10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2016

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: 001-36808

COUNTY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Wisconsin	39-1850431
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
860 North Rapids Road Manitowoc, WI	54221
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (920) 686-9998

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☒

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

As of November 10, 2016, the registrant had 6,560,135 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42
Exhibit Index		43

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2016 and December 31, 2015

(Unaudited)

	September 30, 2016			December 31, 2015
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	52,876		$	14,907
Securities available-for-sale, at fair value		124,442			83,281
FHLB Stock, at cost		5,688			3,507
Loans held for sale		2,960			9,201
Loans, net of allowance for loan losses of $11,626 as of September 30, 2016;    $10,405 as of December 31, 2015		980,852			737,784
Premises and equipment, net		9,810			7,165
Loan servicing rights		9,165			8,145
Other real estate owned, net		2,696			2,872
Cash surrender value of bank owned life insurance		11,374			11,155
Deferred tax asset, net		5,011			2,048
Goodwill		5,038			—
Core deposit intangible, net of amortization of $211 as of September 30, 2016;    $0 as of December 31, 2015		1,590			—
Accrued interest receivable and other assets		5,647			4,824
Total assets	$	1,217,149		$	884,889
LIABILITIES
Deposits:
Noninterest-bearing	$	111,398		$	70,914
Interest-bearing		818,050			601,312
Total deposits		929,448			672,226
Other borrowings		2,218			3,945
Advances from FHLB		132,895			66,445
Subordinated debentures		15,407			12,372
Accrued interest payable and other liabilities		8,387			7,877
Total liabilities		1,088,355			762,865
Small Business Lending Fund redeemable preferred stock-variable rate,    noncumulative, nonparticipating, $1,000 stated value; 15,000 shares authorized;    no shares issued at September 30, 2016; 15,000 shares issued, $15,000 redemption    amount at December 31, 2015	$	—		$	15,000
SHAREHOLDERS' EQUITY
Preferred stock-variable rate, non-cumulative, nonparticipating, $1,000 stated    value; 15,000 shares authorized; 8,000 shares issued at September 30, 2016 and    December 31, 2015		8,000			8,000
Common stock - $0.01 par value; 50,000,000 authorized; 6,964,689 shares issued    and 6,532,776 shares outstanding at September 30, 2016; 6,192,609 shares issued    and 5,771,001 shares outstanding at December 31, 2015		26			19
Surplus		49,795			34,717
Retained earnings		74,846			68,825
Treasury stock, at cost; 431,913 shares at September 30, 2016; 421,608 shares at    December 31, 2015		(4,828	)		(4,758	)
Accumulated other comprehensive income		955			221
Total shareholders' equity		128,794			107,024
Total liabilities and shareholders' equity	$	1,217,149		$	884,889

See accompanying notes to unaudited consolidated financial statements

1

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2016 and 2015

(Unaudited)

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2016		2015			2016		2015
	(dollars in thousands except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	12,245	$	8,393		$	31,180	$	23,687
Taxable securities		426		251			1,021		715
Tax-exempt securities		84		109			283		322
Federal funds sold and other		48		11			137		41
Total interest and dividend income		12,803		8,764			32,621		24,765
INTEREST EXPENSE
Deposits		2,100		1,575			5,907		4,541
FHLB advances and other borrowed funds		408		219			1,043		624
Subordinated debentures		119		99			254		339
Total interest expense		2,627		1,893			7,204		5,504
Net interest income		10,176		6,871			25,417		19,261
Provision for loan losses		1,134		(867	)		2,416		(1,325	)
Net interest income after provision for loan losses		9,042		7,738			23,001		20,586
NON-INTEREST INCOME
Services charges		288		238			976		744
Gain on sale of loans, net		79		44			240		166
Loan servicing fees		1,458		1,185			5,037		3,623
Other		189		256			456		777
Total non-interest income		2,014		1,723			6,709		5,310
NON-INTEREST EXPENSE
Employee compensation and benefits		3,461		2,643			9,554		8,232
Occupancy		157		100			364		260
Information processing		288		183			2,045		527
Write-down of other real estate owned		250		—			334		182
Other		1,949		1,209			5,852		3,782
Total non-interest expense		6,105		4,135			18,149		12,983
Income before income taxes		4,951		5,326			11,561		12,913
Income tax expense		1,849		1,996			4,338		4,839
NET INCOME	$	3,102	$	3,330		$	7,223	$	8,074
NET INCOME PER SHARE:
Basic	$	0.46	$	0.56		$	1.13	$	1.37
Diluted	$	0.46	$	0.55		$	1.12	$	1.34
Dividends paid per share	$	0.05	$	0.04		$	0.15	$	0.12

See accompanying notes to unaudited consolidated financial statements.

2

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, 2016 and 2015

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
	(dollars in thousands)
Net income	$	3,102		$	3,330		$	7,223		$	8,074
Other comprehensive income:
Unrealized gains (losses) on securities available-for-sale		(308	)		524			1,204			347
Income tax (expense) benefit		120			(204	)		(470	)		(135	)
Total other comprehensive income (loss)		(188	)		320			734			212
Comprehensive income	$	2,914		$	3,650		$	7,957		$	8,286

See accompanying notes to unaudited consolidated financial statements.

3

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2016 and 2015

(Unaudited)

	Preferred Stock		Common Stock		Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Total Shareholders' Equity
	(dollars in thousands)
Balance at December 31, 2014	$	8,000	$	5	$	16,970	$	59,254		$	(4,572	)	$	386	$	80,043
Net income		—		—		—		8,074			—			—		8,074
Other comprehensive loss		—		—		—		—			—			212		212
Stock compensation expense, net of tax		—		—		266		—			—			—		266
Cash dividends declared on common stock		—		—		—		(687	)		—			—		(687	)
Cash dividends declared on preferred stock		—		—		—		(239	)		—			—		(239	)
Cash dividends declared on SBLF preferred    stock		—		—		—		(128	)		—			—		(128	)
Proceeds from sale of common stock (1,220,750    shares)		—		13		16,882		—			—			—		16,895
Balance at September 30, 2015	$	8,000	$	18	$	34,118	$	66,274		$	(4,572	)	$	598	$	104,436
Balance at December 31, 2015	$	8,000	$	19	$	34,717	$	68,825		$	(4,758	)	$	221	$	107,024
Net income		—		—		—		7,223			—			—		7,223
Other comprehensive income		—		—		—		—			—			734		734
Stock compensation expense, net of tax		—		—		295		—			—			—		295
Purchase of treasury stock (10,305 shares)		—		—		—		—			(70	)		—		(70	)
Cash dividends declared on common stock		—		—		—		(941	)		—			—		(941	)
Cash dividends declared on preferred stock		—		—		—		(240	)		—			—		(240	)
Cash dividends declared on SBLF preferred    stock		—		—		—		(21	)		—			—		(21	)
Shares issued in the acquisition of Fox River    Valley Bancorp, Inc. (712,830 shares)		—		7		14,249		—			—			—		14,256
Proceeds from exercise of common stock    options (45,493 shares)		—		—		534		—			—			—		534
Balance at September 30, 2016	$	8,000	$	26	$	49,795	$	74,846		$	(4,828	)	$	955	$	128,794

See accompanying notes to unaudited consolidated financial statements.

4

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2016 and 2015

(Unaudited)

	September 30, 2016			September 30, 2015
	(dollars in thousands)
Cash flows from operating activities
Net income	$	7,223		$	8,074
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization of premises and equipment		726			444
Amortization of core deposit intangible		211			—
Provision for loan losses		2,416			(1,325	)
Realized loss (gain) on sales of other real estate owned		(121	)		260
Write-down of other real estate owned		334			182
Realized loss (gain) on sales of premises and equipment		(13	)		4
Increase in cash surrender value of bank owned life insurance		(219	)		(219	)
Deferred income tax expense		459			136
Stock compensation expense, net		295			266
Net amortization of securities		637			431
Net change in:
Accrued interest receivable and other assets		1,511			(476	)
Loans held for sale		6,241			(9,598	)
Loan servicing rights		(1,020	)		25
Accrued interest payable and other liabilities		492			1,363
Net cash provided by (used in) operating activities		19,172			(433	)
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available for sale		15,252			6,691
Purchases of securities available for sale		(6,764	)		(11,274	)
Purchases of FHLB stock		(2,181	)		(2,255	)
Loan originations and principal collections, net		(104,067	)		(56,882	)
Proceeds from sales of premises and equipment		25			—
Purchases of premises and equipment		(1,516	)		(1,623	)
Capitalized additions to other real estate owned		—			(39	)
Proceeds from sales of other real estate owned		2,471			5,240
Net cash provided by business combination		12,320			—
Net cash used in investing activities		(84,460	)		(60,142	)
Cash flows from financing activities
Net decrease in demand and savings deposits		(40,851	)		(521	)
Net increase in certificates of deposits		95,123			31,274
Net change in other borrowings		(1,727	)		(19,473	)
Proceeds from FHLB advances		767,200			404,500
Repayment of FHLB advances		(700,750	)		(368,500	)
Payments to acquire treasury stock		(70	)		—
Proceeds from issuance of common stock		534			16,895
Redemption of SBLF preferred stock		(15,000	)		—
Dividends paid on SBLF preferred stock		(21	)		(128	)
Dividends paid on preferred stock		(240	)		(239	)
Dividends paid on common stock		(941	)		(687	)
Net cash provided by financing activities		103,257			63,121
Net change in cash and cash equivalents		37,969			2,546
Cash and cash equivalents, beginning of period		14,907			10,480
Cash and cash equivalents, end of period	$	52,876		$	13,026
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	6,987		$	5,516
Income taxes		3,935			3,960
Noncash investing activities:
Transfer from loans to other real estate owned	$	159		$	1,530
Transfer from premises and equipment to other real estate owned		397		$	—
Loans charged off		1,232			1,894

See accompanying notes to unaudited consolidated financial statements

5

County Bancorp, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of County Bancorp, Inc. (“we,” “us,” ”our,” or the “Company”) and its subsidiaries have been prepared, in the opinion of management, to reflect all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim period.  The results of operations for the three and nine months ended September 30, 2016 may not necessarily be indicative of the results to be expected for the year ending December 31, 2016, or for any other period.

Management of the Company is required to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods.  Actual results could differ significantly from those estimates.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).  Certain information in footnote disclosure normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period.

Significant Accounting Policies

In addition to the assumptions and methodologies that the Company used to apply significant accounting policies and develop significant estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the following policies have been added:

Business Combinations and Valuation of Loans Acquired in Business Combinations:  We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at estimated fair value on their purchase date. As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities, where it was not possible to estimate the acquisition date fair value upon consummation.

In particular, the valuation of acquired loans involves significant estimates, assumptions and judgments based on information available as of the acquisition date. Substantially all loans acquired in the transaction are evaluated either individually or in pools of loans with similar characteristics; since the estimated fair value of acquired loans includes a credit consideration, no carryover of any previously recorded allowance for loan losses is recorded at acquisition. A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received.

In determining the fair value of acquired loans, management calculates a nonaccretable difference (the credit mark component of the acquired loans) and an accretable difference (the market rate or yield component of the acquired loans). The nonaccretable difference is the difference between the undiscounted contractually required payments and the undiscounted cash flows expected to be collected in accordance with management’s determination of the fair value. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, and nonaccretable difference which would have a positive impact on interest income.

The accretable yield on acquired loans is the difference between the expected cash flows and the initial investment in the acquired loans. The accretable yield is recognized into earnings using the effective yield method over the term of the loans.

6

Management separately monitors the acquired loan portfolio and periodically reviews loans contained within this portfolio against the factors and assumptions used in determining the fair value.

Goodwill and Core Deposit Intangible:  Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired and is included as an asset on the consolidated balance sheets. Goodwill is not amortized but is subject to impairment tests on at least an annual basis. Core deposit intangible represents the value of the acquired customer core deposit bases and is included in as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 66-month period, and is subject to periodic impairment evaluation.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred or whether changes in circumstances have occurred that would require a revision to the remaining useful life, in which case an impairment charge would be recorded as an expense in the period of impairment. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. Given that the acquisition of Fox River Valley Bancorp. (“Fox River Valley”) took place during the second quarter of 2016, there was no impairment charge to goodwill or core deposit intangible at September 30, 2016.  The net book value of core deposit intangible was $1.6 million and $0 at September 30, 2016 and December 31, 2015, respectively and is included on the consolidated balance sheets.

New Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses, to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  This amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for the fiscal year beginning after December 15, 2018, including interim periods within those fiscal years.  Entities should apply this amendment a modified-retrospective approach, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, to reduce the existing diversity in practice in how certain cash receipts and payments are presented and classified on the statement of cash flows.  The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted including adoption in an interim period.  Entities should apply this amendment as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

NOTE 2—ACQUISITION

On May 13, 2016, the Company completed its acquisition of Fox River Valley, a Wisconsin corporation, pursuant to the Agreement and Plan of Merger dated November 19, 2015 (the “Merger Agreement”) by and among the Company, County Acquisition LLC, a wholly-owned subsidiary of the Company, and Fox River Valley, whereby the Company acquired Fox River Valley and its wholly-owned bank subsidiary, The Business Bank, through the merger of Fox River Valley into County Acquisition LLC (which subsequently dissolved) and the merger of The Business Bank into Investors Community Bank (the “Bank”).  Under the terms of the Merger Agreement, the Company acquired Fox River Valley for aggregate consideration of approximately $14.45 million in cash and 712,830 shares of the Company’s common stock.    The system integration was completed, and the two branches of The Business Bank opened on May 16, 2016 as branches of Investors Community Bank.

The Company accounted for the transaction under the acquisition method of accounting under FASB Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, and thus, the financial position and results of operations of Fox River Valley prior to the closing date were not included in the accompanying consolidated financial statements.  The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value with the assistance of third party valuations, appraisals, and third party advisors.  The estimated fair values will be subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period of approximately one year from consummation.

The fair value of the assets acquired and liabilities assumed on May 13, 2016 were as follows:

7

	As recorded by Fox River Valley		Fair value adjustment			As recorded by the Company
	(dollars in thousands)
Cash, cash equivalents and securities available for sale	$	77,117	$	(484	)	$	76,633
Loans, net		143,421		(1,844	)		141,577
Other real estate owned		1,951		—			1,951
Deferred tax asset, net		2,430		683			3,113
Core deposit intangible		—		1,801			1,801
Premises and equipment, and other assets		3,913		686			4,599
Total assets acquired	$	228,832	$	842		$	229,674
Deposits	$	202,201	$	750		$	202,951
Subordinated debentures and other liabilities		3,629		(575	)		3,054
Total liabilities assumed	$	205,830	$	175		$	206,005
Excess of assets acquired over liabilities assumed	$	23,002	$	667		$	23,669
Less: Purchase price							28,707
Goodwill						$	5,038

Supplemental Pro Forma Information

The table below presents supplemental pro forma information as if the Fox River Valley merger had occurred at the beginning of the earliest period presented, which was January 1, 2015.  Pro forma results include adjustments for amortization and accretion of fair value adjustments and do not include any projected cost savings or other anticipated benefits of the merger.  These unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net interest income	$	9,666	$	8,548	$	26,769	$	24,847
Net income (a)	$	2,868	$	3,587	$	6,612	$	7,514

(a) For purposes of the supplemental pro forma information, merger-related expenses of $2.6 million that are reflected in the Company’s nine months ended September 30, 2016 consolidated statement of operations were reflected in the pro forma presentation for the first quarter of 2015.  

8

NOTE 3 – EARNINGS PER SHARE

Earnings per common share is computed using the two-class method.  Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the applicable period.  Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share plus the dilutive effect of share-based compensation using the treasury stock method.

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net income from continuing operations	$	3,102	$	3,330	$	7,223	$	8,074
Less:  preferred stock dividends including SBLF		80		118		261		367
Income available to common shareholders for basic    earnings per common share	$	3,022	$	3,212	$	6,962	$	7,707
Average number of common shares issued		7,311		6,545		6,951		6,428
Less: weighted average treasury shares		429		410		424		410
Less: weighted average nonvested equity incentive plan shares		358		401		367		383
Weighted average number of common shares outstanding		6,524		5,734		6,160		5,635
Effect of dilutive options		95		124		97		119
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,619		5,858		6,257		5,754

NOTE 4 – SECURITIES AVAILABLE-FOR-SALE

The amortized cost and fair value of securities available-for-sale as of September 30, 2016 and December 31, 2015 are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	1,001	$	2	$	—		$	1,003
Municipal securities		42,636		342		(15	)		42,963
Mortgage-backed securities		75,357		1,424		(79	)		76,702
Asset-backed securities		3,885		—		(111	)		3,774
	$	122,879	$	1,768	$	(205	)	$	124,442
December 31, 2015
U.S. government and agency securities	$	2,003	$	—	$	—		$	2,003
Municipal securities		46,185		185		(58	)		46,312
Mortgage-backed securities		34,728		356		(118	)		34,966
	$	82,916	$	541	$	(176	)	$	83,281

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The amortized cost and fair value of securities at September 30, 2016 and December 31, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
September 30, 2016
Due in one year or less	$	15,933	$	15,831
Due from one to five years		27,630		27,891
Due from five to ten years		3,959		4,018
Due after ten years		—		—
Mortgage-backed securities		75,357		76,702
	$	122,879	$	124,442
December 31, 2015
Due in one year or less	$	5,005	$	5,017
Due from one to five years		39,329		39,400
Due from five to ten years		3,854		3,898
Due after ten years		—		—
Mortgage-backed securities		34,728		34,966
	$	82,916	$	83,281

There were no security sales for the nine months ended September 30, 2016 and 2015, respectively.  

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temorarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015:

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	—	$	—		$	—	$	—		$	—	$	—
Municipal securities		8,312		(13	)		606		(2	)		8,918		(15	)
Mortgage-backed securities		12,317		(79	)		—		—			12,317		(79	)
Asset-backed securities		3,774		(111	)		—		—			3,774		(111	)
	$	24,403	$	(203	)	$	606	$	(2	)	$	25,009	$	(205	)
December 31, 2015
U.S. government and agency securities	$	2,003	$	—		$	—	$	—		$	2,003	$	—
Municipal securities		14,153		(53	)		711		(5	)		14,864		(58	)
Mortgage-backed securities		11,291		(86	)		2,039		(32	)		13,330		(118	)
	$	27,447	$	(139	)	$	2,750	$	(37	)	$	30,197	$	(176	)

The unrealized loss on the investments at September 30, 2016 and December 31, 2015 was due to normal fluctuations and pricing inefficiencies.  The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the amortized cost basis of the investment.  Because the Company does not intend to sell the investments and it is not more-likely-than-not that the Company will be required to sell the investments before recovery of the amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016 and December 31, 2015.

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NOTE 5 – LOANS

The components of loans were as follows:  

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	585,273		$	499,320
Commercial real estate loans		282,058			161,741
Commercial loans		80,587			51,978
Residential real estate loans		44,324			34,631
Installment and consumer other		236			519
Total gross loans		992,478			748,189
Allowance for loan losses		(11,626	)		(10,405	)
Loans, net	$	980,852		$	737,784

Changes in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2016 and 2015 were as follows: 

September 30, 2016	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
	(dollars in thousands)
Balance, beginning of year	$	6,355		$	2,237		$	1,268		$	533		$	12		$	—	$	10,405
Provision for loan losses		1,947			419			168			(118	)		(6	)		6		2,416
Loans charged off		(896	)		(50	)		(277	)		(5	)		(4	)		—		(1,232	)
Recoveries		2			26			9			—			—			—		37
Balance, end of period	$	7,408		$	2,632		$	1,168		$	410		$	2		$	6	$	11,626
September 30, 2015	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
Balance, beginning of year	$	3,456		$	3,326		$	2,420		$	1,392		$	9		$	—	$	10,603
Provision for loan losses		2,993			(1,673	)		(1,719	)		(920	)		(6	)		—		(1,325	)
Loans charged off		(1,145	)		(162	)		(415	)		(172	)		—			—		(1,894	)
Recoveries		47			743			1,196			463			—			—		2,449
Balance, end of period	$	5,351		$	2,234		$	1,482		$	763		$	3		$	—	$	9,833

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The following tables present the balances in the allowance for loan losses and the recorded balance in loans by portfolio segment and based on impairment method as of September 30, 2016 and December 31, 2015: 

	September 30, 2016
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	297	$	7,111	$	7,408
Commercial real estate loans		376		2,256		2,632
Commercial loans		524		644		1,168
Residential real estate loans		—		410		410
Installment and consumer other		—		2		2
Unallocated		—		6		6
Total ending allowance for loan losses		1,197		10,429		11,626
Loans:
Agricultural loans		13,219		572,054		585,273
Commercial real estate loans		9,123		272,935		282,058
Commercial loans		5,691		74,896		80,587
Residential real estate loans		200		44,124		44,324
Installment and consumer other		—		236		236
Total loans		28,233		964,245		992,478
Net loans	$	27,036	$	953,816	$	980,852
	December 31, 2015
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	1,055	$	5,300	$	6,355
Commercial real estate loans		357		1,880		2,237
Commercial loans		890		378		1,268
Residential real estate loans		—		533		533
Installment and consumer other		—		12		12
Total ending allowance for loan losses		2,302		8,103		10,405
Loans:
Agricultural loans		20,724		478,596		499,320
Commercial real estate loans		4,197		157,544		161,741
Commercial loans		5,481		46,497		51,978
Residential real estate loans		—		34,631		34,631
Installment and consumer other		—		519		519
Total loans		30,402		717,787		748,189
Net loans	$	28,100	$	709,684	$	737,784

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The following table presents the aging of the recorded investment in past due loans at September 30, 2016 and December 31, 2015:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	402	$	822	$	12,288	$	13,512	$	571,761
Commercial real estate loans		760		—		2,710		3,470		278,588
Commercial loans		67		—		2,633		2,700		77,887
Residential real estate loans		92		—		2		94		44,230
Installment and consumer other		—		—		—		—		236
Total	$	1,321	$	822	$	17,633	$	19,776	$	972,702
December 31, 2015
Agricultural loans	$	978	$	5	$	2,405	$	3,388	$	495,932
Commercial real estate loans		—		234		2,418		2,652		159,089
Commercial loans		—		—		3,476		3,476		48,502
Residential real estate loans		5		—		—		5		34,626
Installment and consumer other		—		—		—		—		519
Total	$	983	$	239	$	8,299	$	9,521	$	738,668

The following table lists information on nonaccrual, restructured, and certain past due loans at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	17,633	$	8,299
Nonaccrual loans 30-89 days past due		1,450		1,212
Nonaccrual loans, less than 30 days past due		3,419		15,068
Restructured loans not on nonaccrual status		4,877		610
90 days or more past due and still accruing		—		—

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days or more at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	13,673	$	17,705
Commercial real estate loans		4,424		3,162
Commercial loans		4,205		3,712
Residential real estate loans		200		—
Total	$	22,502	$	24,579

The average recorded investment in total impaired loans for the nine months ended September 30, 2016 and for the year ended December 31, 2015 amounted to approximately $29.3 million and $27.6 million, respectively.  Interest income recognized on total impaired loans for the nine months ended September 30, 2016 and for the year ended December 31, 2015 amounted to approximately $0.4 million and $1.7 million, respectively.  For nonaccrual loans included in impaired loans, the interest income that would have been recognized had those loans been performing in accordance with their original terms would have been approximately $1.2 million and $1.7 million for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively.  

