10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2019

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.)
2400 S. 44th Street, Manitowoc, WI	54221
(Address of principal executive offices)	(Zip Code)

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

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	ICBK	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act

None

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

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

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

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

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

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

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

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

The aggregate market value of the common equity held by non-affiliates computed by reference to the closing price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter – $89,844,369

As of March 13, 2020, 6,507,268 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of County Bancorp, Inc. for its 2020 annual meeting of shareholders are incorporated by reference into Part III hereof to the extent indicated in such Part.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

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2019 FORM 10-K

TABLE OF CONTENTS

		DESCRIPTION	PAGE NO.
PART I
	ITEM 1.	Business	3
	ITEM 1A.	Risk Factors	16
	ITEM 1B.	Unresolved Staff Comments	31
	ITEM 2.	Properties	31
	ITEM 3.	Legal Proceedings	31
	ITEM 4.	Mine Safety Disclosures	31
PART II
	ITEM 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	31
	ITEM 6.	Selected Financial Data	32
	ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	50
	ITEM 8.	Financial Statements and Supplementary Data	52
	ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	94
	ITEM 9A	Controls and Procedures	94
	ITEM 9B	Other Information	94
PART III
	ITEM 10.	Directors, Executive Officers and Corporate Governance	95
	ITEM 11.	Executive Compensation	95
	ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	95
	ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	95
	ITEM 14.	Principal Accountant Fees and Services	95
PART IV
	ITEM 15.	Exhibits and Financial Statement Schedules	95
	ITEM 16.	Form 10-K Summary	97
		Signatures	98

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PART I

ITEM 1. BUSINESS

General

County Bancorp, Inc. (“we,” “us,” “our” or the “Company”) 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 (the “BHCA”). Our primary activities consist of holding the stock of our wholly owned subsidiary bank, Investors Community Bank (the “Bank”), and providing a wide range of banking and related business activities through the Bank and our other subsidiaries. At December 31, 2019, we had total assets of approximately $1.4 billion. For additional financial information, see our consolidated financial statements in Part II, Item 8 of this Form 10-K.

Investors Community Bank

Investors Community Bank is a Wisconsin state bank originally chartered in 1997, and headquartered in Manitowoc, Wisconsin. The Bank is an independent community bank offering a full range of financial services focusing on the needs of agricultural businesses statewide, with a primary focus on dairy-related lending.  Our customers are served from our full-service branches in Manitowoc, Appleton, Green Bay, and Stevens Point, and our loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

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 which were formed for the purpose of issuing trust preferred securities.  The Bank is the sole member of Investors Insurance Services, LLC, which provides crop insurance and milk margin products to the agricultural sector of Wisconsin, and ABS 1, LLC, which holds real estate and personal property for sale that was obtained through repossession, both of which are Wisconsin limited liability companies.  

Corporate Governance Matters

We maintain a website at www.investorscommunitybank.com. We make available through the Investor Relations link on that website, free of charge, copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, and proxy statements as soon as reasonably practicable after we electronically file those materials with, or furnish them to, the Securities and Exchange Commission (“SEC”).  The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants.

Market

Our agricultural banking business, which is primarily dairy-related, extends throughout Wisconsin.  We had lending relationships in56 of the state’s 72 counties as of December 31, 2019. We also serve business customers throughout Wisconsin with a focus on northeastern and central Wisconsin.

The economy in Wisconsin represents a diverse range of industries, including manufacturing, trade, agriculture, professional and business services, finance and insurance, and government industries.  According to the Bureau of Economic Analysis, the broader Wisconsin economy is growing at a pace on par with that of the United States as a whole, and the overall unemployment rate was below the national rate of unemployment for all of 2019.

Dairy-related business lending has proven to be a source of stability and steady growth for both the Bank and the state of Wisconsin. The economic impact of the dairy industry on Wisconsin is significant. According to a 2018 report from the Wisconsin Department of Agriculture, Trade, and Consumer Protection, as part of the overall Wisconsin $104.8 billion agricultural economy, the dairy sector contributed $45.6 billion of revenue to the state’s economy. According to the National Ag Statistics Service of the United States Department of Agriculture (“USDA”), Wisconsin produces over 30 billion pounds of milk per year.  While consumer tastes have led to a reduction of fluid milk consumption over the past decade, overall U.S consumption of dairy products in total have risen 6.8% from 2008 to 2018.  We believe the available customer base, the increasing demand for agricultural products and changing agricultural industry dynamics will continue to drive the need for agricultural banking services. Furthermore, the broader business banking environment in Wisconsin continues to grow. We believe the Bank is well positioned to continue serving the banking needs of agricultural and business banking customers throughout Wisconsin.

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Our Products and Services

The Bank provides a wide range of consumer and commercial banking services to individuals, businesses, and industries. The basic services offered by the Bank include: demand interest bearing and noninterest bearing accounts, money market deposit accounts, NOW accounts, time deposits, mobile banking, internet banking, remote merchant deposit capture, cash management services, safe deposit services, credit cards, debit cards, direct deposits, notary services, night depository, cashier’s checks, drive-in tellers, banking by mail, and certain consumer loans, both collateralized and uncollateralized. In addition, the Bank makes secured and unsecured commercial loans as well as loans secured by residential and commercial real estate, and issues stand-by letters of credit. The Bank provides access to ATM cards and is a member of the Pulse and Cirrus ATM networks, thereby enabling customers to utilize the convenience of ATM access nationwide and internationally.

The revenues of the Bank are primarily derived from interest on loans and fees received in connection with loans, interest and dividends on its investment securities, and non-interest income primarily generated from loan sales and loan servicing rights. The principal sources of funds for the Bank’s lending activities are deposits (primarily consumer deposits and brokered deposits), loan repayments, and income on and proceeds from the sale of investment securities. The Bank’s principal expenses are interest paid on deposits and operating and general administrative expenses. The Bank also generates non-interest income from Investors Insurance Services, LLC.

As is the case with financial institutions generally, our operations are materially and significantly influenced by general economic conditions and by related monetary and fiscal policies of financial institution regulatory agencies, including the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”) and the Wisconsin Department of Financial Institutions (“WDFI”) Banking Division. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market interest rates. Lending activities are affected by the demand for financing of real estate and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds. The Bank faces strong competition in the attraction of deposits and the origination of loans. For additional information about the competition we face, see the section of this Form 10-K entitled “Item I - Business—Competition.”

Lending Activities

Loans

A significant source of our revenues is the interest earned on the Bank’s loan portfolio.  At December 31, 2019, our total assets were $1.4 billion and our total loans were $1.0 billion, or 75.1% of total assets.  At December 31, 2018, our total assets were $1.5 billion and our total loans were $1.2 billion, or 79.4% of total assets.  The decrease in total loans from December 31, 2018 to December 31, 2019 was $171.5 million, or 14.2%.  For the periods indicated below, the net change in total loans (excluding the allowance for loan losses) was as follows:

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Total loans:
Balance, beginning of period	$	1,207,295		$	1,148,951		$	1,030,486
Loan originations, net of repayments		(70,798	)		126,319			149,201
Less:  Loans sold, net of repayments		(90,481	)		(60,591	)		(23,702	)
Less:  Loans charged-off, net		(3,928	)		(1,280	)		(1,904	)
Less: Transfers to other real estate owned		(6,315	)		(6,104	)		(5,130	)
Balance, end of period	$	1,035,773		$	1,207,295		$	1,148,951

For more information about our loan portfolio, see the section of this Form 10-K entitled “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Financial Condition at December 31, 2019 and 2018 —Net Loans.”

Lending activities are conducted pursuant to a written policy adopted by the Bank. Each loan officer has defined lending authority beyond which loans, depending upon their type, size, and risk classification, must be reviewed and approved by the management loan committee or the board loan committee.

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Loan Portfolio Concentrations

Although our loan portfolio is concentrated in agricultural loans, which is heavily dependent on the dairy industry, there are a number of mitigating factors to this concentration risk. First, our farm customers are diversified geographically throughout the state of Wisconsin and Southeast Minnesota, which we believe helps mitigate the weather-related risk impacting feed availability and cost. Secondly, the USDA provides government support for a number of insurance-type products that dairy producers can purchase, which we believe substantially mitigate weather and pricing risks for crops and pricing risks for milk. The availability of these types of products in addition to the ability to use the futures markets to hedge both milk price and feed cost brings some additional stability and predictability to the cash flows of farmers.

We originate and maintain large credit relationships with a number of customers in the ordinary course of our business. We have established a formal, internal lending limit on loans to one borrower of $8 million, which is significantly lower than our legal lending limit of approximately $37.8 million as of December 31, 2019. Exceptions to this internal limit may be approved by the Bank’s board of directors in the case of particularly strong credits. As of December 31, 2019, 14 relationships exceeded our internal lending limit with total combined credit risk exposure of $149.6 million, or 69% of total risk-based capital, and seven of these relationships exceeded $10 million, with the largest being $17.4 million.

Loan Underwriting

Management seeks to maintain a high quality of loans through sound underwriting and lending practices. We believe an important measurement for monitoring overall credit quality of our loan portfolio is the ratio of non-performing assets to total assets as nonperforming loans may ultimately progress to other real estate owned (“OREO”). Accordingly, the initial underwriting of loans is vital. Our ratios of non-performing assets to total assets as of December 31, 2019, December 31, 2018, and December 31, 2017 were 2.65%, 1.94%, and 1.15%, respectively. We have customized our loan underwriting to reflect the risks that are specific to each product type as described below.

Agricultural Lending. Our agricultural banking team consists of bankers who all grew up on farms in Wisconsin and Minnesota, which provides a solid understanding of the nuances of the industry. As of the date of this filing, we have twelve agricultural banking officers driving the relationships with our customers, as well as five crop insurance sales representatives. Our philosophy is to bring the Bank to the customer, and most contacts are made on the farm. We believe the deep relationships our team has with our agricultural customers, and the value each team member provides given his or her strong agricultural roots, create a barrier to entry for our competitors. We believe this regular personal contact with our customers provides a high level of service and allows our bankers to monitor our credits more effectively.

