and 2020.

Capital Contributions—The Company has commitments to invest in a SBIC and investment company that call for capital contributions up to an amount specified in the partnership agreements.

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

95

NOTE 12—RETIREMENT PLAN    

401(k) Plan—The Company sponsors a 401(k) profit sharing plan that covers all employees who qualify based on minimum age and length of service requirements. Employees may make pretax voluntary contributions to the plan, which are matched, in part, by the Company. Employer matching contributions to the plan were $613 and $610 for the year ended December 31, 2021 and 2020, respectively.

NOTE 13 - STOCK-BASED COMPENSATION

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years. As of December 31, 2021, 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 December 31, 2021, 163,974 restricted shares had been granted under this plan. As of December 31, 2021, no stock options had been granted under this plan.

Net compensation expense related to restricted stock awards from these plans was $797 and $530 for the years ended December 31, 2021 and 2020, respectively.

Restricted Common Stock Awards

	Year ended			Year ended
	December 31, 2021			December 31, 2020
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	57,242	$	12.23	43,457	$	12.76
Granted	64,399	10.78		45,507	11.79
Vested	(44,511)	13.26		(31,722)	12.32
Forfeited	(1,500)	10.78		—	—
Unvested and outstanding at end of year	75,630	$	11.20	57,242	$	12.23

The Company accounts for stock-based employee compensation related to the Company’s 2008 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The net compensation cost recognized for stock-based employee compensation from this plan for the years ended December 31, 2021 and 2020 was $8 and $14, respectively.

96

Common Stock Option Awards

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Year ended December 31, 2021
Outstanding at beginning of year	72,300	$	11.05
Exercised	(5,800)	8.99
Forfeited or expired	(600)	13.76
Outstanding at end of period	65,900	11.20		4.61	$	169
Exercisable at end of period	61,700	$	11.03	4.54	$	169
Year ended December 31, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,800)	11.95
Outstanding at end of year	72,300	11.05		5.49	$	—
Exercisable at end of year	54,100	$	10.82	5.37	$	4

Information related to the 2008 Equity Incentive Plan during each period follows:

	Year ended December 31,		Year ended December 31,
	2021		2020
Intrinsic value of options exercised	$	28	$	—
Cash received from options exercised	$	52	$	—
Tax benefit realized from options exercised	$	—	$	—

97

NOTE 14 – INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	Year ended December 31,		Year ended December 31,
	2021		2020
Current tax provision
Federal	$	4,761	$	5,000
State	2,002		2,081
	6,763		7,081
Deferred tax provision (benefit)
Federal	585		(1,866)
Bank owned life insurance - Tax Act clarification	—		(660)
State	345		—
	930		(2,526)
Total	$	7,693	$	4,555

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	Year ended December 31,				Year ended December 31,
	2021				2020
	Amount		Rate		Amount		Rate
Tax expense at statutory rate	$	6,082	21.0	%	$	3,629	21.0	%
State income taxes, net of federal	1,854		6.4	%	1,123		6.5	%
Bank owned life insurance	(132)		(0.4)	%	(130)		(0.8)	%
Tax exempt interest	(52)		(0.2)	%	(61)		(0.3)	%
Other	(59)		(0.2)	%	(6)		—	%
Total	$	7,693	26.6	%	$	4,555	26.4	%

98

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and December 31, 2020, respectively:

	Year ended December 31,		Year ended December 31,
	2021		2020
Deferred tax assets:
Allowance for loan losses	$	4,587	$	4,567
Deferred loan costs/fees	558		1,117
Restricted stock	189		116
Economic performance accruals	981		694
Other real estate	—		89
Deferred revenue	41		64
Loan discounts	854		1,218
FHLB advances	5		55
Lease liability	613		758
Other	25		70
Deferred tax assets	$	7,853	$	8,748
Deferred tax liabilities:
Office properties and equipment	(1,595)		(1,551)
Federal Home Loan Bank stock	(129)		(129)
Core deposit intangible	(1,298)		(1,615)
Net gain on equity securities	(641)		(442)
Prepaid expenses	(198)		(204)
Mortgage servicing rights	(1,144)		(893)
Leases; right of use asset	(594)		(730)
Net unrealized gains on securities available for sale	(61)		(565)
Deferred tax liabilities	$	(5,660)	$	(6,129)
Net deferred tax assets	$	2,193	$	2,619

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies”, above. At December 31, 2021 and December 31, 2020, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of December 31, 2021, years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2018 to present. The years open to examination by state and local government authorities varies by jurisdiction.

The tax effects from uncertain tax positions can be recognized in the consolidated financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. The Company recognized no material expense on income tax related interest or penalties during any of the periods presented.

99

NOTE 15 – 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).

100

Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2021
Investment securities:
U.S. government agency obligations	$	26,265	$	—	$	26,265	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	107,167		—		107,167		—
Corporate debt securities	35,588		—		35,588		—
Corporate asset-backed securities	33,908		—		33,908		—
Total investment securities	203,068		—		203,068		—
Equity investments:
Equity investments	368		368		—		—
Equity investments measured at NAV(1)	960		—		—		—
Total equity investments	1,328		368		—		—
Total	$	204,396	$	368	$	203,068	$	—
December 31, 2020
Investment securities:
U.S. government agency obligations	$	33,365	$	—	$	33,365	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	40,991		—		40,991		—
Corporate debt securities	17,462		—		17,462		—
Corporate asset-backed securities	35,827		—		35,827		—
Trust preferred securities	16,448		—		16,448		—
Total Investment Securities	144,233		—		144,233		—
Equity investments	200		200		—		—
Total	$	144,433	$	200	$	144,233	$	—

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to                         permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

For the years ended December 31, 2021 and December 31, 2020, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the years ended December 31, 2021 or December 31, 2020. There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the years ended December 31, 2021 or December 31, 2020, respectively.

101

Assets Measured on a Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2021 and December 31, 2020:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	$	—	$	—	$	1,408
Impaired loans with allocated allowances	5,580		—		—		5,580
Mortgage servicing rights	4,161		—		—		4,312
Total	$	11,149	$	—	$	—	$	11,300
December 31, 2020
Foreclosed and repossessed assets, net	$	197	$	—	$	—	$	197
Impaired loans with allocated allowances	3,037		—		—		3,037
Mortgage servicing rights	3,252		—		—		3,285
Total	$	6,486	$	—	$	—	$	6,519

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

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

The following table represents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at December 31, 2021 and December 31, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	5,580	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	4,312	Discounted cash flows	Discounted rates	9% - 12%
December 31, 2020
Foreclosed and repossessed assets, net	$	197	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	3,037	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	3,285	Discounted cash flows	Discounted rates	9% - 12%

(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.

102

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:

		December 31, 2021				December 31, 2020
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	47,691	$	47,691	$	119,440	$	119,440
Other interest bearing deposits	(Level II)	1,511		1,535		3,752		3,818
Securities available for sale "AFS"	(Level II)	203,068		203,068		144,233		144,233
Securities held to maturity "HTM"	(Level II)	71,141		69,177		43,551		43,784
Equity investments	(Level I)	368		368		200		200
Equity investments valued at NAV (1)	N/A	960		960		—		—
Other investments	(Level II)	15,305		15,305		14,948		14,948
Loans receivable, net	(Level III)	1,294,050		1,319,293		1,220,538		1,239,692
Loans held for sale	(Level II)	6,670		6,670		3,075		3,075
Mortgage servicing rights	(Level III)	4,161		4,312		3,252		3,285
Accrued interest receivable	(Level I)	3,916		3,916		5,652		5,652
Financial liabilities:
Deposits	(Level III)	$	1,387,535	$	1,388,390	$	1,295,256	$	1,292,104
FHLB advances	(Level II)	111,527		113,285		123,498		128,282
Other borrowings	(Level I)	58,426		58,426		58,328		58,328
Accrued interest payable	(Level I)	586		586		796		796

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

103

NOTE 16—EARNINGS PER SHARE

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share is as follows:

	Year ended		Year ended
(Share count in thousands)	December 31, 2021		December 31, 2020
Basic
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Basic earnings per share	$	1.98	$	1.14
Diluted
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Add: Dilutive stock options outstanding	10		—
Average shares and dilutive potential common shares	10,727		11,162
Diluted earnings per share	$	1.98	$	1.14
Additional common stock option shares that have not been included due to their antidilutive effect	21		69

104

NOTE 17 – OTHER COMPREHENSIVE INCOME (LOSS)

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

	For the year ended, December 31,						For the year ended, December 31,
	2021						2020
	Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount		Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount
Unrealized (losses) gains on securities:
Net unrealized (losses) gains arising during the period	$	(1,261)	352		$	(909)	$	2,546	$	(472)	$	2,074
Reclassification adjustment for gains included in net income	(573)		153		(420)		(156)		43		(113)
Other comprehensive income	$	(1,834)	$	505	$	(1,329)	$	2,390	$	(429)	$	1,961

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the years ended December 31, 2021 and December 31, 2020 were as follows:

	Unrealized Gains (Losses) on AFS Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2020	$	(649)	$	(471)
Current year-to-date other comprehensive income	2,705		1,961
Ending balance, December 31, 2020	$	2,056	$	1,490
Current year-to-date other comprehensive income	(1,834)		(1,329)
Ending balance, December 31, 2021	$	222	$	161

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2021 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	573		Net gains (losses) on investment securities
Tax effect	(153)			Provision for income taxes
Total reclassifications for the period	$	420		Net income attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2020 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	156		Net gains (losses) on investment securities
Tax effect	(43)			Provision for income taxes
Total reclassifications for the period	$	113		Net income attributable to common shareholders

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

105

NOTE 18—CONDENSED FINANCIAL INFORMATION – PARENT COMPANY ONLY

The following condensed balance sheets as of December 31, 2021 and 2020, and condensed statements of operations and cash flows for the years ended December 31, 2021 and 2020, for Citizens Community Bancorp, Inc. should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Condensed Balance Sheets

	December 31,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	22,465	$	23,333
Equity investments	360		—
Other assets	386		375
Investment in subsidiary	206,427		195,563
Total assets	$	229,638	$	219,271
Liabilities and Stockholders' Equity
Other borrowings	$	58,426	$	58,328
Other liabilities	346		379
Total liabilities	58,772		58,707
Total stockholders’ equity	170,866		160,564
Total liabilities and stockholders’ equity	$	229,638	$	219,271

Statements of Operations

	Year ended December 31,		Year ended December 31,
	2021		2020
Interest income	$	—	$	—
Interest expense	2,946		2,458
Net interest expense	(2,946)		(2,458)
Dividend income from bank subsidiary	12,500		10,500
Non-interest income	—		193
Non-interest expense	(673)		(848)
Net income before benefit for income taxes and equity in undistributed income of subsidiaries	8,881		7,387
Benefit for income taxes	989		860
Net earnings before equity in undistributed income of subsidiaries	9,870		8,247
Equity in undistributed income of subsidiaries	11,396		4,478
Net income	$	21,266	$	12,725

106

Statements of Cash Flows

	Year ended December 31,		Year ended December 31,
	2021		2020
Change in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	21,266	$	12,725
Depreciation expense	12		12
Stock based compensation expense	8		14
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(23,896)		(14,978)
Net change in:
Other assets	(23)		(55)
Other liabilities	(33)		313
Net cash used in operating activities	(2,666)		(1,969)
Cash flows from investing activities:
Purchase of equity securities	(360)		—
Net cash used in investing activities	(360)		—
Cash flows from financing activities:
Proceeds from other borrowings, net of issuance costs	—		14,677
Amortization of debt issuance costs	98		91
Repurchase shares of common stock	(7,951)		(2,820)
Surrender of restricted shares of common stock	(30)		(27)
Common stock options exercised	52		—
Dividend from bank to holding company	12,500		10,500
Cash dividends paid	(2,511)		(2,372)
Net cash provided by financing activities	2,158		20,049
Net (decrease) increase in cash and cash equivalents	(868)		18,080
Cash and cash equivalents at beginning of year	23,333		5,253
Cash and cash equivalents at end of year	$	22,465	$	23,333

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On March 12, 2020, the Company engaged Eide Bailly LLP to replace Baker Tilly Virchow Krause, LLP as its independent registered public accounting firm. Information regarding the change in the independent registered public accounting firm was disclosed in the Company’s Current Report on Form 8-K dated March 16, 2020. There were no disagreements or reportable events requiring disclosure under Item 304(b) of regulation S-K relating to this change in auditors.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure 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) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 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 Securities Exchange Act of 1934 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

107

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 December 31, 2021, under the supervision and with the participation of the Company’s management, including our Chief Executive 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 December 31, 2021 at reaching a level of reasonable assurance.

The report of management required under Item 9A is included under Item 8 of this report along with the Company’s consolidated financial statements under the heading “Report by Citizens Community Bancorp, Inc.’s Management on Internal Control over Financial Reporting” and is incorporated herein by reference.

Changes in Internal Control over Financial Reporting

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 Securities Exchange Act of 1934, as amended) during the Company’s most recently completed fiscal year ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

None

108

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Proposal 1: Election of Directors,” “Executive Officers,” “Delinquent Section 16(a) Reports,” “Corporate Governance – Director Nominations”, “Audit Committee Matters – Audit Committee Financial Expert”, and “Corporate Governance Matters – Code of Business Conduct and Ethics” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before April 30, 2022.

The Audit Committee of the Company’s Board of Directors is an “audit committee” for purposes of Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee consist of the following three outside independent directors: Timothy Olson (Chairman), Richard McHugh and Kristina Bourget.

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to this item is incorporated herein by reference to the discussion under the headings “Directors’ Meetings and Committees – Compensation Committee”, “Director Compensation” and “Executive Compensation” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before April 30, 2022.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Security Ownership” and “Equity Compensation Plan Information” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before April 30, 2022.

Equity Compensation Plan Information

The following table sets forth information as of December 31, 2021, with respect to compensation plans under which shares of common stock were issued or available to be issued:

	Number of Common Shares to Be Issued Upon Exercise of Outstanding Options,	Weighted-average Exercise Price of Outstanding Options,		Number of Common Shares Available for Future Issuance Under Equity
Plan Category	Warrants and Rights (1)	Warrants and Rights		Compensation Plans (2)
Equity compensation plans approved by security holders	65,900	$	11.20	186,026
Equity compensation plans not approved by security holders	—	—		—
Total	65,900	$	11.20	186,026

(1)Represents 65,900 shares of our Common Stock to be issued upon exercise of outstanding stock options under the 2008 Equity Incentive Plan, (the “Prior Plan”).

(2)Represents 186,026 shares of our Common Stock available for issuance under the 2018 Equity Incentive Plan. No new awards may be granted under the Prior Plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to this item is incorporated herein by reference to the discussion under the headings “Transactions with Related Persons” and “Corporate Governance Matters – Director Independence” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before April 30, 2022.

109

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Audit Committee Matters – Fees of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission on or before April 30, 2022.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements:

The following financial statements of the Company are included in Item 8 of this Form 10-K annual report:

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

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules:

All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or has otherwise been included in the financial statements or notes hereto.

(a)(3) Exhibits

2.1	Stock Purchase Agreement between Citizens Community Bancorp, Inc. United Bank and United Bancorporation, dated June 20, 2018 (incorporated by reference to Exhibit 2.1 to the Company's current report on Form 8-K filed on June 21, 2018 (File No. 001-33003)).
2.2	First Amendment to Stock Purchase Agreement by and among Citizens Community Bancorp, Inc., United Bank and United Bancorporation, dated August 13, 2018 (incorporated by reference to Exhibit 2.4 to the Company's Form 10-K filed on December 10, 2018 (File No. 001-33003)).
2.3	Second Amendment to Stock Purchase Agreement by and among Citizens Community Bancorp, Inc., United Bank and United Bancorporation, dated October 19, 2018 (incorporated by reference to Exhibit 2.2 to the Company's current report on Form 8-K filed on October 22, 2018 (File No. 001-33003)).
2.4	Agreement and Plan of Merger dated January 21, 2019, among F. & M. Bancorp. of Tomah, Inc., Citizens Community Bancorp, Inc., and F&M Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 22, 2019 (File No. 001-33003)).
3.1	Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933).
3.2	Articles of Amendment to the Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 (File No. 001-33003)).
3.3	Articles Supplementary with respect to the Series A Preferred Stock of Citizens Community Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 21, 2018 (File No. 001-33003)).
3.4	Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form SB-2 filed on June 30, 2006 (File No. 333-135527) pursuant to Section 5 of the Securities Act of 1933 and incorporated herein by reference.)
3.5	Amendment to the Bylaws of the Registrant (incorporated by reference to Exhibit 99.1 to the Company's Form 8-K dated December 20, 2013, filed on December 26, 2013 (file No. 001-33003)).
3.6	Amendment to the Bylaws of Citizens Community Bancorp, Inc. dated April 23, 2020 (incorporated by reference Exhibit 3.1 to the Company’s current report on Form 8-K filed on April 28, 2020 (file No. 001-33003)).

110

3.7	Amendment to the Bylaws of Citizens Community Bancorp, Inc. dated June 10, 2021 (incorporated by reference Exhibit 3.1 to the Company’s current report on Form 8-K filed on June 6, 2021 (file No. 001-33003)).
4.1	Description of Capital Stock (incorporated by reference to Exhibit 4.1 to the Company's annual report on Form 10-K filed on March 10, 2020 (File No. 001-33003)).
4.2	Subordinated Note Purchase Agreement between Citizens Community Bancorp, Inc. and EJF Debt Opportunities Master Fund, LP dated May 30, 2017 (incorporated by reference to Exhibit 4.1 to the Company's current report on Form 8-K filed on May 31, 2017 (File No. 001-33003)).
4.3	Form of Subordinated Note (incorporated by reference to Exhibit 4.2 to the Company's current report on Form 8-K filed on May 31, 2017 (File No. 001-33003)).
4.4	Form of Subordinated Note Purchase Agreement dated August 27, 2020 (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)).
4.5	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+	Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed on August 28, 2013 (File No. 333-190877)).
10.2+	Form of Restricted Stock Grant Agreement under the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan (incorporated by referent to Exhibit 10.12 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2014 (File No. 001-33003)).
10.3+	Form of Stock Option Agreement under the Citizens Community Bancorp, Inc. 2008 Equity Incentive Plan (incorporated by referent to Exhibit 10.13 to the Company’s annual report on Form 10-K for the fiscal year ended as of September 30, 2014 (File No. 001-33003)).
10.4+	Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form S-8 filed on March 30, 2018 (File No. 333-224042)).
10.5+	First Amendment to Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (filed Herewith).
10.6+	Form of Restricted Stock Agreement under the Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to the Company’s Form 10-K filed on December 10, 2018 (File No. 001-33003)).
10.7+	Form of Director Restricted Stock Agreement under the Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-K filed on December 10, 2018 (File No. 001-33003)).
10.8+	Citizens Community Bancorp, Inc. 2018 Long Term Incentive Plan under the Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.26 to the Company’s Form 10-K filed on December 10, 2018 (File No. 001-33003)).
10.9+	Form of Citizens Community Bancorp, Inc. 2019 Long Term Incentive Plan Award Agreement. (incorporated by reference to Exhibit 10.19 to the Company’s Transition Report on Form 10-K filed on March 8, 2019 (File No. 001-33003)).
10.10+	Form of Citizens Community Bancorp, Inc. 2020 Long Term Incentive Plan Award Agreement (incorporated by reference to Exhibit 10.9 to the Company's annual report on Form 10-K filed on March 8, 2021 (file No. 001-33003)).
10.11+	Form of Citizens Community Bancorp, Inc. Long Term Incentive Plan Award Agreement for Time-Based Restricted Shares (filed herewith).
10.12+	Form of Citizens Community Bancorp, Inc. Long Term Incentive Plan Award Agreement for Performance-Based Restricted Shares (filed herewith).
10.13+	Securities Purchase Agreement between the Citizens Community Bancorp, Inc. and the Purchasers provided therein, dated June 20, 2018 (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed on June 21, 2018 (File No. 001-33003)).
10.14+	Registration Rights Agreement between the Citizens Community Bancorp, Inc. and the Purchasers provided therein, dated June 20, 2018 (incorporated by reference to Exhibit 10.2 to the Company's current report on Form 8-K filed on June 21, 2018 (File No. 001-33003)).
10.15+	Business Note, dated June 26, 2019, issued by Citizens Community Bancorp, Inc. to Chippewa Valley Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 1, 2019 (File No. 001-33003)).
10.16+	Business Credit Agreement, dated August 1, 2019, by and between Citizens Community Bancorp, Inc. and Chippewa Valley Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 1, 2019 (File No. 001-33003)).

111

10.17+	Business Note, dated October 22, 2020, issued by Citizens Community Bancorp, Inc. to Chippewa Valley Bank incorporated by reference to the Exhibit 10.1 to the Company’s quarterly report on Form 10-Q filed on November 6, 2020 (File No. 001-33003)).
10.18+	Business Note Renewal, dated August 1, 2021, issued by Citizens Community Bancorp, Inc. to Chippewa Valley Bank (incorporated by reference to the Exhibit 10.1 to the Company’s quarterly report on Form 10-Q filed on November 8, 2021 (File No. 001-33003)).
10.19+	Note Modification Agreement, dated October 22, 2021, to the Business Note, dated October 22, 2020 issued by Citizens Community Bancorp, Inc. to Chippewa Valley Bank (filed herewith).
10.20 +	Second Amended and Restated Executive Employment Agreement by and between Citizens Community Bancorp, Inc., Citizens Community Federal, N.A., and Stephen Bianchi, dated as of November 1, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on November 4, 2019 (File No. 001-33003)).
10.21+	Second Amended and Restated Executive Employment Agreement by and between Citizens Community Bancorp, Inc., Citizens Community Federal, N.A., and James S. Broucek, dated as of November 1, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed on November 4, 2019 (File No. 001-33003)).
10.22+	Addendum No. 1 to the Second Amended and Restated Executive Employment Agreement with Stephen Addendum No. 1 to the Second Amended and Restated Executive Employment Agreement with Stephen Bianchi, dated April 23, 2020 (incorporated by reference Exhibit 10.1 to the Company’s current report on Form 8-K filed on April 28, 2020 (File No. 001-33003))., dated April 23, 2020 (incorporated by reference Exhibit 3.1 to the Company’s current report on Form 8-K filed on April 28, 2020 (File No. 001-33003)).
10.23+	Addendum No. 1 to the Amended and Restated Executive Employment Agreement with James Broucek, dated April 23, 2020 (Incorporated by reference Exhibit 10.2 to the Company’s current report on Form 8-K filed on April 28, 2020 (File No. 001-33003)).
21	Subsidiaries of the Company as of December 31, 2021 (filed herewith).
23.1	Consent of Independent Registered Public Accounting Firm (Eide Bailly, LLP) (filed herewith).
31.1	Rule 13a-15(e) Certification of the Company’s Chief Executive Officer (filed herewith).
31.2	Rule 13a-15(e) Certification of the Company’s Chief Financial Officer (filed herewith).
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 materials from Citizens Community Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Stockholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

+	A management contract or compensatory plan or arrangement
*	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.

112

SIGNATURES

    Pursuant to the requirements of Section13 or 15(d) 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: March 2, 2022	By:	/s/ James S. Broucek
		James S. Broucek
		Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: March 2, 2022	By:	/s/ Stephen M. Bianchi
		Stephen M. Bianchi President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)
Date: March 2, 2022	By:	/s/ Richard McHugh
		Richard McHugh Lead Director
Date: March 2, 2022	By:	/s/ Michael L. Swenson
		Michael L. Swenson Director
Date: March 2, 2022	By:	/s/ James R. Lang
		James R. Lang Director
Date: March 2, 2022	By:	/s/ Francis E. Felber
		Francis E. Felber Director
Date: March 2, 2022	By:	/s/ James D. Moll
		James D. Moll Director
Date: March 2, 2022	By:	/s/ Kristina M. Bourget
		Kristina M. Bourget Director
Date: March 2, 2022	By:	/s/ Timothy L. Olson
		Timothy L. Olson Director
Date: March 2, 2022	By:	/s/ James S. Broucek
		James S. Broucek Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

113

EX-10.5

72358609v1 FIRST AMENDMENT TO CITIZENS COMMUNITY BANCORP, INC. 2018 EQUITY INCENTIVE PLAN THIS FIRST AMENDMENT TO THE CITIZENS COMMUNITY BANCORP, INC. 2018 EQUITY INCENTIVE PLAN (this “Amendment”) is made effective as of March 2, 2022. RECITALS A. Citizens Community Bancorp, Inc., a Maryland corporation (the “Company”), adopted that certain 2018 Equity Incentive Plan (the “Plan”). B. Section 10.2 of the Plan permits the Board of Directors of the Company (the “Board”) to amend the Plan. C. On the date hereof, the Board approved an amendment to change the definition of a Change in Control under the Plan. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Plan is hereby amended as follows: 1. Change in Control. The definition of “Change in Control” in Article II of the Plan is hereby amended and restated in its entirety to read as follows: “Change in Control means any of the following events: a change-in-control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; or the public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the Company or any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that such person has become the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company (i) representing 30% or more, but not more than 50%, of the combined voting power of the Company’s then outstanding securities unless the transaction resulting in such ownership has been approved in advance by the Continuing Directors (as hereinafter defined); or (ii) representing more than 50% of the combined voting power of the Company’s then outstanding securities (regardless of any approval by the Continuing Directors); provided, however, that notwithstanding the foregoing, no Change-in-Control shall be deemed to have occurred for purposes of this Plan by reason of the ownership of 30% or more of the total voting capital stock of the Company then issued and outstanding by the Company, any subsidiary of the Company or any employee benefit plan of the Company or of any subsidiary of the Company or any entity holding shares of the Exhibit 10.5

72358609v1 Common Stock organized, appointed or established for, or pursuant to the terms of, any such plan (any such person or entity described in this clause is referred to herein as a “Company Entity”); or the Continuing Directors (as hereinafter defined), cease to constitute a majority of the Company’s Board of Directors; or the shareholders of the Company approve (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving company or pursuant to which shares of Company stock would be converted into cash, securities or other property, other than a merger of the Company in which shareholders immediately prior to the merger have the same proportionate ownership of stock of the surviving company immediately after the merger; (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or (iii) any plan of liquidation or dissolution of the Company. For purposes of this definition, “Continuing Director” shall mean any person who is a member of the Board of Directors of the Company, while such person is a member of the Board of Directors, who is not an Acquiring Person (as defined below) or an Affiliate or Associate (as defined below) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (i) was a member of the Board of Directors on the date of this Amendment; or (ii) subsequently becomes a member of the Board of Directors, if such person’s initial nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the then Continuing Directors. For purposes of this definition, “Acquiring Person” shall mean any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act) directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities, but shall not include any Company Entity; and “Affiliate” and “Associate” shall have their respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.” 2. Remaining Terms. Except as expressly set forth in this Amendment, all other terms and provisions of the Plan shall remain in full force and effect. 3. Governing Law. This Amendment and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the internal laws, without regard to the law pertaining to choice or conflict of laws, of the State of Wisconsin. 4. Method of Execution. This Amendment may be executed by pdf or other electronic means. 5. Binding Effect. This Amendment shall be binding upon the Company and recipients of awards under the Plan, and their respective successors and permitted assigns. [SIGNATURE PAGE FOLLOWS]

72358609v1 IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first written above. Citizens Community Bancorp, Inc. By: ______________________________________ Name: Its:

EX-10.11

72402611v1 CITIZENS COMMUNITY BANCORP, INC. LONG-TERM INCENTIVE PLAN AWARD AGREEMENT FOR TIME-BASED RESTRICTED SHARES Award Date: _________________ RS No. _______ I. The Award and the Plan. As of the Award Date set forth above (the “Award Date”), Citizens Community Bancorp, Inc. (the “Company”) grants to _____________________ (“you”) the award (the “Award”) stated in this Long-Term Incentive Plan Award Agreement (this “Agreement”). The Award consists of time-based restricted Shares of the Company (the “Time-Based Restricted Shares”), on the terms and conditions contained in this Agreement and the Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (the “Plan”). II. Terms of Time-Based Restricted Share Grants. 2.1 Time-Based Restricted Shares. Until your Time-Based Restricted Shares vest, you may not sell, assign, pledge or otherwise transfer such Shares (or any interest in or right to such Shares), other than by will or the laws of descent and distribution, and any such attempted transfer will be void (the “Restrictions”). The Time-Based Restricted Shares vest, and the Restrictions will lapse, in accordance with the following vesting schedule: ________ of the Time-Based Restricted Shares shall vest on the one-year anniversary of the Award Date; ________ of the Time-Based Restricted Shares shall vest on the two-year anniversary of the Award Date; and ________ of the Time-Based Restricted Shares shall vest on the three-year anniversary of the Award Date. 2.2 Effect of Disability, Death or other Termination of Employment on Time- Based Restricted Shares. Your employment with the Company may be terminated by your employer at any time for any reason (with or without advance notice). (a) Except as provided in (b) below, if your employment with the Company is terminated before the Restrictions have lapsed, for any reason, you will forfeit all unvested Time-Based Restricted Shares. (b) If your employment with the Company is terminated by reason of your death, or Disability, the Restrictions will lapse with respect to your Time- Based Restricted Shares upon the date of such termination of employment. 2.3 Limitation of Rights Regarding Shares. Upon issuance of any Time-Based Restricted Shares, you will have all of the rights of a shareholder with respect to Exhibit 10.11

72402611v1 2 such Shares, including that you will have the right to vote any unvested Time- Based Restricted Shares and you will have any right to any dividends paid on any unvested Time-Based Restricted Shares. 2.4 Income Taxes. You are liable for any federal and state income or other taxes applicable upon the lapse of the Restrictions on any Time-Based Restricted Shares (or at any such earlier time, if any, that an election is made by you under Section 83(b) of the Code, or any successor thereto), and your subsequent disposition of any Time-Based Restricted Shares that have become vested, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the lapse of Restrictions on any Time-Based Restricted Shares, except as otherwise agreed, the Company will withhold from such Shares a number of Shares having a Fair Market Value equal to the amount of all applicable taxes required by the Company to be withheld upon the lapse of the Restrictions on such Shares. III. Restrictive Covenants. 3.1 Basis for Restrictions. You acknowledge and agree that the Company’s business, technical, and customer information is established and maintained at great expense to the Company and is of significant value to the Company, and that by virtue of employment with the Company, you will have information pertaining to, unique and extensive exposure to, and personal contact with, the Company’s business, technical and customer information which would enable you to compete unfairly with the Company. As a result, and in consideration of the Company’s grant and your acceptance of the Award set forth herein, you acknowledge and agree that the restrictions set forth in this Section III are necessary and enforceable to protect the Company’s business. 3.2 Confidential Information. For purposes of this Agreement, “Confidential Information” means information disclosed to you or known by you as a result of or as disclosed in the course of your employment with the Company which is not generally known to the public pertaining to the Company’s business, including, but not limited to, operations, contracts, customers, customer lists, proposals, research and development, procedures and protocols, operating models, financial information, pricing, price lists, marketing methods, strategic planning information, information stored in or developed for use with Company’s computer systems, insurance plans, risk management information, or marketing programs, and third-party information that the Company may learn from its customers or clients. Confidential Information shall include any such information developed or created by you if the information was developed or created by you while executing your duties for the Company or if the information was developed or created by you based upon any Confidential Information that you learned by virtue of your employment with the Company. Confidential Information shall not include any information that you can demonstrate is in the public domain by means other than disclosure by you, but shall include non-public compilations, combinations, or analyses of otherwise public information.