Troubled Debt Restructurings

The Company has allocated approximately $0.5 million and $0.7 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at September 30, 2016 and December 31, 2015, respectively.  The

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Company has no additional lending commitments at September 30, 2016 and December 31, 2015 to customers with outstanding loans that are classified as TDRs.

A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and of performance according to the modified terms of the loan.  Once this assurance is reached, the TDR is classified as a restructured loan.  There were no unfunded commitments on these loans at September 30, 2016, and December 31, 2015.  The following table presents the TDRs by loan class at September 30, 2016 and December 31, 2015:

	Non-Accrual		Restructured and Accruing		Total
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	8,260	$	1,242	$	9,502
Commercial real estate loans		1,494		2,362		3,856
Commercial loans		1,633		1,273		2,906
Residential real estate loans		92		—		92
Installment and consumer other		—		—		—
Total	$	11,479	$	4,877	$	16,356
December 31, 2015
Agricultural loans	$	1,337	$	—	$	1,337
Commercial real estate loans		744		486		1,230
Commercial loans		235		124		359
Residential real estate loans		—		—		—
Installment and consumer other		—		—		—
Total	$	2,316	$	610	$	2,926

The following table provides the number of loans modified in a troubled debt restructuring investment by class for the nine months ended September 30, 2016 and 2015:

	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		14	$	8,704		5	$	554
Commercial real estate loans		2		553		—		—
Commercial loans		2		1,632		1		76
Total		18	$	10,889		6	$	630

The following table provides the troubled debt restructurings for the nine months ended September 30, 2016 and 2015 grouped by type of concession:

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	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		6	$	1,732		4	$	493
Extension of interest-only payments		5		1,243		—		—
Capitalized interest		—		—		1		61
Combination of extension of term and interest rate concessions		3		5,729		—		—
Commercial real estate loans
Extension of interest-only payments		2		553		—		—
Commercial loans
Payment concessions		—		—		1		76
Extension of interest-only payments		2		1,632		—		—
Total		18	$	10,889		6	$	630

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Beginning in the third quarter of 2016, the substandard category was separated in to performing and impaired subcategories to provide more detailed analysis of this category of loans. The Company analyzes agricultural, commercial, and commercial real estate loans individually by classifying the credits as to credit risk. The process of analyzing loans for changes in risk rating is ongoing through routine monitoring of the portfolio and annual internal credit reviews for credits with total exposure in excess of $300,000. The Company uses the following definitions for credit risk ratings:

Sound. Credits classified as sound show very good probability of ongoing ability to meet and/or exceed obligations.

Acceptable. Credits classified as acceptable show a good probability of ongoing ability to meet and/or exceed obligations.

Satisfactory. Credits classified as satisfactory show fair probability of ongoing ability to meet and/or exceed obligations.

Low Satisfactory.  Credits classified as low satisfactory show fair probability of ongoing ability to meet and/or exceed obligations.  Low satisfactory credits may be newer or have a less established track record of financial performance, inconsistent earnings, or may be going through an expansion.

Watch. Credits classified as watch show some questionable probability of ongoing ability to meet and/or exceed obligations.

Special Mention. Credits classified as special mention show potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard – Performing.  Credits classified as substandard – performing generally have well-defined weaknesses. Collateral coverage is adequate and the loans are not considered impaired.  Payments are being made and the loans are on accrual status. 

Substandard - Impaired. Credits classified as substandard generally have well-defined weaknesses that jeopardize the repayment of the debt. They have a distinct possibility that a loss will be sustained if the deficiencies are not corrected.  Loans are considered impaired.  Loans are either exhibiting signs of delinquency, are on non-accrual or are identified as a TDR. 

Doubtful. Credits classified as doubtful have all the weaknesses inherent in those classified as substandard 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.

The Company categorizes residential real estate, installment and consumer other loans as satisfactory at the time of origination based on information obtained as to the ability of the borrower(s) to service their debt, such as current financial information, employment status and history, historical payment experience, credit scores and type and amount of collateral among other factors.

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The Company updates relevant information on these types of loans at the time of refinance, troubled debt restructuring or other indications of financial difficulty, downgrading as needed using the same category descriptions as for agricultural, commercial, and commercial real estate loans. In addition, the Company further considers current payment status as an indicator of which risk category to assign the borrower.

The greater the level of deteriorated risk as indicated by a loan’s assigned risk category, the greater the likelihood a loss will occur in the future. If the loan is substandard - impaired, then the loan loss reserves for the loan are recorded at the loss level of impairment. If the loan is not impaired, then its loan loss reserves are determined by the application of a loss rate that increases with risk in accordance with the allowance for loan loss analysis.

Based on the most recent analysis performed by management, the risk category of loans by class of loans is as follows as of September 30, 2016 and December 31, 2015: 

	As of September 30, 2016
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	488,989	$	57,652	$	12,930	$	12,483		13,219	$	585,273
Commercial real estate loans		242,171		18,948		3,629		8,187		9,123		282,058
Commercial loans		64,169		6,911		2,620		1,195		5,692		80,587
Residential real estate loans		39,473		4,139		512		—		200		44,324
Installment and consumer other		236		—		—		—		—		236
Total	$	835,038	$	87,650	$	19,691	$	21,865	$	28,234	$	992,478
	As of December 31, 2015
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	441,528	$	30,762	$	6,306	$	20,724	$	499,320
Commercial real estate loans		139,061		13,956		4,527		4,197		161,741
Commercial loans		40,496		5,468		533		5,481		51,978
Residential real estate loans		27,514		4,572		2,545		—		34,631
Installment and consumer other		518		1		—		—		519
Total	$	649,117	$	54,759	$	13,911	$	30,402	$	748,189

NOTE 6 – LOAN SERVICING RIGHTS

Loans serviced for others are not included in the accompanying consolidated balance sheets.  The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates.  The unpaid principal balances of mortgage and other loans serviced for others were approximately $569.2 million and $495.9 million at September 30, 2016 and December 31, 2015, respectively.  The fair value of these rights were approximately $12.0 million and $10.7 million at September 30, 2016 and December 31, 2015, respectively.  The fair value of servicing rights was determined using an assumed discount rate of 10 percent and prepayment speeds primarily ranging from 4 percent to 9 percent, depending upon the stratification of the specific right, and nominal credit losses.

The following summarizes servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances:

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	8,145		$	7,746
Additions		3,862			3,731
Disposals		(1,280	)		(1,421	)
Amortization		(1,562	)		(1,911	)
Balance, end of period	$	9,165		$	8,145

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NOTE 7 – GOODWILL AND CORE DEPOSIT INTANGIBLE

The excess of the purchase price in an acquisition over the fair value of net assets acquired consists primarily of goodwill and the core deposit intangible. Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis. Core deposit intangible, which arose from value ascribed to the deposit base of a bank acquired, has estimated finite lives and is amortized on an accelerated basis to expense over a 66-month period.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred, in which case an impairment charge would be recorded as an expense in the period of impairment, or whether changes in circumstances have occurred that would require a revision to the remaining useful life which would impact expense prospectively. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. There was no impairment charge to goodwill or core deposit intangible at September 30, 2016.  

Goodwill:  Goodwill resulted from the acquisition of Fox River Valley on May 13, 2016.  The carrying amount of goodwill was $5.0 million at September 30, 2016 and $0 million at December 31, 2015. See Note 2 for additional information on the acquisition.

Core deposit intangible:  Core deposit intangible, primarily related to acquired customer relationships, is amortized over their estimated finite lives.  The core deposit intangible related to the Fox River Valley acquisition had a gross carrying amount of $1.8 million. Amortization on core deposit intangible was $157 thousand and $211 thousand for the three and nine months ended September 30, 2016.  There was no core deposit intangible and no amortization recorded on the balance sheet and statement of operations for the year ended December 31, 2015.  See Note 2 for additional information on the acquisition.

	September 30, 2016			December 31, 2015
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	—
Accumulated amortization		(211	)		—
Net book value	$	1,590		$	—
Additions during the period	$	1,801		$	—

NOTE 8 – DEPOSITS

Deposits are summarized as follows at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016		2015
	(dollars in thousands)
Demand deposits	$	111,398	$	70,914
Savings		236,394		174,979
Certificates of deposit		581,656		426,333
Total deposits	$	929,448	$	672,226

At September 30, 2016 and December 31, 2015, brokered deposits amounted to $190.4 million and $164.6 million, respectively, and are included in savings and certificates of deposit categories.

NOTE 9 – SUBORDINATED DEBENTURES

In connection with the merger with Fox River Valley, the Company also acquired Fox River Valley’s wholly-owned subsidiary Fox River Valley Capital Trust I, a Delaware statutory trust (the “Trust”), which issued capital securities that qualify for Tier II capital of the Company.  The Company assumed the $3.6 million of floating rate, junior subordinated debentures, of which the Company owns $0.1 million. The debentures are non-voting, mandatorily redeemable in 2033 and guaranteed by the Company.

The distribution rate payable on the debentures is cumulative and payable quarterly in arrears. The Company has the right, subject to events of default, to defer payments of interest on the debentures at any time by extending the interest payment period not exceeding 20 consecutive quarters with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the debentures. Interest is current through the most recent due date of May 30, 2016.

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The Trust may redeem some or all of the capital securities, at par, with 30 days advance notice, on or after November 30, 2008, but only on May 30 or November 30 of any given year, and only in a minimum amount of $500,000 and in increments of $10,000 thereafter, or the full amount of the capital securities. The Trust may redeem all of the capital securities at any time upon the occurrence and during the continuation of a Tax Event, an Investment Company Event or a Capital Treatment Event (each as defined in the trust agreement for the Trust), at any time within 90 days following such event.

The Trust debentures carry an interest rate equal to 5-year LIBOR plus 3.40%, which resets every five years. The current rate is equal to 4.855% through November 30, 2018. Interest payments are due quarterly.

NOTE 10 – EQUITY INCENTIVE PLAN

On June 21, 2016 the shareholders approved the 2016 Long Term Incentive Plan (the “2016 Plan”), replacing the Company’s 2012 Equity Incentive Compensation Plan (the “2012 Plan”).  In accordance with the 2016 Plan and the 2012 Plan, the Company may grant options to purchase shares of common stock and issue restricted stock to its directors, officers, and employees.  Both qualified and non-qualified stock options and restricted stock may be granted and issued, respectively, under the 2016 Plan and 2012 Plan.  As of September 30, 2016, 3,587 options or shares of restricted stock have been granted under the 2016 Plan.

The exercise price of each option equals the market price of the Company’s stock on the date of grant and an option’s maximum term is ten years. Vesting periods range from one to five years from the date of grant. The restricted stock vesting periods range from one to five years from the date of issuance.

The status of the Company’s 2012 Plan and 2016 Plan as of September 30, 2016, and changes in the 2012 Plan and 2016 Plan during the nine months ended September 30, 2016 are as follows:

	September 30, 2016
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		351,931		$	13.71
Granted		48,684			19.91
Exercised		(45,493	)		11.66
Forfeited/expired		(10,504	)		19.07
Outstanding, end of period		344,618		$	14.70	$	1,830
Options exercisable at period-end		234,897		$	12.74	$	1,708
Weighted-average fair value of options granted during    the period (2)				$	4.89

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2016. This amount changes based on changes in the market value of the Company’s stock.

(2) The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

Activity in restricted stock awards (“RSA”) for the nine months ended September 30, 2016 is as follows:

	September 30, 2016
	RSAs			Weighted Average Grant Price
Outstanding, beginning of year		46,621		$	14.92
Granted		13,757			19.77
Vested		(14,980	)		12.27
Forfeited/expired		(6,805	)		17.20
Outstanding, end of period		38,593		$	17.27

For the nine months ended September 30, 2016 and 2015, share-based compensation expense, including options and restricted stock awards, applicable to the 2016 Plan and 2012 Plan was $295 thousand and $266 thousand, respectively.

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As of September 30, 2016, unrecognized share-based compensation expense related to nonvested options and restricted stock awards amounted to $0.7 million and is expected to be recognized over a weighted average period of 2.4 years.

NOTE 11 – REGULATORY MATTERS

The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1 and Tier 1 Common Equity capital to risk-weighted assets, and of Tier 1 capital to average assets, as such terms are defined in the regulations. Management believed, as of September 30, 2016 and December 31, 2015, that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of September 30, 2016, the Bank’s capital ratios met those required to be considered as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 Common Equity risk-based, and Tier 1 leverage ratios as set forth in the following tables.

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The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table:

	Actual					Minimum For Capital Adequacy Purposes (a):					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
September 30, 2016
Total Capital (to risk weighted assets):
Consolidated	$	149,396		13.74	%	$	93,812		8.625	%	Not applicable
Bank		144,743		13.31	%		93,790		8.625	%	$	108,742		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		137,254		12.62	%		72,058		6.625	%	Not applicable
Bank		132,601		12.19	%		72,042		6.625	%		86,994		8.00	%
Tier 1 Capital (to average assets):
Consolidated		137,254		11.58	%		47,411		4.00	%	Not applicable
Bank		132,601		11.19	%		47,385		4.00	%		59,232		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		113,847		10.47	%		55,743		5.125	%	Not applicable
Bank		132,601		12.19	%		55,730		5.125	%		70,682		6.50	%
December 31, 2015
Total Capital (to risk weighted assets):
Consolidated	$	144,495		17.51	%	$	66,013		8.00	%	Not applicable
Bank		125,354		15.19	%		66,000		8.00	%	$	82,500		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		134,175		16.26	%		49,510		6.00	%	Not applicable
Bank		115,036		13.94	%		49,500		6.00	%		66,000		8.00	%
Tier 1 Capital (to average assets):
Consolidated		134,175		15.49	%		34,656		4.00	%	Not applicable
Bank		115,036		13.29	%		34,635		4.00	%		43,294		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		98,803		11.97	%		37,132		4.50	%	Not applicable
Bank		115,036		13.94	%		37,125		4.50	%		53,625		6.50	%

(a) The ratios for September 30, 2016 include a capital conservation buffer of 0.625%.

The rules of the Basel III regulatory capital framework (the “Basel III Capital Rules”), which became effective January 1, 2015, revised the prompt corrective action requirements by, among other things: (i) introducing a Common Equity Tier 1 ratio requirement at each level (other than critically undercapitalized), with the required Common Equity Tier 1 ratio being 6.5% for “well-capitalized” status; (ii) increasing the minimum Tier 1 capital ratio requirement for each category (other than critically undercapitalized), with the minimum Tier 1 capital ratio for “well-capitalized” status being 8% (compared to the prior ratio of 6%); and (iii) eliminating the former provision that provided that a bank with a composite supervisory rating of 1 may have a 3% Leverage Ratio and still be adequately capitalized. The Basel III Capital Rules do not change the total risk based capital requirement for any prompt corrective action category.  The Basel III Capital Rules also implemented a new capital conservation buffer that is added to the minimum requirements for capital adequacy purposes.  The capital conservation buffer is subject to a three year phase-in period that began on January 1, 2016 and will be fully phased in on January 1, 2019 at 2.5%.  The required phase-in capital conservation buffer during 2016 is 0.625%.  At the present time, the ratios for the Company and the Bank are sufficient to meet the fully phased-in conservation buffer.

NOTE 12 – FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the

20

asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2—Valuation is based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3—Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

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

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents and Interest-Bearing Deposits in Banks

The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

Fair values of other interest-bearing deposits are estimated using discounted cash flow analyses based on current rates for similar types of deposits.

Securities Available for Sale

Where quoted prices are available in an active market, the Company classifies the securities within Level 1 of the valuation hierarchy. Securities are defined as both long and short positions. Level 1 securities include highly liquid government bonds and exchange-traded equities.

If quoted market prices are not available, the Company estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes and credit spreads.

Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include U.S. government and agency securities, corporate bonds and other securities. Mortgage-backed securities are included in Level 2 if

21

observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, the Company classifies those securities in Level 3.

Loans

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (e.g., one-to-four family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans (e.g., commercial and agricultural loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Loans Held for Sale

The carrying value of loans held for sale generally approximates fair value based on the short-term nature of the assets. If management identifies a loan held for sale that will ultimately sell at a value less than its carrying value, it is recorded at the estimated value. 

Loan Servicing Rights

Fair value is based on market prices for comparable loan servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income.

Other Real Estate Owned

Loans on which the underlying collateral has been repossessed are adjusted to fair value upon transfer to other real estate owned. Subsequently, other real estate owned is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral, or management’s estimation of the value of the collateral. Due to the significance of the unobservable inputs, all other real estate owned is classified as Level 3.

Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, statement savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Other Borrowings

The carrying amounts of federal funds purchased, other borrowings, and other short-term borrowings maturing within 90 days approximate their fair values.

Advances from the Federal Home Loan Bank

Current market rates for debt with similar terms and remaining maturities are used to estimate fair value of advances from the Federal Home Loan Bank (the “FHLB”). Fair values are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Subordinated Debentures

The fair values of these debt instruments utilize a discounted cash flow analysis based on an estimate of current interest rates being offered by instruments with similar terms and credit quality.  Since the market for these instruments is limited, the internal evaluation represents a Level 3 measurement and approximates fair value.

Accrued Interest

The carrying amounts approximate fair value.

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Commitments to Extend Credit and Standby Letters of Credit

As of September 30, 2016 and December 31, 2015, the carrying and fair values of the commitments to extend credit and standby letters of credit are not considered significant.

Assets measured at fair value on a recurring basis are summarized below:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
September 30, 2016
Securities available for sale:
U.S. government and agency securities	$	—	$	1,003	$	—	$	1,003
Municipal securities		—		42,963		—		42,963
Mortgage-backed securities		—		76,702		—		76,702
Asset-backed securities		—		3,774		—		3,774
Total assets at fair value	$	—	$	124,442	$	—	$	124,442
December 31, 2015
Securities available for sale:
U.S. government and agency securities	$	—	$	2,003	$	—	$	2,003
Municipal securities		—		46,312		—		46,312
Mortgage-backed securities		—		34,966		—		34,966
Total assets at fair value	$	—	$	83,281	$	—	$	83,281

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy for which a nonrecurring change in fair value has been recorded:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Impairment Losses
	(dollars in thousands)
September 30, 2016
Impaired loans	$	—	$	—	$	27,036	$	1,197
Other real estate owned		—		—		2,696		334
Total assets at fair value	$	—	$	—	$	29,732	$	1,531
December 31, 2015
Impaired loans	$	—	$	—	$	28,100	$	2,302
Other real estate owned		—		—		2,872		256
Total assets at fair value	$	—	$	—	$	30,972	$	2,558

The significant inputs used in the fair value measurements for Level 3 assets measured at fair value on a nonrecurring basis are as follows:

September 30, 2016
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	7%-31% (19%)
December 31, 2015
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	4%-23% (12%)

* Not Meaningful. Evaluations of the underlying assets are completed for each impaired loan with a specific reserve. The types of collateral vary widely and could include accounts receivables, inventory, a variety of equipment, and real estate. Collateral evaluations are reviewed and discounted as appropriate based on knowledge of the specific type of collateral. In the case of real

23

estate, an independent appraisal may be obtained. Types of discounts considered include aging of receivables, condition of the collateral, potential market for the collateral, and estimated disposal costs. These discounts will vary from loan to loan, thus providing a range would not be meaningful.

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows:

	September 30,				December 31,
	2016				2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	52,876	$	52,876	$	14,907	$	14,907	1
Securities available for sale		124,442		124,442		83,281		83,281	2
FHLB Stock		5,688		5,688		3,507		3,507	2
Loans, net of allowance for loan losses		980,852		994,759		737,784		745,572	3
Loans held for sale		2,960		2,960		9,201		9,201	3
Accrued interest receivable		3,148		3,148		2,562		2,562	2
Loan servicing rights		9,165		12,020		8,145		10,705	3
Financial liabilities:
Deposits:
Time		581,656		591,420		426,333		431,077	3
Other deposits		347,792		350,567		245,893		242,493	1
Other borrowings		2,218		2,218		3,945		3,945	3
Advances from FHLB		132,895		134,777		66,445		67,318	3
Subordinated debentures		15,407		15,407		12,372		12,372	3
Accrued interest payable		1,676		1,676		1,459		1,459	2

NOTE 13 – OTHER REAL ESTATE OWNED

Changes in other real estate owned are as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Balance, beginning of period	$	2,789		$	3,166		$	2,872		$	7,137
Assets foreclosed		—			1,485			159			1,530
Assets acquired		—			—			1,951			—
Assets transferred from premises and equipment		397			—			397			—
Write-down of other real estate owned		(250	)		—			(334	)		(182	)
Net gain (loss) on sales of other real estate owned		32			26			121			(260	)
Capitalized additions to other real estate owned		—			—			—			39
Proceeds from sale of other real estate owned		(272	)		(1,653	)		(2,470	)		(5,240	)
Balance, end of period	$	2,696		$	3,024		$	2,696		$	3,024

Expenses applicable to other real estate owned include the following:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Net loss (gain) on sales of other real estate owned	$	(32	)	$	(26	)	$	(121	)	$	260
Write-down of other real estate owned		250			—			334			182
Operating expenses, net of rental income		41			88			120			18
	$	259		$	62		$	333		$	460

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NOTE 14 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the financial statements were issued. There were no significant events or transactions occurring after September 30, 2016, but prior to November 10, 2016, that provided additional evidence about conditions that existed at September 30, 2016. There were no other significant events or transactions that provided evidence about conditions that did not exist at September 30, 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q. This report contains “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995 that reflect our plans, estimates and beliefs. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections titled “Forward-Looking Statements” and “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” or “continue” or the negative thereof or variations thereon or similar terminology.  Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Overview

County Bancorp, Inc. is a Wisconsin corporation founded in May 1996 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Our primary activities consist of operating through our wholly-owned subsidiary bank, Investors Community Bank, headquartered in Manitowoc, Wisconsin, and providing a wide range of banking and related business services through the Bank and our other subsidiaries.

In addition to the Bank, we have three wholly-owned subsidiaries, County Bancorp Statutory Trust II, County Bancorp Statutory Trust III, and Fox River Valley Capital Trust I, which are Delaware statutory trusts.  The Bank is the sole shareholder of ICB Investments Corp., a Nevada corporation, and is the sole member of Investors Insurance Services, LLC and ABS 1, LLC, which are both Wisconsin limited liability companies.  