Our relationships with our agricultural customers typically involve their entire primary banking needs. We lend money to our customers for short-term needs, such as planting crops or buying feed. We also provide intermediate-term loans to fund cattle or equipment needs, as well as longer-term real estate loans to provide funds to purchase real estate or improve existing real estate. Collateral for these loans will typically involve cross-collateralization of all of a farm’s assets, and the Bank will be in a primary lien position. We apply a consistent credit philosophy when underwriting agricultural loans, which focuses on repayment of credit facilities from current and historical cash flow analysis, both cash and accrual. Other factors considered in granting credit are management capability, collateral quality and adequacy, and balance sheet leverage.

Commercial Lending. Our commercial and industrial loans (“commercial loans”) are offered by business bankers who, as a group, have extensive experience in making commercial loans. Our commercial loan portfolio is comprised of conventional term loans, lines of credit and government guaranteed loans, primarily Small Business Administration (“SBA”) loans. These loans have either adjustable or fixed rates typically with terms of five years or less, although terms are generally longer with SBA guarantees. Commercial loans are underwritten on the basis of the borrower’s ability to make repayment from the cash flow of its business and generally are collateralized by business assets, such as accounts receivable, equipment and inventory, as well as personal guarantees of the principals. The availability of funds for the repayment of commercial loans is substantially dependent on the success of the business itself, which is subject to adverse economic conditions.

Commercial Real Estate Lending.  Commercial real estate mortgage loans (“CRE loans”) in our portfolio consist of fixed and adjustable interest rate loans that were originated at prevailing market interest rates. Our policy has been to originate CRE loans predominantly in our primary market area. CRE loans consist primarily of multi-family investment properties and investment retail, office, mini-storage and warehouse loans. These loans are generally underwritten to a maximum loan-to-value ratio of 75% of the lower of appraised value or purchase price of the property securing the loan. In making CRE loans, we primarily consider the net operating income generated by the real estate to support the debt service, the financial resources, income level and managerial expertise of the borrower, the marketability of the collateral and our lending experience with the borrower. CRE loans entail significant additional risks compared to residential mortgage loans. The collateral underlying CRE loans may depreciate over time, cannot be appraised with as much precision as residential real estate, and may fluctuate in value based on the success of the tenants.

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Residential Real Estate Lending and Consumer Lending. At this time, we do not originate consumer, personal, and residential real estate loans; however, we do continue to service legacy loans. These loans are most often collateralized by primary residences, secondary residences, automobiles and recreational vehicles. Consumer loans are priced at prevailing market rates and are made to the individuals responsible for making the scheduled payments. Consumer and personal loans generally have a term of five years or less, with amortizations that match the useful life of the assets being financed. Consumer loans represented less than 0.1% of our overall loan portfolio as of December 31, 2019.

Concentrations. Loan concentrations are defined as amounts loaned to multiple borrowers engaged in similar activities that could cause them to be similarly impacted by economic or other conditions. We, on a routine basis, monitor these concentrations in order to consider adjustments in our lending practices to reflect economic conditions, loan to deposit ratios, and industry trends. As of December 31, 2019, 2018, and 2017, there was a concentration of agricultural real estate and agricultural production loans, which together comprised approximately 63.7%, 60.0%, and 59.7% of our loan portfolio on such dates, respectively.  There was also a concentration of commercial real estate loans at December 31, 2017, which comprised approximately 25.5%, of our loan portfolio on such date.  Other than as previously described, there were no concentrations of loans within any portfolio category to any group of borrowers engaged in similar activities or in a similar business that exceeded 25% of total loans at December 31, 2019, 2018, or 2017.

The credit committee of the board of directors of the Bank concentrates its efforts and resources, and that of its senior management and lending officers, on loan review and underwriting procedures. Internal controls include ongoing reviews of loans made to monitor documentation and the existence and valuations of collateral. In addition, management of the Bank has established a review process with the objective of identifying, evaluating, and initiating necessary corrective action for troubled and stressed loans. The goal of the loan review process is to address classified and non-performing loans as early as possible.

For additional information concerning our risk management, see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management.”

Loan Servicing

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, but because we continue to service these loans, we are able to maintain a relationship with the customer. Additionally, we typically earn a gain on the sale of loans and receive a servicing fee that generally exceeds the cost of administering the loan and maintaining the customer relationship.

For more information about our loan servicing, see the section of this Form 10-K entitled “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Financial Condition at December 31, 2019 and 2018 —Loan Servicing.”

Classification of Assets

Interest on loans accrues and is credited to income based upon the principal balance outstanding. It is management’s policy to discontinue the accrual of interest income and classify a loan as nonaccrual when principal or interest is past due 90 days or more unless, in the opinion of management, the credit is well secured and in the process of collection. Loans may also be placed on nonaccrual status when, in management’s opinion, repayment is not likely to be paid in accordance with the terms of the obligation. Consumer installment loans are generally charged-off after 90 days of delinquency unless adequately collateralized and in the process of collection. Loans are not returned to accrual status until principal and interest payments are brought current and future payments appear reasonably certain. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is charged against interest income.

Real estate acquired by us as a result of foreclosure or by deed in lieu of foreclosure is classified as OREO. OREO properties are recorded on the balance sheet at the lower of cost or fair value less estimated selling costs, and the estimated loss, if any, is charged to the allowance for loan losses at the time it is transferred to OREO. Further write-downs in OREO are recorded at the time management believes additional deterioration in value has occurred and are charged to non-interest expense.  

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Loans on nonaccrual status, OREO, and certain other related information was as follows as of the dates indicated:

	As of  December 31,
	2019					2018					2017
	Amount		% of Loans			Amount		% of Loans			Amount		% of Loans
	(dollars in thousands)
Total loans on nonaccrual    status	$	30,968		2.99	%	$	22,983		2.00	%	$	11,559		1.01	%
Other real estate owned (1)		5,521		0.53	%		6,568		0.57	%		4,565		0.40	%
Total non-performing assets	$	36,489		3.52	%	$	29,551		2.57	%	$	16,124		1.40	%
Loans past due 30-89 days	$	1,876		0.18	%	$	1,429		0.12	%	$	1,540		0.13	%
As a percent of total assets:
Total non-performing loans				2.25	%				1.64	%				0.83	%
Total non-performing assets				2.65	%				1.94	%				1.15	%
Allowance for loan losses as a    percent of:
Total assets				1.11	%				1.09	%				0.95	%
Non-performing loans				49.30	%				71.81	%				114.60	%

(1) 2017 excludes $0.4 million of bank property transferred from premises and equipment that qualifies as OREO but which is not considered a non-performing asset.

At December 31, 2019, loans 30 to 89 days delinquent consisted of seven customer relationships, which totaled $1.9 million. Management continually evaluates the collectability of its non-performing loans and the adequacy of its allowance for loan losses to absorb the identified and unidentified losses inherent in the loan portfolio. As a result of these evaluations, loans considered uncollectible are charged-off, and adjustments to the reserve considered necessary are provided through a provision charged against earnings. These evaluations consider the current economic environment, the real estate market and its impact on underlying collateral values, trends in the level of non-performing and past-due loans, and changes in the size and composition of the loan portfolio.

Provision for loan losses for the years ended December 31, 2019, 2018, and 2017, totaled $0.4 million, $3.2 million, and $2.3 million, respectively. For the year ended December 31, 2019, net loans charged off totaled $1.7 million.  For the year ended December 31, 2018, net loans recovered totaled $63 thousand, and for the year ended December 31, 2017 net loans charged off totaled $1.7 million.  At December 31, 2019, 2018, and 2017, we had non-performing loans (i.e., nonaccrual loans and loans 90 days or more past due) of $31.0 million, $23.0 million, and $11.6 million, respectively, and the allowance for loan loss was $15.3 million, $16.5 million, and $13.2 million at December, 31, 2019, 2018, and 2017, respectively.  Considering the nature of our loan portfolio, management believed that the allowance for loan losses at December 31, 2019 was adequate.

For more information about our allowance for loan losses, see the section of this Form 10-K entitled “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Operating Results for the Years Ended  December 31, 2019 and 2018 —Allowance for Loan Losses.”

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Deposit Activities

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, money market accounts, savings accounts, term certificate accounts (including “jumbo” certificates in denominations of $100,000 or more), and retirement savings plans. As of December 31, 2019, 2018, and 2017, the distribution by type of deposit accounts was as follows:

	As of  December 31,
	2019					2018					2017
	Amount		% of Deposits			Amount		% of Deposits			Amount		% of Deposits
	(dollars in thousands)
Certificates of deposit	$	375,100		34.0	%	$	356,484		29.2	%	$	302,004		27.2	%
National time deposits		99,485		9.0	%		160,445		13.1	%		142,391		12.8	%
Brokered deposits		166,340		15.1	%		308,504		25.2	%		282,616		25.5	%
Money market accounts		247,828		22.5	%		218,929		17.9	%		199,118		18.0	%
Demand, noninterest-bearing		138,489		12.6	%		121,436		9.9	%		125,584		11.3	%
NOW accounts and interest    checking		67,805		6.2	%		51,779		4.2	%		51,613		4.6	%
Savings		6,395		0.6	%		5,770		0.5	%		6,751		0.6	%
Total deposits	$	1,101,442		100.0	%	$	1,223,347		100.0	%	$	1,110,077		100.0	%

Our deposits decreased during 2019 by 10.0% primarily due to Company’s focused effort to increase client deposits and decrease the reliance on brokered and national funding.  Our deposits during 2018 increased 10.2% primarily as a result of increases in money market accounts and time and brokered deposits.  