72402611v1 3 3.3 Non-Disclosure or Use of Confidential Information. For as long as you shall remain employed by the Company, and after termination of employment with the Company for any reason, you shall not directly or indirectly, under any circumstances, communicate or disclose to any person, firm, association, corporation, company or any other third party, or use for your own benefit or the benefit of any person or entity other than the Company, any Confidential Information, and you will keep secret and in strict confidence and hold inviolate said Confidential Information. You further agree not to disclose to others or use at any time after the termination of your employment with the Company any Confidential Information that constitutes and remains a trade secret under the Wisconsin Trade Secrets Act, as amended (Section 134.90 Wis. Stats.), any Confidential Information that the Company received from a third party and continues to hold in confidence, and any Confidential Information that you are otherwise prohibited by law from disclosing to others or using. The prohibitions of this paragraph do not apply to Confidential Information after it has become generally known and/or in the public domain through no fault of yours. The prohibitions of this paragraph also do not prohibit use of your general skills and knowledge acquired during and prior to your employment by the Company, as long as such use does not involve the use or disclosure of Confidential Information. 3.4 Defend Trade Secrets Act. You understand that if you breach the provisions of Section 3.3 above, you may be liable to the Company under the Defend Trade Secrets Act of 2016 (“DTSA”). You further understand that by providing you with the following notice, the Company may recover from you its attorney fees and exemplary damages if it brings a successful claim against you under the DTSA: Under the federal Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a)(i) in confidence to a federal, state, or local governmental official, either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you (i) file any document containing the trade secret under seal and (ii) do not disclose the trade secret, except pursuant to court order. 3.5 Non-Solicitation of Customers. During your employment, and for a period of twelve (12) months following the termination of your employment with the Company for any reason, you shall not, directly or indirectly canvas, contact, reply to, or solicit any “Active Customer” (as defined below) of the Company for the purpose of selling, offering or providing products or services which are the same as or substantially similar to the products or services provided by the Company at any time during the “Reference Period” (as defined below). “Active Customer” shall mean any person or entity which, within the 12-month period prior to the termination of your employment with the Company (the “Reference

72402611v1 4 Period”), received any products or services supplied by or on behalf of the Company; provided, however, “Active Customer” shall be further limited to those customers of the Company: (i) with whom you had material business contact as an employee of the Company during the Reference Period; (ii) whose dealings with the Company were coordinated or supervised, in whole or in part, by you during the Reference Period; or (iii) about whom you obtained Special Knowledge (as defined below) as a result of your position with the Company during the Reference Period. “Special Knowledge” means Confidential Information that is used, possessed or acquired by or developed for the Company in the course of soliciting, selling to or servicing a customer, including, but not limited to, existing or proposed bids, pricing and cost information, margins, negotiation strategies, sales strategies and information generated for customer engagements. 3.6 Non-Solicitation of Company Personnel. During your employment and for a further period of twelve (12) months beginning on the termination of your employment with the Company for any reason, you agree that you shall not, directly or indirectly, solicit, encourage or induce any employee, consultant, contractor, or other agent of the Company with whom you had substantial contact during the Reference Period and who has knowledge of Confidential Information to terminate a relationship (employment or otherwise), or breach any agreement with the Company. 3.7 Severability and Blue Penciling. To the extent that any provision of this Section III shall be determined to be invalid or unenforceable as written, the validity and enforceability of the remainder of such provision and of this Agreement shall be unaffected. If, at the time of enforcement of the covenants contained in this Section III (collectively, the “Restrictive Covenants”), a court shall hold that the duration, scope or area restrictions stated are unreasonable under circumstances then existing, you and the Company agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the Restrictive Covenants to cover the maximum duration, scope and area permitted by law. 3.8 Reasonable and Necessary. You have had the opportunity to consult with your own legal counsel regarding the Restrictive Covenants and agree that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of the Company’s businesses and agree not to challenge the validity or enforceability of the Restrictive Covenants. You agree that the provisions of this Section III are an essential inducement to the Company to enter into this Agreement and they are in addition to, rather than in lieu of, any similar or related covenants with the Company to which you may be bound. 3.9 Remedies. If you breach, or threaten to commit a breach of any of the Restrictive Covenants, the Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally

72402611v1 5 enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity: (a) The right and remedy to immediately cancel, and you would thereby forfeit, any unvested Time-Based Restricted Shares awarded under this Agreement; and (b) The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company; and (c) The right and remedy to require you to account for and pay over to the Company any profits, monies or other benefits derived or received by you as the result of any transactions constituting a breach of the Restrictive Covenants; and (d) The right to payment from you of the Company’s costs and reasonable attorney fees incurred in successfully enforcing the Restrictive Covenants. 3.10 Survival. Notwithstanding any termination of this Agreement or your employment with the Company, whether or not any Time-Based Restricted Shares awarded hereunder have in whole or in part vested at that time, you shall remain bound by the provisions of Section III of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of your employment. IV. General Terms and Conditions. 4.1 Employment. This Agreement does not guarantee your continued employment nor alter the right of the Company to terminate your employment at any time. 4.2 Terms of Plan. This Award is granted pursuant to the Plan and is subject to its terms. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. All determinations and interpretations made in the discretion of the Committee shall be binding and conclusive upon you and your legal representatives with regard to any question arising hereunder or under the Plan. By your acceptance of this Award, you acknowledge receipt of a copy of the Plan and your agreement to the terms and conditions of the Plan and this Agreement. 4.3 Capitalized Terms. Capitalized terms not defined in the body of this Agreement are defined in the Plan. Except as otherwise stated, all references to “Sections” or “Articles” refer to Sections or Articles of this Agreement.

72402611v1 6 4.4 Governing Law. This Agreement is governed by the laws of the State of Wisconsin, without regard to the conflict of law provisions. 4.5 Certificates for Shares. The Company may issue stock certificates or evidence your interest in any Shares by using a restricted book entry account with the Company’s transfer agent. The Company shall hold any certificates for your benefit until the Shares represented thereby become vested. Any certificate(s) or other document(s) delivered to you may bear a legend indicating restrictions on transferability of the Shares pursuant to this Agreement and the Plan or any other restrictions that the Committee may deem advisable. 4.6 Adjustments. If any change is made to the outstanding common stock or the capital structure of the Company, the number and class of Shares covered by this Agreement and the terms and conditions of this Agreement shall be appropriately adjusted in any manner as contemplated by the Plan by the Committee, whose determination shall be conclusive. 4.7 Amendment. The Committee may waive any conditions of or rights of the Company or modify or amend the terms of this Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision hereof which may adversely affect you without your (or your legal representative’s) written consent. 4.8 Insider Trading Policy Acknowledgement. You hereby acknowledge that you have received, or have had access to, the Company’s Insider Trading Policy. You acknowledge, agree and understand that any purchase or sale of Shares, or any attempted sale or transfer of the Shares, are subject to and governed by the provisions of the Insider Trading Policy. By executing this Agreement or accepting this award, you agree to abide by and follow such the terms of the Insider Trading Policy. 4.9 Entire Agreement. This Agreement, together with the Plan, constitute the entire agreement relating to the subject matter hereof and supersede all previous and contemporaneous communications, agreements and understandings between you, on the one hand, and the Company or any of its affiliates, on the other hand. 4.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement to be executed as of the date first above written. CITIZENS COMMUNITY BANCORP, INC. By: ________________________________ Name: Title: ACCEPTED: By: ________________________________ Name: _________________________________ (Street Address) _________________________________ (City, State and Zip Code)

EX-10.12

72402867v1 CITIZENS COMMUNITY BANCORP, INC. LONG-TERM INCENTIVE PLAN AWARD AGREEMENT FOR PERFORMANCE-BASED RESTRICTED SHARES Award Date: ___________________ RS No. ______ I. The Award and the Plan. As of the Award Date set forth above (the “Award Date”), Citizens Community Bancorp, Inc. (the “Company”) grants to _____________________ (“you”) the award (the “Award”) stated in this Long-Term Incentive Plan Award Agreement (this “Agreement”). The Award consists of Share Units representing a commitment to issue you Shares of the Company upon achievement of the Performance Criteria, as defined in the Appendix (the “Performance-Based Restricted Shares”), on the terms and conditions contained in this Agreement and the Citizens Community Bancorp, Inc. 2018 Equity Incentive Plan (the “Plan”). II. Terms of Performance-Based Restricted Share Grants. 2.1 Performance-Based Restricted Shares. The commitment to issue you Shares of the Company upon achievement of the Performance Criteria with respect to the Performance-Based Restricted Shares shall be based on a Target number of Shares. The Target number of Shares pursuant to this Award of Performance- Based Restricted Shares is __________ Shares. The number of Shares actually issued to you, if any, upon achievement of the Performance Criteria shall be as provided in the Appendix. Upon expiration of the Performance Period, the Compensation Committee (the “Committee”) will determine in its sole discretion whether the Performance Criteria has been met. To the extent the Performance Criteria has been met, Shares of the Company will be deemed to be earned by you, and the applicable number of Shares will be delivered to you within 30 days after the Committee makes such determination. The foregoing provisions of this Section 2.1 notwithstanding, upon the occurrence of a Change of Control, the Committee will determine whether and to what extent the Performance Criteria has been attained through the date of such Change of Control, and you will be deemed to have earned the greater of (i) such number of Shares as would have been earned based on the attainment of Target performance under the Performance Criteria or (ii) such number of Shares as would be earned based on the actual Performance Criteria attained as so determined by the Committee. You may not sell, assign, pledge or otherwise transfer any rights to Performance-Based Restricted Shares prior to the expiration of the Performance Period, or prior to the issuance of any Shares earned during the Performance Period, other than by will or the laws of descent and distribution. 2.2 Effect of Disability, Death or other Termination of Employment on Performance-Based Restricted Shares. Your employment with the Company may be terminated by your employer at any time for any reason (with or without advance notice). (a) Except as provided in (b) below, if your employment with the Company is terminated before the end of the Performance Period, for any reason, your Exhibit 10.12

72402867v1 2 rights to all unearned Performance-Based Restricted Shares will be forfeited. (b) If your employment with the Company is terminated by reason of your death or Disability, to the extent the Performance Criteria has been met as of such date, you will be entitled to a pro-rated amount of Shares of the Company. The pro-rated portion will equal a fraction of such earned Shares, the numerator of which is the number of days during the Performance Period you were employed through the date of termination of employment and the denominator of which is 1,095. The Shares will be delivered to you within 30 days after approval of the Performance Criteria. 2.3 Limitation of Rights Regarding Shares. You will not have any rights in any Performance Based Restricted Shares prior to the expiration of the Performance Period, and prior to the issuance of any Shares earned during the Performance Period. 2.4 Income Taxes. Upon the issuance of any earned Shares relating to Performance- Based Restricted Shares, except as otherwise agreed, the Company will withhold from such Shares a number of Shares having a Fair Market Value equal to the amount of all applicable taxes required by the Company to be withheld upon the issuance of Shares earned relating to Performance-Based Restricted Shares. III. Restrictive Covenants. 3.1 Basis for Restrictions. You acknowledge and agree that the Company’s business, technical, and customer information is established and maintained at great expense to the Company and is of significant value to the Company, and that by virtue of employment with the Company, you will have information pertaining to, unique and extensive exposure to, and personal contact with, the Company’s business, technical and customer information which would enable you to compete unfairly with the Company. As a result, and in consideration of the Company’s grant and your acceptance of the Award set forth herein, you acknowledge and agree that the restrictions set forth in this Section III are necessary and enforceable to protect the Company’s business. 3.2 Confidential Information. For purposes of this Agreement, “Confidential Information” means information disclosed to you or known by you as a result of or as disclosed in the course of your employment with the Company which is not generally known to the public pertaining to the Company’s business, including, but not limited to, operations, contracts, customers, customer lists, proposals, research and development, procedures and protocols, operating models, financial information, pricing, price lists, marketing methods, strategic planning information, information stored in or developed for use with Company’s computer systems, insurance plans, risk management information, or marketing programs, and third-party information that the Company may learn from its customers or clients. Confidential Information shall include any such information developed or created by you if the information was developed or created by you while executing your duties for the Company or if the information was developed or created by you based upon any Confidential Information that you learned by

72402867v1 3 virtue of your employment with the Company. Confidential Information shall not include any information that you can demonstrate is in the public domain by means other than disclosure by you, but shall include non-public compilations, combinations, or analyses of otherwise public information. 3.3 Non-Disclosure or Use of Confidential Information. For as long as you shall remain employed by the Company, and after termination of employment with the Company for any reason, you shall not directly or indirectly, under any circumstances, communicate or disclose to any person, firm, association, corporation, company or any other third party, or use for your own benefit or the benefit of any person or entity other than the Company, any Confidential Information, and you will keep secret and in strict confidence and hold inviolate said Confidential Information. You further agree not to disclose to others or use at any time after the termination of your employment with the Company any Confidential Information that constitutes and remains a trade secret under the Wisconsin Trade Secrets Act, as amended (Section 134.90 Wis. Stats.), any Confidential Information that the Company received from a third party and continues to hold in confidence, and any Confidential Information that you are otherwise prohibited by law from disclosing to others or using. The prohibitions of this paragraph do not apply to Confidential Information after it has become generally known and/or in the public domain through no fault of yours. The prohibitions of this paragraph also do not prohibit use of your general skills and knowledge acquired during and prior to your employment by the Company, as long as such use does not involve the use or disclosure of Confidential Information. 3.4 Defend Trade Secrets Act. You understand that if you breach the provisions of Section 3.3 above, you may be liable to the Company under the Defend Trade Secrets Act of 2016 (“DTSA”). You further understand that by providing you with the following notice, the Company may recover from you its attorney fees and exemplary damages if it brings a successful claim against you under the DTSA: Under the federal Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a)(i) in confidence to a federal, state, or local governmental official, either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you (i) file any document containing the trade secret under seal and (ii) do not disclose the trade secret, except pursuant to court order. 3.5 Non-Solicitation of Customers. During your employment, and for a period of twelve (12) months following the termination of your employment with the Company for any reason, you shall not, directly or indirectly canvas, contact, reply to, or solicit any “Active Customer” (as defined below) of the Company for the purpose of selling, offering or providing products or services which are the same as or substantially similar to the products or services provided by the Company at any time during the “Reference Period” (as defined below). “Active

72402867v1 4 Customer” shall mean any person or entity which, within the 12-month period prior to the termination of your employment with the Company (the “Reference Period”), received any products or services supplied by or on behalf of the Company; provided, however, “Active Customer” shall be further limited to those customers of the Company: (i) with whom you had material business contact as an employee of the Company during the Reference Period; (ii) whose dealings with the Company were coordinated or supervised, in whole or in part, by you during the Reference Period; or (iii) about whom you obtained Special Knowledge (as defined below) as a result of your position with the Company during the Reference Period. “Special Knowledge” means Confidential Information that is used, possessed or acquired by or developed for the Company in the course of soliciting, selling to or servicing a customer, including, but not limited to, existing or proposed bids, pricing and cost information, margins, negotiation strategies, sales strategies and information generated for customer engagements. 3.6 Non-Solicitation of Company Personnel. During your employment and for a further period of twelve (12) months beginning on the termination of your employment with the Company for any reason, you agree that you shall not, directly or indirectly, solicit, encourage or induce any employee, consultant, contractor, or other agent of the Company with whom you had substantial contact during the Reference Period and who has knowledge of Confidential Information to terminate a relationship (employment or otherwise), or breach any agreement with the Company. 3.7 Severability and Blue Penciling. To the extent that any provision of this Section III shall be determined to be invalid or unenforceable as written, the validity and enforceability of the remainder of such provision and of this Agreement shall be unaffected. If, at the time of enforcement of the covenants contained in this Section III (collectively, the “Restrictive Covenants”), a court shall hold that the duration, scope or area restrictions stated are unreasonable under circumstances then existing, you and the Company agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the Restrictive Covenants to cover the maximum duration, scope and area permitted by law. 3.8 Reasonable and Necessary. You have had the opportunity to consult with your own legal counsel regarding the Restrictive Covenants and agree that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of the Company’s businesses and agree not to challenge the validity or enforceability of the Restrictive Covenants. You agree that the provisions of this Section III are an essential inducement to the Company to enter into this Agreement and they are in addition to, rather than in lieu of, any similar or related covenants with the Company to which you may be bound. 3.9 Remedies. If you breach, or threaten to commit a breach of any of the Restrictive Covenants, the Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally

72402867v1 5 enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity: (a) The right and remedy to immediately cancel, and you would thereby forfeit, any unearned Performance-Based Restricted Shares awarded under this Agreement; and (b) The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company; and (c) The right and remedy to require you to account for and pay over to the Company any profits, monies or other benefits derived or received by you as the result of any transactions constituting a breach of the Restrictive Covenants; and (d) The right to payment from you of the Company’s costs and reasonable attorney fees incurred in successfully enforcing the Restrictive Covenants. 3.10 Survival. Notwithstanding any termination of this Agreement or your employment with the Company, whether or not any Performance-Based Restricted Shares have been earned, you shall remain bound by the provisions of Section III of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of your employment. IV. General Terms and Conditions. 4.1 Employment. This Agreement does not guarantee your continued employment nor alter the right of the Company to terminate your employment at any time. 4.2 Terms of Plan. This Award is granted pursuant to the Plan and is subject to its terms. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. All determinations and interpretations made in the discretion of the Committee shall be binding and conclusive upon you and your legal representatives with regard to any question arising hereunder or under the Plan. By your acceptance of this Award, you acknowledge receipt of a copy of the Plan and your agreement to the terms and conditions of the Plan and this Agreement. 4.3 Capitalized Terms. Capitalized terms not defined in the body of this Agreement are defined in the Plan. Except as otherwise stated, all references to “Sections” or “Articles” refer to Sections or Articles of this Agreement. 4.4 Governing Law. This Agreement is governed by the laws of the State of Wisconsin, without regard to the conflict of law provisions. 4.5 Certificates for Shares. The Company may issue stock certificates or evidence your interest in any Shares by using a restricted book entry account with the

72402867v1 6 Company’s transfer agent. The Company shall hold any certificates for your benefit until the Shares represented thereby become vested. Any certificate(s) or other document(s) delivered to you may bear a legend indicating restrictions on transferability of the Shares pursuant to this Agreement and the Plan or any other restrictions that the Committee may deem advisable. 4.6 Adjustments. If any change is made to the outstanding common stock or the capital structure of the Company, the number and class of Shares covered by this Agreement and the terms and conditions of this Agreement shall be appropriately adjusted in any manner as contemplated by the Plan by the Committee, whose determination shall be conclusive. 4.7 Amendment. The Committee may waive any conditions of or rights of the Company or modify or amend the terms of this Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision hereof which may adversely affect you without your (or your legal representative’s) written consent. 4.8 Insider Trading Policy Acknowledgement. You hereby acknowledge that you have received, or have had access to, the Company’s Insider Trading Policy. You acknowledge, agree and understand that any purchase or sale of Shares, or any attempted sale or transfer of the Shares, are subject to and governed by the provisions of the Insider Trading Policy. By executing this Agreement or accepting this award, you agree to abide by and follow such the terms of the Insider Trading Policy. 4.9 Entire Agreement. This Agreement, together with the Plan, constitute the entire agreement relating to the subject matter hereof and supersede all previous and contemporaneous communications, agreements and understandings between you, on the one hand, and the Company or any of its affiliates, on the other hand. 4.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement to be executed as of the date first above written. CITIZENS COMMUNITY BANCORP, INC. By: ________________________________ Name: Title: ACCEPTED: By: ________________________________ Name: _________________________________ (Street Address) _________________________________ (City, State and Zip Code)

72402867v1 8 APPENDIX PERFORMANCE-BASED RESTRICTED SHARES 1. Performance Criteria; Performance Period; Performance Shares Earned. The number of performance shares that may be earned under this Award is based on the attainment of the following performance criteria (the “Performance Criteria”): The performance of the Company, as determined by Return on Average Equity (ROAE), over the period commencing on ________________ and ending on ____________________ (except as set forth in the Agreement to which this Appendix is attached) (the “Performance Period”). The number of performance shares that may be earned under this Award are as follows: Performance Level Performance Achieved Number of Shares Earned Below Threshold Less than 6.26% for the Performance Period 0 Shares At Threshold 6.26% for the Performance Period 50% of Target Number of Shares At Target 7.83% for the Performance Period 100% of Target Number of Shares At Maximum 9.40% for the Performance Period 150% of Target Number of Shares The number of performance shares earned will be interpolated on a linear basis for performance between Threshold and Target and between Target and Maximum. 2. No Guaranteed Payout. The minimum number of shares which may be earned is zero and the maximum number of shares which may be earned is 150% of the Target number of Performance Shares. There is no minimum number of shares or other consideration that will be paid out, and no shares will be earned if the performance achieved is below threshold for the Performance Period.

EX-10.19

the amount of each paymentAn adjustment in the Note Rate will result in an increase or decrease in (1) the number of scheduled periodic paymentsthe amount of the final payment, (3) of interest, (2) the amount of each remaining paymentsufficient to repay this Note in substantially equal payments, (4) of principal and interest so that those remaining payments will be substantially equal and sufficient to repay the amount of each remaining payment of principal and )5( ,etad ytirutam deludehcs sti yb etoN siht 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) Lender is authorized to change the amount of periodic payments if and to the extent necessary to pay lapse of time, until paid, at the Note Rate calculated under this paragraph 1.b., plus an additional percentage points. All interest is computed on the same basis as interest is computed as provided in the Note, which interest computation method is not modified by this Agreement. % per year, and until the first change date described below the % perHowever, beginning on the first change date described below the Note Rate will not exceed % per year. The Note Rate shall be adjusted on the change dates provided below. as Maker(s), in (the "Note").the original principal amount of $ (theThe Note is modified according to the terms of this Agreement effective as of "Effective Date"), as follows: Maker(s) promises to pay to Lender the unpaid principal balance of the Note, plus interest on the unpaid principal balance of the Note, according to the following schedule: Page 1 of 2 NOTE MODIFICATION AGREEMENT (VARIABLE RATE) (For use with WBA 451 Business Note and 755 Agricultural Universal Note) 464VAR (3/26/20)W. B. A. © 2020 Wisconsin Bankers Association/Distributed by FIPCO® ,This Note Modification Agreement ("Agreement") modifies the Note dated as Lender, and between For valuable consideration, receipt of which is hereby acknowledged, the undersigned agree as follows: 1. All unpaid principal and accrued interest bear interest after maturity, whether occurring by acceleration or percentage points ("Note Rate") . minus a. b. Boxes checked are applicable. Boxes not checked are inapplicable. eFIPCO The terms of this paragraph 1 supersede any provision to the contrary in the Note, including, but not limited to, provisions for a fixed, variable or stepped interest rate. The "Index Rate :si " c. If the Index Rate ceases to be available to Lender during the term of the Note, Lender may substitute a comparable index. The Index Rate may or may not be the lowest rate charged by Lender. The Note Rate shall be adjusted on the following change dates: Before maturity (whether by acceleration or lapse of time), the Note bears interest on the unpaid principal balance of the Note as follows: At a variable annual rate which will adjust to equal the Index Rate (as defined below) plus year and will not be less than Note Rate shall be . . in full all accrued interest owing on this Note. Maker agrees to pay any such additional payments or amounts. . 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, 2021 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. 3.000 3.000 Exhibit 10.19 October 22, 2020 Chippewa Valley Bank Citizens Community Bancorp, Inc. 28,856,388.88 October 20, 2021 0.750 n/a as and when the index rate changes and becomes effective X n/a 5.000 X 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. Loan Number: 52496

Note Modification Agreement (Variable Rate) Page 2 of 2 (Seal) MAKER(S) LENDER: Dated: .As of the Effective Date, the unpaid principal balance of the Note is $ This Agreement does not satisfy or discharge the Note or any documents that secure the Note. Except as specifically modified by this Agreement, the Note and any documents executed by Maker or any third party in connection with the Note remain in full force and effect and are not modified. 2. 3. Byx Title: (Seal) (Type of Organization) (Seal) (Seal) (Seal) (Seal) (Address) (Phone) 28,856,388.88 October 20, 2021 Chippewa Valley Bank Rick Gerber Chief Executive Officer Citizens Community Bancorp, Inc. A Maryland Corporation By By Stephen Bianchi, President & CEO James S Broucek, EVP, CFO, Treasurer & Secretary 2174 Eastridge Center Eau Claire, WI 54701

EX-21

            Exhibit 21

Subsidiaries of Citizens Community Bancorp, Inc.

The following lists the direct and indirect subsidiaries of Citizens Community Bancorp, Inc.:

Name of Subsidiary	Jurisdiction of Incorporation or Organization
Citizens Community Federal National Association	Federal (U.S.)

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-3 (File No. 333-226268) and Form S-8 (File Nos. 333-128252 and 333-190877 and 333-224042) of Citizens Community Bancorp, Inc. and Subsidiary of our report dated March 2, 2022, relating to the consolidated financial statements, which appears in this annual report on Form 10-K for the year ended December 31, 2021.

/s/ Eide Bailly LLP

Phoenix, Arizona

March 2, 2022

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 Annual Report on Form 10-K 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: March 2, 2022	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 Annual Report on Form 10-K 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: March 2, 2022	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 Annual Report of the Company on Form 10-K for the year ended December 31, 2021, 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:  March 2, 2022	By:	/s/ Stephen M. Bianchi
		Stephen M. Bianchi
		President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)

Date: March 2, 2022	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 - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Mar. 02, 2022	Jun. 30, 2021
Cover [Abstract]
Entity Central Index Key	0001367859
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--12-31
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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 138.8
Entity Common Stock, Shares Outstanding		10,536,544
Documents Incorporated by Reference	Portions of the Proxy Statement for the 2022 Annual Meeting of the Stockholders of the Registrant are incorporated by reference into Part III of this report.

XML

Audit Information	12 Months Ended
	Dec. 31, 2021
Audit Information [Abstract]
Auditor Name	Eide Bailly LLP
Auditor Location	Phoenix, Arizona
Auditor Firm ID	286

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Assets
Cash and cash equivalents	$ 47,691	$ 119,440
Other interest bearing deposits	1,511	3,752
Securities available for sale "AFS"	203,068	144,233
Securities held to maturity "HTM"	71,141	43,551
Equity investments	1,328	200
Other investments	15,305	14,948
Loans receivable	1,310,963	1,237,581
Allowance for loan losses	(16,913)	(17,043)
Loans receivable, net	1,294,050	1,220,538
Loans held for sale	6,670	3,075
Mortgage servicing rights, net	4,161	3,252
Office properties and equipment, net	21,169	21,165
Accrued interest receivable	3,916	5,652
Intangible assets	3,898	5,494
Goodwill	31,498	31,498
Foreclosed and repossessed assets, net	1,408	197
Bank owned life insurance ("BOLI")	24,312	23,684
Other assets	8,502	8,416
TOTAL ASSETS	1,739,628	1,649,095
Liabilities:
Deposits	1,387,535	1,295,256
Federal Home Loan Bank ("FHLB") advances	111,527	123,498
Other borrowings	58,426	58,328
Other liabilities	11,274	11,449
Total liabilities	1,568,762	1,488,531
Stockholders’ Equity:
Common stock— $0.01 par value, authorized 30,000,000; 10,502,442 and 11,056,349 shares issued and outstanding, respectively	105	111
Additional paid-in capital	119,925	126,154
Retained earnings	50,675	32,809
Accumulated other comprehensive income	161	1,490
Total stockholders’ equity	170,866	160,564
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,739,628	$ 1,649,095

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
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)	10,502,442	11,056,349
Common stock outstanding (shares)	10,502,442	11,056,349

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Interest and dividend income:
Interest and fees on loans	$ 58,172	$ 59,763
Interest on investments	5,863	4,764
Total interest and dividend income	64,035	64,527
Interest expense:
Interest on deposits	5,850	10,000
Interest on FHLB and FRB borrowed funds	1,572	1,814
Interest on other borrowed funds	2,946	2,458
Total interest expense	10,368	14,272
Net interest income before provision for loan losses	53,667	50,255
Provision for loan losses	0	7,750
Net interest income after provision for loan losses	53,667	42,505
Non-interest income:
Service charges on deposit accounts	1,726	1,832
Interchange income	2,354	2,029
Loan servicing income	3,322	4,158
Gain on sale of loans	5,399	6,693
Loan fees and service charges	705	1,383
Insurance commission income	0	475
Net gains (losses) on investment securities	1,224	110
Net gain on sale of acquired business lines	0	432
Settlement proceeds	0	131
Other	1,094	1,205
Total non-interest income	15,824	18,448
Non-interest expense:
Compensation and related benefits	22,723	22,256
Occupancy	5,327	5,523
Data processing	5,560	5,193
Amortization of intangible assets	1,596	1,622
Mortgage servicing rights expense, net	191	3,050
Advertising, marketing and public relations	986	967
FDIC premium assessment	551	584
Professional services	1,542	1,757
Gain on repossessed assets, net	(199)	(259)
Other	2,255	2,980
Total non-interest expense	40,532	43,673
Income before provision for income tax	28,959	17,280
Provision for income taxes	7,693	4,555
Net income attributable to common stockholders	$ 21,266	$ 12,725
Per share information:
Basic earnings (USD per share)	$ 1.98	$ 1.14
Diluted earnings (USD per share)	1.98	1.14
Cash dividends paid (USD per share)	$ 0.23	$ 0.21

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income attributable to common stockholders	$ 21,266	$ 12,725
Securities available for sale
Net unrealized (losses) gains arising during period, net of tax	(909)	2,074
Reclassification adjustment for net gains included in net income, net of tax	(420)	(113)
Other comprehensive (loss) income, net of tax	(1,329)	1,961
Comprehensive income	$ 19,937	$ 14,686

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
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	$ 128,394	$ 22,517	$ (471)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	12,725			12,725
Other comprehensive income, net of tax	1,961				1,961
Surrender of restricted shares of common stock (shares)		(2,641)
Surrender of restricted shares of common stock	(27)		(27)
Restricted common stock awarded under the equity incentive plan (shares)		45,507
Common stock fractional share adjustment on acquisitions (shares)		(40)
Common stock repurchased (shares)		(253,431)
Common stock repurchased	(2,820)	$ (2)	(2,757)	(61)
Stock option expense	14		14
Amortization of restricted stock	530		530
Cash dividends	(2,372)			(2,372)
Balance at end of period (shares) at Dec. 31, 2020		11,056,349
Balance at end of period at Dec. 31, 2020	160,564	$ 111	126,154	32,809	1,490
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	21,266			21,266
Other comprehensive income, net of tax	(1,329)				(1,329)
Forfeiture of unvested shares (in shares)		(1,500)
Forfeiture of unvested shares	0
Surrender of restricted shares of common stock (shares)		(2,409)
Surrender of restricted shares of common stock	$ (30)		(30)
Restricted common stock awarded under the equity incentive plan (shares)		64,399
Common stock options exercised (shares)	5,800	5,800
Common stock options exercised	$ 52		52
Common stock repurchased (shares)		(620,197)
Common stock repurchased	(7,951)	$ (6)	(7,056)	(889)
Stock option expense	8		8
Amortization of restricted stock	797		797
Cash dividends	(2,511)			(2,511)
Balance at end of period (shares) at Dec. 31, 2021		10,502,442
Balance at end of period at Dec. 31, 2021	$ 170,866	$ 105	$ 119,925	$ 50,675	$ 161

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Stockholders' Equity [Abstract]
Cash dividends paid (USD per share)	$ 0.23	$ 0.21

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net income attributable to common stockholders	$ 21,266	$ 12,725
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization, net of discount accretion on investment securities	103	142
Depreciation expense	2,255	1,954
Provision for loan losses	0	7,750
Net realized (gain) loss on equity securities	(651)	46
Net realized gain on debt securities	(573)	(156)
Increase in mortgage servicing rights resulting from transfers of financial assets	(1,100)	(2,020)
Mortgage servicing rights amortization and impairment, net	191	3,050
Amortization of intangible assets	1,596	1,622
Amortization of restricted stock	797	530
Net stock based compensation expense	8	14
Loss on sale of office properties and equipment	31	178
Decrease (increase) deferred income taxes	930	(2,526)
Increase in cash surrender value of life insurance	(628)	(621)
Net gain from disposals of foreclosed and repossessed assets	(199)	(259)
Gain on sale of loans held for sale, net	(5,399)	(6,693)
Net gain on sale of insurance agency	0	(252)
Net change in:
Loans held for sale	1,804	9,511
Accrued interest receivable and other assets	1,241	(1,791)
Other liabilities	(73)	581
Total adjustments	333	11,060
Net cash provided by operating activities	21,599	23,785
Cash flows from investing activities:
Net decrease in other interest bearing deposits	2,241	992
Purchase of available for sale securities	(130,545)	(28,218)
Purchase of held to maturity securities	(39,784)	(44,441)
Proceeds from sales of available for sale securities	38,239	12,091
Proceeds from principal payments of available for sale securities	32,218	54,781
Proceeds from principal payments and maturities of held to maturity securities	8,583	3,692
Proceeds from calls of held to maturity securities	3,500	0
Purchase of equity investments	(960)	0
Net purchases of other investments	126	57
Proceeds from sales of foreclosed and repossessed assets	557	2,780
Net increase in loans	(73,636)	(62,486)
Net capital expenditures	(3,778)	(2,573)
Proceeds from disposal of office properties and equipment	38	382
Net proceeds from sale of insurance agency	0	1,128
Net cash used in investing activities	(163,201)	(61,815)
Cash flows from financing activities:
Net decrease in short-term Federal Home Loan Bank advances	0	(41,000)
Amortization of fair value adjustments for acquired Federal Home Loan Bank advances	29	27
Long-term Federal Home Loan Bank advances	0	66,500
Long-term Federal Home Loan Bank maturities	(4,000)	(33,000)
Federal Home Loan Bank advance termination payments	(8,113)	0
Amortization of debt issuance costs	98	91
Proceeds from other borrowings, net of origination costs	0	14,677
Net increase in deposits	92,279	99,554
Repurchase shares of common stock	(7,951)	(2,820)
Surrender of restricted shares of common stock	(30)	(27)
Common stock options exercised	52	0
Cash dividends paid	(2,511)	(2,372)
Net cash provided by financing activities	69,853	101,630
Net (decrease) increase in cash and cash equivalents	(71,749)	63,600
Cash and cash equivalents at beginning of period	119,440	55,840
Cash and cash equivalents at end of period	47,691	119,440
Cash paid during the period for:
Interest on deposits	6,026	9,980
Interest on borrowings	4,552	3,950
Income taxes	6,825	7,870
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	84	1,057
Transfers from office properties and equipment to foreclosed and repossessed assets	$ 1,434	$ 0

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of Citizens Community Federal N.A. (the “Bank”) included herein have been included by its parent company, Citizens Community Bancorp, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As used in this annual 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”). 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 to manage its municipal bond portfolio, and was dissolved in February 2020. The 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 primarily in Wisconsin and Minnesota through 25 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, Mankato and Twin Cities 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 occurring subsequent to the balance sheet date of December 31, 2021 through the date on which the consolidated financial statements were available to be issued on March 2, 2022, for items that should potentially be recognized or disclosed in these consolidated financial statements.