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans, and the interest we pay on interest-bearing liabilities, such as deposits. We generate most of our revenue from interest on loans and investments, and loan- and deposit-related fees. Our loan portfolio consists of a mix of agricultural, commercial real estate, commercial, residential real estate, and installment and consumer loans. Our primary source of funding is deposits. Our largest expenses are interest on these deposits and salaries and related employee benefits. We measure our performance through various metrics, including our pre-tax net income, net interest margin, net overhead ratio, return on average assets,  earnings per share, and ratio of non-performing assets to total assets; we utilize non-GAAP metrics such as efficiency ratio, return on average common shareholders’ equity, income before provision for loan losses, merger expense, and income tax expense.  We are also required to maintain appropriate regulatory leverage and risk-based capital ratios.

Merger Transaction

On May 13, 2016, the Company completed its acquisition of Fox River Valley and its wholly-owned bank subsidiary, The Business Bank, through the merger of Fox River Valley into a wholly-owned subsidiary of the Company (which subsequently dissolved) and the merger of The Business Bank into the Bank.  In connection with the merger, County paid aggregate merger consideration of approximately $14.45 million in cash and 712,830 shares of the Company’s common stock.    

The purpose of the acquisition was for strategic reasons beneficial to the Company. The acquisition is consistent with its growth plans to expand into the markets of Appleton and Green Bay, Wisconsin and diversify its loan portfolio and agricultural concentration.  The Company believes it is well-positioned to achieve stronger financial performance and enhance shareholder value through synergies of the combined operations.

For additional information on this merger, see Note 2. “Acquisition” to our consolidated financial statements.

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Initial Public Offering

On January 22, 2015, we closed our initial public offering (“IPO”), in which we offered 1,357,000 shares of common stock for gross proceeds of $21.4 million.  Of the 1,357,000 shares sold, 1,210,750 shares were sold by the Company and 146,250 shares were sold by certain selling shareholders.  The Company did not receive any proceeds from the sale of shares by the selling shareholders.  The offer and sale of all shares of the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1, which was declared effective by the SEC on January 15, 2015.

The net proceeds from our IPO were $16.9 million after deducting underwriting discounts and commissions of $1.2 million and other offering expenses of $1.0 million for total expenses of $2.2 million.

Operational Overview

• Total loans were $992.5 million at September 30, 2016 compared to $748.2 million at December 31, 2015, and $704.0 million at September 30, 2015, an increase of 32.7% and 41.0%, respectively.

• Net interest income increased by $6.1 million from $19.3 million for the nine months ended September 30, 2015, to $25.4 million from the nine months ended September 30, 2016.

• Net income for the nine months ended September 30, 2016 was $7.2 million compared to $8.1 million for the nine months ended September 30, 2015

• Income before provision for loan losses, merger expenses, and income tax expense was $16.5 million for the nine months ended September 30, 2016 compared to $11.6 million for the nine months ended September 30, 2015, an increase of 42.8%.

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Selected Financial Data

	Three Months Ended						Nine Months Ended						Year Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015			December 31, 2015
	(unaudited)						(unaudited)
Selected Income Statement Data:
(Dollars in thousands, except per share data)
Interest income	$	12,803		$	8,764		$	32,621		$	24,765		$	33,767
Interest expense		2,627			1,893			7,204			5,504			7,520
Net interest income		10,176			6,871			25,417			19,261			26,247
Provision for loan losses		1,134			(867	)		2,416			(1,325	)		(1,019	)
Net interest income after provision for (recovery of) loan losses		9,042			7,738			23,001			20,586			27,266
Non-interest income		2,014			1,723			6,709			5,310			7,685
Non-interest expense		6,105			4,135			18,149			12,983			17,458
Income tax expense		1,849			1,996			4,338			4,839			6,519
Net income	$	3,102		$	3,330		$	7,223		$	8,074		$	10,974
Income before provision for loan losses,        merger expense, and income tax expense (1)	$	6,181		$	4,459		$	16,543		$	11,588		$	16,474
Per Common Share Data:
Basic earnings per common share	$	0.46		$	0.56		$	1.13		$	1.37		$	1.85
Diluted earnings per common share	$	0.46		$	0.55		$	1.12		$	1.34		$	1.82
Cash dividends per common share	$	0.05		$	0.04		$	0.15		$	0.12		$	0.16
Book value per share, end of period	$	18.49		$	16.82		$	18.49		$	16.82		$	17.16
Weighted average common shares - basic		6,524,430			5,733,919			6,159,517			5,635,515			5,664,678
Weighted average common shares - diluted		6,619,354			5,858,211			6,257,002			5,754,118			5,777,802
Common shares outstanding, end of period		6,532,776			5,733,919			6,532,776			5,733,919			5,771,001
Selected Balance Sheet Data (at period end):
Total assets	$	1,217,149		$	844,791		$	1,217,149		$	844,791		$	884,889
Securities		124,442			85,783			124,442			85,783			83,281
Total loans		992,478			704,029			992,478			704,029			748,189
Allowance for loan losses		(11,626	)		(9,833	)		(11,626	)		(9,833	)		(10,405	)
Total deposits		929,448			636,221			929,448			636,221			672,226
Other borrowings and FHLB advances		135,113			68,383			135,113			68,383			70,390
Subordinated debentures		15,407			12,372			15,407			12,372			12,372
Total shareholders' equity		128,794			104,436			128,794			104,436			107,024
Performance Ratios:
Return on average assets		1.04	%		1.63	%		0.92	%		1.36	%		1.35	%
Return on average common shareholders' equity (1)		10.00	%		13.58	%		9.67	%		11.28	%		11.27	%
Net interest margin		3.57	%		3.49	%		3.38	%		3.37	%		3.36	%
Interest rate spread		3.40	%		3.25	%		3.19	%		3.14	%		3.13	%
Non-interest income to average assets		0.68	%		0.84	%		0.86	%		0.89	%		0.95	%
Non-interest expense to average assets		2.05	%		2.02	%		2.31	%		2.18	%		2.15	%
Net overhead ratio (2)		1.37	%		1.18	%		1.46	%		1.29	%		1.20	%
Efficiency ratio (1)		48.29	%		48.42	%		55.83	%		51.04	%		49.95	%
Dividend payout ratio		10.87	%		7.27	%		13.39	%		8.96	%		8.79	%
Asset Quality Ratios:
Nonperforming loans to total loans		2.27	%		1.59	%		2.27	%		1.59	%		3.29	%
Allowance for loan losses to:
Total loans		1.17	%		1.40	%		1.17	%		1.40	%		1.39	%
Nonperforming loans		51.67	%		88.01	%		51.67	%		88.01	%		42.33	%
Net charge-offs (recoveries) to average loans		0.03	%		(0.12	)%		0.14	%		(0.08	)%		(0.12	)%
Nonperforming assets to total assets (3)		2.04	%		1.68	%		2.04	%		1.68	%		3.10	%
Capital Ratios:
Shareholders' common equity to assets		9.92	%		11.42	%		9.92	%		11.42	%		11.19	%
Tier 1 risk-based capital (Bank)		12.19	%		14.23	%		12.19	%		14.23	%		13.94	%

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Total risk-based capital (Bank)	13.31	%	15.48	%	13.31	%	15.48	%	15.19	%
Tier 1 Common Equity ratio (Bank)	12.19	%	14.23	%	12.19	%	14.23	%	13.94	%
Leverage ratio (Bank)	11.19	%	13.70	%	11.19	%	13.70	%	13.29	%

(1) The income before provision for loan losses, merger expense, and income tax expense, return on average common shareholders’ equity, and the efficiency ratio are not recognized under GAAP and are therefore considered to be non-GAAP financial measures.  See below for reconciliations of these financial measures to their most comparable GAAP measures.

(2) Net overhead ratio represents the difference between noninterest expense and noninterest income, divided by average assets.

(3) Non-performing assets consist of nonaccrual loans and other real estate owned.

Non-GAAP Financial Measures

“Efficiency ratio” is defined as non-interest expenses, excluding gains and losses on sales and write-downs of other real estate owned, divided by operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities.  In our judgment, the adjustments made to non-interest expense allow investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

	Three Months Ended						Nine Months Ended						Year Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015			December 31, 2015
	(dollars in thousands)
Efficiency Ratio GAAP to Non-GAAP reconciliation:
Non-interest expense	$	6,105		$	4,135		$	18,149		$	12,983		$	17,458
Less: net gain (loss) on sales and write-downs of OREO		(218	)		26			(213	)		(442	)		(510	)
Adjusted non-interest expense (non-GAAP)	$	5,887		$	4,161		$	17,936		$	12,541		$	16,948
Net interest income	$	10,176		$	6,871		$	25,417		$	19,261		$	26,247
Non-interest income		2,014			1,723			6,709			5,310			7,685
Operating revenue	$	12,190		$	8,594		$	32,126		$	24,571		$	33,932
Efficiency ratio		48.29	%		48.42	%		55.83	%		51.04	%		49.95	%

Return on average common shareholders’ equity is a non-GAAP based financial measure calculated using non-GAAP based amounts.  The most directly comparable GAAP based measure is return on average shareholders’ equity.  We calculate return on average common shareholders’ equity by excluding the average preferred shareholders’ equity and the related dividends.  Management uses the return on average common shareholders’ equity in order to review our core operating results and our performance.  

	Three Months Ended						Nine Months Ended						Year Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015			December 31, 2015
	(dollars in thousands)
Return on Average Common    Shareholders' Equity GAAP    to Non-GAAP reconciliation:
Return on average shareholders'    equity		9.63	%		11.32	%		8.09	%		9.44	%		9.45	%
Effect of excluding average    preferred shareholders' equity		0.37	%		2.26	%		1.58	%		1.84	%		1.82	%
Return on average common    shareholders' equity		10.00	%		13.58	%		9.67	%		11.28	%		11.27	%

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Income before provision for loan losses, merger expense, and income tax expense is a non-GAAP financial measure based on GAAP amounts.  In our judgment, the adjustments made to net income allow investors to better assess our operating results by removing the volatility that is associated with certain nonrecurring items related to our acquisition and other discrete items that are unrelated to our core business.

	Three Months Ended					Nine Months Ended					Year Ended
	September 30, 2016		September 30, 2015			September 30, 2016		September 30, 2015			December 31, 2015
	(dollars in thousands)
Income before provision for loan losses,    merger expense, and income tax    expense reconciliation:
Income before income taxes	$	4,951	$	5,326		$	11,561	$	12,913		$	17,493
Provision for loan losses		1,134		(867	)		2,416		(1,325	)		(1,019	)
Merger expenses (one-time)		96		—			2,566		—			—
Income before provision for loan              losses, merger expense, and              income tax expense	$	6,181	$	4,459		$	16,543	$	11,588		$	16,474

Results of Operations

Our operating revenue is comprised of interest income and non-interest income.  Net interest income increased by 48.1% to $10.2 million for the three months ended September 30, 2016 compared to the three months ended September 30, 2015; the increase is primarily attributable to loan growth of 41.0% between the same periods mainly due to the merger.  Interest income increased to $12.8 million for the third quarter of 2016 compared to $8.8 million for the third quarter of 2015.  The $4.0 million increase was partially offset by an increase in interest expense from $1.9 million for the third quarter of 2015 to $2.6 million for the third quarter of 2016 which was the result of an increase in the volume of deposits between the two periods.  Non-interest income increased 16.9% to $2.0 million and non-interest expense increased 47.6% to $6.1 million for the three months ended September 30, 2016 compared to the same period in 2015.  The increase in non-interest expense is primarily due to increased operating costs associated with two additional branches acquired through the merger and a 31.0% increase in employee headcount since September 30, 2015.

For the nine months ended September 30, 2016, net interest income was $25.4 million, an increase of $6.1 million, or 32.0% from the nine months ended September 30, 2015.  Interest income increased $7.8 million to $32.6 million for the first nine months of 2016 compared to $24.8 million for the same period of 2015 due primarily to increased loan volume.  Interest expense was $7.2 million for the first nine months of 2016, an increase of $1.7 million from the same period of 2015 primarily the result of increased volume of time deposits.  Non-interest income increased to $6.7 million for the first three quarters of 2016 which represents a 26.3% increase compared to the nine months ended September 30, 2015, mainly due to an increase in loan servicing fees.  Non-interest expense increased to $18.1 million for the nine months ended September 30, 2016, an increase of $5.2 million, or 39.8%, from the nine months ended September 30, 2015, primarily due to $2.6 million in nonrecurring merger expenses that were paid during the nine months ended September 30, 2016 in connection with the Fox River Valley acquisition and the resulting increased operating and employee expenses.

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Analysis of Net Interest Income

Net interest income is the largest component of our income and is dependent on the amounts of and yields on interest-earning assets as compared to the amounts of and rates paid on interest-bearing liabilities.  The following tables reflect the components of net interest income for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended
	September 30, 2016								September 30, 2015
	Average Balance (1)			Income/ Expense		Yields/ Rates			Average Balance (1)			Income/ Expense		Yields/ Rates
	(dollars in thousands)
Assets
Investment securities	$	126,319		$	510		1.61	%	$	84,528		$	359		1.70	%
Loans (2)		993,156			12,245		4.93	%		691,049			8,393		4.86	%
Interest bearing deposits due from other banks		21,480			48		0.89	%		12,741			11		0.35	%
Total interest-earning assets	$	1,140,955		$	12,803		4.49	%	$	788,318		$	8,763		4.45	%
Allowance for loan losses		(11,499	)							(10,462	)
Other assets		63,588								40,043
Total assets	$	1,193,044							$	817,899
Liabilities
Savings, NOW, money market, interest checking		245,001			333		0.54	%		162,719			194		0.48	%
Time deposits		565,899			1,767		1.25	%		395,967			1,381		1.40	%
Total interest-bearing deposits	$	810,900		$	2,100		1.04	%	$	558,686		$	1,575		1.13	%
Other borrowings		2,287			35		6.15	%		8,830			63		2.83	%
FHLB advances		133,815			373		1.11	%		52,058			157		1.20	%
Junior subordinated debentures		15,407			119		3.09	%		12,372			99		3.21	%
Total interest-bearing liabilities	$	962,409		$	2,627		1.09	%	$	631,946		$	1,894		1.20	%
Non-interest bearing deposits		93,758								60,196
Other liabilities		8,041								8,099
Total liabilities		1,064,208								700,241
SBLF preferred stock (3)		-								15,000
Shareholders' equity		128,836								102,658
Total liabilities and equity	$	1,193,044							$	817,899
Net interest income				$	10,176							$	6,869
Interest rate spread (4)							3.40	%							3.25	%
Net interest margin (5)							3.57	%							3.49	%
Ratio of interest-earning assets to interest-bearing    liabilities		1.19								1.25

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	Nine Months Ended
	September 30, 2016								September 30, 2015
	Average Balance (1)			Income/ Expense		Yields/ Rates			Average Balance (1)			Income/ Expense		Yields/ Rates
	(dollars in thousands)
Assets
Investment securities	$	104,021		$	1,304		1.67	%	$	82,187		$	1,037		1.68	%
Loans (2)		879,471			31,180		4.73	%		661,797			23,687		4.77	%
Interest bearing deposits due from other banks		18,664			137		0.98	%		17,715			41		0.31	%
Total interest-earning assets	$	1,002,156		$	32,621		4.34	%	$	761,699		$	24,765		4.34	%
Allowance for loan losses		(11,203	)							(10,438	)
Other assets		54,853								42,010
Total assets	$	1,045,806							$	793,271
Liabilities
Savings, NOW, money market, interest checking		198,428			774		0.52	%		154,046			543		0.47	%
Time deposits		511,452			5,133		1.34	%		395,005			3,998		1.35	%
Total interest-bearing deposits	$	709,880		$	5,907		1.11	%	$	549,051		$	4,541		1.10	%
Other borrowings		3,094			128		5.52	%		9,369			221		3.15	%
FHLB advances		107,538			915		1.13	%		39,276			403		1.37	%
Junior subordinated debentures		13,917			254		2.43	%		12,372			339		3.66	%
Total interest-bearing liabilities	$	834,429		$	7,204		1.15	%	$	610,068		$	5,504		1.20	%
Non-interest bearing deposits		81,480								61,236
Other liabilities		7,995								7,900
Total liabilities		923,904								679,204
SBLF preferred stock (3)		2,912								15,000
Shareholders' equity		118,990								99,067
Total liabilities and equity	$	1,045,806							$	793,271
Net interest income				$	25,417							$	19,261
Interest rate spread (4)							3.19	%							3.14	%
Net interest margin (5)							3.38	%							3.37	%
Ratio of interest-earning assets to interest -bearing    liabilities		1.20								1.25

(1) Average balances are calculated on amortized cost.

(2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans.

(3) The SBLF preferred stock refers to the 15,000 shares of our SBLF Preferred Stock, which were redeemed on February 23, 2016.

(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the volume and rate columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended September 30, 2016 v. 2015
	Increase (Decrease) Due to Change in Average
	Volume		Rate			Net
	(dollars in thousands)
Interest Income:
Investment securities	$	168	$	(17	)	$	151
Loans		3,723		129			3,852
Federal funds sold and interest-bearing deposits with    banks		11		26			37
Total interest income		3,902		138			4,040
Interest Expense:
Savings, NOW, money market and interest checking		109		30			139
Time deposits		511		(125	)		386
Other borrowings		47		(74	)		(27	)
FHLB advances		227		(11	)		216
Junior subordinated debentures		23		(3	)		20
Total interest expense		917		(183	)		734
Net interest income	$	2,985	$	321		$	3,306
	Nine Months Ended September 30, 2016 v. 2015
	Increase (Decrease) Due to Change in Average
	Volume		Rate			Net
	(dollars in thousands)
Interest Income:
Investment securities	$	273	$	(6	)	$	267
Loans		7,715		(222	)		7,493
Federal funds sold and interest-bearing deposits with    banks		2		94			96
Total interest income		7,990		(134	)		7,856
Interest Expense:
Savings, NOW, money market and interest checking		169		62			231
Time deposits		1,168		(33	)		1,135
Other borrowings		719		(812	)		(93	)
FHLB advances		568		(56	)		512
Junior subordinated debentures		51		(136	)		(85	)
Total interest expense		2,675		(975	)		1,700
Net interest income	$	5,315	$	841		$	6,156

Provision for Loan Losses

Based on our analysis of the components of the allowance for loan losses, management recorded a provision for loan losses of $1.1 million for the three months ended September 30, 2016 compared to a credit provision of $867 thousand for the three months ended September 30, 2015.  The increase in the provision between these two periods is the result of a $1.6 million non-recurring loan recovery that took place during the third quarter of 2015, organic loan growth, and increased loan loss factors applied to the watch and special mention categories.  The loans that we acquired from Fox River Valley were recorded at fair market value at the time of acquisition and are excluded from the allowance calculation until they are renewed, rewritten, or exhibit deterioration in credit quality in excess of the existing credit mark on the loan. During the third quarter of 2016, we charged-off $327 thousand in loans and recovered $28 thousand in loans that had previously been written-off.

32

For the nine months ended September 30, 2016, the provision for loan losses was $2.4 million compared to a credit provision of $1.3 million for the nine months ended September 30, 2015.  Despite the increase in provision, overall credit quality remains consistent with management’s expectations.  The specific reserve related to impaired loans increased slightly from $2.3 million at September 30, 2015 to $2.4 million at September 30, 2016.

There have been no substantive changes to our methodology for estimating the appropriate level of allowance for loan losses from what was previously outlined in our 2015 Annual Report on Form 10-K. Based upon this methodology, which includes actively monitoring the asset quality and inherent risks within the loan and lease portfolio, management concluded that an allowance for loan losses of $11.6 million, or 1.17% of total loans, was appropriate as of September 30, 2016.  This is compared to an allowance for loan losses of $9.8 million, or 1.40% of total loans, at September 30, 2015, and $10.4 million, or 1.39% of total loans, at December 31, 2015.  Beginning in the third quarter of 2016, the substandard category was separated in to performing and impaired subcategories to provide more detailed analysis of this category of loans.  This addition did not have a material impact on the provision.

Non-Interest Income

Non-interest income for the three months ended September 30, 2016 increased by 16.9% from the three months ended September 30, 2015 of $1.7 million to $2.0 million.  The increase was primarily the result of increases in loan servicing fees, due to an increase in loans sold.

For the nine months ended September 30, 2016, non-interest income increased 26.3% to $6.7 million from $5.3 million for the nine months ended September 30, 2015.  The following table reflects the components of non-interest income for the three months and nine months ended September 30, 2016 and 2015:

	Three Months Ended					Nine Months Ended
	September 30, 2016		September 30, 2015			September 30, 2016		September 30, 2015
	(dollars in thousands)
Service charges	$	288	$	238		$	976	$	744
Gain on sale of loans, net		79		44			240		166
Loan servicing fees		1,404		1,236			4,017		3,648
Loan servicing rights		54		(51	)		1,020		(25	)
Income on other real estate owned		19		33			33		243
Other		170		223			423		534
Total non-interest income	$	2,014	$	1,723		$	6,709	$	5,310

Non-Interest Expense

Non-interest expense increased 47.6% to $6.1 million for the three months ended September 30, 2016 compared to $4.1 million for the three months ended September 30, 2015.  The increase is primarily due to increased operating costs associated with the two additional branches acquired through the merger and a 31.0% increase in employee headcount since September 30, 2015.

33

For the nine months ended September 30, 2016, non-interest expense increased 39.8% to $18.1 million from $13.0 million for the nine months ended September 30, 2015.  The increase is predominantly the result of $2.6 million in nonrecurring merger expenses related to our acquisition of Fox River Valley on May 13, 2016, of which $1.2 million is attributable to expenses relating to the conversion of The Business Bank’s core processor, $0.4 million is attributable to professional fees, and $1.0 million was paid to Fox River Valley executives in accordance with the terms of their employment agreements.  The remaining $2.5 million increase in non-interest expense is the result of increased operations of the expanded entity.

The following table reflects the components of our non-interest expense for the three and nine ended September 30, 2016 and 2015:

	Three Months Ended						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
	(dollars in thousands)
Employee compensation and benefits	$	3,461		$	2,643		$	9,554		$	8,232
Occupancy		157			100			364			260
Information processing		288			183			2,045			527
Professional fees		304			513			1,337			900
Business development		167			147			452			371
FDIC assessment		163			101			424			321
Other real estate owned expenses		60			121			153			261
Write-down of other real estate owned		250			—			334			182
Net loss (gain) on other real estate owned		(32	)		(26	)		(121	)		260
Other		1,287			353			3,607			1,669
Total non-interest expense	$	6,105		$	4,135		$	18,149		$	12,983

Income taxes

The Company accounts for income taxes in accordance with income tax accounting guidance, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.

The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. 

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50%; the terms “examined” and “upon examination” also include resolution of the related appeals or litigation processes, if any. A tax position that meets the “more likely than not” recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the “more likely than not” recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company files income tax returns in the U.S. federal jurisdiction and in the state of Wisconsin. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2012.

The Company recognizes interest and penalties on income taxes as a component of other non-interest expense.