Maturity terms, service fees and withdrawal penalties are established by us on a periodic basis. The determination of rates and terms is predicated on funds acquisition and liquidity requirements, rates paid by competitors, growth goals and federal regulations.

Brokered and Other Deposits

We use various funding sources including: (i) core deposits consisting of traditional bank deposit products, such as demand deposits, money market accounts and certificates of deposit, and (ii) wholesale funds consisting of brokered deposits, national certificates of deposit and Federal Home Loan Bank of Chicago (the “FHLB”) advances. Wholesale funding is used to supplement normal deposit accumulation by us and to assist in asset liability management. We use brokered deposits to obtain non-putable deposits (except for death and incompetence) with maturities and options that assist in the management of various balance sheet interest rate risks. These deposits may have a higher or lower interest rate than deposits obtained locally.  

FDIC regulations limit the ability of certain insured depository institutions under certain conditions to accept, renew, or roll over brokered deposits at rates of interest which are significantly higher than the prevailing rates of interest on deposits offered by other insured depository institutions having the same type of charter in such depository institutions’ normal market area. Under these regulations, “well capitalized” depository institutions may accept, renew, or roll over deposits at such rates without restriction, “adequately capitalized” depository institutions may accept, renew or roll over deposits at such rates with a waiver from the FDIC (subject to certain restrictions on payments of rates), and “undercapitalized” depository institutions may not accept, renew or roll over deposits at such rates. The definitions of “well capitalized,” “adequately capitalized” and “undercapitalized” are the same as the definitions adopted by the agencies to implement the prompt corrective action provisions of applicable law.  As of December 31, 2019, 2018, and 2017, the Bank met the definition of a “well capitalized” depository institution.

Time deposits of $100,000 and over, public fund deposits and other large deposit accounts tend to be short-term in nature and more sensitive to changes in interest rates than other types of deposits and, therefore, may be a less stable source of funds. In the event that existing short-term deposits are not renewed, the resulting loss of the deposited funds could adversely affect our liquidity. In a rising interest rate market, such short-term deposits may prove to be a costly source of funds because their short-term nature facilitates renewal at increasingly higher interest rates, which may adversely affect our earnings. However, the converse is true in a falling interest-rate market where such short-term deposits are more favorable to us.

Competition

We encounter strong competition both in making loans and in attracting deposits. In one or more aspects of our business, we compete with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies and other financial intermediaries. Most of these competitors, some of which are affiliated with bank holding companies, have substantially greater resources and lending limits, and may offer certain services that we do not currently provide.

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In addition, many of our non-bank competitors,such as financial technology (fintech) companies, are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks. Recent federal and state legislation has heightened the competitive environment in which financial institutions must conduct their business, and the potential for competition among financial institutions of all types has increased significantly. There is no assurance that increased competition from other financial institutions will not have an adverse effect on our operations.

To compete, we rely upon specialized services, responsive handling of customer needs, and personal contacts by our officers, directors, and staff. Large multi-branch banking competitors tend to compete primarily by rate and the number and locations of branches while smaller, independent financial institutions tend to compete primarily by rate and personal service.  Based on data from the FDIC, as of June 30, 2019 (the most recent data available), the Bank held 40.6% of deposits in Manitowoc County, 10.5% in Portage County, 3.9% in Outagamie County, and 1.1% in Brown County.

Employees

At March 1, 2020, we had 150 full-time employees and 24 part-time employees.  Our employees are not represented by a collective bargaining unit.  We consider our relations with our employees to be excellent.

Supervision and Regulation

General

FDIC-insured institutions, like the Bank, their holding companies and their affiliates are extensively regulated under federal and state law.  As a result, the Company’s growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Company’s primary regulator, the Federal Reserve, the Bank’s state regulator, the WDFI, and its primary federal regulator, the FDIC, as well as the Consumer Financial Protection Bureau (“CFPB”), as the regulator of consumer financial services and their providers. Furthermore, taxation laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board (“FASB”), securities laws administered by the SEC and state securities authorities, and anti-money laundering laws enforced by the U.S. Department of the Treasury (“Treasury”) have an impact on the Company’s business. The effect of these statutes, regulations, regulatory policies and accounting rules are significant to the Company’s operations and results.

Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of FDIC-insured institutions, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than stockholders. These laws, and the regulations of the bank regulatory agencies issued under them, affect, among other things, the scope of the Company’s business, the kinds and amounts of investments the Company and the Bank may make, reserve requirements, required capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with the Company’s and the Bank’s insiders and affiliates and the Company’s payment of dividends. In reaction to the global financial crisis and particularly following the passage of the Dodd Frank Act, the Company experienced heightened regulatory requirements and scrutiny. Although the reforms primarily targeted systemically important financial service providers, their influence filtered down in varying degrees to community banks over time and caused the Company’s compliance and risk management processes, and the costs thereof, to increase.  However, in May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (Regulatory Relief Act) was enacted by Congress in part to provide regulatory relief for community banks and their holding companies. To that end, the law eliminated questions about the applicability of certain Dodd-Frank Act reforms to community bank systems, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds. The Company believes these reforms are favorable to its operations.

The supervisory framework for U.S. banking organizations subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their business. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations.

The following is a summary of the material elements of the supervisory and regulatory framework applicable to the Company and the Bank, beginning with a discussion of the continuing regulatory emphasis on the Company’s capital levels. It does not describe all of the statutes, regulations and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to the particular statutory and regulatory provision.

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The Role of Capital

Regulatory capital represents the net assets of a banking organization available to absorb losses. Because of the risks attendant to their business, FDIC-insured institutions are generally required to hold more capital than other businesses, which directly affects the Company’s earnings capabilities. While capital has historically been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking regulators recognized that the amount and quality of capital held by banks prior to the crisis was insufficient to absorb losses during periods of severe stress. Certain provisions of the Dodd-Frank Act and Basel III, discussed below, establish capital standards that are meaningfully more stringent than those in place previously.

Minimum Required Capital Levels.Banks have been required to hold minimum levels of capital based on guidelines established by the bank regulatory agencies since 1983. The minimums have been expressed in terms of ratios of “capital” divided by “total assets”. As discussed below, bank capital measures have become more sophisticated over the years and have focused more on the quality of capital and the risk of assets.  Bank holding companies have historically had to comply with less stringent capital standards than their bank subsidiaries and have been able to raise capital with hybrid instruments such as trust preferred securities. The Dodd-Frank Act mandated the Federal Reserve to establish minimum capital levels for holding companies on a consolidated basis as stringent as those required for FDIC-insured institutions.  A result of this change is that the proceeds of hybrid instruments, such as trust preferred securities, were excluded from capital over a phase-out period. However, if such securities were issued prior to May 19, 2010 by bank holding companies with less than $15 billion of assets, they may be retained, subject to certain restrictions. Because the Company has assets of less than $15 billion, the Company is able to maintain its trust preferred proceeds as capital but the Company has to comply with new capital mandates in other respects and will not be able to raise capital in the future through the issuance of trust preferred securities.

The Basel International Capital Accords. The risk-based capital guidelines for U.S. banks since 1989 were based upon the 1988 capital accord known as “Basel I” adopted by the international Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. bank regulatory agencies on an interagency basis. The accord recognized that bank assets for the purpose of the capital ratio calculations needed to be assigned risk weights (the theory being that riskier assets should require more capital) and that off-balance sheet exposures needed to be factored in the calculations.  Basel I had a very simple formula for assigning risk weights to bank assets from 0% to 100% based on four categories.  In 2008, the banking agencies collaboratively began to phase-in capital standards based on a second capital accord, referred to as “Basel II,” for large or “core” international banks (generally defined for U.S. purposes as having total assets of $250 billion or more, or consolidated foreign exposures of $10 billion or more) known as “advanced approaches” banks.  The primary focus of Basel II was on the calculation of risk weights based on complex models developed by each advanced approaches bank. Because most banks were not subject to Basel II, the U.S. bank regulators worked to improve the risk sensitivity of Basel I standards without imposing the complexities of Basel II. This “standardized approach” increased the number of risk-weight categories and recognized risks well above the original 100% risk weight. It is institutionalized by the Dodd-Frank Act for all banking organizations, even for the advanced approaches banks, as a floor.  

On September 12, 2010, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced agreement on a strengthened set of capital requirements for banking organizations around the world, known as Basel III, to address deficiencies recognized in connection with the global financial crisis.   

The Basel III Rule.In July 2013, the U.S. federal banking agencies approved the implementation of the Basel III regulatory capital reforms in pertinent part, and, at the same time, promulgated rules effecting certain changes required by the Dodd-Frank Act (the “Basel III Rule”).  In contrast to capital requirements historically, which were in the form of guidelines, Basel III was released in the form of enforceable regulations by each of the regulatory agencies. The Basel III Rule is applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to bank and savings and loan holding companies, other than “small bank holding companies” who are relieved from compliance with the Basel III Rule (see “—BHC Capital Requirements” in the description of the Company below) and certain qualifying community banking organizations that may elect a simplified framework (which the Bank has not done.)

The Basel III Rule increased the required quantity and quality of capital and, for nearly every class of assets, it requires a more complex, detailed and calibrated assessment of risk and calculation of risk-weight amounts.

Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments. The Basel III Rule also changed the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).  A number of instruments that qualified as Tier 1 Capital under

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Basel I do not qualify, or their qualifications changed. For example, noncumulative perpetual preferred stock, which qualified as simple Tier 1 Capital under Basel I, does not qualify as Common Equity Tier 1 Capital, but qualifies as Additional Tier 1 Capital. The Basel III Rule also constrained the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in capital and requires deductions from Common Equity Tier 1 Capital in the event that such assets exceed a certain percentage of a banking institution’s Common Equity Tier 1 Capital.  