Unless otherwise stated herein, and except for share 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 inter-company 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 accompanying transition report on Form 10-K for the year ended December 31, 2021 and 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.

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

Other Interest Bearing Deposits—Other interest bearing deposits are certificate of deposit investments made by the Bank with other financial institutions that are carried at cost. The weighted average months to maturity of the interest bearing deposits is 8.97 months. Balances over $250 in those institutions are not insured by the FDIC and therefore pose a potential

risk in the event the institution were to fail. As of December 31, 2021 and December 31, 2020, there were no certificate of deposit accounts with a balance greater than $250.

Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet. 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. Realized gains or losses on sales of available for sale securities are calculated with the specific identification method and are included in the consolidated statements of operations under net gains on investment securities. 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 investments - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities. Farmer Mac equity securities are carried at their fair market value, which is readily determinable. Changes in fair value are recognized as net gains (losses) on investment securities in the consolidated Statement of Operations.

Also included in equity investments are the Company’s investments in a Volker Rule-compliant Small Business Investment Company ("SBIC") and an investment fund. The SBIC and investment fund meet the definition of investment companies, as defined in ASC 946, Financial Services - Investment Companies. These investments seek returns by investing in various small businesses and do not have redemption rights. Distributions from the investments will be received as the underlying investments, which generally have a life of 10 years, are liquidated. We elected the practical expedient available in Topic 820, Fair Value Measurements, which permits the use of net asset value ("NAV") per share or equivalent to value investments in entities that are or are similar to investment companies. SBICs and investment funds report their investments at estimated fair value. We record the unrealized gains and losses resulting from changes in the fair value of these investments as gains or losses on equity securities in our consolidated statements of operations. The carrying value of these investments is equal to the capital account balance per each entities' quarterly financial statements.

Other investments - As a member of the Federal Reserve Bank System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. 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 non-interest 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 $15,305 at December 31, 2021 consisted of $7,877 of FHLB stock, $5,200 of Federal Reserve Bank stock and $2,228 of Bankers’ Bank stock. Other investments totaling $14,948 at December 31, 2020 consisted of $8,103 of FHLB stock, $5,170 of Federal Reserve Bank stock, and $1,675 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 (PCI) 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 over the contractual life of the loan with no prepayments assumed. If the loan is prepaid, any amortized net fee is recognized at that time. 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”), less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. 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 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 are 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 credit 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 ultimately are not 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 as non-interest income in the consolidated statement 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.

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.

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 for impairment at least annually; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.

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

Servicing fee income, which is reported on the consolidated statements of operations in non-interest income as loan servicing fee income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Office Properties and Equipment—Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement. Depreciation expense is included in non-interest expense on the consolidated statements of operations.

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, primarily Core Deposit Intangibles (CDI) with definite useful economic lives over their useful economic lives ranging from 48 to 111 months 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. Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. 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, 2021 which is related to its banking activities. The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit. An initial qualitative evaluation is made to assess the likelihood of impairment and determine whether further quantitative testing to calculate the fair value is necessary. When the qualitative evaluation indicates that impairment is more likely than not, quantitative testing is required whereby the fair value of the Company’s reporting unit is calculated and compared to the recorded book value, “step one.” If the calculated fair value of the Company’s reporting unit exceeds its carrying value, goodwill is not considered impaired and “step two” is not considered necessary. If the carrying value of the company’s reporting unit exceeds its calculated fair value, the impairment test continues (“step two”) by comparing the carrying value of the Company’s reporting unit’s goodwill to the implied fair value of goodwill. An impairment charge is recognized if the carrying value of goodwill exceeds the implied fair value of goodwill. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2021. See Note 6 for additional information on goodwill and other intangible assets.

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.

Bank Owned Life Insurance (BOLI)—The Bank invests in bank-owned life insurance (BOLI) as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Bank on a select group of employees. The Bank is the owner and beneficiary of the policies. Income from the increase in cash surrender value of the policies as well as the receipt of death benefits is included in non-interest income on the consolidated statements of operations.

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. Lease expense is included in non-interest expense, occupancy in the consolidated statements of operations.

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 sheets. Debt issuance costs with a Company call option that originated prior to 2020 and senior note debt issuance costs, are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Debt issuance costs that originated in 2020 and thereafter, are amortized through the first Company call option date of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheets, in the period of the share issuance.

    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. See Note 14, “Income Taxes” for details on the Company’s income taxes.

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’s primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts.

The company accounts for revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Topic 606 provides that revenue from contracts with customers be recognized when performance obligations under the terms of a contract are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing service. The company does not have any materially significant payment terms as payment is received shortly after the satisfaction of the performance obligation. The non-interest income line items recognized under the scope of Topic 606 are as follows:

Service charges on deposit accounts - Service charges on accounts consist of monthly service fees, transaction-based fees, overdraft services and other deposit account related fees. The Company’s performance obligation for monthly services fees is generally satisfied over the period in which the service is provided. Revenue for these monthly fees is recognized during the service period. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied at the time the service is provided. Payment for service charges on deposit accounts are primarily received immediately or in the following month through a direct charge to a customer’s account.

Interchange income - The Company earns interchange fees when cardholder debit card transaction are processed through card association networks. The interchange rates are generally set by the card association based upon purchase volumes and other factors. Interchange fees represent a percentage of the underlying transaction value. The Company has a continuous contract, based on customary business practices, with the card association networks to make funds

available for settlement of card transactions. The Company’s performance obligation is satisfied over time as it makes funds available, and the related income is recognized when received.

Insurance commission income - Commission revenue from WIA was recognized as of the effective date of the insurance policy or the date the customer was billed, whichever was later. The Company also received contingent commissions from insurance companies which were 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 were recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations and has been discontinued due to the sale of WIA on June 30, 2020.

Non-interest income outside of the scope of Revenue from Contracts with Customers, Topic 606 is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income outside of the scope of Topic 606 includes mortgage banking activities, loan fees and service charges, net gains (losses) on investment securities, Net gain on sale of acquired business lines, settlement proceeds, and other, which is primarily made up of BOLI related income.

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.

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

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable. See Note 11, “Commitments and Contingencies” in Notes to Consolidated Financial Statements.

Derivatives--Rate-lock Commitments and Forward Sale Agreements —The Company enters into commitments to originate loans, whereby the interest rate on the loan is determined prior to funding (rate-lock commitment). Rate-lock commitments on mortgage loans held for sale are derivative instruments. If material, derivative instruments are carried on the consolidated balance sheets at fair value, and changes in the fair value thereof are recognized in the consolidated statements of operations. The Company originates single-family residential loans for sale, pursuant to programs primarily with the Federal Home Loan Mortgage Corporation (FHLMC) and other similar third parties. In connection with these programs, at the time the Company initially issues a loan commitment, it does not lock in a specific interest rate. At the time the interest rate is locked in by the borrower, the Company concurrently enters into a forward loan sale agreement with the prospective loan purchaser, at a specific price, in order to manage the interest rate risk inherent to the rate-lock commitment. The forward sale agreement also meets the definition of a derivative instrument. Any change in the fair value of the loan commitment after the borrower locks in the interest rate is substantially offset by the corresponding change in the fair value of the forward loan sale agreement related to such loan. The period from the time the borrower locks in the interest rate, to the time the Company funds the loan and sells the loan to a third party varies, and could be up to 90 days. The fair value of each instrument will rise and fall in response to changes in market interest rates, subsequent to the dates the interest rate locks and forward sale agreements are entered into. In the event that interest rates rise after the Company enters into an interest rate lock, the fair value of the loan commitment will decline. However, the fair value of the forward loan sale agreement related to such loan commitment should increase by substantially the same amount, effectively eliminating the Company’s interest rate and price risks.

At December 31, 2021, the Company had $5,685 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above. The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of December 31, 2021.

Other Comprehensive Income —Accumulated and other comprehensive income or loss is comprised of the unrealized and realized gains and losses on securities available for sale, net of tax, and is shown on the accompanying consolidated statements of comprehensive income.

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

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 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 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 contracts, 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, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13 becoming effective in the first quarter of 2023 for the Company. Earlier adoption 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

12 Months Ended

Dec. 31, 2021

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 December 31, 2021 and December 31, 2020, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
U.S. government agency obligations	$	25,826	$	440	$	1	$	26,265
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	107,636		409		878		107,167
Corporate debt securities	35,342		403		157		35,588
Corporate asset-backed securities	33,902		133		127		33,908
Total available for sale securities	$	202,846	$	1,385	$	1,163	$	203,068
December 31, 2020
U.S. government agency obligations	$	33,048	$	387	$	70	$	33,365
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	39,454		1,537		—		40,991
Corporate debt securities	17,199		372		109		17,462
Corporate asset-backed securities	36,039		104		316		35,827
Trust preferred securities	16,297		189		38		16,448
Total available for sale securities	$	142,177	$	2,589	$	533	$	144,233

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
Obligations of states and political subdivisions	$	4,600	$	—	$	7	$	4,593
Mortgage-backed securities	66,541		104		2,061		64,584
Total held to maturity securities	$	71,141	$	104	$	2,068	$	69,177
December 31, 2020
Obligations of states and political subdivisions	$	600	$	2	$	—	$	602
Mortgage-backed securities	42,951		265		34		43,182
Total held to maturity securities	$	43,551	$	267	$	34	$	43,784

At December 31, 2021, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $863 as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2021, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2021, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $3,934 and mortgage-backed securities with a carrying value of $2,879 as collateral against specific municipal deposits. As of December 31, 2021, the Bank also has mortgage-backed securities with a carrying value of $267 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2020, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $1,209 as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2020, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2020, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $576 and mortgage-backed securities with a carrying value of $3,028 as collateral against specific municipal deposits. As of December 31, 2020, the Bank also has mortgage-backed securities with a carrying value of $468 pledged as collateral to the Federal Home Loan Bank of Des Moines.

For the twelve months ended December 31, 2021, gross sales of available for sale securities were $38,239, gross gains on sale of available for sale securities were $646, and gross losses on sale of available for sale securities were $73.

For the twelve months ended December 31, 2020, gross sales of available for sale securities were $12,091, gross gains on sale of available for sale securities were $157, and gross losses on sale of available for sale securities were $1.

The estimated fair value of available for sale securities at December 31, 2021 and December 31, 2020, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and securities due to the call feature.

	December 31, 2021				December 31, 2020
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	140	$	140	$	—	$	—
Due after one year through five years	4,903		4,971		3,833		4,095
Due after five years through ten years	40,410		40,818		44,405		44,880
Due after ten years	49,757		49,972		54,485		54,267
Total securities with contractual maturities	95,210		95,901		102,723		103,242
Mortgage-backed securities	107,636		107,167		39,454		40,991
Total available for sale securities	$	202,846	$	203,068	$	142,177	$	144,233

	December 31, 2021				December 31, 2020
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due after one year through five years	$	4,300	$	4,298	$	200	$	200
Due after five years through ten years	300		295		400		402
Total securities with contractual maturities	4,600		4,593		600		602
Mortgage-backed securities	66,541		64,584		42,951		43,182
Total held to maturity securities	$	71,141	$	69,177	$	43,551	$	43,784

Securities with unrealized losses at December 31, 2021 and December 31, 2020, 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
December 31, 2021
U.S. government agency obligations	$	1,169	$	1	$	—	$	—	$	1,169	$	1
Mortgage-backed securities	89,010		878		—		—		89,010		878
Corporate debt securities	17,240		142		735		15		17,975		157
Corporate asset-backed securities	19,296		127		—		—		19,296		127
Total	$	126,715	$	1,148	$	735	$	15	$	127,450	$	1,163
December 31, 2020
U.S. government agency obligations	$	7,654	$	17	$	6,834	$	53	$	14,488	$	70
Corporate debt securities	3,447		27		1,418		82		4,865		109
Corporate asset-backed securities	—		—		24,310		316		24,310		316
Trust preferred securities	5,612		38		—		—		5,612		38
Total	$	16,713	$	82	$	32,562	$	451	$	49,275	$	533

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
December 31, 2021
Obligations of states and political subdivisions	$	593	$	7	$	—	$	—	$	593	$	7
Mortgage-backed securities	46,969		1,346		14,716		715		61,685		2,061
Total	$	47,562	$	1,353	$	14,716	$	715	$	62,278	$	2,068
December 31, 2020
Mortgage-backed securities	$	16,538	$	34	$	—	$	—	$	16,538	$	34
Total	$	16,538	$	34	$	—	$	—	$	16,538	$	34

    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 as separate components of shareholders’ 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. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur.

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

12 Months Ended

Dec. 31, 2021

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. SBA PPP loan balances are 100% guaranteed under the Small Business Association’s Paycheck Protection Program and may be forgiven in full, depending on use of funds and eligibility. These SBA-backed loans helped businesses keep their workforce employed during the COVID-19 crisis. Eligible borrowers, who qualify for full loan forgiveness during the eight to twenty four week period following loan disbursement, can apply for forgiveness, once all proceeds for which the borrower requested forgiveness has been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan.

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. 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.

Loans by classes within portfolio segments were as follows:

	December 31, 2021		December 31, 2020
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	578,395	$	351,113
Agricultural real estate	52,372		31,741
Multi-family real estate	174,050		112,731
Construction and land development	78,613		91,241
C&I/Agricultural operating:
Commercial and industrial	107,937		95,290
Agricultural operating	26,202		24,457
Residential mortgage:
Residential mortgage	63,855		86,283
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,473		12,056
Total originated loans before SBA PPP loans	$	1,109,739	$	837,023
SBA PPP loans	8,755		123,702
Total originated loans	$	1,118,494	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	120,070	$	156,562
Agricultural real estate	26,123		37,054
Multi-family real estate	4,299		9,421
Construction and land development	907		7,276
C&I/Agricultural operating:
Commercial and industrial	14,230		21,263
Agricultural operating	5,386		8,328
Residential mortgage:
Residential mortgage	27,135		45,103
Consumer installment:
Other Consumer	401		1,157
Total acquired loans	$	198,551	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	698,465	$	507,675
Agricultural real estate	78,495		68,795
Multi-family real estate	178,349		122,152
Construction and land development	79,520		98,517
C&I/Agricultural operating:
Commercial and industrial	122,167		116,553
Agricultural operating	31,588		32,785
Residential mortgage:
Residential mortgage	90,990		131,386
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,874		13,213
Total loans before SBA PPP loans	$	1,308,290	$	1,123,187
SBA PPP loans	8,755		123,702
Gross loans	$	1,317,045	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process	(2,482)		(4,245)
Unamortized discount on acquired loans	(3,600)		(5,063)
Allowance for loan losses	(16,913)		(17,043)
Loans receivable, net	$	1,294,050	$	1,220,538

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 weaknesses 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 breakdown of loans by risk rating as of December 31, 2021:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	572,724	$	667	$	5,004	$	—	$	—	$	578,395
Agricultural real estate	50,834		1,267		271		—		—		52,372
Multi-family real estate	173,760		290		—		—		—		174,050
Construction and land development	75,146		—		3,467		—		—		78,613
C&I/Agricultural operating:
Commercial and industrial	107,798		57		82		—		—		107,937
Agricultural operating	23,935		764		1,503		—		—		26,202
Residential mortgage:
Residential mortgage	60,754		—		3,101		—		—		63,855
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,404		—		69		—		—		8,473
Total originated loans before SBA PPP loans	1,092,879		3,045		13,815		—		—		1,109,739
SBA PPP loans	8,755		—		—		—		—		8,755
Total originated loans	$	1,101,634	$	3,045	$	13,815	$	—	$	—	$	1,118,494
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	116,839	$	1,314	$	1,917	$	—	$	—	$	120,070
Agricultural real estate	21,051		—		5,072		—		—		26,123
Multi-family real estate	4,299		—		—		—		—		4,299
Construction and land development	735		172		—		—		—		907
C&I/Agricultural operating:
Commercial and industrial	13,931		5		294		—		—		14,230
Agricultural operating	4,936		—		450		—		—		5,386
Residential mortgage:
Residential mortgage	25,869		—		1,266		—		—		27,135
Consumer installment:
Other Consumer	398		—		3		—		—		401
Total acquired loans	$	188,058	$	1,491	$	9,002	$	—	$	—	$	198,551
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	689,563	$	1,981	$	6,921	$	—	$	—	$	698,465
Agricultural real estate	71,885		1,267		5,343		—		—		78,495
Multi-family real estate	178,059		290		—		—		—		178,349
Construction and land development	75,881		172		3,467		—		—		79,520
C&I/Agricultural operating:
Commercial and industrial	121,729		62		376		—		—		122,167
Agricultural operating	28,871		764		1,953		—		—		31,588
Residential mortgage:
Residential mortgage	86,623		—		4,367		—		—		90,990
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,802		—		72		—		—		8,874
Gross loans before SBA PPP loans	$	1,280,937	$	4,536	$	22,817	$	—	$	—	$	1,308,290
SBA PPP loans	8,755		—		—		—		—		8,755
Gross loans	$	1,289,692	$	4,536	$	22,817	$	—	$	—	1,317,045
Less:
Unearned net deferred fees and costs and loans in process											(2,482)
Unamortized discount on acquired loans											(3,600)
Allowance for loan losses											(16,913)
Loans receivable, net											$	1,294,050

Below is a breakdown of loans by risk rating as of December 31, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	349,482	$	543	$	1,088	$	—	$	—	$	351,113
Agricultural real estate	30,041		446		1,254		—		—		31,741
Multi-family real estate	112,423		308		—		—		—		112,731
Construction and land development	87,763		—		3,478		—		—		91,241
C&I/Agricultural operating:
Commercial and industrial	91,474		20		3,796		—		—		95,290
Agricultural operating	22,462		934		1,061		—		—		24,457
Residential mortgage:
Residential mortgage	82,097		7		4,179		—		—		86,283
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:					—
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	11,986		—		70		—		—		12,056
Total originated loans before SBA PPP loans	$	819,303	$	2,258	$	15,462	$	—	$	—	$	837,023
SBA PPP loans	123,702		—		—		—		—		123,702
Total originated loans	$	943,005	$	2,258	$	15,462	$	—	$	—	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	148,303	$	4,274	$	3,985	$	—	$	—	$	156,562
Agricultural real estate	31,147		—		5,907		—		—		37,054
Multi-family real estate	9,273		—		148		—		—		9,421
Construction and land development	7,237		—		39		—		—		7,276
C&I/Agricultural operating:
Commercial and industrial	20,918		9		336		—		—		21,263
Agricultural operating	7,838		—		490		—		—		8,328
Residential mortgage:
Residential mortgage	42,805		131		2,167		—		—		45,103
Consumer installment:
Other Consumer	1,150		—		7		—		—		1,157
Total acquired loans	$	268,671	$	4,414	$	13,079	$	—	$	—	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	497,785	$	4,817	$	5,073	$	—	$	—	$	507,675
Agricultural real estate	61,188		446		7,161		—		—		68,795
Multi-family real estate	121,696		308		148		—		—		122,152
Construction and land development	95,000		—		3,517		—		—		98,517
C&I/Agricultural operating:
Commercial and industrial	112,392		29		4,132		—		—		116,553
Agricultural operating	30,300		934		1,551		—		—		32,785
Residential mortgage:
Residential mortgage	124,902		138		6,346		—		—		131,386
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	13,136		—		77		—		—		13,213
Gross loans before SBA PPP loans	$	1,087,974	$	6,672	$	28,541	$	—	$	—	$	1,123,187
SBA PPP loans	123,702		—		—		—		—		123,702
Gross loans	$	1,211,676	$	6,672	$	28,541	$	—	$	—	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process											(4,245)
Unamortized discount on acquired loans											(5,063)
Allowance for loan losses											(17,043)
Loans receivable, net											$	1,220,538

     Certain directors and executive officers of the Company are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during the twelve months ended December 31, 2021 and December 31, 2020. A summary of the changes in those loans is as follows:

	Twelve months ended		Twelve months ended
	December 31, 2021		December 31, 2020
Balance—beginning of period	$	26,483	$	20,367
New loan originations	14,992		7,230
Repayments	(9,052)		(1,114)
Balance—end of period	$	32,423	$	26,483
Available and unused lines of credit	$	75	$	187

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/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2021:
Allowance for Loan Losses:
Beginning balance, January 1, 2021	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Charge-offs	(51)		—		—		(54)		—		(105)
Recoveries	14		110		9		41		—		174
Provision	2,120		(263)		(532)		(251)		(132)		942
Total Allowance on originated loans	$	12,354	$	1,959	$	518	$	225	$	774	$	15,830
Other acquired loans:
Beginning balance, January 1, 2021	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Charge-offs	(200)		(7)		—		(27)		—		(234)
Recoveries	14		13		4		4		—		35
Provision	(642)		(78)		(209)		(13)		—		(942)
Total allowance on other acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Total allowance on acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Ending Balance, December 31, 2021	$	13,210	$	2,028	$	648	$	253	$	774	$	16,913
Allowance for Loan Losses at December 31, 2021:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	797	$	99	$	113	$	—	$	—	$	1,009
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	12,413	$	1,929	$	535	$	253	$	774	$	15,904
Loans Receivable as of December 31, 2021:
Ending balance of originated loans	$	883,430	$	142,894	$	67,726	$	24,444	$	—	$	1,118,494
Ending balance of purchased credit-impaired loans	9,060		1,101		1,044		—		—		11,205
Ending balance of other acquired loans	142,339		18,515		26,091		401		—		187,346
Ending balance of loans	$	1,034,829	$	162,510	$	94,861	$	24,845	$	—	$	1,317,045
Ending balance: individually evaluated for impairment	$	21,792	$	3,337	$	7,007	$	257	$	—	$	32,393
Ending balance: collectively evaluated for impairment	$	1,013,037	$	159,173	$	87,854	$	24,588	$	—	$	1,284,652

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2020:
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(932)		(5)		(145)		—		(1,082)
Recoveries	75		8		7		69		—		159
Provision	3,991		1,393		160		98		549		6,191
Total Allowance on originated loans	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Other acquired loans:
Beginning balance, January 1, 2020	$	526	$	27	$	163	$	53	$	—	$	769
Charge-offs	—		(159)		(74)		(3)		—		(236)
Recoveries	77		33		15		7		—		132
Provision	1,081		240		231		7		—		1,559
Total Allowance on other acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Total Allowance on acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Ending balance, December 31, 2020	$	11,955	$	2,253	$	1,376	$	553	$	906	$	17,043
Allowance for Loan Losses at December 31, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	698	$	190	$	226	$	1	$	—	$	1,115
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	11,257	$	2,063	$	1,150	$	552	$	906	$	15,928
Loans Receivable as of December 31, 2020:
Ending balance of originated loans	$	586,826	$	243,449	$	92,543	$	37,907	$	—	$	960,725
Ending balance of purchased credit-impaired loans	15,100		1,534		1,312		—		—		17,946
Ending balance of other acquired loans	195,213		28,057		43,791		1,157		—		268,218
Ending balance of loans	$	797,139	$	273,040	$	137,646	$	39,064	$	—	$	1,246,889
Ending balance: individually evaluated for impairment	$	26,303	$	7,115	$	9,621	$	358	$	—	$	43,397
Ending balance: collectively evaluated for impairment	$	770,836	$	265,925	$	128,025	$	38,706	$	—	$	1,203,492

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

	Commercial/Agricultural Real Estate Loans				C&I/Agricultural operating				Residential Mortgage				Consumer Installment				Totals
	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
	2021		2020		2021		2020		2021		202		2021		202		2021		2020
Performing loans
Performing TDR loans	$	4,618	$	4,695	$	649	$	3,836	$	2,681	$	3,142	$	36	$	49	$	7,984	$	11,722
Performing loans other	1,021,346		786,533		160,570		266,975		90,591		131,470		24,729		38,856		1,297,236		1,223,834
Total performing loans	1,025,964		791,228		161,219		270,811		93,272		134,612		24,765		38,905		1,305,220		1,235,556
Nonperforming loans (1)
Nonperforming TDR loans	3,389		4,691		554		1,287		593		777		3		—		4,539		6,755
Nonperforming loans other	5,476		1,220		737		942		996		2,257		77		159		7,286		4,578
Total nonperforming loans	8,865		5,911		1,291		2,229		1,589		3,034		80		159		11,825		11,333
Total loans	$	1,034,829	$	797,139	$	162,510	$	273,040	$	94,861	$	137,646	$	24,845	$	39,064	$	1,317,045	$	1,246,889

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

An aging analysis of the Company’s commercial/agricultural real estate and non-real estate, consumer real estate and non-real estate and purchased third party loans as of December 31, 2021 and 2020, 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 Accruing		Nonaccrual Loans		Current		Total Loans
December 31, 2021
Commercial/Agricultural real estate:
Commercial real estate	$	36	$	—	$	—	$	36	$	5,374	$	693,055	$	698,465
Agricultural real estate	498		4		—		502		3,490		74,503		78,495
Multi-family real estate	—		—		—		—		—		178,349		178,349
Construction and land development	—		—		—		—		—		79,520		79,520
C&I/Agricultural operating:
Commercial and industrial	—		32		—		32		298		121,837		122,167
SBA PPP loans	—		—		—		—		—		8,755		8,755
Agricultural operating	1,123		—		—		1,123		993		29,472		31,588
Residential mortgage:
Residential mortgage	1,471		487		156		2,114		1,268		87,608		90,990
Purchased HELOC loans	117		—		—		117		165		3,589		3,871
Consumer installment:
Originated indirect paper	38		27		—		65		55		15,851		15,971
Other Consumer	58		10		4		72		22		8,780		8,874
Total	$	3,341	$	560	$	160	$	4,061	$	11,665	$	1,301,319	$	1,317,045
December 31, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	9,568	$	467	$	—	$	10,035	$	679	$	496,961	$	507,675
Agricultural real estate	411		48		—		459		5,084		63,252		68,795
Multi-family real estate	308		—		—		308		148		121,696		122,152
Construction and land development	3,898		—		—		3,898		—		94,619		98,517
C&I/Agricultural operating:
Commercial and industrial	436		491		—		927		357		115,269		116,553
SBA PPP loans	—		—		—		—		—		123,702		123,702
Agricultural operating	1,499		200		—		1,699		1,872		29,214		32,785
Residential mortgage:
Residential mortgage	2,238		372		516		3,126		2,217		126,043		131,386
Purchased HELOC loans	338		94		67		499		234		5,527		6,260
Consumer installment:
Originated indirect paper	90		37		—		127		133		25,591		25,851
Other Consumer	100		14		3		117		23		13,073		13,213
Total	$	18,886	$	1,723	$	586	$	21,195	$	10,747	$	1,214,947	$	1,246,889

At December 31, 2021, the Company individually evaluated loans for impairment with a recorded investment of $31,740, consisting of (1) $11,205 PCI loans, with a carrying amount of $10,552; (2) $9,860 TDR loans, net of TDR PCI loans; and (3) $11,328 of substandard non-TDR loans, non-PCI loans. The $31,740 total of loans individually evaluated for impairment includes $7,984 of performing TDR loans. At December 31, 2020, the Company individually evaluated loans for impairment with a recorded investment of $42,310, consisting of (1) $17,946 PCI loans, with a carrying amount of $16,859; (2) $15,634 TDR loans, net of TDR PCI loans; and (3) $9,817 of substandard non-TDR loans, non-PCI loans. The $42,310 total of loans individually evaluated for impairment includes $11,742 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 loans evaluated for impairment as of December 31, 2021 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2021
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	15,521	$	15,905	$	—	$	19,412	$	964
C&I/Agricultural operating	3,153		3,337		—		4,622		146
Residential mortgage	6,221		6,306		—		7,316		316
Consumer installment	256		256		—		306		85
Total	$	25,151	$	25,804	$	—	$	31,656	$	1,511
With An Allowance Recorded:
Commercial/Agricultural real estate	$	5,887	$	5,887	$	797	$	4,089	$	62
C&I/Agricultural operating	—		—		99		391		84
Residential mortgage	701		701		113		890		17
Consumer installment	1		1		—		2		—
Total	$	6,589	$	6,589	$	1,009	$	5,372	$	163
December 31, 2021 Totals
Commercial/Agricultural real estate	$	21,408	$	21,792	$	797	$	23,501	$	1,026
C&I/Agricultural operating	3,153		3,337		99		5,013		230
Residential mortgage	6,922		7,007		113		8,206		333
Consumer installment	257		257		—		308		85
Total	$	31,740	$	32,393	$	1,009	$	37,028	$	1,674

At December 31, 2021, the Company had two residential real estate loans, secured by residential real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $109. At December 31, 2021, the Company had five commercial real estate loans, secured by commercial and agricultural real estate properties, for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction, with a recorded investment of $2,096.