Income tax expense for the three months ended September 30, 2016 and 2015 was $1.8 million and $2.0 million, which represents an effective tax rate of 37.3% and 37.5%, respectively.  For the nine months ended September 30, 2016 and 2015, income tax expense was $4.3 million and $4.8 million, respectively.  This represents an effective tax rate of 37.5% for both nine months ended September 30, 2016 and 2015.

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Financial Condition

Total assets increased $332.3 million, or 37.5%, from $884.9 million at December 31, 2015 to $1.2 billion at September 30, 2016.  $223.6 million of the increase is due to the acquisition of Fox River Valley.  The remaining $108.7 million is primarily due to organic loan growth.

Total liabilities increased $325.5 million, or 42.7%, from $762.9 million at December 31, 2015 to $1.1 billion at September 30, 2016.  This increase is primarily attributed to $206.0 million of liabilities assumed in the Fox River Valley acquisition, with the remaining due to increased borrowings associated with our increased loan demand.  

On February 23, 2016, we redeemed all 15,000 shares of SBLF Preferred Stock at its liquidation value of $1,000 per share plus accrued dividends, for a total redemption amount of $15.0 million.  

Shareholders’ equity increased $21.8 million, or 20.3%, to $128.8 million at September 30, 2016 from $107.0 million at December 31, 2015.  This increase was due primarily to the 712,830 shares of common stock that were recorded at a fair value of $20.00 per share in connection with the Fox River Valley acquisition and the net income for the nine months ended September 30, 2016 of $7.2 million.

Net Loans

Total net loans increased by $243.1 million, or 32.9%, from $737.8 million at December 31, 2015 to $980.9 million at September 30, 2016. The acquired loans accounted for $135.6 million of the increase, with the remaining $107.5 million increase from organic loan growth, primarily in the agricultural sector.  Agricultural loans grew 17.2% from December 31, 2015 to $585.3 million at September 30, 2016.

The following table sets forth the composition of our loan portfolio at the dates indicated:

	September 30, 2016						December 31, 2015
	Amount			Percent			Amount			Percent
	(dollars in thousands)
Agriculture loans	$	585,273			59.0	%	$	499,320			66.8	%
Commercial real estate loans		282,058			28.4	%		161,741			21.6	%
Commercial loans		80,587			8.1	%		51,978			6.9	%
Residential real estate loans		44,324			4.5	%		34,631			4.6	%
Installment and consumer other		236			0.0	%		519			0.1	%
Total gross loans	$	992,478			100.0	%	$	748,189			100.0	%
Allowance for loan losses		(11,626	)					(10,405	)
Loans, net	$	980,852					$	737,784

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense, which affects our earnings directly. Loans are charged against the allowance for loan losses when management believes that the collectability of all or some of the principal is unlikely. Subsequent recoveries are added to the allowance. The allowance is an amount that reflects management’s estimate of the level of probable incurred losses in the loan portfolio. Factors considered by management in determining the adequacy of the allowance include, but are not limited to, detailed reviews of individual loans, historical and current trends in loan charge-offs for the various portfolio segments evaluated, the level of the allowance in relation to total loans and to historical loss levels, levels and trends in non-performing and past due loans, volume and migratory direction of adversely graded loans, external factors including regulation, reputation, and competition, and management’s assessment of economic conditions. Our board of directors reviews the recommendations of management regarding the appropriate level for the allowance for loan losses based upon these factors.

The provision for loan losses is the charge to operating earnings necessary to maintain an adequate allowance for loan losses. We have developed policies and procedures for evaluating the overall quality of our loan portfolio and the timely identification of problem credits. Management continuously reviews these policies and procedures and makes further improvements as needed. The adequacy of our allowance for loan losses and the effectiveness of our internal policies and procedures are also reviewed periodically by our regulators, our auditors, and external loan review personnel. Our regulators may advise us to recognize additions to the allowance based upon their judgments about information available to them at the time of their examination. Such regulatory guidance is taken under consideration by management, and we may recognize additions to the allowance as a result.

35

We continually refine our methodology for determining the allowance for loan losses by comparing historical loss ratios utilized to actual experience and by classifying loans for analysis based on similar risk characteristics. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreements; however, cash receipts on impaired and nonaccrual loans for which the accrual of interest has been discontinued are applied to principal and interest income depending upon the overall risk of principal loss to us.

At September 30, 2016 and December 31, 2015, the allowance for loan losses was $11.6 million and $10.4 million, respectively, which resulted in a ratio to total loans of 1.17% and 1.39%, respectively.  The decrease in ratio of the allowance to total loans is due to the acquired loans; at the completion of the merger, the acquired loans were recorded at fair market value and, as a result, are excluded from the allowance calculation until they are renewed or rewritten.  The overall increase in the allowance for loan losses, is the result of organic loan growth, partially offset by slightly lower loan loss factors resulting from improved dairy prices that impact our agricultural customers.  Also during the first three quarters of 2015, we experienced $2.4 million of loan recoveries that are not recurring.  

Charge-offs and recoveries by loan category for the three and nine months ended September 30, 2016 and 2015 are as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
	(dollars in thousands)
Balance, beginning of period	$	10,791		$	9,897		$	10,405		$	10,603
Loans charged off:
Agriculture loans		—			1,145			896			1,145
Commercial real estate loans		45			31			50			162
Commercial loans		277			4			277			415
Residential real estate loans		5			—			5			172
Installment and consumer other		—			—			4			—
Total loans charged off	$	327		$	1,180		$	1,232		$	1,894
Recoveries:
Agriculture loans		—			42			2			47
Commercial real estate loans		25			740			26			743
Commercial loans		3			740			9			1,196
Residential real estate loans		—			461			—			463
Installment and consumer other		—			—			—			—
Total recoveries		28			1,983			37			2,449
Net loans charged-off	$	299		$	(803	)	$	1,195		$	(555	)
Provision for (recovery of) loan losses		1,134			(867	)		2,416			(1,325	)
Allowance for loan losses, end of period	$	11,626		$	9,833		$	11,626		$	9,833
Selected loan quality ratios:
Net charge-offs to average loans		0.03	%		(0.12	)%		0.14	%		(0.08	)%
Allowance for loan losses to total loans    (end of period)		1.17	%		1.40	%		1.17	%		1.40	%
Allowance for loan losses to non-    performing assets and performing    troubled debt restructurings    (end of period)		39.17	%		66.38	%		39.17	%		66.38	%

Loan Servicing Rights

As part of our growth and risk management strategy, we have actively developed a loan participation and loan sales network. Our ability to sell loan participations and whole loans benefits us by freeing up capital and funding to lend to new customers as well as to increase non-interest income through the recognition of loan sale and servicing revenue. Because we continue to service these loans, we are able to maintain a relationship with the customer. Additionally, we receive a servicing fee that offsets some of the cost of administering the loan, while maintaining the customer relationship.  

36

Servicing assets are recognized as separate assets when rights are acquired through the sale of financial assets. Servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer. The Company subsequently measures each class of servicing asset using the amortization method. Under the amortization method, servicing rights are amortized in proportion to and over the period of estimated net servicing income. The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date.

Fair value is based on market prices for comparable servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. These variables may have an adverse impact on the value of the servicing right and may result in a reduction to non-interest income.

Servicing assets measured using the amortization method are evaluated and measured for impairment. Impairment is determined by stratifying rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual tranche, to the extent that fair value is less than the carrying amount of the servicing assets for that tranche. The valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measure of the impairment.

Changes in the valuation allowances are reported with loan servicing fees on the income statement. Fair value in excess of the carrying amount of servicing assets for that stratum is not recognized.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of loan servicing rights is netted against loan servicing fee income.

Information about the loan servicing portfolio is shown below:

	September 30, 2016			December 31, 2015
	(dollars in thousands)
Total loans	$	992,478		$	748,189
Less: nonqualified loan sales included below		(1,996	)		(3,945	)
Loans serviced:
Agricultural		554,888			480,133
Commercial		11,113			11,080
Commercial real estate		3,175			4,720
Total loans serviced		569,176			495,933
Total loans and loans serviced	$	1,559,658		$	1,240,177

Securities

Our securities portfolio is predominately composed of municipal securities, investment grade mortgage-backed securities, U.S. Government and agency securities, and asset-backed securities. We classify substantially all of our securities as available for sale. We do not engage in active securities trading in carrying out our investment strategies.

Securities increased to $124.4 million at September 30, 2016 from $83.3 million at December 31, 2015.  During the nine months ended September 30, 2016, we recognized unrealized holding gains of $1.2 million before income taxes through other comprehensive income.

37

The following table sets forth the amortized cost and fair values of our securities portfolio at September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(dollars in thousands)
Available for sale:
Municipal securities	$	42,636	$	42,963	$	46,185	$	46,312
Mortgage-backed securities		75,357		76,702		34,728		34,966
Asset-backed securities		3,885		3,774		—		—
U.S. Government and agency securities		1,001		1,003		2,003		2,003
Total available for sale	$	122,879	$	124,442	$	82,916	$	83,281

Deposits

Deposits are the major source of our funds for lending and other investment purposes. Deposits are attracted principally from within our primary market area through the offering of a broad variety of deposit instruments including checking accounts, noninterest-bearing demand accounts, money market accounts, savings accounts, time deposit accounts (including “jumbo” certificates in denominations of $100,000 or more) and retirement savings plans.  We also obtain brokered deposits on an as-needed basis.

Deposit growth was 38.3% to $929.4 million at September 30, 2016 from $672.2 million at December 31, 2015.  The increase in deposits was primarily the result of a $203.3 million in deposits acquired from Fox River Valley.  Organic deposit growth has been slow in recent years in a market with compressed interest rates, but our recent acquisition expanded our geographical footprint into two new markets in which we can attract core deposits.  As of September 30, 2016 and December 31, 2015, the distribution by type of deposit accounts was as follows:

	September 30, 2016					December 31, 2015
	Amount		% of Deposits			Amount		% of Deposits
	(dollars in thousands)
Time deposits	$	392,484		42.2	%	$	307,044		45.7	%
Brokered deposits		190,443		20.4	%		164,559		24.5	%
Money market accounts		182,867		19.7	%		96,148		14.3	%
Demand, noninterest-bearing		111,398		12.0	%		70,914		10.5	%
NOW accounts and interest checking		45,145		4.9	%		27,592		4.1	%
Savings		7,111		0.8	%		5,969		0.9	%
Total deposits	$	929,448		100.0	%	$	672,226		100.0	%

Liquidity Management and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature including, but not limited to, funding loans and depositor withdrawals. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities and borrowings from the FHLB. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, calls of investment securities and borrowed funds and prepayments on loans are greatly influenced by general interest rates, economic conditions and competition.

At September 30, 2016, advances from the FHLB were $132.9 million compared to $66.4 million at December 31, 2015.  This increase is directly related to the $108.7 million of organic loan growth between these dates.

Management adjusts our investments in liquid assets based upon an assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, (4) the objectives of our interest-rate risk and investment policies and (5) the risk tolerance of management and our board of directors.

Our cash flows are composed of three primary classifications: cash flows from operating activities, investing activities, and financing activities.  Net cash provided by operating activities was $19.2 million for the nine months ended September 30, 2016, compared to net cash used in operating activities of $0.4 million for the nine months ended September 30, 2015. Net cash used in investing activities, which consists primarily of purchases of and proceeds from the sale, maturities, calls, and principal repayments of securities available for sale, as well as loan originations, net of repayments, was $84.5 million and $60.1 million for the nine months ended September 30, 2016 and 2015, respectively.  Net cash provided by financing activities, consisting primarily of the activity in

38

deposit accounts, FHLB advances, and the redemption of the SBLF Preferred Stock, was $103.3 million and $63.1 million for the nine months ended September 30, 2016 and 2015, respectively.

At September 30, 2016, the Bank exceeded all of its regulatory capital requirements with Tier 1 leverage capital of $132.6 million, or 11.19% of adjusted average total assets, which is above the minimum level to be well-capitalized of $59.2 million, or 5.0% of adjusted average assets, and total risk-based capital of $144.7 million, or 13.31% of risk-weighted assets, which is above the minimum level to be well-capitalized of $108.7 million, or 10.0% of risk-weighted assets.

At the holding company level, our primary sources of liquidity are dividends from the Bank, investment income and net proceeds from investment sales, borrowings and capital offerings. The main uses of liquidity are the payment of interest to holders of our junior subordinated debentures and the payment of interest or dividends to common and preferred shareholders.  The Bank is subject to certain regulatory limitations regarding its ability to pay dividends to the Company; however, we do not believe that the Company will be adversely affected by these dividend limitations.  At September 30, 2016, there were $66.8 million of retained earnings available for the payment of dividends by the Bank to us.

Off-Balance Sheet Arrangements

As of September 30, 2016, there were no significant changes to our contractual obligations and off-balance sheet arrangements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.  We continue to believe that we have adequate capital and liquidity available from various sources to fund projected obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2016. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2016, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There are inherent limitations in the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of disclosure controls and procedures can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

39

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We and our subsidiaries may be involved from time to time in ordinary routine litigation incidental to our respective businesses.  Neither we nor any of our subsidiaries are currently engaged in, nor is any of our property the subject of, any legal proceedings, other than ordinary routine litigation incidental to the business, that are expected to have a material adverse effect on our results of operations or financial position.  

Item 1A. Risk Factors.

There are no material changes to the risk factors set forth in “Risk Factors” in Item 1A to Part I of our Annual Report on Form 10-K for the year ended December 31, 2015.  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not issue any unregistered equity securities or repurchase any shares of its common stock during the quarter ended September 30, 2016.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

40

Item 6. Exhibits.

Exhibit Number	Description
10.1	County Bancorp, Inc. 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 4.4 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.2	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Stock Appreciation Right Award Agreement (incorporated by reference to Exhibit 4.5 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.3	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 4.6 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.4	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Restricted Stock Award Agreement (incorporated by reference to Exhibit 4.7 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.5	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 4.8 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.6	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 4.9 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.7	Release and Waiver Agreement by and among County Bancorp, Inc., Investors Community Bank, and Gary Abramowicz, effective August 12, 2016 (incorporated by reference to Exhibit 10.1 to County Bancorp, Inc.’s current report on Form    8-K filed on September 7, 2016)
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

41

SIGNATURES

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

	County Bancorp, Inc.
Date:  November 10, 2016	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President
Date:  November 10, 2016	By:	/s/ David D. Kohlmeyer
		David D. Kohlmeyer
		Interim Chief Financial Officer

42

Exhibit Index

Exhibit Number	Description
10.1	County Bancorp, Inc. 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 4.4 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.2	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Stock Appreciation Right Award Agreement (incorporated by reference to Exhibit 4.5 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.3	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 4.6 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.4	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Restricted Stock Award Agreement (incorporated by reference to Exhibit 4.7 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.5	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 4.8 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.6	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 4.9 to County Bancorp, Inc.’s registration statement on Form S-8 (File no. 333-213536) filed on September 8, 2016)
10.7	Release and Waiver Agreement by and among County Bancorp, Inc., Investors Community Bank, and Gary Abramowicz, effective August 12, 2016 (incorporated by reference to Exhibit 10.1 to County Bancorp, Inc.’s current report on Form    8-K filed on September 7, 2016)
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

43

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

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

I, Timothy J. Schneider, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of County Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2016	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

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

I, David D. Kohlmeyer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of County Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2016	By:	/s/ David D. Kohlmeyer
		David D. Kohlmeyer
		Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of County Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy J. Schneider, as President of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: November 10, 2016	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of County Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David D. Kohlmeyer, as Interim Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: November 10, 2016	By:	/s/ David D. Kohlmeyer
		David D. Kohlmeyer
		Interim Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 10, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	County Bancorp, Inc.
Entity Central Index Key	0001470205
Trading Symbol	ICBK
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		6,560,135

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 52,876	$ 14,907
Securities available-for-sale, at fair value	124,442	83,281
FHLB Stock, at cost	5,688	3,507
Loans held for sale	2,960	9,201
Loans, net of allowance for loan losses of $11,626 as of September 30, 2016; $10,405 as of December 31, 2015	980,852	737,784
Premises and equipment, net	9,810	7,165
Loan servicing rights	9,165	8,145
Other real estate owned, net	2,696	2,872
Cash surrender value of bank owned life insurance	11,374	11,155
Deferred tax asset, net	5,011	2,048
Goodwill	5,038
Accrued interest receivable and other assets	5,647	4,824
Total assets	1,217,149	884,889
Deposits:
Noninterest-bearing	111,398	70,914
Interest-bearing	818,050	601,312
Total deposits	929,448	672,226
Other borrowings	2,218	3,945
Advances from FHLB	132,895	66,445
Subordinated debentures	15,407	12,372
Accrued interest payable and other liabilities	8,387	7,877
Total liabilities	1,088,355	762,865
Small Business Lending Fund redeemable preferred stock-variable rate, noncumulative, nonparticipating, $1,000 stated value; 15,000 shares authorized; no shares issued at September 30, 2016; 15,000 shares issued, $15,000 redemption amount at December 31, 2015		15,000
SHAREHOLDERS' EQUITY
Preferred stock-variable rate, non-cumulative, nonparticipating, $1,000 stated value; 15,000 shares authorized; 8,000 shares issued at September 30, 2016 and December 31, 2015	8,000	8,000
Common stock - $0.01 par value; 50,000,000 authorized; 6,964,689 shares issued and 6,532,776 shares outstanding at September 30, 2016; 6,192,609 shares issued and 5,771,001 shares outstanding at December 31, 2015	26	19
Surplus	49,795	34,717
Retained earnings	74,846	68,825
Treasury stock, at cost; 431,913 shares at September 30, 2016; 421,608 shares at December 31, 2015	(4,828)	(4,758)
Accumulated other comprehensive income	955	221
Total shareholders' equity	128,794	107,024
Total liabilities and shareholders' equity	1,217,149	884,889
Core Deposit
ASSETS
Core deposit intangible, net of amortization of $211 as of September 30, 2016; $0 as of December 31, 2015	$ 1,590	$ 0

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Allowance for loan losses	$ 11,626	$ 10,405
Small Business Lending Fund redeemable preferred stock, stated value	$ 1,000	$ 1,000
Small Business Lending Fund redeemable preferred stock, shares authorized	15,000	15,000
Small Business Lending Fund redeemable preferred stock, shares issued	0	15,000
Small Business Lending Fund redeemable preferred stock, redemption amount		$ 15,000
Preferred Stock, stated value	$ 1,000	$ 1,000
Preferred Stock, shares authorized	15,000	15,000
Preferred Stock, shares issued	8,000	8,000
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	50,000,000	50,000,000
Common Stock, shares issued	6,964,689	6,192,609
Common Stock, shares outstanding	6,532,776	5,771,001
Treasury Stock, shares	431,913	421,608
Core Deposit
Core deposit intangible, amortization	$ 211	$ 0

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
INTEREST AND DIVIDEND INCOME
Loans, including fees	$ 12,245	$ 8,393	$ 31,180	$ 23,687
Taxable securities	426	251	1,021	715
Tax-exempt securities	84	109	283	322
Federal funds sold and other	48	11	137	41
Total interest and dividend income	12,803	8,764	32,621	24,765
INTEREST EXPENSE
Deposits	2,100	1,575	5,907	4,541
FHLB advances and other borrowed funds	408	219	1,043	624
Subordinated debentures	119	99	254	339
Total interest expense	2,627	1,893	7,204	5,504
Net interest income	10,176	6,871	25,417	19,261
Provision for loan losses	1,134	(867)	2,416	(1,325)
Net interest income after provision for loan losses	9,042	7,738	23,001	20,586
NON-INTEREST INCOME
Services charges	288	238	976	744
Gain on sale of loans, net	79	44	240	166
Loan servicing fees	1,458	1,185	5,037	3,623
Other	189	256	456	777
Total non-interest income	2,014	1,723	6,709	5,310
NON-INTEREST EXPENSE
Employee compensation and benefits	3,461	2,643	9,554	8,232
Occupancy	157	100	364	260
Information processing	288	183	2,045	527
Write-down of other real estate owned	250		334	182
Other	1,949	1,209	5,852	3,782
Total non-interest expense	6,105	4,135	18,149	12,983
Income before income taxes	4,951	5,326	11,561	12,913
Income tax expense	1,849	1,996	4,338	4,839
NET INCOME	$ 3,102	$ 3,330	$ 7,223	$ 8,074
NET INCOME PER SHARE:
Basic	$ 0.46	$ 0.56	$ 1.13	$ 1.37
Diluted	0.46	0.55	1.12	1.34
Dividends paid per share	$ 0.05	$ 0.04	$ 0.15	$ 0.12

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 3,102	$ 3,330	$ 7,223	$ 8,074
Other comprehensive income:
Unrealized gains (losses) on securities available-for-sale	(308)	524	1,204	347
Income tax (expense) benefit	120	(204)	(470)	(135)
Total other comprehensive income (loss)	(188)	320	734	212
Comprehensive income	$ 2,914	$ 3,650	$ 7,957	$ 8,286

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	SBLF	Fox River Valley	Preferred Stock	Common Stock	Common Stock Fox River Valley	Surplus	Surplus Fox River Valley	Retained Earnings	Retained Earnings SBLF	Treasury Stock	Accumulated Other Comprehensive Income
Balance at Dec. 31, 2014	$ 80,043			$ 8,000	$ 5		$ 16,970		$ 59,254		$ (4,572)	$ 386
Net income	8,074								8,074
Other comprehensive income (loss)	212											212
Stock compensation expense, net of tax	266						266
Cash dividends declared on common stock	(687)								(687)
Cash dividends declared on preferred stock	(239)	$ (128)							(239)	$ (128)
Proceeds from sale of common stock	16,895				13		16,882
Balance at Sep. 30, 2015	104,436			8,000	18		34,118		66,274		(4,572)	598
Balance at Dec. 31, 2015	107,024			8,000	19		34,717		68,825		(4,758)	221
Net income	7,223								7,223
Other comprehensive income (loss)	734											734
Stock compensation expense, net of tax	295						295
Purchase of treasury stock	(70)										(70)
Cash dividends declared on common stock	(941)								(941)
Cash dividends declared on preferred stock	(240)	$ (21)							(240)	$ (21)
Shares issued in acquisition			$ 14,256			$ 7		$ 14,249
Proceeds from exercise of common stock options	534						534
Balance at Sep. 30, 2016	$ 128,794			$ 8,000	$ 26		$ 49,795		$ 74,846		$ (4,828)	$ 955

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2016 shares
Proceeds from sale of common stock, shares	1,220,750
Purchase of treasury stock, shares	10,305
Options, exercised	45,493
Fox River Valley
Acquisition of shares	712,830

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net income	$ 7,223	$ 8,074
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization of premises and equipment	726	444
Amortization of core deposit intangible	211
Provision for loan losses	2,416	(1,325)
Realized loss (gain) on sales of other real estate owned	(121)	260
Write-down of other real estate owned	334	182
Realized loss (gain) on sales of premises and equipment	(13)	4
Increase in cash surrender value of bank owned life insurance	(219)	(219)
Deferred income tax expense	459	136
Stock compensation expense, net	295	266
Net amortization of securities	637	431
Net change in:
Accrued interest receivable and other assets	1,511	(476)
Loans held for sale	6,241	(9,598)
Loan servicing rights	(1,020)	25
Accrued interest payable and other liabilities	492	1,363
Net cash provided by (used in) operating activities	19,172	(433)
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available for sale	15,252	6,691
Purchases of securities available for sale	(6,764)	(11,274)
Purchases of FHLB stock	(2,181)	(2,255)
Loan originations and principal collections, net	(104,067)	(56,882)
Proceeds from sales of premises and equipment	25
Purchases of premises and equipment	(1,516)	(1,623)
Capitalized additions to other real estate owned		(39)
Proceeds from sales of other real estate owned	2,471	5,240
Net cash provided by business combination	12,320
Net cash used in investing activities	(84,460)	(60,142)
Cash flows from financing activities
Net decrease in demand and savings deposits	(40,851)	(521)
Net increase in certificates of deposits	95,123	31,274
Net change in other borrowings	(1,727)	(19,473)
Proceeds from FHLB advances	767,200	404,500
Repayment of FHLB advances	(700,750)	(368,500)
Payments to acquire treasury stock	(70)
Proceeds from issuance of common stock	534	16,895
Dividends paid on preferred stock	(240)	(239)
Dividends paid on common stock	(941)	(687)
Net cash provided by financing activities	103,257	63,121
Net change in cash and cash equivalents	37,969	2,546
Cash and cash equivalents, beginning of period	14,907	10,480
Cash and cash equivalents, end of period	52,876	13,026
Cash paid during the period for:
Interest	6,987	5,516
Income taxes	3,935	3,960
Noncash investing activities:
Transfer from loans to other real estate owned	159	1,530
Transfer from premises and equipment to other real estate owned	397
Loans charged off	1,232	1,894
SBLF
Cash flows from financing activities
Redemption of SBLF preferred stock	(15,000)
Dividends paid on preferred stock	$ (21)	$ (128)

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of County Bancorp, Inc. (“we,” “us,” ”our,” or the “Company”) and its subsidiaries have been prepared, in the opinion of management, to reflect all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim period.  The results of operations for the three and nine months ended September 30, 2016 may not necessarily be indicative of the results to be expected for the year ending December 31, 2016, or for any other period.