The Basel III Rule requires minimum capital ratios as follows:

• A ratio of minimum Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets;

• An increase in the minimum required amount of Tier 1 Capital from 4% to 6% of risk-weighted assets;

• A continuation of the minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and

• A minimum leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances.

In addition, institutions that seek the freedom to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain greater than 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer. The purpose of the conservation buffer is to ensure that banking institutions maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the conservation buffer increases the minimum ratios depicted above to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital.  

Well-Capitalized Requirements.The ratios described above are minimum standards in order for banking organizations to be considered “adequately capitalized.” Bank regulatory agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a banking organization that is well-capitalized may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii) qualify for expedited processing of other required notices or applications; and (iii) accept, roll-over or renew brokered deposits. Higher capital levels could also be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 Capital less all intangible assets), well above the minimum levels.

Under the capital regulations of the FDIC, in order to be well‑capitalized, a banking organization must maintain:

• A Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more;

• A ratio of Tier 1 Capital to total risk-weighted assets of 8% or more (6% under Basel I);

• A ratio of Total Capital to total risk-weighted assets of 10% or more (the same as Basel I); and

• A leverage ratio of Tier 1 Capital to total adjusted average quarterly assets of 5% or greater.

It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above.

As of December 31, 2019: (i) the Bank is not subject to a directive from the WDFI or the FDIC to increase its capital and (ii) the Bank was well-capitalized, as defined by FDIC regulations. The Bank is also in compliance with the capital conservation buffer of greater than 2.5 percent.

Prompt Corrective Action.The concept of an institution being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking regulators with broad power to take “prompt corrective action” to resolve the problems of institutions based on the capital level of each particular institution.The extent of the regulators’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth

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and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.

Community Bank Capital Simplification.Community banks have long raised concerns with bank regulators about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule.  In response, Congress provided an “off-ramp” for institutions, like the Bank, with total consolidated assets of less than $10 billion. Section 201 of the Regulatory Relief Act instructed the federal banking regulators to establish a single “Community Bank Leverage Ratio” (“CBLR”) of between 8 and 10%. Under the final rule, a community banking organization is eligible to elect the new framework if it has: less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9%. The Bank may elect the CBLR framework at any time but has not currently determined to do so.

Regulation and Supervision of the Company

General.The Company, as the sole stockholder of the Bank, is a bank holding company. As a bank holding company, the Company is registered with, and is subject to regulation supervision and enforcement by, the Federal Reserve under the BHCA. The Company is legally obligated to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances where the Company might not otherwise do so. Under the BHCA, the Company is subject to periodic examination by the Federal Reserve. The Company is required to file with the Federal Reserve periodic reports of the Company’s operations and such additional information regarding the Company and its subsidiaries as the Federal Reserve may require.

Acquisitions and Activities.The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the United States. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company. Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions. For a discussion of the capital requirements, see “—The Role of Capital” above.

The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions. The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits the Company to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services. The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.

Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally. The Company has not elected to operate as a financial holding company.

Change in Control. Federal law also prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator. “Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership.

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BHC Capital Requirements. Under the Federal Reserve’s Small Bank Holding Company Policy Statement, holding companies with less than $3 billion in total assets are exempt from the Basel III consolidated capital requirements, as long as their pro forma consolidated assets remain under $3 billion and as long as they do not engage in significant nonbanking activities, conduct significant off-balance sheet activities or have a material amount of debt or equity securities registered with the SEC.  As of the date of this filing, the Federal Reserve has not requested that the Company report consolidated regulatory capital and has indicated that the Company is considered well-capitalized.

Dividend Payments.The Company’s ability to pay dividends to its stockholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies.  As a Wisconsin corporation, the Company is subject to the limitations of Wisconsin law, which allows it to pay dividends unless, after giving it effect, any of the following would occur: (i) the Company would not be able to pay the Company’s debts as they become due in the usual course of business or (ii) the total assets would be less than the sum of its total liabilities plus any amount that would be needed if the Company were to be dissolved at the time of the dividend payment, to satisfy the preferential rights upon dissolution of stockholders whose rights are superior to the rights of the stockholders receiving the distribution.

As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to stockholders if: (i) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank holding companies and their nonbank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.  In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain greater than 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “—The Role of Capital” above.

Monetary Policy.The monetary policy of the Federal Reserve has a significant effect on the operating results of financial or bank holding companies and their subsidiaries. Among the tools available to the Federal Reserve to affect the money supply are open market transactions in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements against bank deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits.

Federal Securities Regulation.The Company’s common stock is registered with the SEC under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consequently, the Company is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.

Corporate Governance.The Dodd-Frank Act addressed many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd Frank Act increased stockholder influence over boards of directors by requiring companies to give stockholders a nonbinding vote on executive compensation and so-called “golden parachute” payments and authorizing the SEC to promulgate rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy materials. The legislation also directed the Federal Reserve to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.

Supervision and Regulation of the Bank

General. The Bank is a Wisconsin state-chartered bank.  The deposit accounts of the Bank are insured by the FDIC’s Deposit Insurance Fund (“DIF”) to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category.  As a Wisconsin-chartered FDIC-insured bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the WDFI, the chartering authority for Wisconsin banks, and the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like the Bank, are not members of the Federal Reserve System (nonmember banks).

Deposit Insurance.As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC.  The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification.  For institutions like the Bank that are not considered large and highly complex banking organizations, assessments are now based on examination ratings and financial ratios. The total base assessment rates currently range from 1.5 basis points to 30 basis points. At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, increases or decreases the assessment rates, following notice and comment on proposed rulemaking. The assessment base against which an FDIC-insured institution’s deposit insurance premiums paid to the DIF has been calculated since effectiveness of the

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Dodd-Frank Act is based on its average consolidated total assets less its average tangible equity. This method shifted the burden of deposit insurance premiums toward those large depository institutions that rely on funding sources other than U.S. deposits. 

The reserve ratio is the FDIC insurance fund balance divided by estimated insured deposits. The Dodd-Frank Act altered the minimum reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to FDIC-insured institutions when the reserve ratio exceeds certain thresholds.  The reserve ratio reached 1.36 percent as of September 30, 2018, exceeding the statutory required minimum reserve ratio of 1.35 percent.  As a result, the FDIC is providing assessment credits to insured depository institutions, like the Bank, with total consolidated assets of less than $10 billion for the portion of their regular assessments that contributed to growth in the reserve ratio between 1.15 percent and 1.35 percent. The share of the aggregate small bank credits allocated to each insured institution is proportional to its credit base, defined as the average of its regular assessment base during the credit calculation period. The FDIC is currently applying the credits for quarterly assessment periods beginning July 1, 2019, and, as long as the reserve ratio is at least 1.35 percent, the FDIC will remit the full nominal value of any remaining credits in a lump-sum payment.

Supervisory Assessments. All Wisconsin banks are required to pay supervisory assessments to the WDFI to fund the operations of that agency.  The amount of the assessment is calculated on the basis of the Bank’s total assets.

Capital Requirements. Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “—The Role of Capital” above.

Liquidity Requirements. Liquidity is a measure of the ability and ease with which bank assets may be converted to cash. Liquid assets are those that can be converted to cash quickly if needed to meet financial obligations. To remain viable, FDIC-insured institutions must have enough liquid assets to meet their near-term obligations, such as withdrawals by depositors. Because the global financial crisis was in part a liquidity crisis, Basel III also includes a liquidity framework that requires FDIC-insured institutions to measure their liquidity against specific liquidity tests. One test, referred to as the LCR, is designed to ensure that the banking entity has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The other test, known as the net stable funding ratio, or NSFR, is designed to promote more medium- and long-term funding of the assets and activities of FDIC-insured institutions over a one-year horizon. These tests provide an incentive for banks and holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits).

In addition to liquidity guidelines already in place, the federal bank regulatory agencies implemented the Basel III LCR in September 2014, which requires large financial firms to hold levels of liquid assets sufficient to protect against constraints on their funding during times of financial turmoil, and in 2016 proposed implementation of the NSFR. While these rules do not, and will not, apply to the Bank, it continues to review its liquidity risk management policies in light of developments.

Dividend Payments. The primary source of funds for the Company is dividends from the Bank.  Under Wisconsin law, the board of directors of a bank may declare and pay a dividend from its undivided profits in an amount they consider expedient. The board of directors must provide for the payment of all expenses, losses, required reserves, taxes, and interest accrued or due from the bank before the declaration of dividends from undivided profits. If dividends declared and paid in either of the two immediately preceding years exceeded net income for either of those two years respectively, the bank may not declare or pay any dividend in the current year that exceeds year-to-date net income except with the written consent of the division.  The FDIC and the WDFI may prohibit the payment of dividends by the Bank if either or both determine such payment would constitute an unsafe or unsound practice.  In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain greater than 2.5 percent in Common Equity Tier 1 Capital attributable to the capital conservation buffer.  See “—The Role of Capital” above.

State Bank Investments and Activities.  The Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized by Wisconsin law. However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank. Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless the bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF. These restrictions have not had, and are not currently expected to have, a material impact on the operations of the Bank.

Insider Transactions. The Bank is subject to certain restrictions imposed by federal law on “covered transactions” between the Bank and its “affiliates.” The Company is an affiliate of the Bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company and the acceptance of the stock or other securities of the Company as collateral for loans made by the Bank. The Dodd-Frank Act

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enhanced the requirements for certain transactions with affiliates, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered transactions must be maintained.

Certain limitations and reporting requirements are also placed on extensions of credit by the Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal stockholders of the Company and to “related interests” of such directors, officers and principal stockholders. In addition, federal law and regulations may affect the terms upon which any person who is a director or officer of the Company or the Bank, or a principal stockholder of the Company, may obtain credit from banks with which the Bank maintains a correspondent relationship.