A summary of loans evaluated for impairment as of December 31, 2020 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2020
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	23,302	$	24,013	$	—	$	29,657	$	1,894
C&I/Agricultural operating	6,090		6,334		—		7,025		284
Residential mortgage	8,410		8,542		—		8,418		450
Consumer installment	356		356		—		368		30
Total	$	38,158	$	39,245	$	—	$	45,468	$	2,658
With An Allowance Recorded:
Commercial/Agricultural real estate	$	2,290	$	2,290	$	698	$	2,217	$	100
C&I/Agricultural operating	781		781		190		636		22
Residential mortgage	1,079		1,079		226		1,255		54
Consumer installment	2		2		1		35		1
Total	$	4,152	$	4,152	$	1,115	$	4,143	$	177
December 31, 2020 Totals
Commercial/Agricultural real estate	$	25,592	$	26,303	$	698	$	31,874	$	1,994
C&I/Agricultural operating	6,871		7,115		190		7,661		306
Residential mortgage	9,489		9,621		226		9,673		504
Consumer installment	358		358		1		403		31
Total	$	42,310	$	43,397	$	1,115	$	49,611	$	2,835

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty, and the Bank grants a concession to that borrower that the Bank would not otherwise consider, except for the borrower’s financial difficulties. Concessions may include: extension of the loan’s term, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There was one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $4 at December 31, 2021, compared to one accruing, delinquent TDR, greater than 60 days past due, with a recorded investment of $20 at December 31, 2020.

Following is a summary of TDR loans by accrual status as of December 31, 2021 and December 31, 2020.

	December 31		December 31
	2021		2020
Troubled debt restructure loans:
Accrual status	$	7,984	$	11,742
Non-accrual status	4,539		6,735
Total	$	12,523	$	18,477

There were no TDR commitments meeting our TDR criteria as of December 31, 2021 or as of December 31, 2020. There were unused lines of credit totaling $10 and $14 meeting our TDR criteria as of December 31, 2021 and December 31, 2020, respectively.

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the years ended December 31, 2021 and December 31, 2020:

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2021
TDRs:
Commercial/Agricultural real estate	3	$	39	$	81	$	—	$	—	$	120	$	120	$	—
C&I/Agricultural operating	1	—		—		240		—		240		240		—
Residential mortgage	8	252		295		202		—		749		749		—
Consumer installment	3	6		—		18		—		24		24		—
Totals	15	$	297	$	376	$	460	$	—	$	1,133	$	1,133	$	—

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2020
TDRs:
Commercial/Agricultural real estate	12	$	4,441	$	198	$	293	$	—	$	4,932	$	4,932	$	—
C&I/Agricultural operating	6	3,295		78		3,000		—		6,373		6,373		—
Residential mortgage	17	456		858		117		—		1,431		1,431		—
Consumer installment	3	6		—		4		—		10		10		—
Totals	38	$	8,198	$	1,134	$	3,414	$	—	$	12,746	$	12,746	$	—

A summary of loans by loan class modified in a troubled debt restructuring as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	19	$	8,007	31	$	9,386
C&I/Agricultural operating	7	1,203		16	5,123
Residential mortgage	43	3,274		52	3,919
Consumer installment	7	39		8	49
Total loans	76	$	12,523	107	$	18,477

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the years ended December 31, 2021 and December 31, 2020, as well as the recorded investment in these restructured loans as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	—	$	—	1	$	100
C&I/Agricultural operating	—	—		1	224
Residential mortgage	—	—		4	404
Consumer installment	1	3		—	—
Total troubled debt restructurings	1	$	3	6	$	728

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

	December 31, 2021		December 31, 2020
Accountable for under ASC 310-30 (PCI loans)
Outstanding balance	$	11,205	$	17,946
Carrying amount	$	10,552	$	16,859
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	187,346	$	268,218
Carrying amount	$	184,399	$	264,242
Total acquired loans
Outstanding balance	$	198,551	$	286,164
Carrying amount	$	194,951	$	281,101

The table below shows scheduled accretion by year for the accretable difference recognized due to fair value purchase accounting on recent whole bank acquisitions. In addition, the Company has $1.61 million of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount. The scheduled accretion on this balance is estimated to be $100 per year; however, large balance payoffs, as seen in 2021 and 2020, would accelerate this accretion.

Fiscal years ending December 31,	Purchase Accounting Accretable Discount
2022	$	828
2023	279
2024	131
2025	96
Total	1,334

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

	December 31, 2021		December 31, 2020
Balance at beginning of period	$	1,087	$	6,290
Additions to non-accretable difference for acquired purchased credit impaired loans	—		—
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(105)		(1,693)
Transfers from non-accretable difference to accretable discount	(329)		(2,754)
Non-accretable difference used to reduce loan principal balance	—		(505)
Non-accretable difference transferred to OREO due to loan foreclosure	—		(251)
Balance at end of period	$	653	$	1,087

XML

MORTGAGE SERVICING RIGHTS

12 Months Ended

Dec. 31, 2021

Transfers and Servicing [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 the one- to four-family residential mortgage loans as of December 31, 2021 and December 31, 2020 were $556,086 and $553,655, respectively. These residential mortgage loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $2,781 and $2,890, at December 31, 2021 and December 31, 2020, respectively. Mortgage servicing rights activity for the years ended December 31, 2021 and December 31, 2020 was as follows:

	As of and for the twelve months ended		As of and for the twelve months ended
	December 31, 2021		December 31, 2020
Mortgage servicing rights:
Mortgage servicing rights, beginning of period	$	5,266	$	4,541
Increase in mortgage servicing rights resulting from transfers of financial assets	1,100		2,020
Amortization during the period	(1,639)		(1,295)
Mortgage servicing rights, end of period	4,727		5,266
Valuation allowance, beginning of period	(2,014)		(259)
Additions	—		(1,755)
Recoveries	1,448		—
Valuation allowance, end of period	(566)		(2,014)
Mortgage servicing rights, net	$	4,161	$	3,252
Fair value of mortgage servicing rights, end of period	$	4,312	$	3,285
Residential mortgage loans serviced for others	$	556,086	$	553,655

The current period change in valuation allowance is included in expense as mortgage servicing rights expense, net on the consolidated statement of operations. Servicing fees totaled $1,414 and $1,391 for the years ended December 31, 2021 and December 31, 2020, respectively. Late fees and ancillary fees related to loan servicing are not material.

To estimate the fair value of the MSR asset, a valuation model is applied at the loan level to calculate the present value of the expected future cash flows. The valuation model incorporates various assumptions that would impact market participants’ estimations of future servicing income. Central to the valuation model is the discount rate. Fair value at both December 31, 2021 and December 31, 2020 was determined using discount rates ranging from 9% to 12%. Other assumptions utilized in the valuation model include, but are not limited to, prepayment speed, servicing costs, delinquencies, costs of advances, foreclosure costs, ancillary income, and income earned on float and escrow.

At December 31, 2021, the estimated future aggregate amortization expense for the mortgage servicing rights is as follows. The estimated amortization expense is based on existing mortgage servicing asset balances. The timing of amortization expense actually recognized in future periods may differ significantly based on actual prepayment speeds, mortgage interest rates and other factors.

	Amortization Expense
2022	$	1,241
2023	1,040
2024	842
2025	653
2026	464
After 2026	487
Total	$	4,727

XML

OFFICE PROPERTIES AND EQUIPMENT

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

OFFICE PROPERTIES AND EQUIPMENT

OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment for each of the periods shown below consisted of the following:

	December 31, 2021		December 31, 2020
Land	$	4,215	$	4,298
Buildings	16,781		16,008
Furniture, equipment and vehicles	8,854		7,493
Subtotals	29,850		27,799
Less--Accumulated depreciation	(8,681)		(6,634)
Office properties and equipment, net	$	21,169	$	21,165

Depreciation expense was $2,255 for the year ended December 31, 2021 and $1,954 for the year ended December 31, 2020.

XML

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS    

Goodwill— The beginning and ending balance of goodwill was $31,498 during the periods ended December 31, 2021 and December 31, 2020. There were no changes to goodwill during either period.

Intangible assets--Intangible assets consist of core deposit intangibles arising from various bank acquisitions and the premium on the Wells Insurance Agency customer relationships, until its disposition in June 2020. A summary of intangible assets and related amortization for the periods shown below follows:

	Year ended		Year Ended
	December 31, 2021		December 31, 2020
Gross carrying amount	$	12,180	$	12,180
Accumulated amortization	(8,282)		(6,686)
Net book value	$	3,898	$	5,494
Sales during the period - carrying amount (1)	$	—	$	618
Sales during the period - accumulated amortization (1)	$	—	$	147
Amortization during the period	$	1,596	$	1,622

(1) Intangible asset sales during the year ended December 31, 2020, consisted of Wells Insurance Agency customer relationships included in the sale of the Wells Insurance Agency. Accumulated amortization at disposition was $147. The remaining carrying amount at disposition was $618.

At December 31, 2021, the estimated future aggregate amortization expense for the intangible assets are as follows:

	Intangible Assets
2022	$	1,449
2023	755
2024	715
2025	584
2026	395
Total	$	3,898

XML

LEASES

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

LEASES

We have operating leases for our corporate offices (1), five bank branch offices (5) and an ATM location (1). Our leases have remaining lease terms of 1.25 years to 6.50 years, some of which include options to extend the leases for up to 5 years. As of December 31, 2021, we have no additional lease commitments that have not yet commenced. Lease costs are included in non-interest expense/occupancy in the consolidated statement of operations.

	Twelve Months Ended
	December 31, 2021			December 31, 2020
The components of total lease costs were as follows:
Operating lease cost	$	558		$	618
Variable lease cost	47			59
Total lease cost	$	605		$	677
The components of total lease income were as follows:
Operating lease income	$	33		$	32
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	$	415		$	638
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2		$	508
	December, 31 2021			December 31, 2020
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,159		$	2,657
Operating lease liabilities	$	2,228		$	2,762
Weighted average remaining lease term in years; operating leases	5.55			6.32
Weighted average discount rate; operating leases	2.73		%	2.70		%

Cash obligations and receipts under lease contracts as of December 31, 2021 are as follows:

Fiscal years ending December 31,	Payments		Receipts
2022	$	558	$	34
2023	506		27
2024	419		10
2025	403		—
2026	346		—
Thereafter	480		—
Total lease payments	2,712		$	71
Less: effects of discounting	(484)
Lease liability recognized	$	2,228

XML

DEPOSITS

12 Months Ended

Dec. 31, 2021

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

DEPOSITS

DEPOSITS

The following is a summary of deposits by type at December 31, 2021 and December 31, 2020, respectively: 

	December 31, 2021		December 31, 2020
Non interest bearing demand deposits	$	276,631	$	238,348
Interest bearing demand deposits	396,231		301,764
Savings accounts	222,674		196,348
Money market accounts	288,985		245,549
Certificate accounts	203,014		313,247
Total deposits	$	1,387,535	$	1,295,256

At December 31, 2021, the scheduled maturities of time deposits were as follows:

2022	$	178,777
2023	13,919
2024	6,590
2025	2,522
2026	1,206
After 2026	—
Total	$	203,014

Time deposits of $250 or more were $22,381 and $46,660 at December 31, 2021 and December 31, 2020, respectively. Brokered deposits were $11 and $2,516 at December 31, 2021 and December 31, 2020, respectively.

Deposits from the Company’s directors, executive officers, principal stockholders and their affiliates held by the Bank at December 31, 2021 and December 31, 2020 amounted to $34,093, and $48,596, respectively.

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

12 Months Ended

Dec. 31, 2021

Federal Home Loan Banks [Abstract]

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

    A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2021 and December 31, 2020 is as follows:

		December 31,
		2021						2020
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4)	2021	$	—	—	%	—	%	$	8,000	—	%	2.16	%
	2022	11,000		2.45	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	20,000		1.43	%	1.44	%
	2024	20,530		0.00	%	1.45	%	20,530		0.00	%	1.45	%
	2025	5,000		1.45	%	1.45	%	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	%	12,500		0.52	%	0.86	%
Subtotal		111,530						123,530
Unamortized discount on acquired notes		(3)						(32)
Federal Home Loan Bank advances, net		$	111,527					$	123,498
Other borrowings:
Senior notes (5)	2031	$	28,856	3.00	%	3.50	%	$	28,856	3.25	%	3.50	%
Subordinated notes (6)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%	15,000		6.00	%	6.00	%
		$	30,000					$	30,000
Unamortized debt issuance costs		(430)						(528)
Total other borrowings		$	58,426					$	58,328
Totals		$	169,953					$	181,826

(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 pledged balances of $861,900 and $723,862 at December 31, 2021 and 2020, respectively. At December 31, 2021, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $204,271 compared to $118,391 as of December 31, 2020.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $123,530 and $162,530, during the twelve months ended December 31, 2021 and December 31, 2020, respectively.

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2021 and December 31, 2020 were 2.45% and 1.02%, respectively.

(4)    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.

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

(a) A term note which was subsequently refinanced in October 2020 and modified in October 2021, 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 3.00%, due to the modification in October 2021.

(b) A $5,000 line of credit, maturing in August 2022, that remains undrawn upon.

(6)    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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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 $176,150 and $179,400 at December 31, 2021 and 2020, respectively.

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

The Bank has originated Small Business Administration’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. This FRB PPPLF program expired on July 30, 2021. The Bank has no outstanding loan balances under this facility at December 31, 2021 and December 31, 2020. Maximum month-end borrowed amounts outstanding under this agreement were $0 and $25,136, during the twelve months ended December 31, 2021 and December 31, 2020, respectively. In July 2021, the bank pledged these SBA PPP loans to the FHLB.

XML

CAPITAL MATTERS

12 Months Ended

Dec. 31, 2021

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. As of December 31, 2021 and 2020, the most recent notifications from our regulatory agency categorized the Bank as “Well Capitalized” under the regulatory framework for Prompt Corrective Action. There are no conditions or events since these notifications that management believes have changed the Bank’s category.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2021 and 2020, 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 December 31, 2021
Total capital (to risk weighted assets)	$	187,783	13.4	%	$	111,694	> =	8.0	%	$	139,618	> =	10.0	%
Tier 1 capital (to risk weighted assets)	170,870		12.2	%	83,771		> =	6.0	%	111,694		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	170,870		12.2	%	62,828		> =	4.5	%	90,752		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	170,870		10.0	%	68,323		> =	4.0	%	85,403		> =	5.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	171,702	14.7	%	$	93,381	> =	8.0	%	$	116,726	> =	10.0	%
Tier 1 capital (to risk weighted assets)	157,081		13.5	%	70,035		> =	6.0	%	93,381		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	157,081		13.5	%	52,527		> =	4.5	%	75,872		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	157,081		9.9	%	63,718		> =	4.0	%	79,647		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2021 and 2020, respectively, are presented below:

	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Amount			Ratio
As of December 31, 2021
Total capital (to risk weighted assets)	$	182,242	13.1	%	$	111,694	> =	8.0	%
Tier 1 capital (to risk weighted assets)	135,329		9.7	%	83,771		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	135,329		9.7	%	62,828		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	135,329		7.9	%	68,323		> =	4.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	166,703	14.3	%	$	93,381	> =	8.0	%
Tier 1 capital (to risk weighted assets)	122,082		10.5	%	70,035		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	122,082		10.5	%	52,527		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	122,082		7.7	%	63,718		> =	4.0	%

The Company is a legal entity separate and distinct from its banking subsidiary. As a bank holding company, the Company is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations. Federal bank regulators are authorized to determine, under certain circumstances relating to the financial condition of a bank holding company or a bank, that the payment of dividends would be an unsafe or unsound practice, and to prohibit payment thereof. In particular, federal bank regulators have stated that paying dividends that deplete a banking

organization’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. In addition, in the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreement dated August 27, 2020 and Business Note Agreement dated August 1, 2018, which prohibits the Company from making dividend payments while an event of default has occurred and is continuing under the loan agreement or from allowing payment of a dividend which would create an event of default.

The following table reflects the annual cash dividend paid in the years ended December 31, 2021 and 2020, respectively.

	December 31, 2021		December 31, 2020
Cash dividends per share	$	0.23	$	0.21
Stockholder record date	02/11/2021		02/05/2020
Dividend payment date	02/25/2021		02/19/2020

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk—The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include off-balance-sheet credit instruments consisting of commitments to make loans. The face amounts for these items represent the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following table presents a summary of commitments described below as of December 31, 2021 and 2020, respectively:

	Contract or Notional Amount at December 31,		Contract or Notional Amount at December 31,
	2021		2020
Commitments to extend credit	$	270,985	$	247,324
Commercial standby letter of credit	$	3,825	$	524
Commitment to contribute capital to SBIC	$	2,400	$	—
Commitment to contribute capital to investment company	$	2,640	$	—

Commitments to extend credit—Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Letters of credit—Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The credit and collateral policy for commitments and letters of credit is comparable to that for granting loans. The Company has recorded no liability associated with standby letters of credit as of December 31, 2021 and 2020.

Capital Contributions—The Company has commitments to invest in a SBIC and investment company that call for capital contributions up to an amount specified in the partnership agreements.

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

XML

RETIREMENT PLAN	12 Months Ended
	Dec. 31, 2021
Retirement Benefits [Abstract]
RETIREMENT PLAN	RETIREMENT PLAN    401(k) Plan—The Company sponsors a 401(k) profit sharing plan that covers all employees who qualify based on minimum age and length of service requirements. Employees may make pretax voluntary contributions to the plan, which are matched, in part, by the Company. Employer matching contributions to the plan were $613 and $610 for the year ended December 31, 2021 and 2020, respectively.

XML

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years. As of December 31, 2021, 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 December 31, 2021, 163,974 restricted shares had been granted under this plan. As of December 31, 2021, no stock options had been granted under this plan.

Net compensation expense related to restricted stock awards from these plans was $797 and $530 for the years ended December 31, 2021 and 2020, respectively.

Restricted Common Stock Awards

	Year ended			Year ended
	December 31, 2021			December 31, 2020
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	57,242	$	12.23	43,457	$	12.76
Granted	64,399	10.78		45,507	11.79
Vested	(44,511)	13.26		(31,722)	12.32
Forfeited	(1,500)	10.78		—	—
Unvested and outstanding at end of year	75,630	$	11.20	57,242	$	12.23

The Company accounts for stock-based employee compensation related to the Company’s 2008 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The net compensation cost recognized for stock-based employee compensation from this plan for the years ended December 31, 2021 and 2020 was $8 and $14, respectively.

Common Stock Option Awards

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Year ended December 31, 2021
Outstanding at beginning of year	72,300	$	11.05
Exercised	(5,800)	8.99
Forfeited or expired	(600)	13.76
Outstanding at end of period	65,900	11.20		4.61	$	169
Exercisable at end of period	61,700	$	11.03	4.54	$	169
Year ended December 31, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,800)	11.95
Outstanding at end of year	72,300	11.05		5.49	$	—
Exercisable at end of year	54,100	$	10.82	5.37	$	4

Information related to the 2008 Equity Incentive Plan during each period follows:

	Year ended December 31,		Year ended December 31,
	2021		2020
Intrinsic value of options exercised	$	28	$	—
Cash received from options exercised	$	52	$	—
Tax benefit realized from options exercised	$	—	$	—

XML

INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	Year ended December 31,		Year ended December 31,
	2021		2020
Current tax provision
Federal	$	4,761	$	5,000
State	2,002		2,081
	6,763		7,081
Deferred tax provision (benefit)
Federal	585		(1,866)
Bank owned life insurance - Tax Act clarification	—		(660)
State	345		—
	930		(2,526)
Total	$	7,693	$	4,555

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	Year ended December 31,				Year ended December 31,
	2021				2020
	Amount		Rate		Amount		Rate
Tax expense at statutory rate	$	6,082	21.0	%	$	3,629	21.0	%
State income taxes, net of federal	1,854		6.4	%	1,123		6.5	%
Bank owned life insurance	(132)		(0.4)	%	(130)		(0.8)	%
Tax exempt interest	(52)		(0.2)	%	(61)		(0.3)	%
Other	(59)		(0.2)	%	(6)		—	%
Total	$	7,693	26.6	%	$	4,555	26.4	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and December 31, 2020, respectively:

	Year ended December 31,		Year ended December 31,
	2021		2020
Deferred tax assets:
Allowance for loan losses	$	4,587	$	4,567
Deferred loan costs/fees	558		1,117
Restricted stock	189		116
Economic performance accruals	981		694
Other real estate	—		89
Deferred revenue	41		64
Loan discounts	854		1,218
FHLB advances	5		55
Lease liability	613		758
Other	25		70
Deferred tax assets	$	7,853	$	8,748
Deferred tax liabilities:
Office properties and equipment	(1,595)		(1,551)
Federal Home Loan Bank stock	(129)		(129)
Core deposit intangible	(1,298)		(1,615)
Net gain on equity securities	(641)		(442)
Prepaid expenses	(198)		(204)
Mortgage servicing rights	(1,144)		(893)
Leases; right of use asset	(594)		(730)
Net unrealized gains on securities available for sale	(61)		(565)
Deferred tax liabilities	$	(5,660)	$	(6,129)
Net deferred tax assets	$	2,193	$	2,619

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies”, above. At December 31, 2021 and December 31, 2020, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of December 31, 2021, years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2018 to present. The years open to examination by state and local government authorities varies by jurisdiction.

The tax effects from uncertain tax positions can be recognized in the consolidated financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. The Company recognized no material expense on income tax related interest or penalties during any of the periods presented.

XML

FAIR VALUE ACCOUNTING

12 Months Ended

Dec. 31, 2021

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 December 31, 2021 and December 31, 2020.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2021
Investment securities:
U.S. government agency obligations	$	26,265	$	—	$	26,265	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	107,167		—		107,167		—
Corporate debt securities	35,588		—		35,588		—
Corporate asset-backed securities	33,908		—		33,908		—
Total investment securities	203,068		—		203,068		—
Equity investments:
Equity investments	368		368		—		—
Equity investments measured at NAV(1)	960		—		—		—
Total equity investments	1,328		368		—		—
Total	$	204,396	$	368	$	203,068	$	—
December 31, 2020
Investment securities:
U.S. government agency obligations	$	33,365	$	—	$	33,365	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	40,991		—		40,991		—
Corporate debt securities	17,462		—		17,462		—
Corporate asset-backed securities	35,827		—		35,827		—
Trust preferred securities	16,448		—		16,448		—
Total Investment Securities	144,233		—		144,233		—
Equity investments	200		200		—		—
Total	$	144,433	$	200	$	144,233	$	—

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to                         permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

For the years ended December 31, 2021 and December 31, 2020, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the years ended December 31, 2021 or December 31, 2020. There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the years ended December 31, 2021 or December 31, 2020, respectively.

Assets Measured on a Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2021 and December 31, 2020:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	$	—	$	—	$	1,408
Impaired loans with allocated allowances	5,580		—		—		5,580
Mortgage servicing rights	4,161		—		—		4,312
Total	$	11,149	$	—	$	—	$	11,300
December 31, 2020
Foreclosed and repossessed assets, net	$	197	$	—	$	—	$	197
Impaired loans with allocated allowances	3,037		—		—		3,037
Mortgage servicing rights	3,252		—		—		3,285
Total	$	6,486	$	—	$	—	$	6,519

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

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

The following table represents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at December 31, 2021 and December 31, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	5,580	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	4,312	Discounted cash flows	Discounted rates	9% - 12%
December 31, 2020
Foreclosed and repossessed assets, net	$	197	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	3,037	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	3,285	Discounted cash flows	Discounted rates	9% - 12%

(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:

		December 31, 2021				December 31, 2020
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	47,691	$	47,691	$	119,440	$	119,440
Other interest bearing deposits	(Level II)	1,511		1,535		3,752		3,818
Securities available for sale "AFS"	(Level II)	203,068		203,068		144,233		144,233
Securities held to maturity "HTM"	(Level II)	71,141		69,177		43,551		43,784
Equity investments	(Level I)	368		368		200		200
Equity investments valued at NAV (1)	N/A	960		960		—		—
Other investments	(Level II)	15,305		15,305		14,948		14,948
Loans receivable, net	(Level III)	1,294,050		1,319,293		1,220,538		1,239,692
Loans held for sale	(Level II)	6,670		6,670		3,075		3,075
Mortgage servicing rights	(Level III)	4,161		4,312		3,252		3,285
Accrued interest receivable	(Level I)	3,916		3,916		5,652		5,652
Financial liabilities:
Deposits	(Level III)	$	1,387,535	$	1,388,390	$	1,295,256	$	1,292,104
FHLB advances	(Level II)	111,527		113,285		123,498		128,282
Other borrowings	(Level I)	58,426		58,426		58,328		58,328
Accrued interest payable	(Level I)	586		586		796		796

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

XML

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share is as follows:

	Year ended		Year ended
(Share count in thousands)	December 31, 2021		December 31, 2020
Basic
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Basic earnings per share	$	1.98	$	1.14
Diluted
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Add: Dilutive stock options outstanding	10		—
Average shares and dilutive potential common shares	10,727		11,162
Diluted earnings per share	$	1.98	$	1.14
Additional common stock option shares that have not been included due to their antidilutive effect	21		69

XML

OTHER COMPREHENSIVE INCOME (LOSS)

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

OTHER COMPREHENSIVE INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS)

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

	For the year ended, December 31,						For the year ended, December 31,
	2021						2020
	Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount		Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount
Unrealized (losses) gains on securities:
Net unrealized (losses) gains arising during the period	$	(1,261)	352		$	(909)	$	2,546	$	(472)	$	2,074
Reclassification adjustment for gains included in net income	(573)		153		(420)		(156)		43		(113)
Other comprehensive income	$	(1,834)	$	505	$	(1,329)	$	2,390	$	(429)	$	1,961

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the years ended December 31, 2021 and December 31, 2020 were as follows:

	Unrealized Gains (Losses) on AFS Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2020	$	(649)	$	(471)
Current year-to-date other comprehensive income	2,705		1,961
Ending balance, December 31, 2020	$	2,056	$	1,490
Current year-to-date other comprehensive income	(1,834)		(1,329)
Ending balance, December 31, 2021	$	222	$	161

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2021 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	573		Net gains (losses) on investment securities
Tax effect	(153)			Provision for income taxes
Total reclassifications for the period	$	420		Net income attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2020 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	156		Net gains (losses) on investment securities
Tax effect	(43)			Provision for income taxes
Total reclassifications for the period	$	113		Net income attributable to common shareholders

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

XML

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Disclosure [Abstract]

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY

CONDENSED FINANCIAL INFORMATION – PARENT COMPANY ONLY

The following condensed balance sheets as of December 31, 2021 and 2020, and condensed statements of operations and cash flows for the years ended December 31, 2021 and 2020, for Citizens Community Bancorp, Inc. should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Condensed Balance Sheets

	December 31,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	22,465	$	23,333
Equity investments	360		—
Other assets	386		375
Investment in subsidiary	206,427		195,563
Total assets	$	229,638	$	219,271
Liabilities and Stockholders' Equity
Other borrowings	$	58,426	$	58,328
Other liabilities	346		379
Total liabilities	58,772		58,707
Total stockholders’ equity	170,866		160,564
Total liabilities and stockholders’ equity	$	229,638	$	219,271

Statements of Operations

	Year ended December 31,		Year ended December 31,
	2021		2020
Interest income	$	—	$	—
Interest expense	2,946		2,458
Net interest expense	(2,946)		(2,458)
Dividend income from bank subsidiary	12,500		10,500
Non-interest income	—		193
Non-interest expense	(673)		(848)
Net income before benefit for income taxes and equity in undistributed income of subsidiaries	8,881		7,387
Benefit for income taxes	989		860
Net earnings before equity in undistributed income of subsidiaries	9,870		8,247
Equity in undistributed income of subsidiaries	11,396		4,478
Net income	$	21,266	$	12,725

Statements of Cash Flows

	Year ended December 31,		Year ended December 31,
	2021		2020
Change in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	21,266	$	12,725
Depreciation expense	12		12
Stock based compensation expense	8		14
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(23,896)		(14,978)
Net change in:
Other assets	(23)		(55)
Other liabilities	(33)		313
Net cash used in operating activities	(2,666)		(1,969)
Cash flows from investing activities:
Purchase of equity securities	(360)		—
Net cash used in investing activities	(360)		—
Cash flows from financing activities:
Proceeds from other borrowings, net of issuance costs	—		14,677
Amortization of debt issuance costs	98		91
Repurchase shares of common stock	(7,951)		(2,820)
Surrender of restricted shares of common stock	(30)		(27)
Common stock options exercised	52		—
Dividend from bank to holding company	12,500		10,500
Cash dividends paid	(2,511)		(2,372)
Net cash provided by financing activities	2,158		20,049
Net (decrease) increase in cash and cash equivalents	(868)		18,080
Cash and cash equivalents at beginning of year	23,333		5,253
Cash and cash equivalents at end of year	$	22,465	$	23,333

XML

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

12 Months Ended

Dec. 31, 2021

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 inter-company accounts and transactions have been eliminated.

Use of Estimates

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 accompanying transition report on Form 10-K for the year ended December 31, 2021 and 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.

Cash and Cash Equivalents

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

Other Interest Bearing Deposits

Other Interest Bearing Deposits—Other interest bearing deposits are certificate of deposit investments made by the Bank with other financial institutions that are carried at cost. The weighted average months to maturity of the interest bearing deposits is 8.97 months. Balances over $250 in those institutions are not insured by the FDIC and therefore pose a potential risk in the event the institution were to fail. As of December 31, 2021 and December 31, 2020, there were no certificate of deposit accounts with a balance greater than $250.

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. Realized gains or losses on sales of available for sale securities are calculated with the specific identification method and are included in the consolidated statements of operations under net gains on investment securities. 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 investments

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

Also included in equity investments are the Company’s investments in a Volker Rule-compliant Small Business Investment Company ("SBIC") and an investment fund. The SBIC and investment fund meet the definition of investment companies, as defined in ASC 946, Financial Services - Investment Companies. These investments seek returns by investing in various small businesses and do not have redemption rights. Distributions from the investments will be received as the underlying investments, which generally have a life of 10 years, are liquidated. We elected the practical expedient available in Topic 820, Fair Value Measurements, which permits the use of net asset value ("NAV") per share or equivalent to value investments in entities that are or are similar to investment companies. SBICs and investment funds report their investments at estimated fair value. We record the unrealized gains and losses resulting from changes in the fair value of these investments as gains or losses on equity securities in our consolidated statements of operations. The carrying value of these investments is equal to the capital account balance per each entities' quarterly financial statements.