Management of the Company is required to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods.  Actual results could differ significantly from those estimates.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).  Certain information in footnote disclosure normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period.

Significant Accounting Policies

In addition to the assumptions and methodologies that the Company used to apply significant accounting policies and develop significant estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the following policies have been added:

Business Combinations and Valuation of Loans Acquired in Business Combinations:  We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at estimated fair value on their purchase date. As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities, where it was not possible to estimate the acquisition date fair value upon consummation.

In particular, the valuation of acquired loans involves significant estimates, assumptions and judgments based on information available as of the acquisition date. Substantially all loans acquired in the transaction are evaluated either individually or in pools of loans with similar characteristics; since the estimated fair value of acquired loans includes a credit consideration, no carryover of any previously recorded allowance for loan losses is recorded at acquisition. A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received.

In determining the fair value of acquired loans, management calculates a nonaccretable difference (the credit mark component of the acquired loans) and an accretable difference (the market rate or yield component of the acquired loans). The nonaccretable difference is the difference between the undiscounted contractually required payments and the undiscounted cash flows expected to be collected in accordance with management’s determination of the fair value. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, and nonaccretable difference which would have a positive impact on interest income.

The accretable yield on acquired loans is the difference between the expected cash flows and the initial investment in the acquired loans. The accretable yield is recognized into earnings using the effective yield method over the term of the loans. Management separately monitors the acquired loan portfolio and periodically reviews loans contained within this portfolio against the factors and assumptions used in determining the fair value.

Goodwill and Core Deposit Intangible:  Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired and is included as an asset on the consolidated balance sheets. Goodwill is not amortized but is subject to impairment tests on at least an annual basis. Core deposit intangible represents the value of the acquired customer core deposit bases and is included in as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 66-month period, and is subject to periodic impairment evaluation.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred or whether changes in circumstances have occurred that would require a revision to the remaining useful life, in which case an impairment charge would be recorded as an expense in the period of impairment. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. Given that the acquisition of Fox River Valley Bancorp. (“Fox River Valley”) took place during the second quarter of 2016, there was no impairment charge to goodwill or core deposit intangible at September 30, 2016.  The net book value of core deposit intangible was $1.6 million and $0 at September 30, 2016 and December 31, 2015, respectively and is included on the consolidated balance sheets.

New Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses, to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  This amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for the fiscal year beginning after December 15, 2018, including interim periods within those fiscal years.  Entities should apply this amendment a modified-retrospective approach, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, to reduce the existing diversity in practice in how certain cash receipts and payments are presented and classified on the statement of cash flows.  The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted including adoption in an interim period.  Entities should apply this amendment as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

ACQUISITIONS

NOTE 2—ACQUISITION

On May 13, 2016, the Company completed its acquisition of Fox River Valley, a Wisconsin corporation, pursuant to the Agreement and Plan of Merger dated November 19, 2015 (the “Merger Agreement”) by and among the Company, County Acquisition LLC, a wholly-owned subsidiary of the Company, and Fox River Valley, whereby the Company acquired Fox River Valley and its wholly-owned bank subsidiary, The Business Bank, through the merger of Fox River Valley into County Acquisition LLC (which subsequently dissolved) and the merger of The Business Bank into Investors Community Bank (the “Bank”).  Under the terms of the Merger Agreement, the Company acquired Fox River Valley for aggregate consideration of approximately $14.45 million in cash and 712,830 shares of the Company’s common stock.    The system integration was completed, and the two branches of The Business Bank opened on May 16, 2016 as branches of Investors Community Bank.

The Company accounted for the transaction under the acquisition method of accounting under FASB Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, and thus, the financial position and results of operations of Fox River Valley prior to the closing date were not included in the accompanying consolidated financial statements.  The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value with the assistance of third party valuations, appraisals, and third party advisors.  The estimated fair values will be subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period of approximately one year from consummation.

The fair value of the assets acquired and liabilities assumed on May 13, 2016 were as follows:

	As recorded by Fox River Valley		Fair value adjustment			As recorded by the Company
	(dollars in thousands)
Cash, cash equivalents and securities available for sale	$	77,117	$	(484	)	$	76,633
Loans, net		143,421		(1,844	)		141,577
Other real estate owned		1,951		—			1,951
Deferred tax asset, net		2,430		683			3,113
Core deposit intangible		—		1,801			1,801
Premises and equipment, and other assets		3,913		686			4,599
Total assets acquired	$	228,832	$	842		$	229,674
Deposits	$	202,201	$	750		$	202,951
Subordinated debentures and other liabilities		3,629		(575	)		3,054
Total liabilities assumed	$	205,830	$	175		$	206,005
Excess of assets acquired over liabilities assumed	$	23,002	$	667		$	23,669
Less: Purchase price							28,707
Goodwill						$	5,038

Supplemental Pro Forma Information

The table below presents supplemental pro forma information as if the Fox River Valley merger had occurred at the beginning of the earliest period presented, which was January 1, 2015.  Pro forma results include adjustments for amortization and accretion of fair value adjustments and do not include any projected cost savings or other anticipated benefits of the merger.  These unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net interest income	$	9,666	$	8,548	$	26,769	$	24,847
Net income (a)	$	2,868	$	3,587	$	6,612	$	7,514

(a) For purposes of the supplemental pro forma information, merger-related expenses of $2.6 million that are reflected in the Company’s nine months ended September 30, 2016 consolidated statement of operations were reflected in the pro forma presentation for the first quarter of 2015.  

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 3 – EARNINGS PER SHARE

Earnings per common share is computed using the two-class method.  Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the applicable period.  Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share plus the dilutive effect of share-based compensation using the treasury stock method.

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net income from continuing operations	$	3,102	$	3,330	$	7,223	$	8,074
Less:  preferred stock dividends including SBLF		80		118		261		367
Income available to common shareholders for basic    earnings per common share	$	3,022	$	3,212	$	6,962	$	7,707
Average number of common shares issued		7,311		6,545		6,951		6,428
Less: weighted average treasury shares		429		410		424		410
Less: weighted average nonvested equity incentive plan shares		358		401		367		383
Weighted average number of common shares outstanding		6,524		5,734		6,160		5,635
Effect of dilutive options		95		124		97		119
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,619		5,858		6,257		5,754

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SECURITIES AVAILABLE-FOR-SALE

9 Months Ended

Sep. 30, 2016

Investments Debt And Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE 4 – SECURITIES AVAILABLE-FOR-SALE

The amortized cost and fair value of securities available-for-sale as of September 30, 2016 and December 31, 2015 are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	1,001	$	2	$	—		$	1,003
Municipal securities		42,636		342		(15	)		42,963
Mortgage-backed securities		75,357		1,424		(79	)		76,702
Asset-backed securities		3,885		—		(111	)		3,774
	$	122,879	$	1,768	$	(205	)	$	124,442
December 31, 2015
U.S. government and agency securities	$	2,003	$	—	$	—		$	2,003
Municipal securities		46,185		185		(58	)		46,312
Mortgage-backed securities		34,728		356		(118	)		34,966
	$	82,916	$	541	$	(176	)	$	83,281

The amortized cost and fair value of securities at September 30, 2016 and December 31, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
September 30, 2016
Due in one year or less	$	15,933	$	15,831
Due from one to five years		27,630		27,891
Due from five to ten years		3,959		4,018
Due after ten years		—		—
Mortgage-backed securities		75,357		76,702
	$	122,879	$	124,442
December 31, 2015
Due in one year or less	$	5,005	$	5,017
Due from one to five years		39,329		39,400
Due from five to ten years		3,854		3,898
Due after ten years		—		—
Mortgage-backed securities		34,728		34,966
	$	82,916	$	83,281

There were no security sales for the nine months ended September 30, 2016 and 2015, respectively.  

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temorarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015:

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	—	$	—		$	—	$	—		$	—	$	—
Municipal securities		8,312		(13	)		606		(2	)		8,918		(15	)
Mortgage-backed securities		12,317		(79	)		—		—			12,317		(79	)
Asset-backed securities		3,774		(111	)		—		—			3,774		(111	)
	$	24,403	$	(203	)	$	606	$	(2	)	$	25,009	$	(205	)
December 31, 2015
U.S. government and agency securities	$	2,003	$	—		$	—	$	—		$	2,003	$	—
Municipal securities		14,153		(53	)		711		(5	)		14,864		(58	)
Mortgage-backed securities		11,291		(86	)		2,039		(32	)		13,330		(118	)
	$	27,447	$	(139	)	$	2,750	$	(37	)	$	30,197	$	(176	)

The unrealized loss on the investments at September 30, 2016 and December 31, 2015 was due to normal fluctuations and pricing inefficiencies.  The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the amortized cost basis of the investment.  Because the Company does not intend to sell the investments and it is not more-likely-than-not that the Company will be required to sell the investments before recovery of the amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016 and December 31, 2015.

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LOANS

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

LOANS

NOTE 5 – LOANS

The components of loans were as follows:  

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	585,273		$	499,320
Commercial real estate loans		282,058			161,741
Commercial loans		80,587			51,978
Residential real estate loans		44,324			34,631
Installment and consumer other		236			519
Total gross loans		992,478			748,189
Allowance for loan losses		(11,626	)		(10,405	)
Loans, net	$	980,852		$	737,784

Changes in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2016 and 2015 were as follows: 

September 30, 2016	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
	(dollars in thousands)
Balance, beginning of year	$	6,355		$	2,237		$	1,268		$	533		$	12		$	—	$	10,405
Provision for loan losses		1,947			419			168			(118	)		(6	)		6		2,416
Loans charged off		(896	)		(50	)		(277	)		(5	)		(4	)		—		(1,232	)
Recoveries		2			26			9			—			—			—		37
Balance, end of period	$	7,408		$	2,632		$	1,168		$	410		$	2		$	6	$	11,626
September 30, 2015	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
Balance, beginning of year	$	3,456		$	3,326		$	2,420		$	1,392		$	9		$	—	$	10,603
Provision for loan losses		2,993			(1,673	)		(1,719	)		(920	)		(6	)		—		(1,325	)
Loans charged off		(1,145	)		(162	)		(415	)		(172	)		—			—		(1,894	)
Recoveries		47			743			1,196			463			—			—		2,449
Balance, end of period	$	5,351		$	2,234		$	1,482		$	763		$	3		$	—	$	9,833

The following tables present the balances in the allowance for loan losses and the recorded balance in loans by portfolio segment and based on impairment method as of September 30, 2016 and December 31, 2015: 

	September 30, 2016
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	297	$	7,111	$	7,408
Commercial real estate loans		376		2,256		2,632
Commercial loans		524		644		1,168
Residential real estate loans		—		410		410
Installment and consumer other		—		2		2
Unallocated		—		6		6
Total ending allowance for loan losses		1,197		10,429		11,626
Loans:
Agricultural loans		13,219		572,054		585,273
Commercial real estate loans		9,123		272,935		282,058
Commercial loans		5,691		74,896		80,587
Residential real estate loans		200		44,124		44,324
Installment and consumer other		—		236		236
Total loans		28,233		964,245		992,478
Net loans	$	27,036	$	953,816	$	980,852
	December 31, 2015
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	1,055	$	5,300	$	6,355
Commercial real estate loans		357		1,880		2,237
Commercial loans		890		378		1,268
Residential real estate loans		—		533		533
Installment and consumer other		—		12		12
Total ending allowance for loan losses		2,302		8,103		10,405
Loans:
Agricultural loans		20,724		478,596		499,320
Commercial real estate loans		4,197		157,544		161,741
Commercial loans		5,481		46,497		51,978
Residential real estate loans		—		34,631		34,631
Installment and consumer other		—		519		519
Total loans		30,402		717,787		748,189
Net loans	$	28,100	$	709,684	$	737,784

The following table presents the aging of the recorded investment in past due loans at September 30, 2016 and December 31, 2015:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	402	$	822	$	12,288	$	13,512	$	571,761
Commercial real estate loans		760		—		2,710		3,470		278,588
Commercial loans		67		—		2,633		2,700		77,887
Residential real estate loans		92		—		2		94		44,230
Installment and consumer other		—		—		—		—		236
Total	$	1,321	$	822	$	17,633	$	19,776	$	972,702
December 31, 2015
Agricultural loans	$	978	$	5	$	2,405	$	3,388	$	495,932
Commercial real estate loans		—		234		2,418		2,652		159,089
Commercial loans		—		—		3,476		3,476		48,502
Residential real estate loans		5		—		—		5		34,626
Installment and consumer other		—		—		—		—		519
Total	$	983	$	239	$	8,299	$	9,521	$	738,668

The following table lists information on nonaccrual, restructured, and certain past due loans at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	17,633	$	8,299
Nonaccrual loans 30-89 days past due		1,450		1,212
Nonaccrual loans, less than 30 days past due		3,419		15,068
Restructured loans not on nonaccrual status		4,877		610
90 days or more past due and still accruing		—		—

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days or more at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	13,673	$	17,705
Commercial real estate loans		4,424		3,162
Commercial loans		4,205		3,712
Residential real estate loans		200		—
Total	$	22,502	$	24,579

The average recorded investment in total impaired loans for the nine months ended September 30, 2016 and for the year ended December 31, 2015 amounted to approximately $29.3 million and $27.6 million, respectively.  Interest income recognized on total impaired loans for the nine months ended September 30, 2016 and for the year ended December 31, 2015 amounted to approximately $0.4 million and $1.7 million, respectively.  For nonaccrual loans included in impaired loans, the interest income that would have been recognized had those loans been performing in accordance with their original terms would have been approximately $1.2 million and $1.7 million for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively.  

Troubled Debt Restructurings

The Company has allocated approximately $0.5 million and $0.7 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at September 30, 2016 and December 31, 2015, respectively.  The Company has no additional lending commitments at September 30, 2016 and December 31, 2015 to customers with outstanding loans that are classified as TDRs.

A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and of performance according to the modified terms of the loan.  Once this assurance is reached, the TDR is classified as a restructured loan.  There were no unfunded commitments on these loans at September 30, 2016, and December 31, 2015.  The following table presents the TDRs by loan class at September 30, 2016 and December 31, 2015:

	Non-Accrual		Restructured and Accruing		Total
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	8,260	$	1,242	$	9,502
Commercial real estate loans		1,494		2,362		3,856
Commercial loans		1,633		1,273		2,906
Residential real estate loans		92		—		92
Installment and consumer other		—		—		—
Total	$	11,479	$	4,877	$	16,356
December 31, 2015
Agricultural loans	$	1,337	$	—	$	1,337
Commercial real estate loans		744		486		1,230
Commercial loans		235		124		359
Residential real estate loans		—		—		—
Installment and consumer other		—		—		—
Total	$	2,316	$	610	$	2,926

The following table provides the number of loans modified in a troubled debt restructuring investment by class for the nine months ended September 30, 2016 and 2015:

	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		14	$	8,704		5	$	554
Commercial real estate loans		2		553		—		—
Commercial loans		2		1,632		1		76
Total		18	$	10,889		6	$	630

The following table provides the troubled debt restructurings for the nine months ended September 30, 2016 and 2015 grouped by type of concession:

	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		6	$	1,732		4	$	493
Extension of interest-only payments		5		1,243		—		—
Capitalized interest		—		—		1		61
Combination of extension of term and interest rate concessions		3		5,729		—		—
Commercial real estate loans
Extension of interest-only payments		2		553		—		—
Commercial loans
Payment concessions		—		—		1		76
Extension of interest-only payments		2		1,632		—		—
Total		18	$	10,889		6	$	630

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Beginning in the third quarter of 2016, the substandard category was separated in to performing and impaired subcategories to provide more detailed analysis of this category of loans. The Company analyzes agricultural, commercial, and commercial real estate loans individually by classifying the credits as to credit risk. The process of analyzing loans for changes in risk rating is ongoing through routine monitoring of the portfolio and annual internal credit reviews for credits with total exposure in excess of $300,000. The Company uses the following definitions for credit risk ratings:

Sound. Credits classified as sound show very good probability of ongoing ability to meet and/or exceed obligations.

Acceptable. Credits classified as acceptable show a good probability of ongoing ability to meet and/or exceed obligations.

Satisfactory. Credits classified as satisfactory show fair probability of ongoing ability to meet and/or exceed obligations.

Low Satisfactory.  Credits classified as low satisfactory show fair probability of ongoing ability to meet and/or exceed obligations.  Low satisfactory credits may be newer or have a less established track record of financial performance, inconsistent earnings, or may be going through an expansion.

Watch. Credits classified as watch show some questionable probability of ongoing ability to meet and/or exceed obligations.

Special Mention. Credits classified as special mention show potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard – Performing.  Credits classified as substandard – performing generally have well-defined weaknesses. Collateral coverage is adequate and the loans are not considered impaired.  Payments are being made and the loans are on accrual status. 

Substandard - Impaired. Credits classified as substandard generally have well-defined weaknesses that jeopardize the repayment of the debt. They have a distinct possibility that a loss will be sustained if the deficiencies are not corrected.  Loans are considered impaired.  Loans are either exhibiting signs of delinquency, are on non-accrual or are identified as a TDR. 

Doubtful. Credits classified as doubtful have all the weaknesses inherent in those classified as substandard 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.

The Company categorizes residential real estate, installment and consumer other loans as satisfactory at the time of origination based on information obtained as to the ability of the borrower(s) to service their debt, such as current financial information, employment status and history, historical payment experience, credit scores and type and amount of collateral among other factors. The Company updates relevant information on these types of loans at the time of refinance, troubled debt restructuring or other indications of financial difficulty, downgrading as needed using the same category descriptions as for agricultural, commercial, and commercial real estate loans. In addition, the Company further considers current payment status as an indicator of which risk category to assign the borrower.

The greater the level of deteriorated risk as indicated by a loan’s assigned risk category, the greater the likelihood a loss will occur in the future. If the loan is substandard - impaired, then the loan loss reserves for the loan are recorded at the loss level of impairment. If the loan is not impaired, then its loan loss reserves are determined by the application of a loss rate that increases with risk in accordance with the allowance for loan loss analysis.

Based on the most recent analysis performed by management, the risk category of loans by class of loans is as follows as of September 30, 2016 and December 31, 2015: 

	As of September 30, 2016
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	488,989	$	57,652	$	12,930	$	12,483		13,219	$	585,273
Commercial real estate loans		242,171		18,948		3,629		8,187		9,123		282,058
Commercial loans		64,169		6,911		2,620		1,195		5,692		80,587
Residential real estate loans		39,473		4,139		512		—		200		44,324
Installment and consumer other		236		—		—		—		—		236
Total	$	835,038	$	87,650	$	19,691	$	21,865	$	28,234	$	992,478
	As of December 31, 2015
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	441,528	$	30,762	$	6,306	$	20,724	$	499,320
Commercial real estate loans		139,061		13,956		4,527		4,197		161,741
Commercial loans		40,496		5,468		533		5,481		51,978
Residential real estate loans		27,514		4,572		2,545		—		34,631
Installment and consumer other		518		1		—		—		519
Total	$	649,117	$	54,759	$	13,911	$	30,402	$	748,189

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LOAN SERVICING RIGHTS

9 Months Ended

Sep. 30, 2016

Transfers And Servicing [Abstract]

LOAN SERVICING RIGHTS

NOTE 6 – LOAN SERVICING RIGHTS

Loans serviced for others are not included in the accompanying consolidated balance sheets.  The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates.  The unpaid principal balances of mortgage and other loans serviced for others were approximately $569.2 million and $495.9 million at September 30, 2016 and December 31, 2015, respectively.  The fair value of these rights were approximately $12.0 million and $10.7 million at September 30, 2016 and December 31, 2015, respectively.  The fair value of servicing rights was determined using an assumed discount rate of 10 percent and prepayment speeds primarily ranging from 4 percent to 9 percent, depending upon the stratification of the specific right, and nominal credit losses.

The following summarizes servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances:

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	8,145		$	7,746
Additions		3,862			3,731
Disposals		(1,280	)		(1,421	)
Amortization		(1,562	)		(1,911	)
Balance, end of period	$	9,165		$	8,145

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GOODWILL AND CORE DEPOSIT INTANGIBLE

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

GOODWILL AND CORE DEPOSIT INTANGIBLE

NOTE 7 – GOODWILL AND CORE DEPOSIT INTANGIBLE

The excess of the purchase price in an acquisition over the fair value of net assets acquired consists primarily of goodwill and the core deposit intangible. Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis. Core deposit intangible, which arose from value ascribed to the deposit base of a bank acquired, has estimated finite lives and is amortized on an accelerated basis to expense over a 66-month period.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred, in which case an impairment charge would be recorded as an expense in the period of impairment, or whether changes in circumstances have occurred that would require a revision to the remaining useful life which would impact expense prospectively. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. There was no impairment charge to goodwill or core deposit intangible at September 30, 2016.  