Safety and Soundness Standards/Risk Management. The federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of FDIC-insured institutions. The standards apply to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.  While regulatory standards do not have the force of law, if an institution operates in an unsafe and unsound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates the institution pays on deposits or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with safety and soundness may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.

During the past decade, the bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions they supervise.  Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new technologies, product innovation, and the size and speed of financial transactions have changed the nature of banking markets.  The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal and reputational risk. The agencies identified key risk themes for 2020 as:  (i) elevated operational risk as banks adapt to an evolving technology environment and persistent cybersecurity risks;  (ii) the need for banks to prepare for a cyclical change in credit risk while credit performance is strong;  (iii) elevated interest rate risk due to lower rates continuing to compress net interest margins; and (iv) strategic risks from non-depository financial institutions, use of innovative and evolving technology, and progressive data analysis capabilities.  The Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls.

Privacy and Cybersecurity. The Bank is subject to many U.S. federal and state laws and regulations governing requirements for maintaining policies and procedures to protect non-public confidential information of their customers. These laws require The Bank to periodically disclose their privacy policies and practices relating to sharing such information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances. They also impact the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. In addition, as a part of its operational risk mitigation, the Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information and to require the same of its service providers. These security and privacy policies and procedures, for the protection of personal and confidential information, are in effect across all business lines and geographic locations.

Branching Authority. Wisconsin banks, such as the Bank, have the authority under Wisconsin law to establish branches anywhere in the State of Wisconsin, subject to receipt of all required regulatory approvals. The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or acquire individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments. Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger.

Transaction Account Reserves.  Federal Reserve regulations require FDIC-insured institutions to maintain reserves against their transaction accounts (primarily NOW and regular checking accounts). For 2020, the first $16.9 million of otherwise reservable balances are exempt from reserves and have a zero percent reserve requirement; for transaction accounts aggregating between $16.9 million to $127.5 million, the reserve requirement is 3% of those transaction account balances; and for net transaction accounts in

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excess of $127.5 million, the reserve requirement is 10% of the aggregate amount of total transaction account balances in excess of $127.5 million. These reserve requirements are subject to annual adjustment by the Federal Reserve.

Community Reinvestment Act Requirements.The CRA requires the Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of the entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess the Bank’s record of meeting the credit needs of its communities. Applications for additional acquisitions would be affected by the evaluation of the Bank’s effectiveness in meeting its CRA requirements.

Anti-Money Laundering. The USA Patriot Act is designed to deny terrorists and criminals the ability to obtain access to the U.S. financial system and has significant implications for FDIC-insured institutions, brokers, dealers and other businesses involved in the transfer of money. The USA Patriot Act mandates financial services companies to have policies and procedures with respect to measures designed to address any or all of the following matters: (i) customer identification programs; (ii) money laundering; (iii) terrorist financing; (iv) identifying and reporting suspicious activities and currency transactions; (v) currency crimes; and (vi) cooperation between FDIC-insured institutions and law enforcement authorities.

Concentrations in Commercial Real Estate.Concentration risk exists when FDIC-insured institutions deploy too many assets to any one industry or segment. A concentration in commercial real estate is one example of regulatory concern. The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (“CRE Guidance”) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant commercial real estate loan concentrations that may warrant greater supervisory scrutiny: (i) commercial real estate loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital. The CRE Guidance does not limit banks’ levels of commercial real estate lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their commercial real estate concentrations. On December 18, 2015, the federal banking agencies issued a statement to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards. The federal bank agencies reminded FDIC-insured institutions to maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor, and manage the risks arising from CRE lending. In addition, FDIC-insured institutions must maintain capital commensurate with the level and nature of their CRE concentration risk.

As of December 31, 2019, the Bank did not exceed these guidelines.

Consumer Financial Services. The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced operations to supervise and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including the Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. FDIC-insured institutions with $10 billion or less in assets, like the Bank, continue to be examined by their applicable bank regulators.

Because abuses in connection with residential mortgages were a significant factor contributing to the financial crisis, many new rules issued by the CFPB and required by the Dodd-Frank Act addressed mortgage and mortgage-related products, their underwriting, origination, servicing and sales. The Dodd-Frank Act significantly expanded underwriting requirements applicable to loans secured by 1-4 family residential real property and augmented federal law combating predatory lending practices. In addition to numerous disclosure requirements, the Dodd‑Frank Act imposed new standards for mortgage loan originations on all lenders, including banks and savings associations, in an effort to strongly encourage lenders to verify a borrower’s ability to repay, while also establishing a presumption of compliance for certain “qualified mortgages.”  The Regulatory Relief Act provided relief in connection with mortgages for banks with assets of less than $10 billion, and, as a result, mortgages the Bank makes are now considered to be qualified mortgages if they are held in portfolio for the life of the loan.

The CFPB’s rules have not had a significant impact on the Bank’s operations, except for higher compliance costs.

ITEM 1A. RISK FACTORS

Forward-Looking Statements

This report contains statements that constitute forward-looking statements within the meaning of the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by the use of words such as “estimate,” “project,” “predict,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “may,” “might,” “should,” “indicate,” “will,” “would,” “could,” “contemplate,” “continue,” “intend,” “target” and words of

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similar meaning. These forward-looking statements are not historical facts and include statements of our goals, intentions, expectations, business plans, and operating strategies.

Forward-looking statements are subject to significant risks and uncertainties, and our actual results may differ materially from the results discussed in such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• adverse changes in the economic conditions of our market area and of the agriculture market generally, dairy in particular;

• adverse changes in the financial services industry and national and local real estate markets (including real estate values);

• competition among depository and other financial institutions, as well as fintech companies and other non-traditional competitors;

• risks related to a high concentration of dairy-related collateral located in our market area;

• credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and the sufficiency of our allowance for loan losses and provision for loan losses;

• the failure of assumptions and estimates underlying the establishment of allowances for loan losses, including the effects of the implementation of the Current Expected Credit Loss (CECL) accounting standard, and estimation of values of collateral and various financial assets and liabilities;

• interest rate risks associated with our business;

• fluctuations in the values of the securities held in our securities portfolio;

• changes in U.S. monetary and fiscal policies, the level and volatility of interest rates, the capital markets and other market conditions that may affect, among other things, our liquidity, our net interest margin, our funding sources and the value of our assets and liabilities;

• our success in introducing new financial products;

• our ability to attract and maintain deposits;

• fluctuations in the demand for loans, which may be affected by numerous factors, including commercial conditions in our market areas and by declines in the value of real estate in our market areas;

• changes in consumer spending, borrowing and saving habits that may affect deposit levels;

• costs or difficulties related to the integration of the business of acquired entities and the risk that the anticipated benefits, cost savings and any other savings from such transactions may not be fully realized or may take longer than expected to realize;

• our ability to successfully enter new markets, capitalize on growth opportunities, execute or strategic plan, and manage our growth;

• any negative perception of our reputation or financial strength;

• our ability to raise additional capital on acceptable terms when needed;

• changes in laws or government regulations or policies affecting financial institutions, including changes in banking, consumer protection, securities, trade, and tax laws and regulations, and any increased costs of compliance with such laws and regulations;

• changes in accounting policies and practices, such as the implementation of the CECL accounting standard;

• our ability to attract and retain key members of our senior management team;

• our ability to successfully manage liquidity risk;

• the effectiveness of our risk management framework;

• the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents and our ability to identify and address such incidents;

• interruptions involving our information technology and telecommunications systems or third-party servicers;

• changes in benchmark interest rates used to price our loans and deposits, including the expected elimination of the London Interbank Offered Rate (“LIBOR”);

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• the extensive regulatory framework that applies to us and our compliance with governmental and regulatory requirements, including the Dodd‑Frank Act, the Basel III Rule and others relating to banking, consumer protection, securities and tax matters;

• rapid technological change in the financial services industry;

• the effects of severe weather, natural disasters, acts of war or terrorism, widespread disease or pandemics, and other external events;

• the impact of any claims, legal actions, litigation, and other legal proceedings and regulatory actions against us, including any effect on our reputation;

• the effect of tariffs, trade agreements, and other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and

• each of the factors and risks identified in the “Risk Factors” section included under Item 1A. of Part I of this Annual Report on Form 10-K.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Forward-looking statements are made only as of the date of this report, and the Company undertakes no obligation to update any forward-looking statements contained in this report to reflect new information or events or conditions after the date hereof.

Risk Factors

An investment in our common stock contains a high degree of risk. In addition to the other information contained in, or incorporated by reference into, this Form 10-K, including the matters addressed under the caption “Forward-Looking Statements” above, you should carefully consider the risks described below. If any of the events highlighted in the following risks actually occur, or if additional risks and uncertainties not presently known to us or that we do not currently believe to be material, materialize, our business, results of operations or financial condition would likely suffer. In such an event, the trading price of our common stock could decline, and you could lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in our filings with the SEC and this Form 10-K, including our financial statements and related notes.

Risks Related to Our Business

We are subject to specific market risks due to our focus on agricultural lending.

We primarily concentrate our lending activities in the state of Wisconsin, which has a significant agricultural economy. Historically, our senior management’s primary business lending experience has been in agricultural lending, with a specific expertise in and focus on dairy and dairy-related businesses. Although we attempt to maintain a diversified customer base and a diversified loan portfolio, we are more heavily dependent upon the agricultural economy than a typical commercial bank. At December 31, 2019, agricultural loans comprised $659.7 million, or approximately 63.7%, of our total loan portfolio, and the Bank also serviced an additional $751.7 million of agricultural and commercial loans, which generated approximately $10.0 million of servicing fee income during 2019.