Other investments

Other investments - As a member of the Federal Reserve Bank System and the Federal Home Loan Bank (“FHLB”) System, the Bank is required to maintain an investment in the capital stock of these entities. 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 non-interest 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 (PCI) 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 over the contractual life of the loan with no prepayments assumed. If the loan is prepaid, any amortized net fee is recognized at that time. 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”), less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Residential mortgage loans and open ended consumer installment loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. 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 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 are 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 credit 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 ultimately are not 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 as non-interest income in the consolidated statement 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.

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.

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 for impairment at least annually; carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value. MSR assets are amortized in proportion to and over the period of estimated net servicing income, with the amortization recorded in non-interest expense in the consolidated statement of operations.The valuation of MSRs and related amortization, included in mortgage servicing rights expense in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs. Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.Servicing fee income, which is reported on the consolidated statements of operations in non-interest income as loan servicing fee income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Office Properties and Equipment

Office Properties and Equipment—Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of office properties and equipment are reflected in income. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 10 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated using the straight-line (or accelerated) method with useful lives based on the lesser of (a) the estimated life of the lease, or (b) the estimated useful life of the leasehold improvement. Depreciation expense is included in non-interest expense on the consolidated statements of operations.

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, primarily Core Deposit Intangibles (CDI) with definite useful economic lives over their useful economic lives ranging from 48 to 111 months 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. Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. 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, 2021 which is related to its banking activities. The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit. An initial qualitative evaluation is made to assess the likelihood of impairment and determine whether further quantitative testing to calculate the fair value is necessary. When the qualitative evaluation indicates that impairment is more likely than not, quantitative testing is required whereby the fair value of the Company’s reporting unit is calculated and compared to the recorded book value, “step one.” If the calculated fair value of the Company’s reporting unit exceeds its carrying value, goodwill is not considered impaired and “step two” is not considered necessary. If the carrying value of the company’s reporting unit exceeds its calculated fair value, the impairment test continues (“step two”) by comparing the carrying value of the Company’s reporting unit’s goodwill to the implied fair value of goodwill. An impairment charge is recognized if the carrying value of goodwill exceeds the implied fair value of goodwill.

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.

Bank Owned Life Insurance (BOLI)

Bank Owned Life Insurance (BOLI)—The Bank invests in bank-owned life insurance (BOLI) as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Bank on a select group of employees. The Bank is the owner and beneficiary of the policies. Income from the increase in cash surrender value of the policies as well as the receipt of death benefits is included in non-interest income on the consolidated statements of operations.

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. Lease expense is included in non-interest expense, occupancy in the consolidated statements of operations.

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 and equity issuance costs—Debt issuance costs, which consist primarily of fees paid to note lenders, are deferred and included in other borrowings in the consolidated balance sheets. Debt issuance costs with a Company call option that originated prior to 2020 and senior note debt issuance costs, are amortized over the contractual term of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Debt issuance costs that originated in 2020 and thereafter, are amortized through the first Company call option date of the corresponding debt, as a component of interest expense on other borrowed funds in the consolidated statements of operations. Specific costs associated with the issuance of shares of the Company’s common or preferred stock are netted against proceeds and recorded in stockholders’ equity, as additional paid in capital, on the consolidated balance sheets, in the period of the share issuance.

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. See Note 14, “Income Taxes” for details on the Company’s income taxes.

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’s primary source of revenue is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method. The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts or other similar contracts.

The company accounts for revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Topic 606 provides that revenue from contracts with customers be recognized when performance obligations under the terms of a contract are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing service. The company does not have any materially significant payment terms as payment is received shortly after the satisfaction of the performance obligation. The non-interest income line items recognized under the scope of Topic 606 are as follows:

Service charges on deposit accounts - Service charges on accounts consist of monthly service fees, transaction-based fees, overdraft services and other deposit account related fees. The Company’s performance obligation for monthly services fees is generally satisfied over the period in which the service is provided. Revenue for these monthly fees is recognized during the service period. Other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied at the time the service is provided. Payment for service charges on deposit accounts are primarily received immediately or in the following month through a direct charge to a customer’s account.

Interchange income - The Company earns interchange fees when cardholder debit card transaction are processed through card association networks. The interchange rates are generally set by the card association based upon purchase volumes and other factors. Interchange fees represent a percentage of the underlying transaction value. The Company has a continuous contract, based on customary business practices, with the card association networks to make funds

available for settlement of card transactions. The Company’s performance obligation is satisfied over time as it makes funds available, and the related income is recognized when received.

Insurance commission income - Commission revenue from WIA was recognized as of the effective date of the insurance policy or the date the customer was billed, whichever was later. The Company also received contingent commissions from insurance companies which were 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 were recognized when determinable. Commission revenue is included in other non-interest income in the consolidated statement of operations and has been discontinued due to the sale of WIA on June 30, 2020.

Non-interest income outside of the scope of Revenue from Contracts with Customers, Topic 606 is recognized on the accrual basis of accounting as services are provided or as transactions occur. Non-interest income outside of the scope of Topic 606 includes mortgage banking activities, loan fees and service charges, net gains (losses) on investment securities, Net gain on sale of acquired business lines, settlement proceeds, and other, which is primarily made up of BOLI related income.

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.

Loss Contingencies

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

Off-Balance-Sheet Financial Instruments

Off-Balance-Sheet Financial Instruments—In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and commitments under lines of credit arrangements, issued to meet customer financial needs. Such financial instruments are recorded in the financial statements when they become payable. See Note 11, “Commitments and Contingencies” in Notes to Consolidated Financial Statements.

Derivatives--Rate-lock Commitments and Forward Sale Agreements

Derivatives--Rate-lock Commitments and Forward Sale Agreements —The Company enters into commitments to originate loans, whereby the interest rate on the loan is determined prior to funding (rate-lock commitment). Rate-lock commitments on mortgage loans held for sale are derivative instruments. If material, derivative instruments are carried on the consolidated balance sheets at fair value, and changes in the fair value thereof are recognized in the consolidated statements of operations. The Company originates single-family residential loans for sale, pursuant to programs primarily with the Federal Home Loan Mortgage Corporation (FHLMC) and other similar third parties. In connection with these programs, at the time the Company initially issues a loan commitment, it does not lock in a specific interest rate. At the time the interest rate is locked in by the borrower, the Company concurrently enters into a forward loan sale agreement with the prospective loan purchaser, at a specific price, in order to manage the interest rate risk inherent to the rate-lock commitment. The forward sale agreement also meets the definition of a derivative instrument. Any change in the fair value of the loan commitment after the borrower locks in the interest rate is substantially offset by the corresponding change in the fair value of the forward loan sale agreement related to such loan. The period from the time the borrower locks in the interest rate, to the time the Company funds the loan and sells the loan to a third party varies, and could be up to 90 days. The fair value of each instrument will rise and fall in response to changes in market interest rates, subsequent to the dates the interest rate locks and forward sale agreements are entered into. In the event that interest rates rise after the Company enters into an interest rate lock, the fair value of the loan commitment will decline. However, the fair value of the forward loan sale agreement related to such loan commitment should increase by substantially the same amount, effectively eliminating the Company’s interest rate and price risks.

Other Comprehensive Income

Other Comprehensive Income —Accumulated and other comprehensive income or loss is comprised of the unrealized and realized gains and losses on securities available for sale, net of tax, and is shown on the accompanying consolidated statements of comprehensive income.

Operating Segments

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 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 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 contracts, 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, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13 becoming effective in the first quarter of 2023 for the Company. Earlier adoption 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 (Tables)

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Estimated Fair Value and Related Unrealized Gains and Losses on Available-for-Sale Securities

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of December 31, 2021 and December 31, 2020, respectively, were as follows:

Available for sale securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
U.S. government agency obligations	$	25,826	$	440	$	1	$	26,265
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	107,636		409		878		107,167
Corporate debt securities	35,342		403		157		35,588
Corporate asset-backed securities	33,902		133		127		33,908
Total available for sale securities	$	202,846	$	1,385	$	1,163	$	203,068
December 31, 2020
U.S. government agency obligations	$	33,048	$	387	$	70	$	33,365
Obligations of states and political subdivisions	140		—		—		140
Mortgage-backed securities	39,454		1,537		—		40,991
Corporate debt securities	17,199		372		109		17,462
Corporate asset-backed securities	36,039		104		316		35,827
Trust preferred securities	16,297		189		38		16,448
Total available for sale securities	$	142,177	$	2,589	$	533	$	144,233

Schedule of Amortized Cost, Estimated Fair Value and Related Unrealized Gains and Losses on Held-to-Maturity Securities

Held to maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
Obligations of states and political subdivisions	$	4,600	$	—	$	7	$	4,593
Mortgage-backed securities	66,541		104		2,061		64,584
Total held to maturity securities	$	71,141	$	104	$	2,068	$	69,177
December 31, 2020
Obligations of states and political subdivisions	$	600	$	2	$	—	$	602
Mortgage-backed securities	42,951		265		34		43,182
Total held to maturity securities	$	43,551	$	267	$	34	$	43,784

Schedule of Estimated Fair Value of Securities by Contractual Maturity

The estimated fair value of available for sale securities at December 31, 2021 and December 31, 2020, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities on mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Expected maturities may differ from contractual maturities on certain agency and securities due to the call feature.

	December 31, 2021				December 31, 2020
Available for sale securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	140	$	140	$	—	$	—
Due after one year through five years	4,903		4,971		3,833		4,095
Due after five years through ten years	40,410		40,818		44,405		44,880
Due after ten years	49,757		49,972		54,485		54,267
Total securities with contractual maturities	95,210		95,901		102,723		103,242
Mortgage-backed securities	107,636		107,167		39,454		40,991
Total available for sale securities	$	202,846	$	203,068	$	142,177	$	144,233

	December 31, 2021				December 31, 2020
Held to maturity securities	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due after one year through five years	$	4,300	$	4,298	$	200	$	200
Due after five years through ten years	300		295		400		402
Total securities with contractual maturities	4,600		4,593		600		602
Mortgage-backed securities	66,541		64,584		42,951		43,182
Total held to maturity securities	$	71,141	$	69,177	$	43,551	$	43,784

Schedule of Available-for-Sale Securities with Unrealized Losses

Securities with unrealized losses at December 31, 2021 and December 31, 2020, 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
December 31, 2021
U.S. government agency obligations	$	1,169	$	1	$	—	$	—	$	1,169	$	1
Mortgage-backed securities	89,010		878		—		—		89,010		878
Corporate debt securities	17,240		142		735		15		17,975		157
Corporate asset-backed securities	19,296		127		—		—		19,296		127
Total	$	126,715	$	1,148	$	735	$	15	$	127,450	$	1,163
December 31, 2020
U.S. government agency obligations	$	7,654	$	17	$	6,834	$	53	$	14,488	$	70
Corporate debt securities	3,447		27		1,418		82		4,865		109
Corporate asset-backed securities	—		—		24,310		316		24,310		316
Trust preferred securities	5,612		38		—		—		5,612		38
Total	$	16,713	$	82	$	32,562	$	451	$	49,275	$	533

Schedule of Held-to-Maturity Securities with Unrealized Losses

	Less than 12 Months				12 Months or More				Total
Held to maturity securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
December 31, 2021
Obligations of states and political subdivisions	$	593	$	7	$	—	$	—	$	593	$	7
Mortgage-backed securities	46,969		1,346		14,716		715		61,685		2,061
Total	$	47,562	$	1,353	$	14,716	$	715	$	62,278	$	2,068
December 31, 2020
Mortgage-backed securities	$	16,538	$	34	$	—	$	—	$	16,538	$	34
Total	$	16,538	$	34	$	—	$	—	$	16,538	$	34

XML

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

12 Months Ended

Dec. 31, 2021

Receivables [Abstract]

Schedule of Major Classifications of Loans

Loans by classes within portfolio segments were as follows:

	December 31, 2021		December 31, 2020
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	578,395	$	351,113
Agricultural real estate	52,372		31,741
Multi-family real estate	174,050		112,731
Construction and land development	78,613		91,241
C&I/Agricultural operating:
Commercial and industrial	107,937		95,290
Agricultural operating	26,202		24,457
Residential mortgage:
Residential mortgage	63,855		86,283
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,473		12,056
Total originated loans before SBA PPP loans	$	1,109,739	$	837,023
SBA PPP loans	8,755		123,702
Total originated loans	$	1,118,494	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	120,070	$	156,562
Agricultural real estate	26,123		37,054
Multi-family real estate	4,299		9,421
Construction and land development	907		7,276
C&I/Agricultural operating:
Commercial and industrial	14,230		21,263
Agricultural operating	5,386		8,328
Residential mortgage:
Residential mortgage	27,135		45,103
Consumer installment:
Other Consumer	401		1,157
Total acquired loans	$	198,551	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	698,465	$	507,675
Agricultural real estate	78,495		68,795
Multi-family real estate	178,349		122,152
Construction and land development	79,520		98,517
C&I/Agricultural operating:
Commercial and industrial	122,167		116,553
Agricultural operating	31,588		32,785
Residential mortgage:
Residential mortgage	90,990		131,386
Purchased HELOC loans	3,871		6,260
Consumer installment:
Originated indirect paper	15,971		25,851
Other Consumer	8,874		13,213
Total loans before SBA PPP loans	$	1,308,290	$	1,123,187
SBA PPP loans	8,755		123,702
Gross loans	$	1,317,045	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process	(2,482)		(4,245)
Unamortized discount on acquired loans	(3,600)		(5,063)
Allowance for loan losses	(16,913)		(17,043)
Loans receivable, net	$	1,294,050	$	1,220,538

Schedule of Loans by Risk Rating

Below is a breakdown of loans by risk rating as of December 31, 2021:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	572,724	$	667	$	5,004	$	—	$	—	$	578,395
Agricultural real estate	50,834		1,267		271		—		—		52,372
Multi-family real estate	173,760		290		—		—		—		174,050
Construction and land development	75,146		—		3,467		—		—		78,613
C&I/Agricultural operating:
Commercial and industrial	107,798		57		82		—		—		107,937
Agricultural operating	23,935		764		1,503		—		—		26,202
Residential mortgage:
Residential mortgage	60,754		—		3,101		—		—		63,855
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,404		—		69		—		—		8,473
Total originated loans before SBA PPP loans	1,092,879		3,045		13,815		—		—		1,109,739
SBA PPP loans	8,755		—		—		—		—		8,755
Total originated loans	$	1,101,634	$	3,045	$	13,815	$	—	$	—	$	1,118,494
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	116,839	$	1,314	$	1,917	$	—	$	—	$	120,070
Agricultural real estate	21,051		—		5,072		—		—		26,123
Multi-family real estate	4,299		—		—		—		—		4,299
Construction and land development	735		172		—		—		—		907
C&I/Agricultural operating:
Commercial and industrial	13,931		5		294		—		—		14,230
Agricultural operating	4,936		—		450		—		—		5,386
Residential mortgage:
Residential mortgage	25,869		—		1,266		—		—		27,135
Consumer installment:
Other Consumer	398		—		3		—		—		401
Total acquired loans	$	188,058	$	1,491	$	9,002	$	—	$	—	$	198,551
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	689,563	$	1,981	$	6,921	$	—	$	—	$	698,465
Agricultural real estate	71,885		1,267		5,343		—		—		78,495
Multi-family real estate	178,059		290		—		—		—		178,349
Construction and land development	75,881		172		3,467		—		—		79,520
C&I/Agricultural operating:
Commercial and industrial	121,729		62		376		—		—		122,167
Agricultural operating	28,871		764		1,953		—		—		31,588
Residential mortgage:
Residential mortgage	86,623		—		4,367		—		—		90,990
Purchased HELOC loans	3,706		—		165		—		—		3,871
Consumer installment:
Originated indirect paper	15,818		—		153		—		—		15,971
Other Consumer	8,802		—		72		—		—		8,874
Gross loans before SBA PPP loans	$	1,280,937	$	4,536	$	22,817	$	—	$	—	$	1,308,290
SBA PPP loans	8,755		—		—		—		—		8,755
Gross loans	$	1,289,692	$	4,536	$	22,817	$	—	$	—	1,317,045
Less:
Unearned net deferred fees and costs and loans in process											(2,482)
Unamortized discount on acquired loans											(3,600)
Allowance for loan losses											(16,913)
Loans receivable, net											$	1,294,050

Below is a breakdown of loans by risk rating as of December 31, 2020:

	1 to 5		6		7		8		9		TOTAL
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	349,482	$	543	$	1,088	$	—	$	—	$	351,113
Agricultural real estate	30,041		446		1,254		—		—		31,741
Multi-family real estate	112,423		308		—		—		—		112,731
Construction and land development	87,763		—		3,478		—		—		91,241
C&I/Agricultural operating:
Commercial and industrial	91,474		20		3,796		—		—		95,290
Agricultural operating	22,462		934		1,061		—		—		24,457
Residential mortgage:
Residential mortgage	82,097		7		4,179		—		—		86,283
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:					—
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	11,986		—		70		—		—		12,056
Total originated loans before SBA PPP loans	$	819,303	$	2,258	$	15,462	$	—	$	—	$	837,023
SBA PPP loans	123,702		—		—		—		—		123,702
Total originated loans	$	943,005	$	2,258	$	15,462	$	—	$	—	$	960,725
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	148,303	$	4,274	$	3,985	$	—	$	—	$	156,562
Agricultural real estate	31,147		—		5,907		—		—		37,054
Multi-family real estate	9,273		—		148		—		—		9,421
Construction and land development	7,237		—		39		—		—		7,276
C&I/Agricultural operating:
Commercial and industrial	20,918		9		336		—		—		21,263
Agricultural operating	7,838		—		490		—		—		8,328
Residential mortgage:
Residential mortgage	42,805		131		2,167		—		—		45,103
Consumer installment:
Other Consumer	1,150		—		7		—		—		1,157
Total acquired loans	$	268,671	$	4,414	$	13,079	$	—	$	—	$	286,164
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate	$	497,785	$	4,817	$	5,073	$	—	$	—	$	507,675
Agricultural real estate	61,188		446		7,161		—		—		68,795
Multi-family real estate	121,696		308		148		—		—		122,152
Construction and land development	95,000		—		3,517		—		—		98,517
C&I/Agricultural operating:
Commercial and industrial	112,392		29		4,132		—		—		116,553
Agricultural operating	30,300		934		1,551		—		—		32,785
Residential mortgage:
Residential mortgage	124,902		138		6,346		—		—		131,386
Purchased HELOC loans	5,959		—		301		—		—		6,260
Consumer installment:
Originated indirect paper	25,616		—		235		—		—		25,851
Other Consumer	13,136		—		77		—		—		13,213
Gross loans before SBA PPP loans	$	1,087,974	$	6,672	$	28,541	$	—	$	—	$	1,123,187
SBA PPP loans	123,702		—		—		—		—		123,702
Gross loans	$	1,211,676	$	6,672	$	28,541	$	—	$	—	$	1,246,889
Less:
Unearned net deferred fees and costs and loans in process											(4,245)
Unamortized discount on acquired loans											(5,063)
Allowance for loan losses											(17,043)
Loans receivable, net											$	1,220,538

Schedule of Changes in Loans

A summary of the changes in those loans is as follows:

	Twelve months ended		Twelve months ended
	December 31, 2021		December 31, 2020
Balance—beginning of period	$	26,483	$	20,367
New loan originations	14,992		7,230
Repayments	(9,052)		(1,114)
Balance—end of period	$	32,423	$	26,483
Available and unused lines of credit	$	75	$	187

Schedule of Changes in Specific Component on Impaired Loans and General Component for Non-Impaired Loans

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

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2021:
Allowance for Loan Losses:
Beginning balance, January 1, 2021	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Charge-offs	(51)		—		—		(54)		—		(105)
Recoveries	14		110		9		41		—		174
Provision	2,120		(263)		(532)		(251)		(132)		942
Total Allowance on originated loans	$	12,354	$	1,959	$	518	$	225	$	774	$	15,830
Other acquired loans:
Beginning balance, January 1, 2021	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Charge-offs	(200)		(7)		—		(27)		—		(234)
Recoveries	14		13		4		4		—		35
Provision	(642)		(78)		(209)		(13)		—		(942)
Total allowance on other acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Total allowance on acquired loans	$	856	$	69	$	130	$	28	$	—	$	1,083
Ending Balance, December 31, 2021	$	13,210	$	2,028	$	648	$	253	$	774	$	16,913
Allowance for Loan Losses at December 31, 2021:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	797	$	99	$	113	$	—	$	—	$	1,009
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	12,413	$	1,929	$	535	$	253	$	774	$	15,904
Loans Receivable as of December 31, 2021:
Ending balance of originated loans	$	883,430	$	142,894	$	67,726	$	24,444	$	—	$	1,118,494
Ending balance of purchased credit-impaired loans	9,060		1,101		1,044		—		—		11,205
Ending balance of other acquired loans	142,339		18,515		26,091		401		—		187,346
Ending balance of loans	$	1,034,829	$	162,510	$	94,861	$	24,845	$	—	$	1,317,045
Ending balance: individually evaluated for impairment	$	21,792	$	3,337	$	7,007	$	257	$	—	$	32,393
Ending balance: collectively evaluated for impairment	$	1,013,037	$	159,173	$	87,854	$	24,588	$	—	$	1,284,652

	Commercial/Agricultural Real Estate		C&I/Agricultural operating		Residential Mortgage		Consumer Installment		Unallocated		Total
Twelve months ended December 31, 2020:
Allowance for Loan Losses:
Beginning balance, January 1, 2020	$	6,205	$	1,643	$	879	$	467	$	357	$	9,551
Charge-offs	—		(932)		(5)		(145)		—		(1,082)
Recoveries	75		8		7		69		—		159
Provision	3,991		1,393		160		98		549		6,191
Total Allowance on originated loans	$	10,271	$	2,112	$	1,041	$	489	$	906	$	14,819
Other acquired loans:
Beginning balance, January 1, 2020	$	526	$	27	$	163	$	53	$	—	$	769
Charge-offs	—		(159)		(74)		(3)		—		(236)
Recoveries	77		33		15		7		—		132
Provision	1,081		240		231		7		—		1,559
Total Allowance on other acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Total Allowance on acquired loans	$	1,684	$	141	$	335	$	64	$	—	$	2,224
Ending balance, December 31, 2020	$	11,955	$	2,253	$	1,376	$	553	$	906	$	17,043
Allowance for Loan Losses at December 31, 2020:
Amount of allowance for loan losses arising from loans individually evaluated for impairment	$	698	$	190	$	226	$	1	$	—	$	1,115
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	$	11,257	$	2,063	$	1,150	$	552	$	906	$	15,928
Loans Receivable as of December 31, 2020:
Ending balance of originated loans	$	586,826	$	243,449	$	92,543	$	37,907	$	—	$	960,725
Ending balance of purchased credit-impaired loans	15,100		1,534		1,312		—		—		17,946
Ending balance of other acquired loans	195,213		28,057		43,791		1,157		—		268,218
Ending balance of loans	$	797,139	$	273,040	$	137,646	$	39,064	$	—	$	1,246,889
Ending balance: individually evaluated for impairment	$	26,303	$	7,115	$	9,621	$	358	$	—	$	43,397
Ending balance: collectively evaluated for impairment	$	770,836	$	265,925	$	128,025	$	38,706	$	—	$	1,203,492

Schedule of Loans Receivable

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

	Commercial/Agricultural Real Estate Loans				C&I/Agricultural operating				Residential Mortgage				Consumer Installment				Totals
	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
	2021		2020		2021		2020		2021		202		2021		202		2021		2020
Performing loans
Performing TDR loans	$	4,618	$	4,695	$	649	$	3,836	$	2,681	$	3,142	$	36	$	49	$	7,984	$	11,722
Performing loans other	1,021,346		786,533		160,570		266,975		90,591		131,470		24,729		38,856		1,297,236		1,223,834
Total performing loans	1,025,964		791,228		161,219		270,811		93,272		134,612		24,765		38,905		1,305,220		1,235,556
Nonperforming loans (1)
Nonperforming TDR loans	3,389		4,691		554		1,287		593		777		3		—		4,539		6,755
Nonperforming loans other	5,476		1,220		737		942		996		2,257		77		159		7,286		4,578
Total nonperforming loans	8,865		5,911		1,291		2,229		1,589		3,034		80		159		11,825		11,333
Total loans	$	1,034,829	$	797,139	$	162,510	$	273,040	$	94,861	$	137,646	$	24,845	$	39,064	$	1,317,045	$	1,246,889

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

Schedule of Aging Analysis of Bank Real Estate and Consumer Loans

An aging analysis of the Company’s commercial/agricultural real estate and non-real estate, consumer real estate and non-real estate and purchased third party loans as of December 31, 2021 and 2020, 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 Accruing		Nonaccrual Loans		Current		Total Loans
December 31, 2021
Commercial/Agricultural real estate:
Commercial real estate	$	36	$	—	$	—	$	36	$	5,374	$	693,055	$	698,465
Agricultural real estate	498		4		—		502		3,490		74,503		78,495
Multi-family real estate	—		—		—		—		—		178,349		178,349
Construction and land development	—		—		—		—		—		79,520		79,520
C&I/Agricultural operating:
Commercial and industrial	—		32		—		32		298		121,837		122,167
SBA PPP loans	—		—		—		—		—		8,755		8,755
Agricultural operating	1,123		—		—		1,123		993		29,472		31,588
Residential mortgage:
Residential mortgage	1,471		487		156		2,114		1,268		87,608		90,990
Purchased HELOC loans	117		—		—		117		165		3,589		3,871
Consumer installment:
Originated indirect paper	38		27		—		65		55		15,851		15,971
Other Consumer	58		10		4		72		22		8,780		8,874
Total	$	3,341	$	560	$	160	$	4,061	$	11,665	$	1,301,319	$	1,317,045
December 31, 2020
Commercial/Agricultural real estate:
Commercial real estate	$	9,568	$	467	$	—	$	10,035	$	679	$	496,961	$	507,675
Agricultural real estate	411		48		—		459		5,084		63,252		68,795
Multi-family real estate	308		—		—		308		148		121,696		122,152
Construction and land development	3,898		—		—		3,898		—		94,619		98,517
C&I/Agricultural operating:
Commercial and industrial	436		491		—		927		357		115,269		116,553
SBA PPP loans	—		—		—		—		—		123,702		123,702
Agricultural operating	1,499		200		—		1,699		1,872		29,214		32,785
Residential mortgage:
Residential mortgage	2,238		372		516		3,126		2,217		126,043		131,386
Purchased HELOC loans	338		94		67		499		234		5,527		6,260
Consumer installment:
Originated indirect paper	90		37		—		127		133		25,591		25,851
Other Consumer	100		14		3		117		23		13,073		13,213
Total	$	18,886	$	1,723	$	586	$	21,195	$	10,747	$	1,214,947	$	1,246,889

Schedule of Bank Impaired Loans

A summary of loans evaluated for impairment as of December 31, 2021 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2021
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	15,521	$	15,905	$	—	$	19,412	$	964
C&I/Agricultural operating	3,153		3,337		—		4,622		146
Residential mortgage	6,221		6,306		—		7,316		316
Consumer installment	256		256		—		306		85
Total	$	25,151	$	25,804	$	—	$	31,656	$	1,511
With An Allowance Recorded:
Commercial/Agricultural real estate	$	5,887	$	5,887	$	797	$	4,089	$	62
C&I/Agricultural operating	—		—		99		391		84
Residential mortgage	701		701		113		890		17
Consumer installment	1		1		—		2		—
Total	$	6,589	$	6,589	$	1,009	$	5,372	$	163
December 31, 2021 Totals
Commercial/Agricultural real estate	$	21,408	$	21,792	$	797	$	23,501	$	1,026
C&I/Agricultural operating	3,153		3,337		99		5,013		230
Residential mortgage	6,922		7,007		113		8,206		333
Consumer installment	257		257		—		308		85
Total	$	31,740	$	32,393	$	1,009	$	37,028	$	1,674

A summary of loans evaluated for impairment as of December 31, 2020 was as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2020
With No Related Allowance Recorded:
Commercial/Agricultural real estate	$	23,302	$	24,013	$	—	$	29,657	$	1,894
C&I/Agricultural operating	6,090		6,334		—		7,025		284
Residential mortgage	8,410		8,542		—		8,418		450
Consumer installment	356		356		—		368		30
Total	$	38,158	$	39,245	$	—	$	45,468	$	2,658
With An Allowance Recorded:
Commercial/Agricultural real estate	$	2,290	$	2,290	$	698	$	2,217	$	100
C&I/Agricultural operating	781		781		190		636		22
Residential mortgage	1,079		1,079		226		1,255		54
Consumer installment	2		2		1		35		1
Total	$	4,152	$	4,152	$	1,115	$	4,143	$	177
December 31, 2020 Totals
Commercial/Agricultural real estate	$	25,592	$	26,303	$	698	$	31,874	$	1,994
C&I/Agricultural operating	6,871		7,115		190		7,661		306
Residential mortgage	9,489		9,621		226		9,673		504
Consumer installment	358		358		1		403		31
Total	$	42,310	$	43,397	$	1,115	$	49,611	$	2,835

Schedule of Troubled Debt Restructuring, Loans by Accrual Status

Following is a summary of TDR loans by accrual status as of December 31, 2021 and December 31, 2020.

	December 31		December 31
	2021		2020
Troubled debt restructure loans:
Accrual status	$	7,984	$	11,742
Non-accrual status	4,539		6,735
Total	$	12,523	$	18,477

Schedule of Troubled Debt Restructuring

The following provides detail, including specific reserve and reasons for modification, related to loans identified as TDRs during the years ended December 31, 2021 and December 31, 2020:

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2021
TDRs:
Commercial/Agricultural real estate	3	$	39	$	81	$	—	$	—	$	120	$	120	$	—
C&I/Agricultural operating	1	—		—		240		—		240		240		—
Residential mortgage	8	252		295		202		—		749		749		—
Consumer installment	3	6		—		18		—		24		24		—
Totals	15	$	297	$	376	$	460	$	—	$	1,133	$	1,133	$	—

	Number of Contracts	Modified Rate		Modified Payment		Modified Under- writing		Other		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Twelve months ended December 31, 2020
TDRs:
Commercial/Agricultural real estate	12	$	4,441	$	198	$	293	$	—	$	4,932	$	4,932	$	—
C&I/Agricultural operating	6	3,295		78		3,000		—		6,373		6,373		—
Residential mortgage	17	456		858		117		—		1,431		1,431		—
Consumer installment	3	6		—		4		—		10		10		—
Totals	38	$	8,198	$	1,134	$	3,414	$	—	$	12,746	$	12,746	$	—

Schedule of Loans by Loan Class Modified in Troubled Debt Restructuring

A summary of loans by loan class modified in a troubled debt restructuring as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	19	$	8,007	31	$	9,386
C&I/Agricultural operating	7	1,203		16	5,123
Residential mortgage	43	3,274		52	3,919
Consumer installment	7	39		8	49
Total loans	76	$	12,523	107	$	18,477

Schedule of Restructured Loans in Default

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the years ended December 31, 2021 and December 31, 2020, as well as the recorded investment in these restructured loans as of December 31, 2021 and December 31, 2020:

	December 31, 2021			December 31, 2020
	Number of Modifications	Recorded Investment		Number of Modifications	Recorded Investment
Troubled debt restructurings:
Commercial/Agricultural real estate	—	$	—	1	$	100
C&I/Agricultural operating	—	—		1	224
Residential mortgage	—	—		4	404
Consumer installment	1	3		—	—
Total troubled debt restructurings	1	$	3	6	$	728

Schedule of Acquired Loans

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

	December 31, 2021		December 31, 2020
Accountable for under ASC 310-30 (PCI loans)
Outstanding balance	$	11,205	$	17,946
Carrying amount	$	10,552	$	16,859
Accountable for under ASC 310-20 (non-PCI loans)
Outstanding balance	$	187,346	$	268,218
Carrying amount	$	184,399	$	264,242
Total acquired loans
Outstanding balance	$	198,551	$	286,164
Carrying amount	$	194,951	$	281,101

Schedule of Accretable Expense

The table below shows scheduled accretion by year for the accretable difference recognized due to fair value purchase accounting on recent whole bank acquisitions. In addition, the Company has $1.61 million of accretable discount from purchased impaired loans with the original non-accretable discount transferred to accretable discount. The scheduled accretion on this balance is estimated to be $100 per year; however, large balance payoffs, as seen in 2021 and 2020, would accelerate this accretion.