Goodwill:  Goodwill resulted from the acquisition of Fox River Valley on May 13, 2016.  The carrying amount of goodwill was $5.0 million at September 30, 2016 and $0 million at December 31, 2015. See Note 2 for additional information on the acquisition.

Core deposit intangible:  Core deposit intangible, primarily related to acquired customer relationships, is amortized over their estimated finite lives.  The core deposit intangible related to the Fox River Valley acquisition had a gross carrying amount of $1.8 million. Amortization on core deposit intangible was $157 thousand and $211 thousand for the three and nine months ended September 30, 2016.  There was no core deposit intangible and no amortization recorded on the balance sheet and statement of operations for the year ended December 31, 2015.  See Note 2 for additional information on the acquisition.

	September 30, 2016			December 31, 2015
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	—
Accumulated amortization		(211	)		—
Net book value	$	1,590		$	—
Additions during the period	$	1,801		$	—

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DEPOSITS

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

DEPOSITS

NOTE 8 – DEPOSITS

Deposits are summarized as follows at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016		2015
	(dollars in thousands)
Demand deposits	$	111,398	$	70,914
Savings		236,394		174,979
Certificates of deposit		581,656		426,333
Total deposits	$	929,448	$	672,226

At September 30, 2016 and December 31, 2015, brokered deposits amounted to $190.4 million and $164.6 million, respectively, and are included in savings and certificates of deposit categories.

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SUBORDINATED DEBENTURES

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

SUBORDINATED DEBENTURES

NOTE 9 – SUBORDINATED DEBENTURES

In connection with the merger with Fox River Valley, the Company also acquired Fox River Valley’s wholly-owned subsidiary Fox River Valley Capital Trust I, a Delaware statutory trust (the “Trust”), which issued capital securities that qualify for Tier II capital of the Company.  The Company assumed the $3.6 million of floating rate, junior subordinated debentures, of which the Company owns $0.1 million. The debentures are non-voting, mandatorily redeemable in 2033 and guaranteed by the Company.

The distribution rate payable on the debentures is cumulative and payable quarterly in arrears. The Company has the right, subject to events of default, to defer payments of interest on the debentures at any time by extending the interest payment period not exceeding 20 consecutive quarters with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the debentures. Interest is current through the most recent due date of May 30, 2016.

The Trust may redeem some or all of the capital securities, at par, with 30 days advance notice, on or after November 30, 2008, but only on May 30 or November 30 of any given year, and only in a minimum amount of $500,000 and in increments of $10,000 thereafter, or the full amount of the capital securities. The Trust may redeem all of the capital securities at any time upon the occurrence and during the continuation of a Tax Event, an Investment Company Event or a Capital Treatment Event (each as defined in the trust agreement for the Trust), at any time within 90 days following such event.

The Trust debentures carry an interest rate equal to 5-year LIBOR plus 3.40%, which resets every five years. The current rate is equal to 4.855% through November 30, 2018. Interest payments are due quarterly.

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EQUITY INCENTIVE PLAN

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

EQUITY INCENTIVE PLAN

NOTE 10 – EQUITY INCENTIVE PLAN

On June 21, 2016 the shareholders approved the 2016 Long Term Incentive Plan (the “2016 Plan”), replacing the Company’s 2012 Equity Incentive Compensation Plan (the “2012 Plan”).  In accordance with the 2016 Plan and the 2012 Plan, the Company may grant options to purchase shares of common stock and issue restricted stock to its directors, officers, and employees.  Both qualified and non-qualified stock options and restricted stock may be granted and issued, respectively, under the 2016 Plan and 2012 Plan.  As of September 30, 2016, 3,587 options or shares of restricted stock have been granted under the 2016 Plan.

The exercise price of each option equals the market price of the Company’s stock on the date of grant and an option’s maximum term is ten years. Vesting periods range from one to five years from the date of grant. The restricted stock vesting periods range from one to five years from the date of issuance.

The status of the Company’s 2012 Plan and 2016 Plan as of September 30, 2016, and changes in the 2012 Plan and 2016 Plan during the nine months ended September 30, 2016 are as follows:

	September 30, 2016
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		351,931		$	13.71
Granted		48,684			19.91
Exercised		(45,493	)		11.66
Forfeited/expired		(10,504	)		19.07
Outstanding, end of period		344,618		$	14.70	$	1,830
Options exercisable at period-end		234,897		$	12.74	$	1,708
Weighted-average fair value of options granted during    the period (2)				$	4.89

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2016. This amount changes based on changes in the market value of the Company’s stock.

(2) The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

Activity in restricted stock awards (“RSA”) for the nine months ended September 30, 2016 is as follows:

	September 30, 2016
	RSAs			Weighted Average Grant Price
Outstanding, beginning of year		46,621		$	14.92
Granted		13,757			19.77
Vested		(14,980	)		12.27
Forfeited/expired		(6,805	)		17.20
Outstanding, end of period		38,593		$	17.27

For the nine months ended September 30, 2016 and 2015, share-based compensation expense, including options and restricted stock awards, applicable to the 2016 Plan and 2012 Plan was $295 thousand and $266 thousand, respectively.

As of September 30, 2016, unrecognized share-based compensation expense related to nonvested options and restricted stock awards amounted to $0.7 million and is expected to be recognized over a weighted average period of 2.4 years.

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REGULATORY MATTERS

9 Months Ended

Sep. 30, 2016

Regulatory Capital Requirements [Abstract]

REGULATORY MATTERS

NOTE 11 – REGULATORY MATTERS

The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1 and Tier 1 Common Equity capital to risk-weighted assets, and of Tier 1 capital to average assets, as such terms are defined in the regulations. Management believed, as of September 30, 2016 and December 31, 2015, that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of September 30, 2016, the Bank’s capital ratios met those required to be considered as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 Common Equity risk-based, and Tier 1 leverage ratios as set forth in the following tables.

The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table:

	Actual					Minimum For Capital Adequacy Purposes (a):					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
September 30, 2016
Total Capital (to risk weighted assets):
Consolidated	$	149,396		13.74	%	$	93,812		8.625	%	Not applicable
Bank		144,743		13.31	%		93,790		8.625	%	$	108,742		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		137,254		12.62	%		72,058		6.625	%	Not applicable
Bank		132,601		12.19	%		72,042		6.625	%		86,994		8.00	%
Tier 1 Capital (to average assets):
Consolidated		137,254		11.58	%		47,411		4.00	%	Not applicable
Bank		132,601		11.19	%		47,385		4.00	%		59,232		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		113,847		10.47	%		55,743		5.125	%	Not applicable
Bank		132,601		12.19	%		55,730		5.125	%		70,682		6.50	%
December 31, 2015
Total Capital (to risk weighted assets):
Consolidated	$	144,495		17.51	%	$	66,013		8.00	%	Not applicable
Bank		125,354		15.19	%		66,000		8.00	%	$	82,500		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		134,175		16.26	%		49,510		6.00	%	Not applicable
Bank		115,036		13.94	%		49,500		6.00	%		66,000		8.00	%
Tier 1 Capital (to average assets):
Consolidated		134,175		15.49	%		34,656		4.00	%	Not applicable
Bank		115,036		13.29	%		34,635		4.00	%		43,294		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		98,803		11.97	%		37,132		4.50	%	Not applicable
Bank		115,036		13.94	%		37,125		4.50	%		53,625		6.50	%

(a) The ratios for September 30, 2016 include a capital conservation buffer of 0.625%.

The rules of the Basel III regulatory capital framework (the “Basel III Capital Rules”), which became effective January 1, 2015, revised the prompt corrective action requirements by, among other things: (i) introducing a Common Equity Tier 1 ratio requirement at each level (other than critically undercapitalized), with the required Common Equity Tier 1 ratio being 6.5% for “well-capitalized” status; (ii) increasing the minimum Tier 1 capital ratio requirement for each category (other than critically undercapitalized), with the minimum Tier 1 capital ratio for “well-capitalized” status being 8% (compared to the prior ratio of 6%); and (iii) eliminating the former provision that provided that a bank with a composite supervisory rating of 1 may have a 3% Leverage Ratio and still be adequately capitalized. The Basel III Capital Rules do not change the total risk based capital requirement for any prompt corrective action category.  The Basel III Capital Rules also implemented a new capital conservation buffer that is added to the minimum requirements for capital adequacy purposes.  The capital conservation buffer is subject to a three year phase-in period that began on January 1, 2016 and will be fully phased in on January 1, 2019 at 2.5%.  The required phase-in capital conservation buffer during 2016 is 0.625%.  At the present time, the ratios for the Company and the Bank are sufficient to meet the fully phased-in conservation buffer.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 12 – FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2—Valuation is based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3—Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

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

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents and Interest-Bearing Deposits in Banks

The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

Fair values of other interest-bearing deposits are estimated using discounted cash flow analyses based on current rates for similar types of deposits.

Securities Available for Sale

Where quoted prices are available in an active market, the Company classifies the securities within Level 1 of the valuation hierarchy. Securities are defined as both long and short positions. Level 1 securities include highly liquid government bonds and exchange-traded equities.

If quoted market prices are not available, the Company estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes and credit spreads.

Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include U.S. government and agency securities, corporate bonds and other securities. Mortgage-backed securities are included in Level 2 if observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, the Company classifies those securities in Level 3.

Loans

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (e.g., one-to-four family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans (e.g., commercial and agricultural loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Loans Held for Sale

The carrying value of loans held for sale generally approximates fair value based on the short-term nature of the assets. If management identifies a loan held for sale that will ultimately sell at a value less than its carrying value, it is recorded at the estimated value. 

Loan Servicing Rights

Fair value is based on market prices for comparable loan servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income.

Other Real Estate Owned

Loans on which the underlying collateral has been repossessed are adjusted to fair value upon transfer to other real estate owned. Subsequently, other real estate owned is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral, or management’s estimation of the value of the collateral. Due to the significance of the unobservable inputs, all other real estate owned is classified as Level 3.

Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, statement savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Other Borrowings

The carrying amounts of federal funds purchased, other borrowings, and other short-term borrowings maturing within 90 days approximate their fair values.

Advances from the Federal Home Loan Bank

Current market rates for debt with similar terms and remaining maturities are used to estimate fair value of advances from the Federal Home Loan Bank (the “FHLB”). Fair values are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Subordinated Debentures

The fair values of these debt instruments utilize a discounted cash flow analysis based on an estimate of current interest rates being offered by instruments with similar terms and credit quality.  Since the market for these instruments is limited, the internal evaluation represents a Level 3 measurement and approximates fair value.

Accrued Interest

The carrying amounts approximate fair value.

Commitments to Extend Credit and Standby Letters of Credit

As of September 30, 2016 and December 31, 2015, the carrying and fair values of the commitments to extend credit and standby letters of credit are not considered significant.

Assets measured at fair value on a recurring basis are summarized below:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
September 30, 2016
Securities available for sale:
U.S. government and agency securities	$	—	$	1,003	$	—	$	1,003
Municipal securities		—		42,963		—		42,963
Mortgage-backed securities		—		76,702		—		76,702
Asset-backed securities		—		3,774		—		3,774
Total assets at fair value	$	—	$	124,442	$	—	$	124,442
December 31, 2015
Securities available for sale:
U.S. government and agency securities	$	—	$	2,003	$	—	$	2,003
Municipal securities		—		46,312		—		46,312
Mortgage-backed securities		—		34,966		—		34,966
Total assets at fair value	$	—	$	83,281	$	—	$	83,281

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy for which a nonrecurring change in fair value has been recorded:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Impairment Losses
	(dollars in thousands)
September 30, 2016
Impaired loans	$	—	$	—	$	27,036	$	1,197
Other real estate owned		—		—		2,696		334
Total assets at fair value	$	—	$	—	$	29,732	$	1,531
December 31, 2015
Impaired loans	$	—	$	—	$	28,100	$	2,302
Other real estate owned		—		—		2,872		256
Total assets at fair value	$	—	$	—	$	30,972	$	2,558

The significant inputs used in the fair value measurements for Level 3 assets measured at fair value on a nonrecurring basis are as follows:

September 30, 2016
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	7%-31% (19%)
December 31, 2015
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	4%-23% (12%)

* Not Meaningful. Evaluations of the underlying assets are completed for each impaired loan with a specific reserve. The types of collateral vary widely and could include accounts receivables, inventory, a variety of equipment, and real estate. Collateral evaluations are reviewed and discounted as appropriate based on knowledge of the specific type of collateral. In the case of real estate, an independent appraisal may be obtained. Types of discounts considered include aging of receivables, condition of the collateral, potential market for the collateral, and estimated disposal costs. These discounts will vary from loan to loan, thus providing a range would not be meaningful.

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows:

	September 30,				December 31,
	2016				2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	52,876	$	52,876	$	14,907	$	14,907	1
Securities available for sale		124,442		124,442		83,281		83,281	2
FHLB Stock		5,688		5,688		3,507		3,507	2
Loans, net of allowance for loan losses		980,852		994,759		737,784		745,572	3
Loans held for sale		2,960		2,960		9,201		9,201	3
Accrued interest receivable		3,148		3,148		2,562		2,562	2
Loan servicing rights		9,165		12,020		8,145		10,705	3
Financial liabilities:
Deposits:
Time		581,656		591,420		426,333		431,077	3
Other deposits		347,792		350,567		245,893		242,493	1
Other borrowings		2,218		2,218		3,945		3,945	3
Advances from FHLB		132,895		134,777		66,445		67,318	3
Subordinated debentures		15,407		15,407		12,372		12,372	3
Accrued interest payable		1,676		1,676		1,459		1,459	2

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OTHER REAL ESTATE OWNED

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

OTHER REAL ESTATE OWNED

NOTE 13 – OTHER REAL ESTATE OWNED

Changes in other real estate owned are as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Balance, beginning of period	$	2,789		$	3,166		$	2,872		$	7,137
Assets foreclosed		—			1,485			159			1,530
Assets acquired		—			—			1,951			—
Assets transferred from premises and equipment		397			—			397			—
Write-down of other real estate owned		(250	)		—			(334	)		(182	)
Net gain (loss) on sales of other real estate owned		32			26			121			(260	)
Capitalized additions to other real estate owned		—			—			—			39
Proceeds from sale of other real estate owned		(272	)		(1,653	)		(2,470	)		(5,240	)
Balance, end of period	$	2,696		$	3,024		$	2,696		$	3,024

Expenses applicable to other real estate owned include the following:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Net loss (gain) on sales of other real estate owned	$	(32	)	$	(26	)	$	(121	)	$	260
Write-down of other real estate owned		250			—			334			182
Operating expenses, net of rental income		41			88			120			18
	$	259		$	62		$	333		$	460

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the financial statements were issued. There were no significant events or transactions occurring after September 30, 2016, but prior to November 10, 2016, that provided additional evidence about conditions that existed at September 30, 2016. There were no other significant events or transactions that provided evidence about conditions that did not exist at September 30, 2016.

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

In addition to the assumptions and methodologies that the Company used to apply significant accounting policies and develop significant estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the following policies have been added:

Business Combinations and Valuation of Loans Acquired in Business Combinations:  We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at estimated fair value on their purchase date. As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities, where it was not possible to estimate the acquisition date fair value upon consummation.

In particular, the valuation of acquired loans involves significant estimates, assumptions and judgments based on information available as of the acquisition date. Substantially all loans acquired in the transaction are evaluated either individually or in pools of loans with similar characteristics; since the estimated fair value of acquired loans includes a credit consideration, no carryover of any previously recorded allowance for loan losses is recorded at acquisition. A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received.

In determining the fair value of acquired loans, management calculates a nonaccretable difference (the credit mark component of the acquired loans) and an accretable difference (the market rate or yield component of the acquired loans). The nonaccretable difference is the difference between the undiscounted contractually required payments and the undiscounted cash flows expected to be collected in accordance with management’s determination of the fair value. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, and nonaccretable difference which would have a positive impact on interest income.

The accretable yield on acquired loans is the difference between the expected cash flows and the initial investment in the acquired loans. The accretable yield is recognized into earnings using the effective yield method over the term of the loans. Management separately monitors the acquired loan portfolio and periodically reviews loans contained within this portfolio against the factors and assumptions used in determining the fair value.

Goodwill and Core Deposit Intangible:  Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired and is included as an asset on the consolidated balance sheets. Goodwill is not amortized but is subject to impairment tests on at least an annual basis. Core deposit intangible represents the value of the acquired customer core deposit bases and is included in as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 66-month period, and is subject to periodic impairment evaluation.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred or whether changes in circumstances have occurred that would require a revision to the remaining useful life, in which case an impairment charge would be recorded as an expense in the period of impairment. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. Given that the acquisition of Fox River Valley Bancorp. (“Fox River Valley”) took place during the second quarter of 2016, there was no impairment charge to goodwill or core deposit intangible at September 30, 2016.  The net book value of core deposit intangible was $1.6 million and $0 at September 30, 2016 and December 31, 2015, respectively and is included on the consolidated balance sheets.

New Accounting Pronouncements

New Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses, to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  This amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for the fiscal year beginning after December 15, 2018, including interim periods within those fiscal years.  Entities should apply this amendment a modified-retrospective approach, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, to reduce the existing diversity in practice in how certain cash receipts and payments are presented and classified on the statement of cash flows.  The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted including adoption in an interim period.  Entities should apply this amendment as of the beginning of the first reporting period in which the guidance is effective.  The Company is currently evaluating the effects this ASU will have on its consolidated financial statements.

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Fair Value of Assets Acquired and Liabilities Assumed

The fair value of the assets acquired and liabilities assumed on May 13, 2016 were as follows:

	As recorded by Fox River Valley		Fair value adjustment			As recorded by the Company
	(dollars in thousands)
Cash, cash equivalents and securities available for sale	$	77,117	$	(484	)	$	76,633
Loans, net		143,421		(1,844	)		141,577
Other real estate owned		1,951		—			1,951
Deferred tax asset, net		2,430		683			3,113
Core deposit intangible		—		1,801			1,801
Premises and equipment, and other assets		3,913		686			4,599
Total assets acquired	$	228,832	$	842		$	229,674
Deposits	$	202,201	$	750		$	202,951
Subordinated debentures and other liabilities		3,629		(575	)		3,054
Total liabilities assumed	$	205,830	$	175		$	206,005
Excess of assets acquired over liabilities assumed	$	23,002	$	667		$	23,669
Less: Purchase price							28,707
Goodwill						$	5,038

Supplemental Pro Forma Information of Fox River Valley Merger

The table below presents supplemental pro forma information as if the Fox River Valley merger had occurred at the beginning of the earliest period presented, which was January 1, 2015.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net interest income	$	9,666	$	8,548	$	26,769	$	24,847
Net income (a)	$	2,868	$	3,587	$	6,612	$	7,514

(a) For purposes of the supplemental pro forma information, merger-related expenses of $2.6 million that are reflected in the Company’s nine months ended September 30, 2016 consolidated statement of operations were reflected in the pro forma presentation for the first quarter of 2015.  

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

Earnings per common share is computed using the two-class method.  Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the applicable period.  Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share plus the dilutive effect of share-based compensation using the treasury stock method.

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net income from continuing operations	$	3,102	$	3,330	$	7,223	$	8,074
Less:  preferred stock dividends including SBLF		80		118		261		367
Income available to common shareholders for basic    earnings per common share	$	3,022	$	3,212	$	6,962	$	7,707
Average number of common shares issued		7,311		6,545		6,951		6,428
Less: weighted average treasury shares		429		410		424		410
Less: weighted average nonvested equity incentive plan shares		358		401		367		383
Weighted average number of common shares outstanding		6,524		5,734		6,160		5,635
Effect of dilutive options		95		124		97		119
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,619		5,858		6,257		5,754

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SECURITIES AVAILABLE-FOR-SALE (Tables)

9 Months Ended

Sep. 30, 2016

Investments Debt And Equity Securities [Abstract]

Schedule of Amortized Cost and Fair Value of Available for Sale of Securities

The amortized cost and fair value of securities available-for-sale as of September 30, 2016 and December 31, 2015 are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	1,001	$	2	$	—		$	1,003
Municipal securities		42,636		342		(15	)		42,963
Mortgage-backed securities		75,357		1,424		(79	)		76,702
Asset-backed securities		3,885		—		(111	)		3,774
	$	122,879	$	1,768	$	(205	)	$	124,442
December 31, 2015
U.S. government and agency securities	$	2,003	$	—	$	—		$	2,003
Municipal securities		46,185		185		(58	)		46,312
Mortgage-backed securities		34,728		356		(118	)		34,966
	$	82,916	$	541	$	(176	)	$	83,281

Schedule of Amortized Cost and Fair Value of Securities Available for Sale by Contractual Maturity

The amortized cost and fair value of securities at September 30, 2016 and December 31, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
September 30, 2016
Due in one year or less	$	15,933	$	15,831
Due from one to five years		27,630		27,891
Due from five to ten years		3,959		4,018
Due after ten years		—		—
Mortgage-backed securities		75,357		76,702
	$	122,879	$	124,442
December 31, 2015
Due in one year or less	$	5,005	$	5,017
Due from one to five years		39,329		39,400
Due from five to ten years		3,854		3,898
Due after ten years		—		—
Mortgage-backed securities		34,728		34,966
	$	82,916	$	83,281

Schedule of Fair Value and Gross Unrealized Losses of Entity's Investment

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temorarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015:

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
September 30, 2016
U.S. government and agency securities	$	—	$	—		$	—	$	—		$	—	$	—
Municipal securities		8,312		(13	)		606		(2	)		8,918		(15	)
Mortgage-backed securities		12,317		(79	)		—		—			12,317		(79	)
Asset-backed securities		3,774		(111	)		—		—			3,774		(111	)
	$	24,403	$	(203	)	$	606	$	(2	)	$	25,009	$	(205	)
December 31, 2015
U.S. government and agency securities	$	2,003	$	—		$	—	$	—		$	2,003	$	—
Municipal securities		14,153		(53	)		711		(5	)		14,864		(58	)
Mortgage-backed securities		11,291		(86	)		2,039		(32	)		13,330		(118	)
	$	27,447	$	(139	)	$	2,750	$	(37	)	$	30,197	$	(176	)

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LOANS (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Components of Loans

The components of loans were as follows:  

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	585,273		$	499,320
Commercial real estate loans		282,058			161,741
Commercial loans		80,587			51,978
Residential real estate loans		44,324			34,631
Installment and consumer other		236			519
Total gross loans		992,478			748,189
Allowance for loan losses		(11,626	)		(10,405	)
Loans, net	$	980,852		$	737,784

Changes in Allowance for Loan Losses by Portfolio Segment

Changes in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2016and 2015 were as follows: 