The agricultural economy is subject to certain risks that are either inherently volatile or are beyond our ability, or the ability of farmers or other participants in the agricultural economy, to predict or control. Some of these risks include, but are not limited to:

• Market Prices. Agricultural markets are sensitive to real and perceived changes in supply and demand of agricultural products, and given that approximately 83% of our agricultural lending is to dairy farms, the credit quality of a substantial portion of our loan portfolio is closely related to the performance of, and supply and demand in, this sub-sector of the agricultural market. For example, the success of a dairy operation hinges in large part on the cost of feed and the price of milk. When feed costs are high and milk prices are low, it places a strain on our dairy borrowers’ business, which may impair their ability to repay their outstanding loans to us.

• Governmental Policies and Regulations. Our agricultural loans are dependent on the profitable operation and management of the farm properties securing the loans and their cash flows, and government policies and regulations (including the availability of price supports for crops and other agricultural products (in particular, milk), subsidies, tariffs, trade agreements, or government-sponsored crop insurance) are outside the control of our borrowers and may affect the successful operation of a farm.

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• Changing Consumer Preferences.The business of dairy farms and dairy-related borrowers is subject to changing consumer preferences and nutritional and health-related concerns.  Periodically, medical and other studies are released which raise concerns over the healthfulness of cow’s milk in the human diet.  As a result of studies or other cultural influences, the dairy industry could be affected by certain consumer concerns about dairy products, such as the fat, cholesterol, calorie, sodium and lactose content of such products, which could reduce demand for dairy products and negatively affect dairy-related revenue.  In addition, the introduction and rising popularity of dairy-free alternatives to milk, such as almond, soy and oat beverages, could reduce the demand for dairy products and thereby reduce revenues for dairy farmers.

• Weather-Related Risks. Severe weather, including such things as drought, hail, excessive rain or other natural disasters, could impact the quantity and quality of crops and of feed necessary to support our borrowers’ dairy operations and, in turn, increase their expenses. If significant adverse weather-related events occur, it could impair the ability of borrowers to repay outstanding loans or impair the value of collateral securing loans due to significant property damage, which could either result in loss of revenue or cause us to incur additional expenses.

• Disease-Related Risks. The operations of our dairy farm and dairy-related borrowers depend primarily on their cattle. If the livestock were to contract an illness or disease, the borrowers would incur additional expenses, and the viability of their operations may be compromised if the disease is not properly managed. The existence of a widespread livestock disease or pandemic could have a significant impact on our borrowers’ ability to repay outstanding loans or impair the value of collateral securing loans, which could either result in loss of revenue or cause us to incur additional expenses.

• Real Property Value. Our dairy farm and dairy-related borrowers tend to grow and produce much of their feed as opposed to purchasing it from third parties, unlike many dairy farmers in other parts of the country. While this means they are often less subject to fluctuations in feed prices, they require more land. Accordingly, declines in real property values in the areas in which we operate could result in a deterioration of the credit quality of our borrowers or an increase in the number of loan delinquencies, default and charge-offs, and could reduce the value of any collateral we realize following a default on agricultural loans.

• Effects of Bankruptcies of Major Dairies.  In November 2019, Dean Foods, the largest milk producer in the United States, filed for Chapter 11 bankruptcy.  In January 2020, Borden Dairy Co. also filed for Chapter 11 bankruptcy.  These companies cited the rising cost of raw milk and changes in consumer preferences as contributors to the bankruptcies.  The effect of the disruption to the dairy industry caused by these bankruptcies, and the correlating effect on our dairy farm and dairy-related borrowers, is uncertain.

Our focus on local markets and agricultural lending creates credit concentration risks.

Credit risk is primarily related to the risk that a borrower will not be able to repay some or all of its obligations to us. Concentrations of credit risk occur when the aggregate amount owed by one borrower, a group of related borrowers, or borrowers within the same or related markets, industries or groups, represents a relatively large percentage of the total capital or total credit extended by a bank. Although each loan in a concentration may be of sound quality, concentration risks represent a risk not present when the same loan amounts are extended to a more diversified group of borrowers. Loans concentrated in one borrower depend, to a large degree, upon the financial capability and character of the individual borrower. Loans made to a group of related borrowers can be susceptible to financial problems experienced by one or a few members of that group. Loans made to borrowers that are part of the same or related industries or groups, or that are located in the same market area, can all be adversely impacted with respect to their ability to repay some or all of their obligations when adverse conditions prevail in the broader economy generally, in the market specifically or even within just the respective industries or groups.

Our lending is primarily to borrowers located or doing business in Wisconsin. Furthermore, at December 31, 2019, we had certain loan-type concentrations of credit risk, specifically in agricultural lending, which are described in more detail in the section of this Form 10-K entitled “Item 1 - Business—Lending Activities” and “Item 1 - Business—General—Market.” Because of the concentration of agricultural loans in our lending portfolio and the volume of our borrowers in regions dependent upon agriculture, we could be disproportionately affected by changes in the agricultural industry relative to others because these high concentrations present a risk to our lending operations. If any of these borrowers becomes unable to repay their loan obligations for any reason, our nonperforming loans, our allowance for loan losses, and our provision for loan losses could increase significantly, which could have a material adverse effect on our business, financial condition and results of operations.

A prolonged period of weakness in the agricultural economy could result in an increase in agricultural defaults and impaired assets.  

The agricultural economy in the Midwest, including Wisconsin, has declined over the past several years.  In particular, milk prices have generally declined since 2014.  A prolonged period of weakness in the agricultural economy could result in a decrease in demand for loans or other products and services offered by us, an increase in agricultural loan delinquencies and defaults, an increase

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in impaired assets and foreclosures, a decline in the value of our loans secured by real estate, and an inability to sell foreclosed assets.  The effects of a prolonged period of a weakened agricultural economy could have a material adverse effect on our business, financial condition and results of operations.

Our business is dependent on local economies, and a regional or local economic downturn affecting Wisconsin may magnify the adverse effects and consequences to us.

We operate as a community-oriented business bank, with a focus on servicing both business customers and individuals in our market areas, which include our headquarters in Manitowoc, full-service branches in Appleton, Green Bay, and Stevens Point, and a loan production office in each of Darlington, Eau Claire, Fond du Lac, and Sheboygan. Although we have a primary focus on agricultural and business banking, future growth opportunities will depend largely on market area penetration, market area growth and our ability to compete for traditional banking business within our market areas. We anticipate that as a result of this concentration, a downturn in the general economy in our market areas, including Wisconsin specifically, could increase the risk of loss associated with our loan portfolio. Although economic conditions in our markets have been generally strong, there can be no assurance that such conditions will continue to prevail.  Unfavorable or uncertain economic and market conditions can be caused by declines in economic, growth, business activity or investor or business confidence; limitations on the availability of increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; uncertainty in U.S. trade policies, legislation, treaties and tariffs; natural disasters; acts of war or terrorism; widespread disease or pandemics; or a combination of these or other factors.

Volatility in commodity prices may adversely affect our financial condition and results of operations.

At December 31, 2019, approximately 63.7% of our total loan portfolio was comprised of agricultural loans. Volatility in certain commodity prices, including milk, could adversely impact the ability of those borrowers to perform under the terms of their borrowing arrangements with us. In terms of the dairy industry, milk prices have fluctuated. For the 17-year period ended December 31, 2019, the per-year average Class III milk price (a weighted average price of all uses of milk in a particular milk order) in the United States paid to producers has ranged from an average low price of $11.36 per hundredweight (cwt) in 2009 to an average high price of $22.34 per cwt in 2014, according to the University of Wisconsin - Madison.  During 2019, the Class III milk price was an average of $16.96 per cwt.  “Hundredweight” or “cwt” is a measure equal to 100 pounds of milk shipped.  A decrease in milk prices may result in an increase in the number of non-performing loans in our agricultural portfolio, which could have a material adverse effect on our financial condition, earnings and capital.

Changes in U.S. trade policies and other factors beyond the Company’s control, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition and results of operations.

There have been changes in and discussions with respect to U.S. trade policies, legislation, treaties and tariffs, including trade policies and tariffs affecting other countries, including China, the European Union, Canada and Mexico, and retaliatory tariffs by such countries, including retaliatory tariffs on agricultural products from the United States. Tariffs and retaliatory tariffs have been imposed, and additional tariffs and retaliation tariffs have been proposed and may be imposed in the future by these and other countries.  Such tariffs, retaliatory tariffs or other trade restrictions on products and materials that our customers import or export, including among others, agricultural products and dairy products, could cause the prices of our customers’ products to increase which could reduce demand for such products, or reduce our customer’s margins, and adversely impact their revenues, financial results and ability to service debt, which, in turn, could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted in the future.

It remains unclear what the U.S. government or foreign governments will or will not do with respect to tariffs already imposed, additional tariffs that may be imposed, or international trade agreements and policies.  In 2018, the United States, Canada and Mexico agreed to a new trade deal, the United States Mexico Canada Agreement (USMCA) to replace the North American Free Trade Agreement. The USMCA contains provisions giving dairy products from the United States access to Canada’s dairy market.  The USMCA was ratified by Mexico in June 2019 and by the United States in January 2020, but it is still subject to ratification by Canada and will not go into effect until after it is ratified by Canada.  It is not certain if or when Canada will ratify the USMCA and, as a result, if or when the USMCA will go into effect. The full impact of the USMCA on us, our customers and on the economic conditions in Wisconsin is currently unknown. A trade war or other governmental action related to tariffs or international trade agreements or policies has the potential to negatively impact ours and/or our customers’ costs, demand for our customers’ products, and/or the U.S. economy or certain sectors thereof and, thus, adversely impact our business, financial condition and results of operations.

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Our business is significantly dependent on the real estate markets where we operate, as a large portion of our loan portfolio is secured by real estate.