Fiscal years ending December 31,	Purchase Accounting Accretable Discount
2022	$	828
2023	279
2024	131
2025	96
Total	1,334

Schedule of Non-Accretable Yield

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

	December 31, 2021		December 31, 2020
Balance at beginning of period	$	1,087	$	6,290
Additions to non-accretable difference for acquired purchased credit impaired loans	—		—
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(105)		(1,693)
Transfers from non-accretable difference to accretable discount	(329)		(2,754)
Non-accretable difference used to reduce loan principal balance	—		(505)
Non-accretable difference transferred to OREO due to loan foreclosure	—		(251)
Balance at end of period	$	653	$	1,087

XML

MORTGAGE SERVICING RIGHTS (Tables)

12 Months Ended

Dec. 31, 2021

Transfers and Servicing [Abstract]

Schedule of Mortgage Servicing Rights Activity

Mortgage servicing rights activity for the years ended December 31, 2021 and December 31, 2020 was as follows:

	As of and for the twelve months ended		As of and for the twelve months ended
	December 31, 2021		December 31, 2020
Mortgage servicing rights:
Mortgage servicing rights, beginning of period	$	5,266	$	4,541
Increase in mortgage servicing rights resulting from transfers of financial assets	1,100		2,020
Amortization during the period	(1,639)		(1,295)
Mortgage servicing rights, end of period	4,727		5,266
Valuation allowance, beginning of period	(2,014)		(259)
Additions	—		(1,755)
Recoveries	1,448		—
Valuation allowance, end of period	(566)		(2,014)
Mortgage servicing rights, net	$	4,161	$	3,252
Fair value of mortgage servicing rights, end of period	$	4,312	$	3,285
Residential mortgage loans serviced for others	$	556,086	$	553,655

Schedule of Estimated Future Aggregate Amortization Expense

The timing of amortization expense actually recognized in future periods may differ significantly based on actual prepayment speeds, mortgage interest rates and other factors.

	Amortization Expense
2022	$	1,241
2023	1,040
2024	842
2025	653
2026	464
After 2026	487
Total	$	4,727

At December 31, 2021, the estimated future aggregate amortization expense for the intangible assets are as follows:

	Intangible Assets
2022	$	1,449
2023	755
2024	715
2025	584
2026	395
Total	$	3,898

XML

OFFICE PROPERTIES AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Schedule of Office Properties and Equipment

Office properties and equipment for each of the periods shown below consisted of the following:

	December 31, 2021		December 31, 2020
Land	$	4,215	$	4,298
Buildings	16,781		16,008
Furniture, equipment and vehicles	8,854		7,493
Subtotals	29,850		27,799
Less--Accumulated depreciation	(8,681)		(6,634)
Office properties and equipment, net	$	21,169	$	21,165

XML

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Related Amortization

A summary of intangible assets and related amortization for the periods shown below follows:

	Year ended		Year Ended
	December 31, 2021		December 31, 2020
Gross carrying amount	$	12,180	$	12,180
Accumulated amortization	(8,282)		(6,686)
Net book value	$	3,898	$	5,494
Sales during the period - carrying amount (1)	$	—	$	618
Sales during the period - accumulated amortization (1)	$	—	$	147
Amortization during the period	$	1,596	$	1,622

(1) Intangible asset sales during the year ended December 31, 2020, consisted of Wells Insurance Agency customer relationships included in the sale of the Wells Insurance Agency. Accumulated amortization at disposition was $147. The remaining carrying amount at disposition was $618.

Schedule of Estimated Future Aggregate Amortization Expense

The timing of amortization expense actually recognized in future periods may differ significantly based on actual prepayment speeds, mortgage interest rates and other factors.

	Amortization Expense
2022	$	1,241
2023	1,040
2024	842
2025	653
2026	464
After 2026	487
Total	$	4,727

At December 31, 2021, the estimated future aggregate amortization expense for the intangible assets are as follows:

	Intangible Assets
2022	$	1,449
2023	755
2024	715
2025	584
2026	395
Total	$	3,898

XML

LEASES (Tables)

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Schedule of Components of Lease Expense

	Twelve Months Ended
	December 31, 2021			December 31, 2020
The components of total lease costs were as follows:
Operating lease cost	$	558		$	618
Variable lease cost	47			59
Total lease cost	$	605		$	677
The components of total lease income were as follows:
Operating lease income	$	33		$	32
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	$	415		$	638
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2		$	508
	December, 31 2021			December 31, 2020
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	$	2,159		$	2,657
Operating lease liabilities	$	2,228		$	2,762
Weighted average remaining lease term in years; operating leases	5.55			6.32
Weighted average discount rate; operating leases	2.73		%	2.70		%

Schedule of Maturities of Operating Lease Liabilities

Cash obligations and receipts under lease contracts as of December 31, 2021 are as follows:

Fiscal years ending December 31,	Payments		Receipts
2022	$	558	$	34
2023	506		27
2024	419		10
2025	403		—
2026	346		—
Thereafter	480		—
Total lease payments	2,712		$	71
Less: effects of discounting	(484)
Lease liability recognized	$	2,228

XML

DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2021

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

Schedule of Deposits by Type

The following is a summary of deposits by type at December 31, 2021 and December 31, 2020, respectively: 

	December 31, 2021		December 31, 2020
Non interest bearing demand deposits	$	276,631	$	238,348
Interest bearing demand deposits	396,231		301,764
Savings accounts	222,674		196,348
Money market accounts	288,985		245,549
Certificate accounts	203,014		313,247
Total deposits	$	1,387,535	$	1,295,256

Schedule of Maturities of Time Deposits

At December 31, 2021, the scheduled maturities of time deposits were as follows:

2022	$	178,777
2023	13,919
2024	6,590
2025	2,522
2026	1,206
After 2026	—
Total	$	203,014

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2021

Federal Home Loan Banks [Abstract]

Schedule of Federal Home Loan Bank Advances

A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2021 and December 31, 2020 is as follows:

		December 31,
		2021						2020
	Stated Maturity	Amount		Range of Stated Rates				Amount		Range of Stated Rates
Federal Home Loan Bank advances (1), (2), (3), (4)	2021	$	—	—	%	—	%	$	8,000	—	%	2.16	%
	2022	11,000		2.45	%	2.45	%	15,000		2.34	%	2.45	%
	2023	20,000		1.43	%	1.44	%	20,000		1.43	%	1.44	%
	2024	20,530		0.00	%	1.45	%	20,530		0.00	%	1.45	%
	2025	5,000		1.45	%	1.45	%	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	%	12,500		0.52	%	0.86	%
Subtotal		111,530						123,530
Unamortized discount on acquired notes		(3)						(32)
Federal Home Loan Bank advances, net		$	111,527					$	123,498
Other borrowings:
Senior notes (5)	2031	$	28,856	3.00	%	3.50	%	$	28,856	3.25	%	3.50	%
Subordinated notes (6)	2027	$	15,000	6.75	%	6.75	%	$	15,000	6.75	%	6.75	%
	2030	15,000		6.00	%	6.00	%	15,000		6.00	%	6.00	%
		$	30,000					$	30,000
Unamortized debt issuance costs		(430)						(528)
Total other borrowings		$	58,426					$	58,328
Totals		$	169,953					$	181,826

(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 pledged balances of $861,900 and $723,862 at December 31, 2021 and 2020, respectively. At December 31, 2021, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $204,271 compared to $118,391 as of December 31, 2020.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $123,530 and $162,530, during the twelve months ended December 31, 2021 and December 31, 2020, respectively.

(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2021 and December 31, 2020 were 2.45% and 1.02%, respectively.

(4)    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.

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

(a) A term note which was subsequently refinanced in October 2020 and modified in October 2021, 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 3.00%, due to the modification in October 2021.

(b) A $5,000 line of credit, maturing in August 2022, that remains undrawn upon.

(6)    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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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. The note is callable by the Bank when, and anytime after, the floating rate is initially set. 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)

12 Months Ended

Dec. 31, 2021

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 December 31, 2021 and 2020, 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 December 31, 2021
Total capital (to risk weighted assets)	$	187,783	13.4	%	$	111,694	> =	8.0	%	$	139,618	> =	10.0	%
Tier 1 capital (to risk weighted assets)	170,870		12.2	%	83,771		> =	6.0	%	111,694		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	170,870		12.2	%	62,828		> =	4.5	%	90,752		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	170,870		10.0	%	68,323		> =	4.0	%	85,403		> =	5.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	171,702	14.7	%	$	93,381	> =	8.0	%	$	116,726	> =	10.0	%
Tier 1 capital (to risk weighted assets)	157,081		13.5	%	70,035		> =	6.0	%	93,381		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	157,081		13.5	%	52,527		> =	4.5	%	75,872		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	157,081		9.9	%	63,718		> =	4.0	%	79,647		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2021 and 2020, respectively, are presented below:

	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Amount			Ratio
As of December 31, 2021
Total capital (to risk weighted assets)	$	182,242	13.1	%	$	111,694	> =	8.0	%
Tier 1 capital (to risk weighted assets)	135,329		9.7	%	83,771		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	135,329		9.7	%	62,828		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	135,329		7.9	%	68,323		> =	4.0	%
As of December 31, 2020
Total capital (to risk weighted assets)	$	166,703	14.3	%	$	93,381	> =	8.0	%
Tier 1 capital (to risk weighted assets)	122,082		10.5	%	70,035		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	122,082		10.5	%	52,527		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	122,082		7.7	%	63,718		> =	4.0	%

Schedule of Dividends

The following table reflects the annual cash dividend paid in the years ended December 31, 2021 and 2020, respectively.

	December 31, 2021		December 31, 2020
Cash dividends per share	$	0.23	$	0.21
Stockholder record date	02/11/2021		02/05/2020
Dividend payment date	02/25/2021		02/19/2020

XML

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Summary of Commitments

The following table presents a summary of commitments described below as of December 31, 2021 and 2020, respectively:

	Contract or Notional Amount at December 31,		Contract or Notional Amount at December 31,
	2021		2020
Commitments to extend credit	$	270,985	$	247,324
Commercial standby letter of credit	$	3,825	$	524
Commitment to contribute capital to SBIC	$	2,400	$	—
Commitment to contribute capital to investment company	$	2,640	$	—

XML

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Restricted Stock Awards

	Year ended			Year ended
	December 31, 2021			December 31, 2020
	Number of Shares	Weighted Average Grant Price		Number of Shares	Weighted Average Grant Price
Restricted Shares
Unvested and outstanding at beginning of year	57,242	$	12.23	43,457	$	12.76
Granted	64,399	10.78		45,507	11.79
Vested	(44,511)	13.26		(31,722)	12.32
Forfeited	(1,500)	10.78		—	—
Unvested and outstanding at end of year	75,630	$	11.20	57,242	$	12.23

Schedule of Stock Option Activity

	Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Year ended December 31, 2021
Outstanding at beginning of year	72,300	$	11.05
Exercised	(5,800)	8.99
Forfeited or expired	(600)	13.76
Outstanding at end of period	65,900	11.20		4.61	$	169
Exercisable at end of period	61,700	$	11.03	4.54	$	169
Year ended December 31, 2020
Outstanding at beginning of year	78,100	$	11.18
Forfeited or expired	(5,800)	11.95
Outstanding at end of year	72,300	11.05		5.49	$	—
Exercisable at end of year	54,100	$	10.82	5.37	$	4

Schedule of Information Related to Stock Option Plan

Information related to the 2008 Equity Incentive Plan during each period follows:

	Year ended December 31,		Year ended December 31,
	2021		2020
Intrinsic value of options exercised	$	28	$	—
Cash received from options exercised	$	52	$	—
Tax benefit realized from options exercised	$	—	$	—

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense (Benefit)

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	Year ended December 31,		Year ended December 31,
	2021		2020
Current tax provision
Federal	$	4,761	$	5,000
State	2,002		2,081
	6,763		7,081
Deferred tax provision (benefit)
Federal	585		(1,866)
Bank owned life insurance - Tax Act clarification	—		(660)
State	345		—
	930		(2,526)
Total	$	7,693	$	4,555

Schedule of Provision for Income Taxes

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	Year ended December 31,				Year ended December 31,
	2021				2020
	Amount		Rate		Amount		Rate
Tax expense at statutory rate	$	6,082	21.0	%	$	3,629	21.0	%
State income taxes, net of federal	1,854		6.4	%	1,123		6.5	%
Bank owned life insurance	(132)		(0.4)	%	(130)		(0.8)	%
Tax exempt interest	(52)		(0.2)	%	(61)		(0.3)	%
Other	(59)		(0.2)	%	(6)		—	%
Total	$	7,693	26.6	%	$	4,555	26.4	%

Schedule of Deferred Tax Assets and Liabilities

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and December 31, 2020, respectively:

	Year ended December 31,		Year ended December 31,
	2021		2020
Deferred tax assets:
Allowance for loan losses	$	4,587	$	4,567
Deferred loan costs/fees	558		1,117
Restricted stock	189		116
Economic performance accruals	981		694
Other real estate	—		89
Deferred revenue	41		64
Loan discounts	854		1,218
FHLB advances	5		55
Lease liability	613		758
Other	25		70
Deferred tax assets	$	7,853	$	8,748
Deferred tax liabilities:
Office properties and equipment	(1,595)		(1,551)
Federal Home Loan Bank stock	(129)		(129)
Core deposit intangible	(1,298)		(1,615)
Net gain on equity securities	(641)		(442)
Prepaid expenses	(198)		(204)
Mortgage servicing rights	(1,144)		(893)
Leases; right of use asset	(594)		(730)
Net unrealized gains on securities available for sale	(61)		(565)
Deferred tax liabilities	$	(5,660)	$	(6,129)
Net deferred tax assets	$	2,193	$	2,619

XML

FAIR VALUE ACCOUNTING (Tables)

12 Months Ended

Dec. 31, 2021

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 December 31, 2021 and December 31, 2020.

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2021
Investment securities:
U.S. government agency obligations	$	26,265	$	—	$	26,265	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	107,167		—		107,167		—
Corporate debt securities	35,588		—		35,588		—
Corporate asset-backed securities	33,908		—		33,908		—
Total investment securities	203,068		—		203,068		—
Equity investments:
Equity investments	368		368		—		—
Equity investments measured at NAV(1)	960		—		—		—
Total equity investments	1,328		368		—		—
Total	$	204,396	$	368	$	203,068	$	—
December 31, 2020
Investment securities:
U.S. government agency obligations	$	33,365	$	—	$	33,365	$	—
Obligations of states and political subdivisions	140		—		140		—
Mortgage-backed securities	40,991		—		40,991		—
Corporate debt securities	17,462		—		17,462		—
Corporate asset-backed securities	35,827		—		35,827		—
Trust preferred securities	16,448		—		16,448		—
Total Investment Securities	144,233		—		144,233		—
Equity investments	200		200		—		—
Total	$	144,433	$	200	$	144,233	$	—

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to                         permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

Schedule of Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2021 and December 31, 2020:

	Carrying Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	$	—	$	—	$	1,408
Impaired loans with allocated allowances	5,580		—		—		5,580
Mortgage servicing rights	4,161		—		—		4,312
Total	$	11,149	$	—	$	—	$	11,300
December 31, 2020
Foreclosed and repossessed assets, net	$	197	$	—	$	—	$	197
Impaired loans with allocated allowances	3,037		—		—		3,037
Mortgage servicing rights	3,252		—		—		3,285
Total	$	6,486	$	—	$	—	$	6,519

Schedule of Assets Measured on Recurring and Nonrecurring Basis

The following table represents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at December 31, 2021 and December 31, 2020.

	Fair Value		Valuation Techniques (1)	Significant Unobservable Inputs (2)	Range
December 31, 2021
Foreclosed and repossessed assets, net	$	1,408	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	5,580	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	4,312	Discounted cash flows	Discounted rates	9% - 12%
December 31, 2020
Foreclosed and repossessed assets, net	$	197	Appraisal value	Estimated costs to sell	10% - 15%
Impaired loans with allocated allowances	$	3,037	Appraisal value	Estimated costs to sell	10% - 15%
Mortgage servicing rights	$	3,285	Discounted cash flows	Discounted rates	9% - 12%

(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:

		December 31, 2021				December 31, 2020
	Valuation Method Used	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(Level I)	$	47,691	$	47,691	$	119,440	$	119,440
Other interest bearing deposits	(Level II)	1,511		1,535		3,752		3,818
Securities available for sale "AFS"	(Level II)	203,068		203,068		144,233		144,233
Securities held to maturity "HTM"	(Level II)	71,141		69,177		43,551		43,784
Equity investments	(Level I)	368		368		200		200
Equity investments valued at NAV (1)	N/A	960		960		—		—
Other investments	(Level II)	15,305		15,305		14,948		14,948
Loans receivable, net	(Level III)	1,294,050		1,319,293		1,220,538		1,239,692
Loans held for sale	(Level II)	6,670		6,670		3,075		3,075
Mortgage servicing rights	(Level III)	4,161		4,312		3,252		3,285
Accrued interest receivable	(Level I)	3,916		3,916		5,652		5,652
Financial liabilities:
Deposits	(Level III)	$	1,387,535	$	1,388,390	$	1,295,256	$	1,292,104
FHLB advances	(Level II)	111,527		113,285		123,498		128,282
Other borrowings	(Level I)	58,426		58,426		58,328		58,328
Accrued interest payable	(Level I)	586		586		796		796

(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.

XML

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic and Diluted Earnings per Share

Earnings per share is based on the weighted average number of shares outstanding for the year. A reconciliation of the basic and diluted earnings per share is as follows:

	Year ended		Year ended
(Share count in thousands)	December 31, 2021		December 31, 2020
Basic
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Basic earnings per share	$	1.98	$	1.14
Diluted
Net income attributable to common shareholders	$	21,266	$	12,725
Weighted average common shares outstanding	10,717		11,162
Add: Dilutive stock options outstanding	10		—
Average shares and dilutive potential common shares	10,727		11,162
Diluted earnings per share	$	1.98	$	1.14
Additional common stock option shares that have not been included due to their antidilutive effect	21		69

XML

OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

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

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

	For the year ended, December 31,						For the year ended, December 31,
	2021						2020
	Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount		Before-Tax Amount		Tax Benefit (Expense)		Net-of-Tax Amount
Unrealized (losses) gains on securities:
Net unrealized (losses) gains arising during the period	$	(1,261)	352		$	(909)	$	2,546	$	(472)	$	2,074
Reclassification adjustment for gains included in net income	(573)		153		(420)		(156)		43		(113)
Other comprehensive income	$	(1,834)	$	505	$	(1,329)	$	2,390	$	(429)	$	1,961

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 years ended December 31, 2021 and December 31, 2020 were as follows:

	Unrealized Gains (Losses) on AFS Securities		Other Accumulated Comprehensive Income (Loss), net of tax
Beginning Balance, January 1, 2020	$	(649)	$	(471)
Current year-to-date other comprehensive income	2,705		1,961
Ending balance, December 31, 2020	$	2,056	$	1,490
Current year-to-date other comprehensive income	(1,834)		(1,329)
Ending balance, December 31, 2021	$	222	$	161

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

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2021 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	573		Net gains (losses) on investment securities
Tax effect	(153)			Provision for income taxes
Total reclassifications for the period	$	420		Net income attributable to common shareholders

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

Reclassifications out of accumulated other comprehensive income for the twelve months ended December 31, 2020 were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(1)	Affected Line Item on the Statement of Operations
Unrealized gains and losses
Sale of securities	$	156		Net gains (losses) on investment securities
Tax effect	(43)			Provision for income taxes
Total reclassifications for the period	$	113		Net income attributable to common shareholders

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

XML

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (Tables)

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Schedule of Condensed Balance Sheets

Condensed Balance Sheets

	December 31,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	22,465	$	23,333
Equity investments	360		—
Other assets	386		375
Investment in subsidiary	206,427		195,563
Total assets	$	229,638	$	219,271
Liabilities and Stockholders' Equity
Other borrowings	$	58,426	$	58,328
Other liabilities	346		379
Total liabilities	58,772		58,707
Total stockholders’ equity	170,866		160,564
Total liabilities and stockholders’ equity	$	229,638	$	219,271

Schedule of Statements of Operations

Statements of Operations

	Year ended December 31,		Year ended December 31,
	2021		2020
Interest income	$	—	$	—
Interest expense	2,946		2,458
Net interest expense	(2,946)		(2,458)
Dividend income from bank subsidiary	12,500		10,500
Non-interest income	—		193
Non-interest expense	(673)		(848)
Net income before benefit for income taxes and equity in undistributed income of subsidiaries	8,881		7,387
Benefit for income taxes	989		860
Net earnings before equity in undistributed income of subsidiaries	9,870		8,247
Equity in undistributed income of subsidiaries	11,396		4,478
Net income	$	21,266	$	12,725

Schedule of Statements of Cash flows

Statements of Cash Flows

	Year ended December 31,		Year ended December 31,
	2021		2020
Change in cash and cash equivalents:
Cash flows from operating activities:
Net income	$	21,266	$	12,725
Depreciation expense	12		12
Stock based compensation expense	8		14
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(23,896)		(14,978)
Net change in:
Other assets	(23)		(55)
Other liabilities	(33)		313
Net cash used in operating activities	(2,666)		(1,969)
Cash flows from investing activities:
Purchase of equity securities	(360)		—
Net cash used in investing activities	(360)		—
Cash flows from financing activities:
Proceeds from other borrowings, net of issuance costs	—		14,677
Amortization of debt issuance costs	98		91
Repurchase shares of common stock	(7,951)		(2,820)
Surrender of restricted shares of common stock	(30)		(27)
Common stock options exercised	52		—
Dividend from bank to holding company	12,500		10,500
Cash dividends paid	(2,511)		(2,372)
Net cash provided by financing activities	2,158		20,049
Net (decrease) increase in cash and cash equivalents	(868)		18,080
Cash and cash equivalents at beginning of year	23,333		5,253
Cash and cash equivalents at end of year	$	22,465	$	23,333

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2021 USD ($) branch_location account	Dec. 31, 2021 USD ($) operating_segment account reporting_unit	Dec. 31, 2020 USD ($) account
Property, Plant and Equipment [Line Items]
Total number of service offices | branch_location	25
Maturity of certificate of deposit investments		9 months
Cash, FDIC insured amount, balance in excess	$ 250	$ 250
Number of accounts, FDIC insured amount, balance in excess | account	0	0	0
Liquidating investment period (in years)		10 years
Other investments	$ 15,305	$ 15,305	$ 14,948
Interest income recognized debt past due not more than days		90 days
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 | operating_segment		1
Number of reporting units | reporting_unit		1
Loan commitments outstanding	5,685	$ 5,685
Minimum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life		48 months
Minimum | Buildings and Components
Property, Plant and Equipment [Line Items]
Useful lives assets		10 years
Minimum | Furniture Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Useful lives assets		3 years
Maximum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life		111 months
Maximum | Buildings and Components
Property, Plant and Equipment [Line Items]
Useful lives assets		40 years
Maximum | Furniture Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Useful lives assets		10 years
Investment in Federal Home Loan Bank Stock
Property, Plant and Equipment [Line Items]
Other investments	7,877	$ 7,877	8,103
Federal Reserve Bank
Property, Plant and Equipment [Line Items]
Other investments	5,200	5,200	5,170
Bankers Bank Stock
Property, Plant and Equipment [Line Items]
Other investments	$ 2,228	$ 2,228	$ 1,675
Commercial Loan
Property, Plant and Equipment [Line Items]
Interest income discontinued over delinquent days		90 days
Closed End Consumer Loan
Property, Plant and Equipment [Line Items]
Interest income discontinued over delinquent days		120 days
Real Estate and Open Ended Consumer Loans
Property, Plant and Equipment [Line Items]
Interest income discontinued over delinquent days		180 days

XML

INVESTMENT SECURITIES - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	$ 202,846	$ 142,177
Gross Unrealized Gains	1,385	2,589
Gross Unrealized Losses	1,163	533
Estimated Fair Value	203,068	144,233
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	25,826	33,048
Gross Unrealized Gains	440	387
Gross Unrealized Losses	1	70
Estimated Fair Value	26,265	33,365
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	140
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	140	140
Mortgage-backed securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	107,636	39,454
Gross Unrealized Gains	409	1,537
Gross Unrealized Losses	878	0
Estimated Fair Value	107,167	40,991
Corporate debt securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	35,342	17,199
Gross Unrealized Gains	403	372
Gross Unrealized Losses	157	109
Estimated Fair Value	35,588	17,462
Corporate asset-backed securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	33,902	36,039
Gross Unrealized Gains	133	104
Gross Unrealized Losses	127	316
Estimated Fair Value	$ 33,908	35,827
Trust preferred securities
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost		16,297
Gross Unrealized Gains		189
Gross Unrealized Losses		38
Estimated Fair Value		$ 16,448

XML

INVESTMENT SECURITIES - Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 71,141	$ 43,551
Gross Unrealized Gains	104	267
Gross Unrealized Losses	2,068	34
Estimated Fair Value	69,177	43,784
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	4,600	600
Gross Unrealized Gains	0	2
Gross Unrealized Losses	7	0
Estimated Fair Value	4,593	602
Mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	66,541	42,951
Gross Unrealized Gains	104	265
Gross Unrealized Losses	2,061	34
Estimated Fair Value	$ 64,584	$ 43,182

XML

INVESTMENT SECURITIES - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Gross sales of available-for-sale securities	$ 38,239	$ 12,091
Gross gains on sale of available-for-sale securities	646	157
Gross losses on sale of available-for-sale securities	73	1
Federal Reserve Bank
Debt Instrument [Line Items]
Long-term line of credit	0	0
Line of Credit | Mortgage-backed securities
Debt Instrument [Line Items]
Available-for-sale security, restricted	863	1,209
Specific Municipal Deposits | Mortgage-backed securities
Debt Instrument [Line Items]
Available-for-sale security, restricted	2,879	3,028
Specific Municipal Deposits | U.S. government agency obligations
Debt Instrument [Line Items]
Available-for-sale security, restricted	3,934	576
MPF Credit Enhancement Fee | Mortgage-backed securities
Debt Instrument [Line Items]
Available-for-sale security, restricted	$ 267	$ 468

XML

INVESTMENT SECURITIES - Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Amortized Cost
Due in one year or less	$ 140	$ 0
Due after one year through five years	4,903	3,833
Due after five years through ten years	40,410	44,405
Due after ten years	49,757	54,485
Total securities with contractual maturities	95,210	102,723
Amortized Cost	202,846	142,177
Estimated Fair Value
Due in one year or less	140	0
Due after one year through five years	4,971	4,095
Due after five years through ten years	40,818	44,880
Due after ten years	49,972	54,267
Total securities with contractual maturities	95,901	103,242
Total available for sale securities	203,068	144,233
Amortized Cost
Due after one year through five years	4,300	200
Due after five years through ten years	300	400
Total securities with contractual maturities	4,600	600
Mortgage-backed securities	66,541	42,951
Total held to maturity securities	71,141	43,551
Estimated Fair Value
Due after one year through five years	4,298	200
Due after five years through ten years	295	402
Total securities with contractual maturities	4,593	602
Mortgage-backed securities	64,584	43,182
Total held to maturity securities	69,177	43,784
Mortgage-backed securities
Amortized Cost
Mortgage-backed securities	107,636	39,454
Estimated Fair Value
Mortgage-backed securities	$ 107,167	$ 40,991

XML

INVESTMENT SECURITIES - Unrealized Losses on Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value
Less than 12 Months	$ 126,715	$ 16,713
12 Months or More	735	32,562
Total	127,450	49,275
Unrealized Loss
Less than 12 Months	1,148	82
12 Months or More	15	451
Total	1,163	533
U.S. government agency obligations
Fair Value
Less than 12 Months	1,169	7,654
12 Months or More	0	6,834
Total	1,169	14,488
Unrealized Loss
Less than 12 Months	1	17
12 Months or More	0	53
Total	1	70
Mortgage-backed securities
Fair Value
Less than 12 Months	89,010
12 Months or More	0
Total	89,010
Unrealized Loss
Less than 12 Months	878
12 Months or More	0
Total	878
Corporate debt securities
Fair Value
Less than 12 Months	17,240	3,447
12 Months or More	735	1,418
Total	17,975	4,865
Unrealized Loss
Less than 12 Months	142	27
12 Months or More	15	82
Total	157	109
Corporate asset-backed securities
Fair Value
Less than 12 Months	19,296	0
12 Months or More	0	24,310
Total	19,296	24,310
Unrealized Loss
Less than 12 Months	127	0
12 Months or More	0	316
Total	$ 127	316
Trust preferred securities
Fair Value
Less than 12 Months		5,612
12 Months or More		0
Total		5,612
Unrealized Loss
Less than 12 Months		38
12 Months or More		0
Total		$ 38

XML

INVESTMENT SECURITIES - Unrealized Losses on Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value
Fair Value, Less than 12 months	$ 47,562	$ 16,538
Fair Value, 12 Months or More	14,716	0
Fair Value, Total	62,278	16,538
Unrealized Loss
Unrealized Loss, Less than 12 Months	1,353	34
Unrealized Loss, 12 Months or More	715	0
Unrealized Loss, Total	2,068	34
Obligations of states and political subdivisions
Fair Value
Fair Value, Less than 12 months	593
Fair Value, 12 Months or More	0
Fair Value, Total	593
Unrealized Loss
Unrealized Loss, Less than 12 Months	7
Unrealized Loss, 12 Months or More	0
Unrealized Loss, Total	7
Mortgage-backed securities
Fair Value
Fair Value, Less than 12 months	46,969	16,538
Fair Value, 12 Months or More	14,716	0
Fair Value, Total	61,685	16,538
Unrealized Loss
Unrealized Loss, Less than 12 Months	1,346	34
Unrealized Loss, 12 Months or More	715	0
Unrealized Loss, Total	$ 2,061	$ 34

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) troubled_debt_restructuring loan	Dec. 31, 2020 USD ($) troubled_debt_restructuring
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total impaired loans	$ 31,740	$ 42,310
Recorded Investment	$ 12,523	$ 18,477
Number of delinquent TDR | troubled_debt_restructuring	1	1
Recorded investment in delinquent TDR	$ 4	$ 20
Number of TDR commitments meeting our TDR criteria | troubled_debt_restructuring	0	0
Available line of credit loan, amount	$ 10	$ 14
Accretable expense from purchased impaired loans	1,610
Expected balance (as a percent)	100
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	11,328	9,817
PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	10,552	16,859
Net Of TDR PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	9,860	15,634
Acquired Loans | PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	11,205	17,946
Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	12,523	18,477
Originated Loans | Performing loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	7,984	11,742
Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total impaired loans	257	358
Consumer installment: | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 39	49
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans, foreclosure | loan	5
Loans in process of foreclosure	$ 2,096
Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total impaired loans	21,408	25,592
Commercial/Agricultural real estate: | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	8,007	9,386
Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total impaired loans	$ 6,922	9,489
Number of loans, foreclosure | loan	2
Loans in process of foreclosure	$ 109
Residential mortgage: | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 3,274	$ 3,919
Agricultural real estate | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan-to-value ratio (as a percent)	75.00%