September 30, 2016	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
	(dollars in thousands)
Balance, beginning of year	$	6,355		$	2,237		$	1,268		$	533		$	12		$	—	$	10,405
Provision for loan losses		1,947			419			168			(118	)		(6	)		6		2,416
Loans charged off		(896	)		(50	)		(277	)		(5	)		(4	)		—		(1,232	)
Recoveries		2			26			9			—			—			—		37
Balance, end of period	$	7,408		$	2,632		$	1,168		$	410		$	2		$	6	$	11,626
September 30, 2015	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Unallocated		Total
Balance, beginning of year	$	3,456		$	3,326		$	2,420		$	1,392		$	9		$	—	$	10,603
Provision for loan losses		2,993			(1,673	)		(1,719	)		(920	)		(6	)		—		(1,325	)
Loans charged off		(1,145	)		(162	)		(415	)		(172	)		—			—		(1,894	)
Recoveries		47			743			1,196			463			—			—		2,449
Balance, end of period	$	5,351		$	2,234		$	1,482		$	763		$	3		$	—	$	9,833

Balances in Allowance for Loan Losses and Recorded Balance in Loans by Portfolio Segment and Based on Impairment Method

The following tables present the balances in the allowance for loan losses and the recorded balance in loans by portfolio segment and based on impairment method as of September 30, 2016 and December 31, 2015: 

	September 30, 2016
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	297	$	7,111	$	7,408
Commercial real estate loans		376		2,256		2,632
Commercial loans		524		644		1,168
Residential real estate loans		—		410		410
Installment and consumer other		—		2		2
Unallocated		—		6		6
Total ending allowance for loan losses		1,197		10,429		11,626
Loans:
Agricultural loans		13,219		572,054		585,273
Commercial real estate loans		9,123		272,935		282,058
Commercial loans		5,691		74,896		80,587
Residential real estate loans		200		44,124		44,324
Installment and consumer other		—		236		236
Total loans		28,233		964,245		992,478
Net loans	$	27,036	$	953,816	$	980,852
	December 31, 2015
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	1,055	$	5,300	$	6,355
Commercial real estate loans		357		1,880		2,237
Commercial loans		890		378		1,268
Residential real estate loans		—		533		533
Installment and consumer other		—		12		12
Total ending allowance for loan losses		2,302		8,103		10,405
Loans:
Agricultural loans		20,724		478,596		499,320
Commercial real estate loans		4,197		157,544		161,741
Commercial loans		5,481		46,497		51,978
Residential real estate loans		—		34,631		34,631
Installment and consumer other		—		519		519
Total loans		30,402		717,787		748,189
Net loans	$	28,100	$	709,684	$	737,784

Schedule of Aging of Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans at September 30, 2016 and December 31, 2015:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	402	$	822	$	12,288	$	13,512	$	571,761
Commercial real estate loans		760		—		2,710		3,470		278,588
Commercial loans		67		—		2,633		2,700		77,887
Residential real estate loans		92		—		2		94		44,230
Installment and consumer other		—		—		—		—		236
Total	$	1,321	$	822	$	17,633	$	19,776	$	972,702
December 31, 2015
Agricultural loans	$	978	$	5	$	2,405	$	3,388	$	495,932
Commercial real estate loans		—		234		2,418		2,652		159,089
Commercial loans		—		—		3,476		3,476		48,502
Residential real estate loans		5		—		—		5		34,626
Installment and consumer other		—		—		—		—		519
Total	$	983	$	239	$	8,299	$	9,521	$	738,668

Nonaccrual, Restructured and Certain Past Due Loans

The following table lists information on nonaccrual, restructured, and certain past due loans at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	17,633	$	8,299
Nonaccrual loans 30-89 days past due		1,450		1,212
Nonaccrual loans, less than 30 days past due		3,419		15,068
Restructured loans not on nonaccrual status		4,877		610
90 days or more past due and still accruing		—		—

Recorded Investment in Nonaccrual and Loans Past Due 90 Days or More

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days or more at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016			2015
	(dollars in thousands)
Agricultural loans	$	13,673	$	17,705
Commercial real estate loans		4,424		3,162
Commercial loans		4,205		3,712
Residential real estate loans		200		—
Total	$	22,502	$	24,579

TDRs by Loan Class

The following table presents the TDRs by loan class at September 30, 2016 and December 31, 2015:

	Non-Accrual		Restructured and Accruing		Total
	(dollars in thousands)
September 30, 2016
Agricultural loans	$	8,260	$	1,242	$	9,502
Commercial real estate loans		1,494		2,362		3,856
Commercial loans		1,633		1,273		2,906
Residential real estate loans		92		—		92
Installment and consumer other		—		—		—
Total	$	11,479	$	4,877	$	16,356
December 31, 2015
Agricultural loans	$	1,337	$	—	$	1,337
Commercial real estate loans		744		486		1,230
Commercial loans		235		124		359
Residential real estate loans		—		—		—
Installment and consumer other		—		—		—
Total	$	2,316	$	610	$	2,926

The following table provides the number of loans modified in a troubled debt restructuring investment by class for the nine months ended September 30, 2016 and 2015:

	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		14	$	8,704		5	$	554
Commercial real estate loans		2		553		—		—
Commercial loans		2		1,632		1		76
Total		18	$	10,889		6	$	630

Summary of Troubled Debt Restructurings Grouped by Type of Concession

The following table provides the troubled debt restructurings for the nine months ended September 30, 2016 and 2015 grouped by type of concession:

	For the nine months ended				For the nine months ended
	September 30, 2016				September 30, 2015
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		6	$	1,732		4	$	493
Extension of interest-only payments		5		1,243		—		—
Capitalized interest		—		—		1		61
Combination of extension of term and interest rate concessions		3		5,729		—		—
Commercial real estate loans
Extension of interest-only payments		2		553		—		—
Commercial loans
Payment concessions		—		—		1		76
Extension of interest-only payments		2		1,632		—		—
Total		18	$	10,889		6	$	630

Risk Category of Loans by Class of Loans

Based on the most recent analysis performed by management, the risk category of loans by class of loans is as follows as of September 30, 2016 and December 31, 2015: 

	As of September 30, 2016
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	488,989	$	57,652	$	12,930	$	12,483		13,219	$	585,273
Commercial real estate loans		242,171		18,948		3,629		8,187		9,123		282,058
Commercial loans		64,169		6,911		2,620		1,195		5,692		80,587
Residential real estate loans		39,473		4,139		512		—		200		44,324
Installment and consumer other		236		—		—		—		—		236
Total	$	835,038	$	87,650	$	19,691	$	21,865	$	28,234	$	992,478
	As of December 31, 2015
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	441,528	$	30,762	$	6,306	$	20,724	$	499,320
Commercial real estate loans		139,061		13,956		4,527		4,197		161,741
Commercial loans		40,496		5,468		533		5,481		51,978
Residential real estate loans		27,514		4,572		2,545		—		34,631
Installment and consumer other		518		1		—		—		519
Total	$	649,117	$	54,759	$	13,911	$	30,402	$	748,189

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LOAN SERVICING RIGHTS (Tables)

9 Months Ended

Sep. 30, 2016

Transfers And Servicing [Abstract]

Summary of Servicing Rights Capitalized and Amortized along with the Aggregate Activity in Related Valuation

The following summarizes servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances:

	September 30,			December 31,
	2016			2015
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	8,145		$	7,746
Additions		3,862			3,731
Disposals		(1,280	)		(1,421	)
Amortization		(1,562	)		(1,911	)
Balance, end of period	$	9,165		$	8,145

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GOODWILL AND CORE DEPOSIT INTANGIBLE (Tables)

9 Months Ended

Sep. 30, 2016

Core Deposit

Finite Lived Intangible Assets [Line Items]

Core Deposit Intangible

	September 30, 2016			December 31, 2015
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	—
Accumulated amortization		(211	)		—
Net book value	$	1,590		$	—
Additions during the period	$	1,801		$	—

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

Summary of Deposits

Deposits are summarized as follows at September 30, 2016 and December 31, 2015:

	September 30,		December 31,
	2016		2015
	(dollars in thousands)
Demand deposits	$	111,398	$	70,914
Savings		236,394		174,979
Certificates of deposit		581,656		426,333
Total deposits	$	929,448	$	672,226

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EQUITY INCENTIVE PLAN (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Status and Changes in Stock Option 2012 Plan and 2016 Plan

The status of the Company’s 2012 Plan and 2016 Plan as of September 30, 2016, and changes in the 2012 Plan and 2016 Plan during the nine months ended September 30, 2016 are as follows:

	September 30, 2016
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		351,931		$	13.71
Granted		48,684			19.91
Exercised		(45,493	)		11.66
Forfeited/expired		(10,504	)		19.07
Outstanding, end of period		344,618		$	14.70	$	1,830
Options exercisable at period-end		234,897		$	12.74	$	1,708
Weighted-average fair value of options granted during    the period (2)				$	4.89

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2016. This amount changes based on changes in the market value of the Company’s stock.

(2) The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

Activity in Restricted Stock Awards

Activity in restricted stock awards (“RSA”) for the nine months ended September 30, 2016 is as follows:

	September 30, 2016
	RSAs			Weighted Average Grant Price
Outstanding, beginning of year		46,621		$	14.92
Granted		13,757			19.77
Vested		(14,980	)		12.27
Forfeited/expired		(6,805	)		17.20
Outstanding, end of period		38,593		$	17.27

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REGULATORY MATTERS (Tables)

9 Months Ended

Sep. 30, 2016

Regulatory Capital Requirements [Abstract]

Summary of Actual Capital Amount and Ratio of Company's and Bank's

The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table:

	Actual					Minimum For Capital Adequacy Purposes (a):					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
September 30, 2016
Total Capital (to risk weighted assets):
Consolidated	$	149,396		13.74	%	$	93,812		8.625	%	Not applicable
Bank		144,743		13.31	%		93,790		8.625	%	$	108,742		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		137,254		12.62	%		72,058		6.625	%	Not applicable
Bank		132,601		12.19	%		72,042		6.625	%		86,994		8.00	%
Tier 1 Capital (to average assets):
Consolidated		137,254		11.58	%		47,411		4.00	%	Not applicable
Bank		132,601		11.19	%		47,385		4.00	%		59,232		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		113,847		10.47	%		55,743		5.125	%	Not applicable
Bank		132,601		12.19	%		55,730		5.125	%		70,682		6.50	%
December 31, 2015
Total Capital (to risk weighted assets):
Consolidated	$	144,495		17.51	%	$	66,013		8.00	%	Not applicable
Bank		125,354		15.19	%		66,000		8.00	%	$	82,500		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		134,175		16.26	%		49,510		6.00	%	Not applicable
Bank		115,036		13.94	%		49,500		6.00	%		66,000		8.00	%
Tier 1 Capital (to average assets):
Consolidated		134,175		15.49	%		34,656		4.00	%	Not applicable
Bank		115,036		13.29	%		34,635		4.00	%		43,294		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		98,803		11.97	%		37,132		4.50	%	Not applicable
Bank		115,036		13.94	%		37,125		4.50	%		53,625		6.50	%

(a) The ratios for September 30, 2016 include a capital conservation buffer of 0.625%.

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
September 30, 2016
Securities available for sale:
U.S. government and agency securities	$	—	$	1,003	$	—	$	1,003
Municipal securities		—		42,963		—		42,963
Mortgage-backed securities		—		76,702		—		76,702
Asset-backed securities		—		3,774		—		3,774
Total assets at fair value	$	—	$	124,442	$	—	$	124,442
December 31, 2015
Securities available for sale:
U.S. government and agency securities	$	—	$	2,003	$	—	$	2,003
Municipal securities		—		46,312		—		46,312
Mortgage-backed securities		—		34,966		—		34,966
Total assets at fair value	$	—	$	83,281	$	—	$	83,281

Financial Instruments Carried on Consolidated Balance Sheet for Which Nonrecurring Change in Fair Value Has Been Recorded

The following table presents the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy for which a nonrecurring change in fair value has been recorded:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Impairment Losses
	(dollars in thousands)
September 30, 2016
Impaired loans	$	—	$	—	$	27,036	$	1,197
Other real estate owned		—		—		2,696		334
Total assets at fair value	$	—	$	—	$	29,732	$	1,531
December 31, 2015
Impaired loans	$	—	$	—	$	28,100	$	2,302
Other real estate owned		—		—		2,872		256
Total assets at fair value	$	—	$	—	$	30,972	$	2,558

Significant Inputs Used in Fair Value Measurements for Level 3 Assets Measured on Nonrecurring Basis

The significant inputs used in the fair value measurements for Level 3 assets measured at fair value on a nonrecurring basis are as follows:

September 30, 2016
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	7%-31% (19%)
December 31, 2015
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	4%-23% (12%)

Estimated Fair Values and Related Carrying or Notional Amounts of Financial Instruments

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows:

	September 30,				December 31,
	2016				2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	52,876	$	52,876	$	14,907	$	14,907	1
Securities available for sale		124,442		124,442		83,281		83,281	2
FHLB Stock		5,688		5,688		3,507		3,507	2
Loans, net of allowance for loan losses		980,852		994,759		737,784		745,572	3
Loans held for sale		2,960		2,960		9,201		9,201	3
Accrued interest receivable		3,148		3,148		2,562		2,562	2
Loan servicing rights		9,165		12,020		8,145		10,705	3
Financial liabilities:
Deposits:
Time		581,656		591,420		426,333		431,077	3
Other deposits		347,792		350,567		245,893		242,493	1
Other borrowings		2,218		2,218		3,945		3,945	3
Advances from FHLB		132,895		134,777		66,445		67,318	3
Subordinated debentures		15,407		15,407		12,372		12,372	3
Accrued interest payable		1,676		1,676		1,459		1,459	2

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OTHER REAL ESTATE OWNED (Tables)

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

Schedule of Other Real Estate Owned

Changes in other real estate owned are as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Balance, beginning of period	$	2,789		$	3,166		$	2,872		$	7,137
Assets foreclosed		—			1,485			159			1,530
Assets acquired		—			—			1,951			—
Assets transferred from premises and equipment		397			—			397			—
Write-down of other real estate owned		(250	)		—			(334	)		(182	)
Net gain (loss) on sales of other real estate owned		32			26			121			(260	)
Capitalized additions to other real estate owned		—			—			—			39
Proceeds from sale of other real estate owned		(272	)		(1,653	)		(2,470	)		(5,240	)
Balance, end of period	$	2,696		$	3,024		$	2,696		$	3,024

Expenses Applicable to Other Real Estate Owned

Expenses applicable to other real estate owned include the following:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
		2016			2015			2016			2015
	(dollars in thousands)
Net loss (gain) on sales of other real estate owned	$	(32	)	$	(26	)	$	(121	)	$	260
Write-down of other real estate owned		250			—			334			182
Operating expenses, net of rental income		41			88			120			18
	$	259		$	62		$	333		$	460

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Basis of Presentation - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Basis of Presentation [Line Items]
Impairment charge to goodwill	$ 0
Core Deposit
Basis of Presentation [Line Items]
Amortization period on accelerated basis	66 months
Impairment charge to intangible assets	$ 0
Core deposit intangible, net of amortization of $211 as of September 30, 2016; $0 as of December 31, 2015	$ 1,590,000	$ 0

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Acquisitions - Additional Information (Detail) $ in Thousands			9 Months Ended
	May 16, 2016 Branch	May 13, 2016 USD ($) shares	Sep. 30, 2016
Fox River Valley
Business Acquisition [Line Items]
Business acquisition, date of acquisition			May 13, 2016
Business acquisition, name of acquired entity			Fox River Valley
Business acquisition, date of acquisition agreement			Nov. 19, 2015
Business acquisition, consideration paid in cash | $		$ 14,450
Business acquisition, consideration paid in shares | shares		712,830
Investors Community Bank
Business Acquisition [Line Items]
Number of branches | Branch	2

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Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	May 13, 2016	Sep. 30, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Cash, cash equivalents and securities available for sale	$ 76,633
Loans, net	141,577
Other real estate owned	1,951
Deferred tax asset, net	3,113
Core deposit intangible	1,801
Premises and equipment, and other assets	4,599
Total assets acquired	229,674
Deposits	202,951
Subordinated debentures and other liabilities	3,054
Total liabilities assumed	206,005
Excess of assets acquired over liabilities assumed	23,669
Less: Purchase price	28,707
Goodwill	5,038	$ 5,038
Fox River Valley
Business Acquisition [Line Items]
Goodwill		$ 5,000	$ 0
As Recorded by Fox River Valley | Fox River Valley
Business Acquisition [Line Items]
Cash, cash equivalents and securities available for sale	77,117
Loans, net	143,421
Other real estate owned	1,951
Deferred tax asset, net	2,430
Premises and equipment, and other assets	3,913
Total assets acquired	228,832
Deposits	202,201
Subordinated debentures and other liabilities	3,629
Total liabilities assumed	205,830
Excess of assets acquired over liabilities assumed	23,002
Fair Value Adjustment
Business Acquisition [Line Items]
Cash, cash equivalents and securities available for sale	(484)
Loans, net	(1,844)
Deferred tax asset, net	683
Core deposit intangible	1,801
Premises and equipment, and other assets	686
Total assets acquired	842
Deposits	750
Subordinated debentures and other liabilities	(575)
Total liabilities assumed	175
Excess of assets acquired over liabilities assumed	$ 667

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Acquisitions - Supplemental Pro Forma Information of Fox River Valley Merger (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Supplemental Pro Forma Information [Abstract]
Net interest income		$ 9,666	$ 8,548	$ 26,769	$ 24,847
Net income	[1]	$ 2,868	$ 3,587	$ 6,612	$ 7,514

[1] For purposes of the supplemental pro forma information, merger-related expenses of $2.6 million that are reflected in the Company’s nine months ended September 30, 2016 consolidated statement of operations were reflected in the pro forma presentation for the first quarter of 2015.

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Acquisitions - Supplemental Pro Forma Information of Fox River Valley Merger (Parenthetical) (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($)
Supplemental Pro Forma Information [Abstract]
Merger-related expenses	$ 2.6

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Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net income from continuing operations	$ 3,102	$ 3,330	$ 7,223	$ 8,074
Less: preferred stock dividends including SBLF	80	118	261	367
Income available to common shareholders for basic earnings per common share	$ 3,022	$ 3,212	$ 6,962	$ 7,707
Average number of common shares issued	7,311	6,545	6,951	6,428
Less: weighted average treasury shares	429	410	424	410
Less: weighted average nonvested equity incentive plan shares	358	401	367	383
Weighted average number of common shares outstanding	6,524	5,734	6,160	5,635
Effect of dilutive options	95	124	97	119
Weighted average number of common shares outstanding used to calculate diluted earnings per common share	6,619	5,858	6,257	5,754

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Securities Available-for-Sale - Schedule of Amortized Cost and Fair Value of Available for Sale of Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 122,879	$ 82,916
Unrealized Gains	1,768	541
Unrealized Losses	(205)	(176)
Fair Value	124,442	83,281
U.S. Government and Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	1,001	2,003
Unrealized Gains	2
Fair Value	1,003	2,003
Municipal securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	42,636	46,185
Unrealized Gains	342	185
Unrealized Losses	(15)	(58)
Fair Value	42,963	46,312
Mortgage-backed securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	75,357	34,728
Unrealized Gains	1,424	356
Unrealized Losses	(79)	(118)
Fair Value	76,702	$ 34,966
Asset-backed securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	3,885
Unrealized Losses	(111)
Fair Value	$ 3,774

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Securities Available for Sale - Schedule of Amortized Cost and Fair Value of Securities Available for Sale by Contractual Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available For Sale Securities [Abstract]
Due in one year or less, Amortized Cost	$ 15,933	$ 5,005
Due from one to five years, Amortized Cost	27,630	39,329
Due from five to ten years, Amortized Cost	3,959	3,854
Due after ten years, Amortized Cost	0	0
Mortgage-backed securities, Amortized Cost	75,357	34,728
Amortized Cost	122,879	82,916
Due in one year or less, Fair Value	15,831	5,017
Due from one to five years, Fair Value	27,891	39,400
Due from five to ten years, Fair Value	4,018	3,898
Due after ten years, Fair Value	0	0
Mortgage-backed securities, Fair Value	76,702	34,966
Fair Value	$ 124,442	$ 83,281

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Securities Available-for-Sale - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Available For Sale Securities [Abstract]
Sale of available-for-sale securities	$ 0	$ 0

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Securities Available-for-Sale - Schedule of Fair Value and Gross Unrealized Losses of Entity's Investments (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	$ 24,403	$ 27,447
Investments with unrealized losses less than 12 months, unrealized losses	(203)	(139)
Investments with unrealized losses 12 months or greater, fair value	606	2,750
Investments with unrealized losses 12 months or greater, unrealized losses	(2)	(37)
Investments with unrealized losses, fair value	25,009	30,197
Investments with unrealized losses, unrealized losses	(205)	(176)
U.S. Government and Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value		2,003
Investments with unrealized losses, fair value		2,003
Municipal securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	8,312	14,153
Investments with unrealized losses less than 12 months, unrealized losses	(13)	(53)
Investments with unrealized losses 12 months or greater, fair value	606	711
Investments with unrealized losses 12 months or greater, unrealized losses	(2)	(5)
Investments with unrealized losses, fair value	8,918	14,864
Investments with unrealized losses, unrealized losses	(15)	(58)
Mortgage-backed securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	12,317	11,291
Investments with unrealized losses less than 12 months, unrealized losses	(79)	(86)
Investments with unrealized losses 12 months or greater, fair value		2,039
Investments with unrealized losses 12 months or greater, unrealized losses		(32)
Investments with unrealized losses, fair value	12,317	13,330
Investments with unrealized losses, unrealized losses	(79)	$ (118)
Asset-backed securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	3,774
Investments with unrealized losses less than 12 months, unrealized losses	(111)
Investments with unrealized losses, fair value	3,774
Investments with unrealized losses, unrealized losses	$ (111)

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Loans - Components of Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Loans And Leases Receivable Net Reported Amount [Abstract]
Agricultural loans	$ 585,273	$ 499,320
Commercial real estate loans	282,058	161,741
Commercial loans	80,587	51,978
Residential real estate loans	44,324	34,631
Installment and consumer other	236	519
Total gross loans	992,478	748,189
Allowance for loan losses	(11,626)	(10,405)	$ (9,833)	$ (10,603)
Loans, net	$ 980,852	$ 737,784

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Loans - Changes in Allowance for Loan Losses by Portfolio Segment (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	$ 10,405	$ 10,603
Provision for loan losses	2,416	(1,325)
Loans charged off	(1,232)	(1,894)
Recoveries	37	2,449
Balance, end of period	11,626	9,833
Agricultural
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	6,355	3,456
Provision for loan losses	1,947	2,993
Loans charged off	(896)	(1,145)
Recoveries	2	47
Balance, end of period	7,408	5,351
Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	2,237	3,326
Provision for loan losses	419	(1,673)
Loans charged off	(50)	(162)
Recoveries	26	743
Balance, end of period	2,632	2,234
Commercial
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	1,268	2,420
Provision for loan losses	168	(1,719)
Loans charged off	(277)	(415)
Recoveries	9	1,196
Balance, end of period	1,168	1,482
Residential Real Estate
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	533	1,392
Provision for loan losses	(118)	(920)
Loans charged off	(5)	(172)
Recoveries		463
Balance, end of period	410	763
Installment And Consumer Other
Accounts Notes And Loans Receivable [Line Items]
Balance, beginning of year	12	9
Provision for loan losses	(6)	(6)
Loans charged off	(4)
Balance, end of period	2	$ 3
Unallocated
Accounts Notes And Loans Receivable [Line Items]
Provision for loan losses	6
Balance, end of period	$ 6