At December 31, 2019, approximately 59.6% of our aggregate loan portfolio, comprising our agriculture real estate loans (including agricultural construction loans), commercial real estate loans and residential real estate loans, was primarily secured by interests in real estate predominantly located in Wisconsin.  Additionally, some of our other lending occasionally involves taking real estate as primary or secondary collateral. Real property values in Wisconsin may be different from, and in some instances worse than, real property values in other markets or in the United States as a whole, and may be affected by a variety of factors outside our control and the control of our borrowers, including national and local economic conditions generally. The market value of real estate securing our real estate loans can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located.  Although a significant portion of such loans is secured by real estate as a secondary form of repayment, adverse developments affecting real estate values in Wisconsin could increase the credit risk associated with our loan portfolio and cause an increase in the number of loan delinquencies, defaults and charge-offs.  Additionally, real estate lending typically involves higher loan principal amounts and the repayment of the loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service.  Economic events or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties.

If problems develop in the real estate market, particularly within Wisconsin, the value of collateral securing our real estate loans could decline.  In such case, we may not be able to realize the amount of security that we anticipated at the time of originating the loan, which could cause us to increase our provision for loan losses and adversely affect our operating results, financial condition and/or capital.

Our commercial real estate and commercial loans generally carry greater credit risk than loans secured by owner occupied one-to-four family real estate, and our credit risk may increase if we succeed in our plan to increase our commercial lending.

At December 31, 2019, $331.7 million, or approximately 32.0%, of our loan portfolio consisted of commercial real estate and commercial loans. Given their generally larger balances and the complexity of the underlying collateral, commercial real estate and commercial loans generally expose a lender to greater credit risk than loans secured by owner occupied one-to-four family real estate.  For commercial real estate loans, the principal risk is that repayment is generally dependent on income from tenant leases being generated in amounts sufficient to cover operating expenses and debt service.  For commercial loans, the principal risk is that repayment is generally dependent upon the successful operation of the borrower’s business.  If loans that are collateralized by real estate or other business assets become troubled and the value of the collateral has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses and would adversely affect our operating results.

We are subject to environmental liability risk associated with real estate collateral securing our loans.

A significant portion of our loan portfolio is secured by real property. Under certain circumstances, we may take title to the real property collateral through foreclosure or other means. As the titleholder of the property, we may be responsible for environmental risks, such as hazardous materials, which attach to the property. For these reasons, prior to extending credit, we have an environmental risk assessment program to identify any known environmental risks associated with the real property that will secure our loans. In addition, we routinely inspect properties following the taking of title. When environmental risks are found, environmental laws and regulations may prescribe our approach to remediation. As a result, while we have ownership of a property, we may incur substantial expense and bear potential liability for any damages caused. The environmental risks may also materially reduce the property's value or limit our ability to use or sell the property. We also cannot guarantee that our environmental risk assessment will detect all environmental issues relating to a property, which could subject us to additional liability.

Our business depends on our ability to successfully manage credit risk.

The operation of our business requires us to manage credit risk. As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans and leases according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment. In addition, there are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers, including the risk that a borrower may not provide information to us about its business in a timely manner, and/or may present inaccurate or incomplete information to us, and risks relating to the value of collateral. In order to manage credit risk successfully, we must, among other things, maintain disciplined and prudent underwriting standards and ensure that our bankers follow those standards. The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions

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affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for loan and lease losses, each of which could adversely affect our net income. As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition or results of operations.

Strong competition could hurt our earnings and slow growth.

We face intense competition in making loans and attracting deposits. Price competition for loans and deposits sometimes results in us charging lower interest rates on our loans and paying higher interest rates on our deposits, which may reduce our net interest income.  Many of the institutions with which we compete have substantially greater resources and lending limits than we have and may offer services that we do not provide. We also face competition for agricultural loans from participants in the nationwide Farm Credit System and much larger regional, national and global banks.  Competition also makes it more difficult and costly to attract and retain qualified employees.  We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of non-bank competition in the financial services industry, such as by fintech companies. If we are not able to effectively compete in our market areas and targeted business segments, our profitability may be negatively affected.

Consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations.

Technology and other changes are allowing consumers and businesses to complete financial transactions that historically have involved banks through alternative methods. For example, the wide acceptance of internet-based commerce has resulted in a number of alternative payment processing systems and lending platforms in which banks play only minor roles. Customers can now maintain funds in prepaid debit cards or digital currencies, and pay bills and transfer funds directly without the direct assistance of banks. The diminishing role of banks as financial intermediaries has resulted and could continue to result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the potential loss of lower cost deposits as a source of funds could have a material adverse effect on our business, liquidity, financial condition and results of operations.

Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance.

We have benefited from strong relationships with our customers, and also from our relationships with financial intermediaries. As a result, our reputation is an important component of our business. A key component of our business strategy is to leverage our reputation for customer service and knowledge of our customers’ needs and businesses to expand our presence by capturing new business opportunities from existing and prospective customers in and outside of our local market areas. We strive to conduct our business in a manner that enhances our reputation. We aim to enhance our reputation, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities and markets we serve, who are able to connect with customers through on-site visits and knowledge of our customers’ businesses, and who care about and deliver superior service to our customers. If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or by events beyond our control, our business and operating results may be adversely affected.

Changes in interest rates may hurt our earnings and asset value.

Like other financial institutions, we are subject to interest rate risk. Our primary source of income is net interest income, which is the difference between interest earned on interest-earning assets (consisting primarily of loans and securities) and the interest paid on interest-bearing liabilities (consisting primarily of deposits and borrowings). Changes in both the general level of interest rates and in the difference between short-term and long-term rates can affect our net interest income. Interest rates are highly sensitive to many factors, including government monetary policies, domestic and international economic and political conditions and other factors beyond our control.

While we pursue an asset/liability strategy designed to mitigate our risk from changes in interest rates, including by seeking to originate variable rate loans and balancing the respective terms of assets and liabilities, changes in interest rates may still have a material adverse effect on our financial condition and results of operations. Changes in the level of interest rates also may negatively affect our ability to originate loans, the value of our assets and liabilities and our ability to realize gains from the sale of our assets, all of which could affect our earnings.

Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.

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In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market operations in U.S. government securities, adjustments of the discount rate, and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The specific effects of such policies upon our business, financial condition and results of operations cannot be predicted.

Interest rates on our financial instruments might be subject to change based on developments related to LIBOR, which could adversely impact our revenue, expenses, and value of those financial instruments.

In July 2017, the Financial Conduct Authority, the authority regulating LIBOR, along with various other regulatory bodies, announced that LIBOR would likely be discontinued at the end of 2021. LIBOR makes up the most liquid and common interest rate index in the world and is commonly referenced in financial instruments. We have exposure to LIBOR in various aspects through our financial contracts. Instruments that may be impacted include loans, securities, derivatives, and subordinated debentures, among other financial contracts indexed to LIBOR and that mature after December 31, 2021.

While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected by the Federal Reserve Bank of New York, started in May 2018 to publish the Secured Overnight Financing Rate (“SOFR”) as an alternative to LIBOR. SOFR is a broad measure of the cost of overnight borrowings collateralized by Treasury securities that was selected by the Alternative Reference Rate Committee due to the depth and robustness of the U.S. Treasury repurchase market. At this time, it is impossible to predict whether SOFR will become an accepted alternative to LIBOR.

The market transition away from LIBOR to an alternative reference rate, such as SOFR, is complex and could have a range of adverse effects on our business, financial condition and results of operations. In particular, any such transition could:

• adversely affect the interest rates paid or received on, the revenue and expenses associate with, and the value of our floating-rate obligations, loans, deposits, derivatives, subordinated debentures and other financial instruments tied to LIBOR rates, or other securities or financial arrangements given LIBOR’s role in determining market interest rates globally;

• prompt inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with an alternative reference rate;

• result in disputes, litigation or other actions with counterparties regarding the interpretation and enforceability of certain fallback language, or lack of fallback language, in LIBOR-based instruments; and

• require the transition to or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on the applicable alternative pricing benchmark, such as SOFR.

The manner and impact of this transition, as well as the effect of these developments on our funding costs, loan and investment and trading securities portfolios, asset-liability management, and business,

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings and capital could decrease.

At December 31, 2019, our allowance for loan losses totaled $15.3 million, which represented 1.5% of gross loans. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for our loans. In determining the amount of the allowance for loan losses, we review our loss and delinquency experience, and we evaluate other factors including, among other things, current economic conditions. If our assumptions are incorrect, or if delinquencies or non-performing loans increase, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, which would require additions to our allowance, and could decrease our net income or reduce our capital.

In addition, our regulators, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to increase the allowance for loan losses by recognizing additional provisions for loan losses charged to expense, or to charge off loans, which, net of any recoveries, would decrease the allowance for loan losses. Any such additional provisions for loan losses or charge-offs could have a material adverse effect on our financial condition and results of operations.  Also, beginning in January 2023, the Company will be required to implement the CECL accounting standard, which will change how the Company calculates its allowance for loan losses by requiring the Company to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for loan losses.  This will change the current method of providing

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allowances for loan losses that are probable, which may require us to increase our allowance for loan losses. Any increase in our allowance for loan losses may have a material adverse effect on our financial condition and results on operations.

We rely on the accuracy and completeness of information about our customers and counterparties, and inaccurate or incomplete information could subject us to various risks.

In deciding whether to extend credit or enter into other transactions with our customers and counterparties, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements and other financial information. We may also rely on representations as to the accuracy and completeness of such information and, with respect to financial statements, on reports of independent auditors.

While we strive to verify the accuracy and sufficiency of such information, if this information is inaccurate or incomplete, we may be subject to loan losses, regulatory action, reputational harm, or other adverse effects on the operation of our business, results of operations, or financial condition.

We depend on our management team to implement our business strategy and on our relationship managers to maintain and grow our agricultural and commercial relationships, and we could be harmed by the loss of their services.