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Financing Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	$ 1,317,045	$ 1,246,889
Unearned net deferred fees and costs and loans in process	(2,482)	(4,245)
Unamortized discount on acquired loans	(3,600)	(5,063)
Allowance for loan losses	(16,913)	(17,043)
Loans receivable, net	1,294,050	1,220,538
Total originated loans before SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	1,308,290	1,123,187
SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	8,755	123,702
Commercial/Agricultural real estate:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	1,034,829	797,139
Allowance for loan losses	(13,210)	(11,955)
Commercial/Agricultural real estate: | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	698,465	507,675
Commercial/Agricultural real estate: | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	78,495	68,795
Commercial/Agricultural real estate: | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	178,349	122,152
Commercial/Agricultural real estate: | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	79,520	98,517
C&I/Agricultural operating:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	162,510	273,040
Allowance for loan losses	(2,028)	(2,253)
C&I/Agricultural operating: | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	122,167	116,553
C&I/Agricultural operating: | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	31,588	32,785
Residential mortgage:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	94,861	137,646
Allowance for loan losses	(648)	(1,376)
Residential mortgage: | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	90,990	131,386
Residential mortgage: | Purchased HELOC loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	3,871	6,260
Consumer installment:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	24,845	39,064
Allowance for loan losses	(253)	(553)
Consumer installment: | Originated indirect paper
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	15,971	25,851
Consumer installment: | Other Consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	8,874	13,213
Originated Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	1,118,494	960,725
Allowance for loan losses	(15,830)	(14,819)	$ (9,551)
Originated Loans | Total originated loans before SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	1,109,739	837,023
Originated Loans | SBA PPP loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	8,755	123,702
Originated Loans | Commercial/Agricultural real estate:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	883,430	586,826
Allowance for loan losses	(12,354)	(10,271)	(6,205)
Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	578,395	351,113
Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	52,372	31,741
Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	174,050	112,731
Originated Loans | Commercial/Agricultural real estate: | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	78,613	91,241
Originated Loans | C&I/Agricultural operating:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	142,894	243,449
Allowance for loan losses	(1,959)	(2,112)	(1,643)
Originated Loans | C&I/Agricultural operating: | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	107,937	95,290
Originated Loans | C&I/Agricultural operating: | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	26,202	24,457
Originated Loans | Residential mortgage:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	67,726	92,543
Allowance for loan losses	(518)	(1,041)	(879)
Originated Loans | Residential mortgage: | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	63,855	86,283
Originated Loans | Residential mortgage: | Purchased HELOC loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	3,871	6,260
Originated Loans | Consumer installment:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	24,444	37,907
Allowance for loan losses	(225)	(489)	$ (467)
Originated Loans | Consumer installment: | Originated indirect paper
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	15,971	25,851
Originated Loans | Consumer installment: | Other Consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	8,473	12,056
Acquired Loans
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	198,551	286,164
Allowance for loan losses	(1,083)	(2,224)
Acquired Loans | Commercial/Agricultural real estate:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(856)	(1,684)
Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	120,070	156,562
Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	26,123	37,054
Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	4,299	9,421
Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	907	7,276
Acquired Loans | C&I/Agricultural operating:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(69)	(141)
Acquired Loans | C&I/Agricultural operating: | Commercial and industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	14,230	21,263
Acquired Loans | C&I/Agricultural operating: | Agricultural operating
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	5,386	8,328
Acquired Loans | Residential mortgage:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(130)	(335)
Acquired Loans | Residential mortgage: | Residential mortgage
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	27,135	45,103
Acquired Loans | Consumer installment:
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for loan losses	(28)	(64)
Acquired Loans | Consumer installment: | Other Consumer
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Loans receivable	$ 401	$ 1,157

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Loans By Risk (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	$ 1,317,045	$ 1,246,889
Unearned net deferred fees and costs and loans in process	(2,482)	(4,245)
Unamortized discount on acquired loans	3,600	5,063
Allowance for loan losses	(16,913)	(17,043)
Loans receivable, net	1,294,050	1,220,538
SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,755	123,702
Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,034,829	797,139
Allowance for loan losses	(13,210)	(11,955)
Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	698,465	507,675
Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	78,495	68,795
Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	178,349	122,152
Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	79,520	98,517
C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	122,167	116,553
C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	31,588	32,785
Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	90,990	131,386
Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,871	6,260
Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	15,971	25,851
Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,874	13,213
Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,118,494	960,725
Allowance for loan losses	(15,830)	(14,819)	$ (9,551)
Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,755	123,702
Originated Loans | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	883,430	586,826
Allowance for loan losses	(12,354)	(10,271)	$ (6,205)
Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	578,395	351,113
Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	52,372	31,741
Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	174,050	112,731
Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	78,613	91,241
Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	107,937	95,290
Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	26,202	24,457
Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	63,855	86,283
Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,871	6,260
Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	15,971	25,851
Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,473	12,056
Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,109,739	837,023
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	198,551	286,164
Allowance for loan losses	(1,083)	(2,224)
Acquired Loans | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	(856)	(1,684)
Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	120,070	156,562
Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	26,123	37,054
Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,299	9,421
Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	907	7,276
Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	14,230	21,263
Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	5,386	8,328
Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	27,135	45,103
Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	401	1,157
Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,308,290	1,123,187
1 to 5
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,289,692	1,211,676
1 to 5 | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,755	123,702
1 to 5 | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	689,563	497,785
1 to 5 | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	71,885	61,188
1 to 5 | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	178,059	121,696
1 to 5 | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	75,881	95,000
1 to 5 | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	121,729	112,392
1 to 5 | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	28,871	30,300
1 to 5 | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	86,623	124,902
1 to 5 | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,706	5,959
1 to 5 | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	15,818	25,616
1 to 5 | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,802	13,136
1 to 5 | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,101,634	943,005
1 to 5 | Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,755	123,702
1 to 5 | Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	572,724	349,482
1 to 5 | Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	50,834	30,041
1 to 5 | Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	173,760	112,423
1 to 5 | Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	75,146	87,763
1 to 5 | Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	107,798	91,474
1 to 5 | Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	23,935	22,462
1 to 5 | Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	60,754	82,097
1 to 5 | Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,706	5,959
1 to 5 | Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	15,818	25,616
1 to 5 | Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	8,404	11,986
1 to 5 | Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,092,879	819,303
1 to 5 | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	188,058	268,671
1 to 5 | Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	116,839	148,303
1 to 5 | Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	21,051	31,147
1 to 5 | Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,299	9,273
1 to 5 | Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	735	7,237
1 to 5 | Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	13,931	20,918
1 to 5 | Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,936	7,838
1 to 5 | Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	25,869	42,805
1 to 5 | Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	398	1,150
1 to 5 | Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,280,937	1,087,974
6
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,536	6,672
6 | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,981	4,817
6 | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,267	446
6 | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	290	308
6 | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	172	0
6 | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	62	29
6 | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	764	934
6 | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	138
6 | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,045	2,258
6 | Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	667	543
6 | Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,267	446
6 | Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	290	308
6 | Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	57	20
6 | Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	764	934
6 | Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	7
6 | Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,045	2,258
6 | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,491	4,414
6 | Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,314	4,274
6 | Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	172	0
6 | Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	5	9
6 | Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	131
6 | Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
6 | Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,536	6,672
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	22,817	28,541
Substandard | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
Substandard | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	6,921	5,073
Substandard | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	5,343	7,161
Substandard | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	148
Substandard | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,467	3,517
Substandard | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	376	4,132
Substandard | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,953	1,551
Substandard | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	4,367	6,346
Substandard | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	165	301
Substandard | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	153	235
Substandard | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	72	77
Substandard | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	13,815	15,462
Substandard | Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
Substandard | Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	5,004	1,088
Substandard | Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	271	1,254
Substandard | Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
Substandard | Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,467	3,478
Substandard | Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	82	3,796
Substandard | Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,503	1,061
Substandard | Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3,101	4,179
Substandard | Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	165	301
Substandard | Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	153	235
Substandard | Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	69	70
Substandard | Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	13,815	15,462
Substandard | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	9,002	13,079
Substandard | Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,917	3,985
Substandard | Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	5,072	5,907
Substandard | Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	148
Substandard | Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	39
Substandard | Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	294	336
Substandard | Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	450	490
Substandard | Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,266	2,167
Substandard | Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	3	7
Substandard | Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	22,817	28,541
8
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
8 | Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Residential mortgage: | Purchased HELOC loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Consumer installment: | Originated indirect paper
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Originated Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Total originated loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Commercial/Agricultural real estate: | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Commercial/Agricultural real estate: | Agricultural real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Commercial/Agricultural real estate: | Multi-family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Commercial/Agricultural real estate: | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | C&I/Agricultural operating: | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | C&I/Agricultural operating: | Agricultural Operating
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Residential mortgage: | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Acquired Loans | Consumer installment: | Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
9 | Gross loans before SBA PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	$ 0	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Financing Receivables to Related Party (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance—beginning of period	$ 26,483	$ 20,367
New loan originations	14,992	7,230
Repayments	(9,052)	(1,114)
Balance—end of period	32,423	26,483
Available and unused lines of credit	$ 75	$ 187

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Allowance for Loans by Loan Portfolio (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Allowance for Loan Losses:
Beginning balance	$ 17,043
Provision	0	$ 7,750
Ending balance	16,913	17,043
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	1,009	1,115
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	15,904	15,928
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	1,317,045	1,246,889
Ending balance: individually evaluated for impairment	32,393	43,397
Ending balance: collectively evaluated for impairment	1,284,652	1,203,492
Commercial/Agricultural real estate:
Allowance for Loan Losses:
Beginning balance	11,955
Ending balance	13,210	11,955
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	797	698
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	12,413	11,257
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	1,034,829	797,139
Ending balance: individually evaluated for impairment	21,792	26,303
Ending balance: collectively evaluated for impairment	1,013,037	770,836
C&I/Agricultural operating:
Allowance for Loan Losses:
Beginning balance	2,253
Ending balance	2,028	2,253
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	99	190
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	1,929	2,063
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	162,510	273,040
Ending balance: individually evaluated for impairment	3,337	7,115
Ending balance: collectively evaluated for impairment	159,173	265,925
Residential mortgage:
Allowance for Loan Losses:
Beginning balance	1,376
Ending balance	648	1,376
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	113	226
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	535	1,150
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	94,861	137,646
Ending balance: individually evaluated for impairment	7,007	9,621
Ending balance: collectively evaluated for impairment	87,854	128,025
Consumer installment:
Allowance for Loan Losses:
Beginning balance	553
Ending balance	253	553
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	0	1
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	253	552
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	24,845	39,064
Ending balance: individually evaluated for impairment	257	358
Ending balance: collectively evaluated for impairment	24,588	38,706
Unallocated
Allowance for Loan Losses:
Beginning balance	906
Ending balance	774	906
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of allowance for loan losses arising from loans individually evaluated for impairment	0	0
Amount of allowance for loan losses arising from loans collectively evaluated for impairment	774	906
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	0	0
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	0	0
Originated loans
Allowance for Loan Losses:
Beginning balance	14,819	9,551
Charge-offs	(105)	(1,082)
Recoveries	174	159
Provision	942	6,191
Ending balance	15,830	14,819
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	1,118,494	960,725
Originated loans | Commercial/Agricultural real estate:
Allowance for Loan Losses:
Beginning balance	10,271	6,205
Charge-offs	(51)	0
Recoveries	14	75
Provision	2,120	3,991
Ending balance	12,354	10,271
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	883,430	586,826
Originated loans | C&I/Agricultural operating:
Allowance for Loan Losses:
Beginning balance	2,112	1,643
Charge-offs	0	(932)
Recoveries	110	8
Provision	(263)	1,393
Ending balance	1,959	2,112
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	142,894	243,449
Originated loans | Residential mortgage:
Allowance for Loan Losses:
Beginning balance	1,041	879
Charge-offs	0	(5)
Recoveries	9	7
Provision	(532)	160
Ending balance	518	1,041
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	67,726	92,543
Originated loans | Consumer installment:
Allowance for Loan Losses:
Beginning balance	489	467
Charge-offs	(54)	(145)
Recoveries	41	69
Provision	(251)	98
Ending balance	225	489
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	24,444	37,907
Originated loans | Unallocated
Allowance for Loan Losses:
Beginning balance	906	357
Charge-offs	0	0
Recoveries	0	0
Provision	(132)	549
Ending balance	774	906
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	0	0
Ending balance of purchased credit-impaired loans
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	11,205	17,946
Ending balance of purchased credit-impaired loans | Commercial/Agricultural real estate:
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	9,060	15,100
Ending balance of purchased credit-impaired loans | C&I/Agricultural operating:
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	1,101	1,534
Ending balance of purchased credit-impaired loans | Residential mortgage:
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	1,044	1,312
Ending balance of purchased credit-impaired loans | Consumer installment:
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	0	0
Ending balance of purchased credit-impaired loans | Unallocated
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	0	0
Other acquired loans
Allowance for Loan Losses:
Beginning balance	2,224	769
Charge-offs	(234)	(236)
Recoveries	35	132
Provision	(942)	1,559
Ending balance	1,083	2,224
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	187,346	268,218
Other acquired loans | Commercial/Agricultural real estate:
Allowance for Loan Losses:
Beginning balance	1,684	526
Charge-offs	(200)	0
Recoveries	14	77
Provision	(642)	1,081
Ending balance	856	1,684
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	142,339	195,213
Other acquired loans | C&I/Agricultural operating:
Allowance for Loan Losses:
Beginning balance	141	27
Charge-offs	(7)	(159)
Recoveries	13	33
Provision	(78)	240
Ending balance	69	141
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	18,515	28,057
Other acquired loans | Residential mortgage:
Allowance for Loan Losses:
Beginning balance	335	163
Charge-offs	0	(74)
Recoveries	4	15
Provision	(209)	231
Ending balance	130	335
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	26,091	43,791
Other acquired loans | Consumer installment:
Allowance for Loan Losses:
Beginning balance	64	53
Charge-offs	(27)	(3)
Recoveries	4	7
Provision	(13)	7
Ending balance	28	64
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	401	1,157
Other acquired loans | Unallocated
Allowance for Loan Losses:
Beginning balance	0	0
Charge-offs	0	0
Recoveries	0	0
Provision	0	0
Ending balance	0	0
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	0	0
Acquired loans
Allowance for Loan Losses:
Beginning balance	2,224
Ending balance	1,083	2,224
Loans Receivable:
Total Past Due Accruing and Nonaccrual Loans	198,551	286,164
Acquired loans | Commercial/Agricultural real estate:
Allowance for Loan Losses:
Beginning balance	1,684
Ending balance	856	1,684
Acquired loans | C&I/Agricultural operating:
Allowance for Loan Losses:
Beginning balance	141
Ending balance	69	141
Acquired loans | Residential mortgage:
Allowance for Loan Losses:
Beginning balance	335
Ending balance	130	335
Acquired loans | Consumer installment:
Allowance for Loan Losses:
Beginning balance	64
Ending balance	28	64
Acquired loans | Unallocated
Allowance for Loan Losses:
Beginning balance	0
Ending balance	$ 0	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Loans receivable
Total Past Due Accruing and Nonaccrual Loans	$ 1,317,045	$ 1,246,889
Performing loans
Loans receivable
TDR loans	7,984	11,722
Other loans	1,297,236	1,223,834
Total Past Due Accruing and Nonaccrual Loans	1,305,220	1,235,556
Nonperforming loans
Loans receivable
TDR loans	4,539	6,755
Other loans	7,286	4,578
Total Past Due Accruing and Nonaccrual Loans	11,825	11,333
Commercial/Agricultural real estate:
Loans receivable
Total Past Due Accruing and Nonaccrual Loans	1,034,829	797,139
Commercial/Agricultural real estate: | Performing loans
Loans receivable
TDR loans	4,618	4,695
Other loans	1,021,346	786,533
Total Past Due Accruing and Nonaccrual Loans	1,025,964	791,228
Commercial/Agricultural real estate: | Nonperforming loans
Loans receivable
TDR loans	3,389	4,691
Other loans	5,476	1,220
Total Past Due Accruing and Nonaccrual Loans	8,865	5,911
C&I/Agricultural operating:
Loans receivable
Total Past Due Accruing and Nonaccrual Loans	162,510	273,040
C&I/Agricultural operating: | Performing loans
Loans receivable
TDR loans	649	3,836
Other loans	160,570	266,975
Total Past Due Accruing and Nonaccrual Loans	161,219	270,811
C&I/Agricultural operating: | Nonperforming loans
Loans receivable
TDR loans	554	1,287
Other loans	737	942
Total Past Due Accruing and Nonaccrual Loans	1,291	2,229
Residential mortgage:
Loans receivable
Total Past Due Accruing and Nonaccrual Loans	94,861	137,646
Residential mortgage: | Performing loans
Loans receivable
TDR loans	2,681	3,142
Other loans	90,591	131,470
Total Past Due Accruing and Nonaccrual Loans	93,272	134,612
Residential mortgage: | Nonperforming loans
Loans receivable
TDR loans	593	777
Other loans	996	2,257
Total Past Due Accruing and Nonaccrual Loans	1,589	3,034
Consumer installment:
Loans receivable
Total Past Due Accruing and Nonaccrual Loans	24,845	39,064
Consumer installment: | Performing loans
Loans receivable
TDR loans	36	49
Other loans	24,729	38,856
Total Past Due Accruing and Nonaccrual Loans	24,765	38,905
Consumer installment: | Nonperforming loans
Loans receivable
TDR loans	3	0
Other loans	77	159
Total Past Due Accruing and Nonaccrual Loans	$ 80	$ 159

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Past Due Financing Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	$ 1,310,963	$ 1,237,581
Current	1,301,319	1,214,947
Total Loans	1,317,045	1,246,889
Total Past Due Accruing
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	4,061	21,195
30-59 Days Past Due and Accruing
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	3,341	18,886
60-89 Days Past Due and Accruing
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	560	1,723
Greater Than 89 Days Past Due and Accruing
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	160	586
Nonaccrual Loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	11,665	10,747
Commercial/Agricultural real estate: | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Current	693,055	496,961
Total Loans	698,465	507,675
Commercial/Agricultural real estate: | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Current	74,503	63,252
Total Loans	78,495	68,795
Commercial/Agricultural real estate: | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Current	178,349	121,696
Total Loans	178,349	122,152
Commercial/Agricultural real estate: | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Current	79,520	94,619
Total Loans	79,520	98,517
Commercial/Agricultural real estate: | Total Past Due Accruing | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	36	10,035
Commercial/Agricultural real estate: | Total Past Due Accruing | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	502	459
Commercial/Agricultural real estate: | Total Past Due Accruing | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	308
Commercial/Agricultural real estate: | Total Past Due Accruing | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	3,898
Commercial/Agricultural real estate: | 30-59 Days Past Due and Accruing | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	36	9,568
Commercial/Agricultural real estate: | 30-59 Days Past Due and Accruing | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	498	411
Commercial/Agricultural real estate: | 30-59 Days Past Due and Accruing | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	308
Commercial/Agricultural real estate: | 30-59 Days Past Due and Accruing | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	3,898
Commercial/Agricultural real estate: | 60-89 Days Past Due and Accruing | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	467
Commercial/Agricultural real estate: | 60-89 Days Past Due and Accruing | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	4	48
Commercial/Agricultural real estate: | 60-89 Days Past Due and Accruing | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | 60-89 Days Past Due and Accruing | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | Greater Than 89 Days Past Due and Accruing | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | Greater Than 89 Days Past Due and Accruing | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | Greater Than 89 Days Past Due and Accruing | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | Greater Than 89 Days Past Due and Accruing | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Commercial/Agricultural real estate: | Nonaccrual Loans | Commercial real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	5,374	679
Commercial/Agricultural real estate: | Nonaccrual Loans | Agricultural real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	3,490	5,084
Commercial/Agricultural real estate: | Nonaccrual Loans | Multi-family real estate
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	148
Commercial/Agricultural real estate: | Nonaccrual Loans | Construction and land development
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Current	121,837	115,269
Total Loans	122,167	116,553
C&I/Agricultural operating: | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Current	8,755	123,702
Total Loans	8,755	123,702
C&I/Agricultural operating: | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Current	29,472	29,214
Total Loans	31,588	32,785
C&I/Agricultural operating: | Total Past Due Accruing | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	32	927
C&I/Agricultural operating: | Total Past Due Accruing | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Total Past Due Accruing | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	1,123	1,699
C&I/Agricultural operating: | 30-59 Days Past Due and Accruing | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	436
C&I/Agricultural operating: | 30-59 Days Past Due and Accruing | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | 30-59 Days Past Due and Accruing | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	1,123	1,499
C&I/Agricultural operating: | 60-89 Days Past Due and Accruing | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	32	491
C&I/Agricultural operating: | 60-89 Days Past Due and Accruing | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | 60-89 Days Past Due and Accruing | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	200
C&I/Agricultural operating: | Greater Than 89 Days Past Due and Accruing | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Greater Than 89 Days Past Due and Accruing | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Greater Than 89 Days Past Due and Accruing | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Nonaccrual Loans | Commercial and industrial
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	298	357
C&I/Agricultural operating: | Nonaccrual Loans | SBA PPP loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
C&I/Agricultural operating: | Nonaccrual Loans | Agricultural operating
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	993	1,872
Residential mortgage: | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Current	87,608	126,043
Total Loans	90,990	131,386
Residential mortgage: | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Current	3,589	5,527
Total Loans	3,871	6,260
Residential mortgage: | Total Past Due Accruing | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	2,114	3,126
Residential mortgage: | Total Past Due Accruing | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	117	499
Residential mortgage: | 30-59 Days Past Due and Accruing | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	1,471	2,238
Residential mortgage: | 30-59 Days Past Due and Accruing | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	117	338
Residential mortgage: | 60-89 Days Past Due and Accruing | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	487	372
Residential mortgage: | 60-89 Days Past Due and Accruing | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	94
Residential mortgage: | Greater Than 89 Days Past Due and Accruing | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	156	516
Residential mortgage: | Greater Than 89 Days Past Due and Accruing | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	67
Residential mortgage: | Nonaccrual Loans | Residential mortgage
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	1,268	2,217
Residential mortgage: | Nonaccrual Loans | Purchased HELOC loans
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	165	234
Consumer installment: | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Current	15,851	25,591
Total Loans	15,971	25,851
Consumer installment: | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Current	8,780	13,073
Total Loans	8,874	13,213
Consumer installment: | Total Past Due Accruing | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	65	127
Consumer installment: | Total Past Due Accruing | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	72	117
Consumer installment: | 30-59 Days Past Due and Accruing | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	38	90
Consumer installment: | 30-59 Days Past Due and Accruing | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	58	100
Consumer installment: | 60-89 Days Past Due and Accruing | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	27	37
Consumer installment: | 60-89 Days Past Due and Accruing | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	10	14
Consumer installment: | Greater Than 89 Days Past Due and Accruing | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	0	0
Consumer installment: | Greater Than 89 Days Past Due and Accruing | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	4	3
Consumer installment: | Nonaccrual Loans | Originated indirect paper
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	55	133
Consumer installment: | Nonaccrual Loans | Other Consumer
Aging analysis of the Bank's real estate and consumer loans
Loans receivable	$ 22	$ 23

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Impaired Financing Receivables (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Bank impaired loans
With no related allowance recorded, Recorded investment	$ 25,151	$ 38,158
With an allowance recorded, Recorded investment	6,589	4,152
Recorded investment, Total	31,740	42,310
With no related allowance recorded, unpaid principal balance	25,804	39,245
With an allowance recorded, unpaid principal balance	6,589	4,152
Unpaid principal balance, Total	32,393	43,397
Impaired Financing Receivable, Related Allowance	1,009	1,115
With no related allowance recorded, Average recorded investment	31,656	45,468
With an allowance recorded, Average recorded investment	5,372	4,143
Average recorded investment, Total	37,028	49,611
With no related allowance recorded, Interest income recognized	1,511	2,658
With an allowance recorded, Interest income recognized	163	177
Interest income recognized, Total	1,674	2,835
Commercial/Agricultural real estate:
Bank impaired loans
With no related allowance recorded, Recorded investment	15,521	23,302
With an allowance recorded, Recorded investment	5,887	2,290
Recorded investment, Total	21,408	25,592
With no related allowance recorded, unpaid principal balance	15,905	24,013
With an allowance recorded, unpaid principal balance	5,887	2,290
Unpaid principal balance, Total	21,792	26,303
Impaired Financing Receivable, Related Allowance	797	698
With no related allowance recorded, Average recorded investment	19,412	29,657
With an allowance recorded, Average recorded investment	4,089	2,217
Average recorded investment, Total	23,501	31,874
With no related allowance recorded, Interest income recognized	964	1,894
With an allowance recorded, Interest income recognized	62	100
Interest income recognized, Total	1,026	1,994
C&I/Agricultural operating:
Bank impaired loans
With no related allowance recorded, Recorded investment	3,153	6,090
With an allowance recorded, Recorded investment	0	781
Recorded investment, Total	3,153	6,871
With no related allowance recorded, unpaid principal balance	3,337	6,334
With an allowance recorded, unpaid principal balance	0	781
Unpaid principal balance, Total	3,337	7,115
Impaired Financing Receivable, Related Allowance	99	190
With no related allowance recorded, Average recorded investment	4,622	7,025
With an allowance recorded, Average recorded investment	391	636
Average recorded investment, Total	5,013	7,661
With no related allowance recorded, Interest income recognized	146	284
With an allowance recorded, Interest income recognized	84	22
Interest income recognized, Total	230	306
Residential mortgage:
Bank impaired loans
With no related allowance recorded, Recorded investment	6,221	8,410
With an allowance recorded, Recorded investment	701	1,079
Recorded investment, Total	6,922	9,489
With no related allowance recorded, unpaid principal balance	6,306	8,542
With an allowance recorded, unpaid principal balance	701	1,079
Unpaid principal balance, Total	7,007	9,621
Impaired Financing Receivable, Related Allowance	113	226
With no related allowance recorded, Average recorded investment	7,316	8,418
With an allowance recorded, Average recorded investment	890	1,255
Average recorded investment, Total	8,206	9,673
With no related allowance recorded, Interest income recognized	316	450
With an allowance recorded, Interest income recognized	17	54
Interest income recognized, Total	333	504
Consumer installment:
Bank impaired loans
With no related allowance recorded, Recorded investment	256	356
With an allowance recorded, Recorded investment	1	2
Recorded investment, Total	257	358
With no related allowance recorded, unpaid principal balance	256	356
With an allowance recorded, unpaid principal balance	1	2
Unpaid principal balance, Total	257	358
Impaired Financing Receivable, Related Allowance	0	1
With no related allowance recorded, Average recorded investment	306	368
With an allowance recorded, Average recorded investment	2	35
Average recorded investment, Total	308	403
With no related allowance recorded, Interest income recognized	85	30
With an allowance recorded, Interest income recognized	0	1
Interest income recognized, Total	$ 85	$ 31

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Troubled Debt Restructuring, Loans by Accrual Status (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Receivables [Abstract]
Accrual status	$ 7,984	$ 11,742
Non-accrual status	4,539	6,735
Total	$ 12,523	$ 18,477

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Troubled Debt Restructurings on Financing Receivables (Details)	12 Months Ended
	Dec. 31, 2021 USD ($) contract troubled_debt_restructuring	Dec. 31, 2020 USD ($) contract troubled_debt_restructuring
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | troubled_debt_restructuring	15	38
Pre-Modification Outstanding Recorded Investment	$ 1,133,000	$ 12,746,000
Post-Modification Outstanding Recorded Investment	1,133,000	12,746,000
Specific Reserve	$ 0	$ 0
Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | contract	3	12
Pre-Modification Outstanding Recorded Investment	$ 120,000	$ 4,932,000
Post-Modification Outstanding Recorded Investment	120,000	4,932,000
Specific Reserve	$ 0	$ 0
C&I/Agricultural operating:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | contract	1	6
Pre-Modification Outstanding Recorded Investment	$ 240,000	$ 6,373,000
Post-Modification Outstanding Recorded Investment	240,000	6,373,000
Specific Reserve	$ 0	$ 0
Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | contract	8	17
Pre-Modification Outstanding Recorded Investment	$ 749,000	$ 1,431,000
Post-Modification Outstanding Recorded Investment	749,000	1,431,000
Specific Reserve	$ 0	$ 0
Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | contract	3	3
Pre-Modification Outstanding Recorded Investment	$ 24,000	$ 10,000
Post-Modification Outstanding Recorded Investment	24,000	10,000
Specific Reserve	0	0
Modified Rate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	297,000	8,198,000
Modified Rate | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	39,000	4,441,000
Modified Rate | C&I/Agricultural operating:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	3,295,000
Modified Rate | Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	252,000	456,000
Modified Rate | Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	6,000	6,000
Modified Payment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	376,000	1,134,000
Modified Payment | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	81,000	198,000
Modified Payment | C&I/Agricultural operating:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	78,000
Modified Payment | Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	295,000	858,000
Modified Payment | Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	0
Modified Under- writing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	460,000	3,414,000
Modified Under- writing | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	293,000
Modified Under- writing | C&I/Agricultural operating:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	240,000	3,000,000
Modified Under- writing | Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	202,000	117,000
Modified Under- writing | Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	18,000	4,000
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	0
Other | Commercial/Agricultural real estate:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	0
Other | C&I/Agricultural operating:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	0
Other | Residential mortgage:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	0	0
Other | Consumer installment:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan restructuring	$ 0	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Loans by Loan Class Modified in Troubled Debt Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) contract loan troubled_debt_restructuring	Dec. 31, 2020 USD ($) loan contract troubled_debt_restructuring
Troubled Debt Restructuring
Number of Modifications | troubled_debt_restructuring	15	38
Recorded Investment	$ 12,523	$ 18,477
Commercial/Agricultural real estate:
Troubled Debt Restructuring
Number of Modifications | contract	3	12
C&I/Agricultural operating:
Troubled Debt Restructuring
Number of Modifications | contract	1	6
Residential mortgage:
Troubled Debt Restructuring
Number of Modifications | contract	8	17
Consumer installment:
Troubled Debt Restructuring
Number of Modifications | contract	3	3
Originated Loans
Troubled Debt Restructuring
Number of Modifications | loan	76	107
Recorded Investment	$ 12,523	$ 18,477
Originated Loans | Commercial/Agricultural real estate:
Troubled Debt Restructuring
Number of Modifications | loan	19	31
Recorded Investment	$ 8,007	$ 9,386
Originated Loans | C&I/Agricultural operating:
Troubled Debt Restructuring
Number of Modifications | loan	7	16
Recorded Investment	$ 1,203	$ 5,123
Originated Loans | Residential mortgage:
Troubled Debt Restructuring
Number of Modifications | loan	43	52
Recorded Investment	$ 3,274	$ 3,919
Originated Loans | Consumer installment:
Troubled Debt Restructuring
Number of Modifications | loan	7	8
Recorded Investment	$ 39	$ 49