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Loans - Balances in Allowance for Loan Losses and Recorded Balance in Loans by Portfolio Segment and Based on Impairment Method (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Loans individually evaluated for impairment	$ 27,036	$ 28,100
Loans collectively evaluated for impairment	953,816	709,684
Loans, net	980,852	737,784
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	1,197	2,302
Allowance for loan losses collectively evaluated for impairment	10,429	8,103
Total	11,626	10,405
Loans:
Loans individually evaluated for impairment	28,233	30,402
Loans collectively evaluated for impairment	964,245	717,787
Total gross loans	992,478	748,189
Agricultural Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	297	1,055
Allowance for loan losses collectively evaluated for impairment	7,111	5,300
Total	7,408	6,355
Loans:
Loans individually evaluated for impairment	13,219	20,724
Loans collectively evaluated for impairment	572,054	478,596
Total gross loans	585,273	499,320
Commercial Real Estate Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	376	357
Allowance for loan losses collectively evaluated for impairment	2,256	1,880
Total	2,632	2,237
Loans:
Loans individually evaluated for impairment	9,123	4,197
Loans collectively evaluated for impairment	272,935	157,544
Total gross loans	282,058	161,741
Commercial Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	524	890
Allowance for loan losses collectively evaluated for impairment	644	378
Total	1,168	1,268
Loans:
Loans individually evaluated for impairment	5,691	5,481
Loans collectively evaluated for impairment	74,896	46,497
Total gross loans	80,587	51,978
Residential Real Estate Loans
Allowance for loan losses:
Allowance for loan losses collectively evaluated for impairment	410	533
Total	410	533
Loans:
Loans individually evaluated for impairment	200
Loans collectively evaluated for impairment	44,124	34,631
Total gross loans	44,324	34,631
Installment and consumer other
Allowance for loan losses:
Allowance for loan losses collectively evaluated for impairment	2	12
Total	2	12
Loans:
Loans collectively evaluated for impairment	236	519
Total gross loans	236	$ 519
Unallocated
Allowance for loan losses:
Allowance for loan losses collectively evaluated for impairment	6
Total	$ 6

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Loans - Schedule of Aging of Recorded Investment in Past Due Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	$ 19,776	$ 9,521
Loans Not Past Due	972,702	738,668
Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	1,321	983
Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	822	239
Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	17,633	8,299
Agricultural Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	13,512	3,388
Loans Not Past Due	571,761	495,932
Agricultural Loans | Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	402	978
Agricultural Loans | Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	822	5
Agricultural Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	12,288	2,405
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	3,470	2,652
Loans Not Past Due	278,588	159,089
Commercial Real Estate Loans | Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	760
Commercial Real Estate Loans | Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due		234
Commercial Real Estate Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	2,710	2,418
Commercial Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	2,700	3,476
Loans Not Past Due	77,887	48,502
Commercial Loans | Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	67
Commercial Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	2,633	3,476
Residential Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	94	5
Loans Not Past Due	44,230	34,626
Residential Real Estate Loans | Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	92	5
Residential Real Estate Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	2
Installment and consumer other
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Not Past Due	$ 236	$ 519

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Loans - Nonaccrual, Restructured and Certain Past Due Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	$ 19,776	$ 9,521
Restructured loans not on nonaccrual status	4,877	610
Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	17,633	8,299
Financing Receivables 30 To 89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	1,450	1,212
Financing Receivables 1 To 29 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	$ 3,419	$ 15,068

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Loans - Recorded Investment in Nonaccrual Loans and Loans Past Due 90 Days or More (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	$ 22,502	$ 24,579
Agricultural Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	13,673	17,705
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	4,424	3,162
Commercial Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	4,205	$ 3,712
Residential Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	$ 200

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Loans - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Average recorded investment in total impaired loans	$ 29,300,000	$ 27,600,000
Interest income recognized on total impaired loans	400,000	1,700,000
Interest income recognized for nonaccrual loans	1,200,000	1,700,000
Specific reserve to customers whose loan terms have been modified in TDR	500,000	700,000
Additional lending commitments to customers with outstanding loans that are classified as TDRs	0	0
Minimum exposure for annual internal credit review	300,000
TDR Loans
Accounts Notes And Loans Receivable [Line Items]
TDR loans, unfunded commitments	$ 0	$ 0

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Loans - TDRs by Loan Class (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	$ 22,502	$ 24,579
Restructured and Accruing	4,877	610
Total	10,889		$ 630
TDR Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	11,479	2,316
Restructured and Accruing	4,877	610
Total	16,356	2,926
Agricultural Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	13,673	17,705
Total	8,704		554
Agricultural Loans | TDR Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	8,260	1,337
Restructured and Accruing	1,242
Total	9,502	1,337
Commercial Real Estate Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	4,424	3,162
Total	553
Commercial Real Estate Loans | TDR Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	1,494	744
Restructured and Accruing	2,362	486
Total	3,856	1,230
Commercial Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	4,205	3,712
Total	1,632		$ 76
Commercial Loans | TDR Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	1,633	235
Restructured and Accruing	1,273	124
Total	2,906	$ 359
Residential Real Estate Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	200
Residential Real Estate Loans | TDR Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Non-Accrual	92
Total	$ 92

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Loans - Number of Loans Modified in Troubled Debt Restructuring Investment by Class (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	18	6
Recorded Investment | $	$ 10,889	$ 630
Agricultural Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	14	5
Recorded Investment | $	$ 8,704	$ 554
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	2
Recorded Investment | $	$ 553
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	2	1
Recorded Investment | $	$ 1,632	$ 76

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Loans - Summary of Troubled Debt Restructurings Grouped by Type of Concession (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	18	6
Recorded Investment | $	$ 10,889	$ 630
Agricultural Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	14	5
Recorded Investment | $	$ 8,704	$ 554
Agricultural Loans | Payment Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	6	4
Recorded Investment | $	$ 1,732	$ 493
Agricultural Loans | Extension of Interest-Only Payments
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	5
Recorded Investment | $	$ 1,243
Agricultural Loans | Capitalized Interest
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan		1
Recorded Investment | $		$ 61
Agricultural Loans | Combination of Extension of Term and Interest Rate Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	3
Recorded Investment | $	$ 5,729
Commercial Real Estate Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2
Recorded Investment | $	$ 553
Commercial Real Estate Loans | Extension of Interest-Only Payments
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2
Recorded Investment | $	$ 553
Commercial Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2	1
Recorded Investment | $	$ 1,632	$ 76
Commercial Loans | Payment Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan		1
Recorded Investment | $		$ 76
Commercial Loans | Extension of Interest-Only Payments
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2
Recorded Investment | $	$ 1,632

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Loans - Risk Category of Loans by Class of Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Long Term Debt [Line Items]
Agricultural loans	$ 585,273	$ 499,320
Commercial real estate loans	282,058	161,741
Commercial loans	80,587	51,978
Residential real estate loans	44,324	34,631
Installment and consumer other	236	519
Total gross loans	992,478	748,189
Sound/ Acceptable/ Satisfactory/ Low Satisfactory
Long Term Debt [Line Items]
Agricultural loans	488,989	441,528
Commercial real estate loans	242,171	139,061
Commercial loans	64,169	40,496
Residential real estate loans	39,473	27,514
Installment and consumer other	236	518
Total gross loans	835,038	649,117
Watch
Long Term Debt [Line Items]
Agricultural loans	57,652	30,762
Commercial real estate loans	18,948	13,956
Commercial loans	6,911	5,468
Residential real estate loans	4,139	4,572
Installment and consumer other		1
Total gross loans	87,650	54,759
Special Mention
Long Term Debt [Line Items]
Agricultural loans	12,930	6,306
Commercial real estate loans	3,629	4,527
Commercial loans	2,620	533
Residential real estate loans	512	2,545
Total gross loans	19,691	13,911
Substandard Performing
Long Term Debt [Line Items]
Agricultural loans	12,483
Commercial real estate loans	8,187
Commercial loans	1,195
Total gross loans	21,865
Substandard Impaired
Long Term Debt [Line Items]
Agricultural loans	13,219	20,724
Commercial real estate loans	9,123	4,197
Commercial loans	5,692	5,481
Residential real estate loans	200
Total gross loans	$ 28,234	$ 30,402

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Loan Servicing Rights - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Servicing Assets at Fair Value [Line Items]
Unpaid principal balance of mortgage	$ 569,200	$ 495,900
Servicing assets and servicing liabilities at fair value, assumptions used to estimate fair value, discount rate	10.00%
Level 3 Inputs
Servicing Assets at Fair Value [Line Items]
Loan servicing rights, fair value	$ 12,020	$ 10,705
Minimum
Servicing Assets at Fair Value [Line Items]
Servicing assets and servicing liabilities at fair value, assumptions used to estimate fair value, Prepayment speed	4.00%
Maximum
Servicing Assets at Fair Value [Line Items]
Servicing assets and servicing liabilities at fair value, assumptions used to estimate fair value, Prepayment speed	9.00%

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Loan Servicing Rights - Summary of Servicing Rights Capitalized and Amortized along with the Aggregate Activity in Related Valuation (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Transfers And Servicing [Abstract]
Balance, beginning of period	$ 8,145	$ 7,746
Additions	3,862	3,731
Disposals	(1,280)	(1,421)
Amortization	(1,562)	(1,911)
Balance, end of period	$ 9,165	$ 8,145

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Goodwill and Core Deposit Intangible - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015	May 13, 2016
Goodwill And Intangible Assets [Line Items]
Impairment charge to goodwill		$ 0
Goodwill	$ 5,038,000	5,038,000		$ 5,038,000
Fox River Valley
Goodwill And Intangible Assets [Line Items]
Goodwill	5,000,000	$ 5,000,000	$ 0
Core Deposit
Goodwill And Intangible Assets [Line Items]
Intangible assets, amortization period on accelerated basis		66 months
Impairment charge to intangible assets		$ 0
Intangible assets, net	1,590,000	1,590,000	0
Core Deposit | Fox River Valley
Goodwill And Intangible Assets [Line Items]
Gross carrying amount of intangible assets	1,801,000	1,801,000
Amortization on intangible assets	157,000	211,000	0
Intangible assets, net	$ 1,590,000	$ 1,590,000	$ 0

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Goodwill and Core Deposit Intangible - Core Deposit Intangible (Detail) - Core Deposit - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Core deposit intangible:
Accumulated amortization	$ (211,000)	$ 0
Net book value	1,590,000	0
Fox River Valley
Core deposit intangible:
Gross carrying amount	1,801,000
Accumulated amortization	(211,000)
Net book value	1,590,000	$ 0
Additions during the period	$ 1,801,000

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Deposits - Summary of Deposits (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Deposits [Abstract]
Demand deposits	$ 111,398	$ 70,914
Savings	236,394	174,979
Certificates of deposit	581,656	426,333
Total deposits	$ 929,448	$ 672,226

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Deposits - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Deposits [Abstract]
Brokered deposits	$ 190.4	$ 164.6

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Subordinated Debentures - Additional Information (Detail) - Fox River Valley Capital Trust I	9 Months Ended
	Sep. 30, 2016 USD ($)
Debt Instrument [Line Items]
Junior subordinated debentures owned amount	$ 100,000
Interest rate	4.855%
5-year LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.40%
Trust Preferred Securities Subject to Mandatory Redemption
Debt Instrument [Line Items]
Floating rate junior subordinated debentures	$ 3,600,000
Incremental redeemable capital securities	10,000
Trust Preferred Securities Subject to Mandatory Redemption | Minimum
Debt Instrument [Line Items]
Floating rate capital securities	$ 500,000

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Equity Incentive Plan - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 295	$ 266
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option term	10 years
Maximum | Equity Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	5 years
Minimum | Equity Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	1 year
Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of restricted stock granted under plan	13,757
Restricted Stock Awards | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	5 years
Restricted Stock Awards | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	1 year
Employee Stock Option and Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized share-based compensation expense related to nonvested options and restricted stock awards amounted	$ 700
Unrecognized share-based compensation expense related to nonvested options and restricted stock award amounted, weighted average period of recognition	2 years 4 months 24 days
2016 Long Term Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options granted under plan	3,587
2016 Long Term Incentive Plan | Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of restricted stock granted under plan	3,587
2016 and 2012 Equity Incentive Compensation Plan | Stock Options And Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 295	$ 266

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Equity Incentive Plan - Status and Changes in Stock Option 2012 Plan and 2016 Plan (Detail) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Number of Options
Options, Exercised | shares	(45,493)
2012 and 2016 Equity Incentive Compensation Plan
Number of Options
Options, Outstanding beginning of year | shares	351,931
Options, Granted | shares	48,684
Options, Exercised | shares	(45,493)
Options, Forfeited/expired | shares	(10,504)
Options, Outstanding end of period | shares	344,618
Options exercisable at period-end | shares	234,897
Weighted-Average Exercise Price
Weighted Average Exercise price, Outstanding, beginning of year | $ / shares	$ 13.71
Weighted Average Exercise Price, Granted | $ / shares	19.91
Weighted Average Exercise Price, Exercised | $ / shares	11.66
Weighted Average Exercise Price, Forfeited/expired | $ / shares	19.07
Weighted Average Exercise Price, Outstanding, end of period | $ / shares	14.70
Weighted Average Exercise Price, Options exercisable at period-end | $ / shares	12.74
Weighted-average fair value of options granted during the period | $ / shares	$ 4.89	[1]
Aggregate Intrinsic Value
Aggregate Intrinsic Value, Outstanding, end of period | $	$ 1,830	[2]
Aggregate Intrinsic Value, Options exercisable at period-end | $	$ 1,708	[2]

[1] The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

[2] The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2016. This amount changes based on changes in the market value of the Company’s stock.

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Equity Incentive Plan - Activity in Restricted Stock Awards (Detail) - Restricted Stock Awards	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Number of RSAs
RSAs Outstanding, beginning of year | shares	46,621
RSAs Granted | shares	13,757
RSAs Vested | shares	(14,980)
RSAs Forfeited/expired | shares	(6,805)
RSAs Outstanding, end of period | shares	38,593
Weighted Average Grant Date Fair Value
Weighted Average Grant Price Outstanding, Beginning of year | $ / shares	$ 14.92
Weighted Average Grant Price Outstanding, Granted | $ / shares	19.77
Weighted Average Grant Price, Vested | $ / shares	12.27
Weighted Average Grant Price, Forfeited or expired | $ / shares	17.20
Weighted Average Grant Price Outstanding, End of year | $ / shares	$ 17.27

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Regulatory Matters - Summary of Actual Capital Amounts and Ratios of Company's and Bank's (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to risk weighted assets), Actual Amount		$ 149,396	$ 144,495
Total Capital (to risk weighted assets), Actual Ratio		13.74%	17.51%
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Amount	[1]	$ 93,812	$ 66,013
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Ratio	[1]	8.625%	8.00%
Tier 1 Capital (to risk weighted assets), Actual Amount		$ 137,254	$ 134,175
Tier 1 Capital (to risk weighted assets), Actual Ratio		12.62%	16.26%
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 72,058	$ 49,510
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	6.625%	6.00%
Tier 1 Capital (to average assets), Actual Amount		$ 137,254	$ 134,175
Tier 1 Capital (to average assets), Actual Ratio		11.58%	15.49%
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Amount	[1]	$ 47,411	$ 34,656
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Ratio	[1]	4.00%	4.00%
Tier 1 Common Equity Ratio (to risk weighted assets), Actual Amount		$ 113,847	$ 98,803
Tier 1 Common Equity Ratio (to risk weighted assets), Actual Ratio		10.47%	11.97%
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 55,743	$ 37,132
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	5.125%	4.50%
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to risk weighted assets), Actual Amount		$ 144,743	$ 125,354
Total Capital (to risk weighted assets), Actual Ratio		13.31%	15.19%
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Amount	[1]	$ 93,790	$ 66,000
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Ratio	[1]	8.625%	8.00%
Total Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 108,742	$ 82,500
Total Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio		10.00%	10.00%
Tier 1 Capital (to risk weighted assets), Actual Amount		$ 132,601	$ 115,036
Tier 1 Capital (to risk weighted assets), Actual Ratio		12.19%	13.94%
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 72,042	$ 49,500
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	6.625%	6.00%
Tier 1 Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 86,994	$ 66,000
Tier 1 Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio		8.00%	8.00%
Tier 1 Capital (to average assets), Actual Amount		$ 132,601	$ 115,036
Tier 1 Capital (to average assets), Actual Ratio		11.19%	13.29%
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Amount	[1]	$ 47,385	$ 34,635
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Ratio	[1]	4.00%	4.00%
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Amount		$ 59,232	$ 43,294
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Ratio		5.00%	5.00%
Tier 1 Common Equity Ratio (to risk weighted assets), Actual Amount		$ 132,601	$ 115,036
Tier 1 Common Equity Ratio (to risk weighted assets), Actual Ratio		12.19%	13.94%
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 55,730	$ 37,125
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	5.125%	4.50%
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 70,682	$ 53,625
Tier 1 Common Equity Ratio (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio		6.50%	6.50%

[1] The ratios for September 30, 2016 include a capital conservation buffer of 0.625%.

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Fair Value Measurements - Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 124,442	$ 83,281
Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	124,442	83,281
Fair Value on a Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	124,442	83,281
Fair Value on a Recurring Basis | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	124,442	83,281
Fair Value on a Recurring Basis | U.S. Government and Agency Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	1,003	2,003
Fair Value on a Recurring Basis | U.S. Government and Agency Securities | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	1,003	2,003
Fair Value on a Recurring Basis | Municipal securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	42,963	46,312
Fair Value on a Recurring Basis | Municipal securities | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	42,963	46,312
Fair Value on a Recurring Basis | Mortgage-backed securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	76,702	34,966
Fair Value on a Recurring Basis | Mortgage-backed securities | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	76,702	$ 34,966
Fair Value on a Recurring Basis | Asset-backed securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	3,774
Fair Value on a Recurring Basis | Asset-backed securities | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 3,774

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Fair Value Measurements - Financial Instruments Carried on Consolidated Balance Sheet for Which Nonrecurring Change in Fair Value Has Been Recorded (Detail) - Fair Value on a Nonrecurring Basis - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impairment Losses	$ 1,531	$ 2,558
Level 3 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	29,732	30,972
Impaired Loans
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impairment Losses	1,197	2,302
Impaired Loans | Level 3 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	27,036	28,100
Other Real Estate Owned
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impairment Losses	334	256
Other Real Estate Owned | Level 3 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	$ 2,696	$ 2,872

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Fair Value Measurements - Significant Inputs Used in Fair Value Measurements for Level 3 Assets Measured on Nonrecurring Basis (Detail) - Level 3 Inputs	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Impaired Loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Valuation Techniques	Evaluation of collateral	Evaluation of collateral
Unobservable Inputs	Estimation of value	Estimation of value
Other Real Estate Owned
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Valuation Techniques	Appraisal	Appraisal
Unobservable Inputs	Appraisal adjustment	Appraisal adjustment
Other Real Estate Owned | Minimum
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	7.00%	4.00%
Other Real Estate Owned | Maximum
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	31.00%	23.00%
Other Real Estate Owned | Weighted Average
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	19.00%	12.00%

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Fair Value Measurements - Estimated Fair Values and Related Carrying or Notional Amounts of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Financial assets:
Cash and cash equivalents	$ 52,876	$ 14,907	$ 13,026	$ 10,480
FHLB Stock	5,688	3,507
Loans, net of allowance for loan losses	980,852	737,784
Loans held for sale	2,960	9,201
Loan servicing rights	9,165	8,145		$ 7,746
Financial liabilities:
Deposits	929,448	672,226
Other borrowings	2,218	3,945
Advances from FHLB	132,895	66,445
Subordinated debentures	15,407	12,372
Financial assets:
Securities available for sale	124,442	83,281
Level 1 Inputs
Financial assets:
Cash and cash equivalents	52,876	14,907
Financial assets:
Cash and cash equivalents, Fair Value	52,876	14,907
Level 1 Inputs | Other Deposits
Financial liabilities:
Deposits	347,792	245,893
Financial liabilities:
Deposits, Fair Value	350,567	242,493
Level 2 Inputs
Financial assets:
Securities available for sale	124,442	83,281
FHLB Stock	5,688	3,507
Accrued interest receivable	3,148	2,562
Financial liabilities:
Accrued interest payable	1,676	1,459
Financial assets:
Securities available for sale	124,442	83,281
FHLB Stock, Fair Value	5,688	3,507
Accrued interest receivable	3,148	2,562
Financial liabilities:
Accrued interest payable, Fair Value	1,676	1,459
Level 3 Inputs
Financial assets:
Loans, net of allowance for loan losses	980,852	737,784
Loans held for sale	2,960	9,201
Loan servicing rights	9,165	8,145
Financial liabilities:
Other borrowings	2,218	3,945
Advances from FHLB	132,895	66,445
Subordinated debentures	15,407	12,372
Financial assets:
Loans, net of allowance for loan losses, Fair Value	994,759	745,572
Loans held for sale, Fair Value	2,960	9,201
Loan servicing rights, fair value	12,020	10,705
Financial liabilities:
Other borrowings, Fair Value	2,218	3,945
Advances from FHLB, Fair Value	134,777	67,318
Subordinated debentures, Fair Value	15,407	12,372
Level 3 Inputs | Bank Time Deposits
Financial liabilities:
Deposits	581,656	426,333
Financial liabilities:
Deposits, Fair Value	$ 591,420	$ 431,077

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Other Real Estate Owned - Summary of Changes in Other Real Estate Owned (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Real Estate Owned Disclosure Of Detailed Components [Abstract]
Balance, beginning of period	$ 2,789	$ 3,166	$ 2,872	$ 7,137
Assets foreclosed		1,485	159	1,530
Assets acquired			1,951
Assets transferred from premises and equipment	397		397
Write-down of other real estate owned	(250)		(334)	(182)
Net gain (loss) on sales of other real estate owned	32	26	121	(260)
Capitalized additions to other real estate owned				39
Proceeds from sale of other real estate owned	(272)	(1,653)	(2,470)	(5,240)
Balance, end of period	$ 2,696	$ 3,024	$ 2,696	$ 3,024

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Other Real Estate Owned - Expenses Applicable to Other Real Estate Owned (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Real Estate Owned Disclosure Of Detailed Components [Abstract]
Net loss (gain) on sales of other real estate owned	$ (32)	$ (26)	$ (121)	$ 260
Write-down of other real estate owned	250		334	182
Operating expenses, net of rental income	41	88	120	18
Total Expenses	$ 259	$ 62	$ 333	$ 460