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Restructured Loans in Default (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) loan	Dec. 31, 2020 USD ($) loan
Financing Receivable, Troubled Debt Restructuring, Subsequent Default [Abstract]
Number of Modifications | loan	1	6
Recorded Investment | $	$ 3	$ 728
Commercial/Agricultural real estate:
Financing Receivable, Troubled Debt Restructuring, Subsequent Default [Abstract]
Number of Modifications | loan	0	1
Recorded Investment | $	$ 0	$ 100
C&I/Agricultural operating:
Financing Receivable, Troubled Debt Restructuring, Subsequent Default [Abstract]
Number of Modifications | loan	0	1
Recorded Investment | $	$ 0	$ 224
Residential mortgage:
Financing Receivable, Troubled Debt Restructuring, Subsequent Default [Abstract]
Number of Modifications | loan	0	4
Recorded Investment | $	$ 0	$ 404
Consumer installment:
Financing Receivable, Troubled Debt Restructuring, Subsequent Default [Abstract]
Number of Modifications | loan	1	0
Recorded Investment | $	$ 3	$ 0

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Acquired Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 1,310,963	$ 1,237,581
Carrying amount	1,294,050	1,220,538
Receivables Acquired with Deteriorated Credit Quality
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	11,205	17,946
Carrying amount	10,552	16,859
Non-PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	187,346	268,218
Carrying amount	184,399	264,242
Non-PCI Loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	198,551	286,164
Carrying amount	$ 194,951	$ 281,101

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Accretable Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Receivables [Abstract]
2022	$ 828
2023	279
2024	131
2025	96
Total	$ 1,334

XML

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS - Non-Accretable Yield (Details) - Acquired Loans - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non-Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	$ 1,087	$ 6,290
Additions to non-accretable difference for acquired purchased credit impaired loans	0	0
Non-accretable difference realized as interest from payoffs of purchased credit impaired loans	(105)	(1,693)
Transfers from non-accretable difference to accretable discount	(329)	(2,754)
Non-accretable difference used to reduce loan principal balance	0	(505)
Non-accretable difference transferred to OREO due to loan foreclosure	0	(251)
Balance at end of period	$ 653	$ 1,087

XML

MORTGAGE SERVICING RIGHTS - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Finite-Lived Intangible Assets [Line Items]
Deposits	$ 1,387,535	$ 1,295,256
Servicing fees	$ 1,414	1,391
Measurement Input, Discount Rate | Minimum
Finite-Lived Intangible Assets [Line Items]
Servicing asset, measurement input	0.09
Measurement Input, Discount Rate | Maximum
Finite-Lived Intangible Assets [Line Items]
Servicing asset, measurement input	0.12
Mortgage servicing rights
Finite-Lived Intangible Assets [Line Items]
Residential mortgage loans serviced for others	$ 556,086	553,655
Mortgage servicing rights
Finite-Lived Intangible Assets [Line Items]
Deposits	$ 2,781	$ 2,890

XML

MORTGAGE SERVICING RIGHTS - Rollforward of Rights (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Mortgage servicing rights, beginning of period	$ 3,252
Increase in mortgage servicing rights resulting from transfers of financial assets	(1,100)	$ (2,020)
Amortization of mortgage servicing rights	(191)	(3,050)
Mortgage servicing rights, end of period	4,161	3,252
Mortgage servicing rights
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Mortgage servicing rights, beginning of period	5,266	4,541
Increase in mortgage servicing rights resulting from transfers of financial assets	1,100	2,020
Amortization of mortgage servicing rights	(1,639)	(1,295)
Mortgage servicing rights, end of period	4,727	5,266
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward]
Valuation allowance, beginning of period	(2,014)	(259)
Additions	0	(1,755)
Recoveries	1,448	0
Valuation allowance, end of period	(566)	(2,014)
Mortgage servicing rights, net	4,161	3,252
Fair value of mortgage servicing rights, end of period	4,312	3,285
Residential mortgage loans serviced for others	$ 556,086	$ 553,655

XML

MORTGAGE SERVICING RIGHTS - Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Acquired Finite-Lived Intangible Assets [Line Items]
2022	$ 1,449
2023	755
2024	715
2025	584
2026	395
Total	3,898	$ 5,494
Mortgage servicing rights
Acquired Finite-Lived Intangible Assets [Line Items]
2022	1,241
2023	1,040
2024	842
2025	653
2026	464
After 2026	487
Total	$ 4,727

XML

OFFICE PROPERTIES AND EQUIPMENT - Summary (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Office Properties and Equipment
Office properties and equipment, gross	$ 29,850	$ 27,799
Less--Accumulated depreciation	(8,681)	(6,634)
Office properties and equipment, net	21,169	21,165
Land
Office Properties and Equipment
Office properties and equipment, gross	4,215	4,298
Buildings
Office Properties and Equipment
Office properties and equipment, gross	16,781	16,008
Furniture, equipment and vehicles
Office Properties and Equipment
Office properties and equipment, gross	$ 8,854	$ 7,493

XML

OFFICE PROPERTIES AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 2,255	$ 1,954

XML

GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 31,498	$ 31,498	$ 31,498
Changes in goodwill	$ 0	$ 0

XML

GOODWILL AND INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Gross carrying amount	$ 12,180	$ 12,180
Accumulated amortization	(8,282)	(6,686)
Total	3,898	5,494
Sales during the period - carrying amount	0	618
Sales during the period - accumulated amortization	0	147
Amortization during the period	$ 1,596	$ 1,622

XML

GOODWILL AND INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
2022	$ 1,449
2023	755
2024	715
2025	584
2026	395
Total	$ 3,898	$ 5,494

XML

LEASES - Narrative (Details)	Dec. 31, 2021 lease
Lessee, Lease, Description [Line Items]
Operating lease renewal term	5 years
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 year 3 months
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	6 years 6 months
Corporate Offices
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases	1
Bank Branch
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases	5
ATM Location
Lessee, Lease, Description [Line Items]
Number of properties subject to operating leases	1

XML

LEASES - Operating Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
The components of total lease costs were as follows:
Operating lease cost	$ 558	$ 618
Variable lease cost	47	59
Total lease cost	605	677
The components of total lease income were as follows:
Operating lease income	33	32
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	415	638
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	2	508
Supplemental balance sheet information related to leases was as follows:
Operating lease right-of-use assets	2,159	2,657
Operating lease liabilities	$ 2,228	$ 2,762
Weighted average remaining lease term in years; operating leases	5 years 6 months 18 days	6 years 3 months 25 days
Weighted average discount rate; operating leases (as a percent)	2.73%	2.70%
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other assets	Other assets
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Other liabilities	Other liabilities

XML

LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Payments
2022	$ 558
2023	506
2024	419
2025	403
2026	346
Thereafter	480
Total lease payments	2,712
Less: effects of discounting	(484)
Operating lease liabilities	2,228	$ 2,762
Receipts
2022	34
2023	27
2024	10
2025	0
2026	0
Thereafter	0
Total lease payments	$ 71

XML

DEPOSITS - Deposits by Type (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Non interest bearing demand deposits	$ 276,631	$ 238,348
Interest bearing demand deposits	396,231	301,764
Savings accounts	222,674	196,348
Money market accounts	288,985	245,549
Certificate accounts	203,014	313,247
Total deposits	$ 1,387,535	$ 1,295,256

XML

DEPOSITS - Maturities (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
2022	$ 178,777
2023	13,919
2024	6,590
2025	2,522
2026	1,206
After 2026	0
Total	$ 203,014

XML

DEPOSITS - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Time deposits at or above FDIC insurance limit	$ 22,381	$ 46,660
Brokered deposits	11	2,516
Deposits held from various parties	$ 34,093	$ 48,596

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS - Summary (Details) - USD ($)	1 Months Ended		12 Months Ended
	Sep. 30, 2025	Aug. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Summary of Federal Home Loan Bank advances
Federal Home Loan Bank advances, net			$ 111,527,000	$ 123,498,000
Long-term debt, gross			169,953,000	181,826,000
Letters of credit outstanding, amount			176,150,000	179,400,000
Banks available and unused portion of borrowing agreement			204,271,000	118,391,000
Maximum month-end amounts outstanding			123,530,000	162,530,000
Senior Notes - Variable Rate due June 2031 | Revolving Credit Facility
Summary of Federal Home Loan Bank advances
Maximum borrowing capacity			5,000,000
Advances from FHLB
Summary of Federal Home Loan Bank advances
Federal Home Loan Bank advances, Maturity 2021			0	8,000,000
Federal Home Loan Bank advances, Maturity 2022			11,000,000	15,000,000
Federal Home Loan Bank advances, Maturity 2023			20,000,000	20,000,000
Federal Home Loan Bank advances, Maturity 2024			20,530,000	20,530,000
Federal Home Loan Bank advances, Maturity 2025			5,000,000	5,000,000
Federal Home Loan Bank advances, Maturity 2029			42,500,000	42,500,000
Federal Home Loan Bank advances, Maturity 2030			12,500,000	12,500,000
Federal Home Loan Bank, Advances, Maturities Summary			111,530,000	123,530,000
Unamortized discount (premium) and debt issuance costs			(3,000)	(32,000)
Federal Home Loan Bank advances, net			111,527,000	123,498,000
Letters of credit outstanding, amount			$ 861,900,000	$ 723,862,000
Weighted average interest rate (as a percent)			2.45%	1.02%
Advances from FHLB | Minimum
Summary of Federal Home Loan Bank advances
Range of Stated Rates, 2021 (as a percent)			0.00%	0.00%
Range of Stated Rates, 2022 (as a percent)			2.45%	2.34%
Range of Stated Rates, 2023 (as a percent)			1.43%	1.43%
Range of Stated Rates, 2024 (as a percent)			0.00%	0.00%
Range of Stated Rates, 2025 (as a percent)			1.45%	1.45%
Range of Stated Rates, 2029 (as a percent)			1.00%	1.00%
Range of Stated Rates, 2030 (as a percent)			0.52%	0.52%
Advances from FHLB | Maximum
Summary of Federal Home Loan Bank advances
Range of Stated Rates, 2021 (as a percent)			0.00%	2.16%
Range of Stated Rates, 2022 (as a percent)			2.45%	2.45%
Range of Stated Rates, 2023 (as a percent)			1.44%	1.44%
Range of Stated Rates, 2024 (as a percent)			1.45%	1.45%
Range of Stated Rates, 2025 (as a percent)			1.45%	1.45%
Range of Stated Rates, 2029 (as a percent)			1.13%	1.13%
Range of Stated Rates, 2030 (as a percent)			0.86%	0.86%
Senior notes
Summary of Federal Home Loan Bank advances
Unamortized discount (premium) and debt issuance costs			$ (430,000)	$ (528,000)
Long-term debt, gross			58,426,000	58,328,000
Senior notes | Senior Notes due 2031
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 28,856,000	$ 28,856,000
Senior notes | Senior Notes due 2031 | Minimum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			3.00%	3.25%
Senior notes | Senior Notes due 2031 | Maximum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			3.50%	3.50%
Subordinated notes
Summary of Federal Home Loan Bank advances
Long-term debt, gross			$ 30,000,000	$ 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 | Forecast
Summary of Federal Home Loan Bank advances
Debt instrument, 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	$ 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) | Forecast
Summary of Federal Home Loan Bank advances
Debt instrument, 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%	6.00%
Subordinated notes | Subordinated Notes due 2030 | Maximum
Summary of Federal Home Loan Bank advances
Stated interest rate (as a percent)			6.00%	6.00%
Federal Home Loan Bank Advances
Summary of Federal Home Loan Bank advances
FHLB, advances, maturity 2029 and 2030			$ 55,000,000

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Letters of credit outstanding, amount	$ 176,150,000	$ 179,400,000
Line of Credit | Federal Reserve Bank Paycheck Protection Program Liquidity Facility
Debt Instrument [Line Items]
Outstanding balances of debt instrument	0
Maximum month-end outstanding amount	$ 0	$ 25,136,000

XML

CAPITAL MATTERS - Summary (Details) $ in Thousands	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual, Amount	$ 187,783	$ 171,702
Total capital (to risk weighted assets), Actual, Ratio	0.134	0.147
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 111,694	$ 93,381
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	$ 139,618	$ 116,726
Total capital (to risk weighted assets), To Be Well Capitalized, Ratio	0.100	0.100
Tier 1 capital (to risk weighted assets), Actual, Amount	$ 170,870	$ 157,081
Tier 1 capital (to risk weighted assets), Actual, Ratio	0.122	0.135
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 83,771	$ 70,035
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	$ 111,694	$ 93,381
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	$ 170,870	$ 157,081
Common equity tier 1 (to risk weighted assets), Actual, Ratio	12.20%	13.50%
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 62,828	$ 52,527
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	$ 90,752	$ 75,872
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	$ 170,870	$ 157,081
Tier 1 leverage ratio (to adjusted total assets), Actual, Ratio	0.100	0.099
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Amount	$ 68,323	$ 63,718
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	$ 85,403	$ 79,647
Tier 1 leverage ratio (to adjusted total assets), To Be Well Capitalized, Ratio	0.050	0.050
Parent Company
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual, Amount	$ 182,242	$ 166,703
Total capital (to risk weighted assets), Actual, Ratio	0.131	0.143
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 111,694	$ 93,381
Total capital (to risk weighted assets), For Capital Adequacy Purposes, Ratio	0.080	0.080
Tier 1 capital (to risk weighted assets), Actual, Amount	$ 135,329	$ 122,082
Tier 1 capital (to risk weighted assets), Actual, Ratio	0.097	0.105
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 83,771	$ 70,035
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	$ 135,329	$ 122,082
Common equity tier 1 (to risk weighted assets), Actual, Ratio	9.70%	10.50%
Common equity tier 1 (to risk weighted assets), For Capital Adequacy Purposes, Amount	$ 62,828	$ 52,527
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	$ 135,329	$ 122,082
Tier 1 leverage ratio (to adjusted total assets), Actual, Ratio	0.079	0.077
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Amount	$ 68,323	$ 63,718
Tier 1 leverage ratio (to adjusted total assets), For Capital Adequacy Purposes, Ratio	0.040	0.040

XML

CAPITAL MATTERS - Dividends (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Cash dividends paid (USD per share)	$ 0.23	$ 0.21

XML

COMMITMENTS AND CONTINGENCIES - Off-Balance-Sheet Credit Instruments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	$ 270,985	$ 247,324
Commercial standby letter of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	3,825	524
Commitment to contribute capital to SBIC
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	2,400	0
Commitment to contribute capital to investment company
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	$ 2,640	$ 0

XML

COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Standby letters of credit, liability	$ 0	$ 0

XML

RETIREMENT PLAN - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Retirement Benefits [Abstract]
Employer matching contributions	$ 613	$ 610

XML

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Mar. 27, 2018
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
Options outstanding (shares)	65,900	72,300	78,100
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares, in years	5 years
2008 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of Equity Incentive Plan	10 years
Options granted (shares)	181,000
2008 Equity Incentive Plan | Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-option instruments granted (shares)	89,183
2008 Equity Incentive Plan | Restricted stock awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares, in years	2 years
2008 Equity Incentive Plan | Restricted stock awards | Maximum
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 stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (shares)	163,974
2018 Equity Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (shares)	0
2004 Recognition and Retention Plan and 2008 Equity Incentive Plan | Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related to awards	$ 797	$ 530
2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related to awards	$ 8	$ 14

XML

STOCK-BASED COMPENSATION - Restricted Stock Award (Details) - Restricted stock awards - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Number of Shares
Unvested and outstanding at beginning of year (shares)	57,242	43,457
Granted (shares)	64,399	45,507
Vested (shares)	(44,511)	(31,722)
Forfeited (shares)	(1,500)	0
Unvested and outstanding at end of year (shares)	75,630	57,242
Weighted Average Grant Price
Unvested and outstanding at beginning of year (USD per share)	$ 12.23	$ 12.76
Granted (USD per share)	10.78	11.79
Vested (USD per share)	13.26	12.32
Forfeited (USD per share)	10.78	0
Unvested and outstanding at end of year (USD per share)	$ 11.20	$ 12.23

XML

STOCK-BASED COMPENSATION - Common Stock Options Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Option Shares
Outstanding at beginning of period (shares)	72,300	78,100
Exercised (shares)	(5,800)
Forfeited or expired (shares)	(600)	(5,800)
Outstanding at end of period (shares)	65,900	72,300
Exercisable at end of period (shares)	61,700	54,100
Weighted Average Exercise Price
Outstanding at beginning of period (USD per share)	$ 11.05	$ 11.18
Exercised (USD per share)	8.99
Forfeited or expired (USD per share)	13.76	11.95
Outstanding at end of period (USD per share)	11.20	11.05
Weighted Average Exercise Price, Exercisable at end of year (USD per share)	$ 11.03	$ 10.82
Weighted Average Remaining Contractual Term, Outstanding at end of period	4 years 7 months 9 days	5 years 5 months 26 days
Weighted Average Remaining Contractual Term, Exercisable at end of period	4 years 6 months 14 days	5 years 4 months 13 days
Aggregate intrinsic value, outstanding at end of period	$ 169	$ 0
Aggregate intrinsic value, exercisable at end of period	$ 169	$ 4

XML

STOCK-BASED COMPENSATION - Information on 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Payment Arrangement [Abstract]
Intrinsic value of options exercised	$ 28	$ 0
Cash received from options exercised	52	0
Tax benefit realized from options exercised	$ 0	$ 0

XML

INCOME TAXES - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Current tax provision
Federal	$ 4,761	$ 5,000
State	2,002	2,081
Total current tax provision	6,763	7,081
Deferred tax provision (benefit)
Federal	585	(1,866)
Bank owned life insurance - Tax Act clarification	0	(660)
State	345	0
Total deferred tax provision	930	(2,526)
Total	$ 7,693	$ 4,555

XML

INCOME TAXES - Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income
Tax expense at statutory rate	$ 6,082	$ 3,629
State income taxes, net of federal	1,854	1,123
Bank owned life insurance	(132)	(130)
Tax exempt interest	(52)	(61)
Other	(59)	(6)
Total	$ 7,693	$ 4,555
Tax expense at statutory rate (as a percent)	21.00%	21.00%
State income taxes, net of federal (as a percent)	6.40%	6.50%
Bank owned life insurance (as a percent)	(0.40%)	(0.80%)
Tax exempt interest (as a percent)	(0.20%)	(0.30%)
Other (as a percent)	(0.20%)	0.00%
Total (as a percent)	26.60%	26.40%

XML

INCOME TAXES - Narrative (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Valuation allowance	$ 0	$ 0

XML

INCOME TAXES - Net Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets:
Allowance for loan losses	$ 4,587	$ 4,567
Deferred loan costs/fees	558	1,117
Restricted stock	189	116
Economic performance accruals	981	694
Other real estate	0	89
Deferred revenue	41	64
Loan discounts	854	1,218
FHLB advances	5	55
Lease liability	613	758
Other	25	70
Deferred tax assets	7,853	8,748
Deferred tax liabilities:
Office properties and equipment	(1,595)	(1,551)
Federal Home Loan Bank stock	(129)	(129)
Core deposit intangible	(1,298)	(1,615)
Net gain on equity securities	(641)	(442)
Prepaid expenses	(198)	(204)
Mortgage servicing rights	(1,144)	(893)
Leases; right of use asset	(594)	(730)
Net unrealized gains on securities available for sale	(61)	(565)
Deferred tax liabilities	(5,660)	(6,129)
Net deferred tax assets	$ 2,193	$ 2,619

XML

FAIR VALUE ACCOUNTING - Available-for-sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	$ 203,068	$ 144,233
U.S. government agency obligations
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	26,265	33,365
Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	140	140
Mortgage-backed securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	107,167	40,991
Corporate debt securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	35,588	17,462
Trust preferred securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"		16,448
Recurring
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	203,068	144,233
Total equity investments	1,328
Total	204,396	144,433
Recurring | Equity investments
Assets Measured on a Recurring Basis
Total equity investments	368	200
Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Total equity investments	368
Total	368	200
Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Equity investments
Assets Measured on a Recurring Basis
Total equity investments	368	200
Recurring | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	203,068	144,233
Total equity investments	0
Total	203,068	144,233
Recurring | Significant Other Observable Inputs (Level 2) | Equity investments
Assets Measured on a Recurring Basis
Total equity investments	0	0
Recurring | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Total equity investments	0
Total	0	0
Recurring | Significant Unobservable Inputs (Level 3) | Equity investments
Assets Measured on a Recurring Basis
Total equity investments	0	0
Recurring | NAV | Equity investments
Assets Measured on a Recurring Basis
Total equity investments	960
Recurring | U.S. government agency obligations
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	26,265	33,365
Recurring | U.S. government agency obligations | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | U.S. government agency obligations | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	26,265	33,365
Recurring | U.S. government agency obligations | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Obligations of states and political subdivisions
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	140	140
Recurring | Obligations of states and political subdivisions | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Obligations of states and political subdivisions | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	140	140
Recurring | Obligations of states and political subdivisions | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Mortgage-backed securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	107,167	40,991
Recurring | Mortgage-backed securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Mortgage-backed securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	107,167	40,991
Recurring | Mortgage-backed securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Corporate debt securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	35,588	17,462
Recurring | Corporate debt securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Corporate debt securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	35,588	17,462
Recurring | Corporate debt securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Corporate asset-backed securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	33,908	35,827
Recurring | Corporate asset-backed securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	0	0
Recurring | Corporate asset-backed securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	33,908	35,827
Recurring | Corporate asset-backed securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"	$ 0	0
Recurring | Trust preferred securities
Assets Measured on a Recurring Basis
Securities available for sale "AFS"		16,448
Recurring | Trust preferred securities | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"		0
Recurring | Trust preferred securities | Significant Other Observable Inputs (Level 2)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"		16,448
Recurring | Trust preferred securities | Significant Unobservable Inputs (Level 3)
Assets Measured on a Recurring Basis
Securities available for sale "AFS"		$ 0

XML

FAIR VALUE ACCOUNTING - Assets Measured on Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	$ 11,149	$ 6,486
Quoted Prices in Active Markets for Identical Instruments (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	11,300	6,519
Foreclosed and repossessed assets, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	1,408	197
Foreclosed and repossessed assets, net | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Foreclosed and repossessed assets, net | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Foreclosed and repossessed assets, net | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	1,408	197
Impaired loans with allocated allowances
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	5,580	3,037
Impaired loans with allocated allowances | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Impaired loans with allocated allowances | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Impaired loans with allocated allowances | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	5,580	3,037
Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	4,161	3,252
Mortgage servicing rights | Quoted Prices in Active Markets for Identical Instruments (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Mortgage servicing rights | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	0	0
Mortgage servicing rights | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	$ 4,312	$ 3,285

XML

FAIR VALUE ACCOUNTING - Level 3 Inputs (Details) $ in Thousands	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 11,149	$ 6,486
Significant Unobservable Inputs (Level 3) | Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	11,300	6,519
Significant Unobservable Inputs (Level 3) | Foreclosed and repossessed assets, net | Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,408	197
Significant Unobservable Inputs (Level 3) | Impaired loans with allocated allowances | Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,580	3,037
Significant Unobservable Inputs (Level 3) | Mortgage servicing rights | Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 4,312	$ 3,285
Significant Unobservable Inputs (Level 3) | Measurement Input, Cost to Sell | Minimum | Foreclosed and repossessed assets, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.10	0.10
Significant Unobservable Inputs (Level 3) | Measurement Input, Cost to Sell | Minimum | Impaired loans with allocated allowances
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.10	0.10
Significant Unobservable Inputs (Level 3) | Measurement Input, Cost to Sell | Maximum | Foreclosed and repossessed assets, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.15	0.15
Significant Unobservable Inputs (Level 3) | Measurement Input, Cost to Sell | Maximum | Impaired loans with allocated allowances
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.15	0.15
Significant Unobservable Inputs (Level 3) | Measurement Input, Discount Rate | Minimum | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.09	0.09
Significant Unobservable Inputs (Level 3) | Measurement Input, Discount Rate | Maximum | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans and leases receivable, measurement input	0.12	0.12

XML

FAIR VALUE ACCOUNTING - Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Financial assets:
Securities available for sale "AFS"	$ 203,068	$ 144,233
Securities held to maturity "HTM"	69,177	43,784
Equity investments	1,328	200
Carrying Amount | (Level I)
Financial assets:
Cash and cash equivalents	47,691	119,440
Equity investments	368	200
Accrued interest receivable	3,916	5,652
Financial liabilities:
Other borrowings	58,426	58,328
Accrued interest payable	586	796
Carrying Amount | (Level II)
Financial assets:
Other interest bearing deposits	1,511	3,752
Securities available for sale "AFS"	203,068	144,233
Securities held to maturity "HTM"	71,141	43,551
Other investments	15,305	14,948
Loans held for sale	6,670	3,075
Financial liabilities:
FHLB advances	111,527	123,498
Carrying Amount | (Level III)
Financial assets:
Loans receivable, net	1,294,050	1,220,538
Mortgage servicing rights	4,161	3,252
Financial liabilities:
Deposits	1,387,535	1,295,256
Carrying Amount | NAV
Financial assets:
Equity investments	960	0
Estimated Fair Value | (Level I)
Financial assets:
Cash and cash equivalents	47,691	119,440
Equity investments	368	200
Accrued interest receivable	3,916	5,652
Financial liabilities:
Other borrowings	58,426	58,328
Accrued interest payable	586	796
Estimated Fair Value | (Level II)
Financial assets:
Other interest bearing deposits	1,535	3,818
Securities available for sale "AFS"	203,068	144,233
Securities held to maturity "HTM"	69,177	43,784
Other investments	15,305	14,948
Loans held for sale	6,670	3,075
Financial liabilities:
FHLB advances	113,285	128,282
Estimated Fair Value | (Level III)
Financial assets:
Loans receivable, net	1,319,293	1,239,692
Mortgage servicing rights	4,312	3,285
Financial liabilities:
Deposits	1,388,390	1,292,104
Estimated Fair Value | NAV
Financial assets:
Equity investments	$ 960	$ 0

XML

EARNINGS PER SHARE - Summary (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Basic
Net income attributable to common shareholders	$ 21,266	$ 12,725
Weighted average common shares outstanding (shares)	10,717	11,162
Basic earnings per share (USD per share)	$ 1.98	$ 1.14
Diluted
Net income attributable to common shareholders	$ 21,266	$ 12,725
Weighted average common shares outstanding (shares)	10,717	11,162
Add: Dilutive stock options outstanding (shares)	10	0
Average shares and dilutive potential common shares (shares)	10,727	11,162
Diluted earnings per share (USD per share)	$ 1.98	$ 1.14
Additional common stock option shares that have not been included due to their antidilutive effect (shares)	21	69

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Before-Tax Amount
Other comprehensive income	$ (1,834)	$ 2,390
Tax Benefit (Expense)
Other comprehensive income (loss)	505	(429)
Net-of-Tax Amount
Other comprehensive income	(1,329)	1,961
Unrealized Gains (Losses) on Securities
Before-Tax Amount
Net unrealized (losses) gains arising during the period	(1,261)	2,546
Reclassification adjustment for gains included in net income	(573)	(156)
Tax Benefit (Expense)
Net unrealized (losses) gains arising during the period	352	(472)
Reclassification adjustment for gains included in net income	153	43
Net-of-Tax Amount
Net unrealized (losses) gains arising during the period	(909)	2,074
Reclassification adjustment for gains included in net income	(420)	(113)
Other comprehensive income	$ (1,834)	$ 2,705

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Changes in the Accumulated Balances (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	$ 160,564	$ 150,553
Current year-to-date other comprehensive income	(1,329)	1,961
Balance at end of period	170,866	160,564
Unrealized Gains (Losses) on Securities
Changes in the accumulated balances for each component of other comprehensive income
Balance at beginning of period	2,056	(649)
Current year-to-date other comprehensive income	(1,834)	2,705
Balance at end of period	222	2,056
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	1,490	(471)
Balance at end of period	$ 161	$ 1,490

XML

OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Tax effect	$ 7,693	$ 4,555
Net income attributable to common stockholders	21,266	12,725
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	573	156
Tax effect	(153)	(43)
Net income attributable to common stockholders	$ 420	$ 113

XML

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY - Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 47,691	$ 119,440
TOTAL ASSETS	1,739,628	1,649,095
Liabilities and Stockholders’ Equity
Other borrowings	58,426	58,328
Other liabilities	11,274	11,449
Total liabilities	1,568,762	1,488,531
Total stockholders’ equity	170,866	160,564	$ 150,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	1,739,628	1,649,095
Parent Company
Assets
Cash and cash equivalents	22,465	23,333
Equity investments	360	0
Other assets	386	375
Investment in subsidiary	206,427	195,563
TOTAL ASSETS	229,638	219,271
Liabilities and Stockholders’ Equity
Other borrowings	58,426	58,328
Other liabilities	346	379
Total liabilities	58,772	58,707
Total stockholders’ equity	170,866	160,564
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 229,638	$ 219,271

XML

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY - Statement of Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Condensed Financial Statements, Captions [Line Items]
Interest income	$ 64,035	$ 64,527
Interest expense	10,368	14,272
Net interest income before provision for loan losses	53,667	50,255
Non-interest income	15,824	18,448
Non-interest expense	(40,532)	(43,673)
Benefit for income taxes	(7,693)	(4,555)
Net income attributable to common stockholders	21,266	12,725
Parent Company
Condensed Financial Statements, Captions [Line Items]
Interest income	0	0
Interest expense	2,946	2,458
Net interest income before provision for loan losses	(2,946)	(2,458)
Dividend income from bank subsidiary	12,500	10,500
Non-interest income	0	193
Non-interest expense	(673)	(848)
Net income before benefit for income taxes and equity in undistributed income of subsidiaries	8,881	7,387
Benefit for income taxes	989	860
Net earnings before equity in undistributed income of subsidiaries	9,870	8,247
Equity in undistributed income of subsidiaries	11,396	4,478
Net income attributable to common stockholders	$ 21,266	$ 12,725

XML

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY - Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net income	$ 21,266	$ 12,725
Depreciation expense	2,255	1,954
Net change in:
Other assets	1,241	(1,791)
Other liabilities	(73)	581
Net cash provided by operating activities	21,599	23,785
Cash flows from investing activities:
Net cash used in investing activities	(163,201)	(61,815)
Cash flows from financing activities:
Proceeds from other borrowings, net of issuance costs	0	14,677
Amortization of debt issuance costs	98	91
Repurchase shares of common stock	(7,951)	(2,820)
Surrender of restricted shares of common stock	(30)	(27)
Common stock options exercised	52	0
Cash dividends paid	(2,511)	(2,372)
Net cash provided by financing activities	69,853	101,630
Net (decrease) increase in cash and cash equivalents	(71,749)	63,600
Cash and cash equivalents at beginning of period	119,440	55,840
Cash and cash equivalents at end of period	47,691	119,440
Parent Company
Cash flows from operating activities:
Net income	21,266	12,725
Depreciation expense	12	12
Stock based compensation expense	8	14
Adjustments to reconcile net income to net cash provided by operating activities - Equity in undistributed income of subsidiary	(23,896)	(14,978)
Net change in:
Other assets	(23)	(55)
Other liabilities	(33)	313
Net cash provided by operating activities	(2,666)	(1,969)
Cash flows from investing activities:
Purchase of equity securities	(360)	0
Net cash used in investing activities	(360)	0
Cash flows from financing activities:
Proceeds from other borrowings, net of issuance costs	0	14,677
Amortization of debt issuance costs	98	91
Repurchase shares of common stock	(7,951)	(2,820)
Surrender of restricted shares of common stock	(30)	(27)
Common stock options exercised	52	0
Dividend from bank to holding company	12,500	10,500
Cash dividends paid	(2,511)	(2,372)
Net cash provided by financing activities	2,158	20,049
Net (decrease) increase in cash and cash equivalents	(868)	18,080
Cash and cash equivalents at beginning of period	23,333	5,253
Cash and cash equivalents at end of period	$ 22,465	$ 23,333