We are dependent upon the services and expertise of our founders and the other members of our management team who direct our strategy and operations, especially relating to our agricultural lending focus, and we have benefited from our management’s extensive banking knowledge and experience in this regard. We also rely heavily upon the talents, experience and customer relationships of our loan officers and have benefited from their expertise and relationship-building skills, especially with respect to our agricultural and commercial lending. Members of our executive management team and our seasoned loan officers could be difficult to replace. Our loss of the services of one or more of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our business and results of operations.

Limits on our ability to use brokered deposits as part of our funding strategy may adversely affect our ability to grow.

A “brokered deposit” is any deposit that is obtained from or through the mediation or assistance of a deposit broker, which includes larger correspondent banks and securities brokerage firms. These deposit brokers attract deposits from individuals and companies throughout the country and internationally whose deposit decisions are based almost exclusively on obtaining the highest interest rates. We have used brokered deposits in the past, and we intend to continue to use brokered deposits as one of our funding sources to support future growth. At December 31, 2019, brokered deposits represented approximately 15.1% of our total deposits and equaled $166.3 million. There are risks associated with using brokered deposits. In order to continue to maintain our level of brokered deposits, we may be forced to pay higher interest rates than contemplated by our asset-liability pricing strategy. In addition, banks that become less than “well capitalized” under applicable regulatory capital requirements may be restricted in their ability to accept or prohibited from accepting brokered deposits.  In addition, banks not considered to be “well capitalized” are subject to a cap on interest rates paid to depositors as published by the FDIC. Such depositor interest rate caps could impede our ability to raise local deposits to replace brokered deposits no longer available if we were not considered to be “well capitalized.”  If brokered deposits become more difficult to access, we will have to seek alternative funding sources in order to continue to fund our growth. This may include increasing our reliance on the FHLB borrowings, attempting to attract non-brokered deposits, reducing our available for sale securities portfolio and selling loans, potentially at a time when pricing may be unfavorable, which may increase our funding costs and reduce our net interest income and net income.  There can be no assurance that brokered deposits will be available or, if available, sufficient to support our continued growth.

Liquidity risks could affect operations and jeopardize our business, financial condition and results of operations.

Liquidity risk is the risk that we will not be able to meet our obligations, including financial commitments, as they come due and is inherent in our operations. An inability to raise funds through deposits, borrowings, the sale of loans, and/or investment securities and from other sources could have a substantial negative effect on our liquidity. Our most important source of funds consists of our customer deposits, which we supplement with other sources such as brokered deposits. Deposit balances can decrease for a variety of reasons, including when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, we could lose a relatively low cost source of funds. This loss would require us to seek other funding alternatives, including brokered deposits, in order to continue to grow, thereby increasing our funding costs and reducing our net interest income and net income.

Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Economic conditions and a loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital,

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including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. There is also the potential risk that collateral calls with respect to our repurchase agreements could reduce our available liquidity.

Any decline in available funding could adversely impact our ability to continue to implement our business plan, including originating loans, investing in securities, meeting our expenses or fulfilling obligations such as repaying our borrowings and meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.

If a significant portion of any future unrealized losses in our portfolio of investment securities were to become other than temporarily impaired with credit losses, we would recognize a material charge to our earnings, and our capital ratios would be adversely impacted.

Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of those securities. These factors include, but are not limited to, changes in interest rates, rating agency downgrades of the securities, defaults by the issuer or individual mortgagors with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could cause an other than temporary impairment (“OTTI”) in future periods and result in realized losses.

We analyze our investment securities quarterly to determine whether, in the opinion of management, any of the securities have OTTI. To the extent that any portion of the unrealized losses in our portfolio of investment securities is determined to have OTTI and is credit-loss related, we will recognize a charge to our earnings in the quarter during which such determination is made, and our capital ratios will be adversely impacted. Generally, a fixed income security is determined to have OTTI when it appears unlikely that we will receive all of the principal and interest due in accordance with the original terms of the investment. In addition to credit losses, losses are recognized for a security with an unrealized loss if the Company has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before collection of the principal amount.

The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.  Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.  Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks and malware or other cyber-attacks.  

In recent periods, there continues to be a rise in electronic fraudulent activity, security breaches and cyber-attacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts.  Moreover, in recent periods, several large corporations, including financial institutions and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity. Some of our clients may have been affected by these breaches, which could increase their risks of identity theft and other fraudulent activity that could involve their accounts with us.

Information pertaining to us and our clients is maintained, and transactions are executed, on networks and systems maintained by us and certain third party partners, such as our online banking, mobile banking or accounting systems.  The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect us and our clients against fraud and security breaches and to maintain the confidence of our clients.  Breaches of information security also may occur through intentional or unintentional acts by those having access to our systems or the confidential information of our clients, including employees.  In addition, increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third party technologies (including browsers and operating systems) or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our clients and underlying transactions, as well as the technology used by our clients to access our systems.  Our third party partners’ inability to anticipate, or failure to adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, disruption to our business, additional regulatory scrutiny or penalties or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

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We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third party servicers, accounting systems, mobile and online banking platforms and financial intermediaries.  We outsource to third parties many of our major systems, such as data processing and mobile and online banking.  The failure of these systems, or the termination of a third party software license or service agreement on which any of these systems is based, could interrupt our operations.  Because our information technology and telecommunications systems interface with and depend on third party systems, we could experience service denials if demand for such services exceeds capacity or such third party systems fail or experience interruptions.  A system failure or service denial could result in a deterioration of our ability to process loans or gather deposits and provide customer service, compromise our ability to operate effectively, result in potential noncompliance with applicable laws or regulations, damage our reputation, result in a loss of customer business or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on business, financial condition, results of operations and growth prospects.  In addition, failures of third parties to comply with applicable laws and regulations, or fraud or misconduct on the part of employees of any of these third parties, could disrupt our operations or adversely affect our reputation.

It may be difficult for us to replace some of our third party vendors, particularly vendors providing our core banking and information services, in a timely manner if they are unwilling or unable to provide us with these services in the future for any reason and even if we are able to replace them, it may be at higher cost or result in the loss of customers.  Any such events could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Our operations rely heavily on the secure processing, storage and transmission of information and the monitoring of a large number of transactions on a minute-by-minute basis, and even a short interruption in service could have significant consequences.  We also interact with and rely on retailers, for whom we process transactions, as well as financial counterparties and regulators. Each of these third parties may be targets of the same types of fraudulent activity, computer break-ins and other cyber security breaches described above, and the cyber security measures that they maintain to mitigate the risk of such activity may be different than our own and may be inadequate.

As a result of financial entities and technology systems becoming more interdependent and complex, a cyber incident, information breach or loss, or technology failure that compromises the systems or data of one or more financial entities could have a material impact on counterparties or other market participants, including ourselves.  As a result of the foregoing, our ability to conduct business may be adversely affected by any significant disruptions to us or to third parties with whom we interact.

We rely on other companies to provide certain key components of our business infrastructure.

Third-party service providers provide certain key components of our business infrastructure, such as data processing and deposit processing systems, mobile payment systems, internet connections, and network access. While we have selected these third-party service providers carefully, we do not control their operations. Any failure by these third parties to perform or provide agreed-upon goods and services for any reason or their poor performance of services could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Replacing these third-party service providers could also entail significant delay and expense.

We may face risks with respect to future acquisitions.

We may continue to attempt to expand our business in Wisconsin or other states through mergers and acquisitions.  We anticipate that we will seek targets that are culturally similar to us, have experienced management and possess either significant market presence or have potential for improved profitability through economies of scale or expanded services. In addition to the general risks associated with our growth plans, acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things, the following:

• the time and costs associated with identifying and evaluating potential acquisition and merger targets;

• unexpected delays, complications or expenses resulting from regulatory approval requirements or other conditions to closing;

• inaccuracies in the estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution;

• the time and costs of evaluating new markets, hiring experienced local management, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion;

• our ability to finance an acquisition and possible dilution to our existing shareholders;

• the diversion of our management’s attention to the negotiation of a transaction;

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• the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations;

• entry into new markets where we lack experience; and

• risks associated with integrating the operations and personnel of the acquired business in a manner that permits growth opportunities and does not materially disrupt existing customer relationships or result in decreased revenues resulting from any loss of customers.

With respect to the risks particularly associated with the integration of an acquired business, we may encounter a number of difficulties, such as: (1) customer loss and revenue loss; (2) the loss of key employees; (3) the disruption of our operations and business; (4) our inability to maintain and increase competitive presence; (5) possible inconsistencies in standards, control procedures and policies; and/or (6) unexpected problems with costs, operations, personnel, technology and credit.

In addition to the risks posed by the integration process itself, the focus of management’s attention and effort on integration may result in a lack of sufficient management attention to other important issues, causing harm to our business. Also, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful integration of an acquired business.  Failure to realize the expected revenue increases, cost savings, increases in geographic or product presence and/or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

If we fail to successfully keep pace with technological change, our business could be materially adversely affected.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Failure to successfully keep pace with technological change affecting the financial services industry generally, and virtual banking in particular, could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected and any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business results of operations and financial condition.

If our risk management framework does not effectively identify or mitigate our risks, we could suffer losses.

Our risk management framework seeks to mitigate risk and appropriately balance risk and return. We have established processes and procedures intended to identify, measure, monitor and report the types of risk to which we are subject, including credit risk, operations risk, compliance risk, reputation risk, strategic risk, market risk and liquidity risk. We seek to monitor and control our risk exposure through a framework of policies, procedures, monitoring and reporting requirements. There may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated. If our risk management framework does not effectively identify or mitigate our risks, we could suffer unexpected losses and could be materially adversely affected.

We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives relating to our financial and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an “emerging growth company.” We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations

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as a stand-alone public company. These obligations increase our operating expenses and could divert management’s attention from other aspects of our business.  We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, as well as rules adopted, and to be adopted, by the SEC and the Nasdaq Global Market, except for such requirements that we may elect not to comply with during the period we are an emerging growth company, which could require us to further upgrade our systems and/or hire additional staff, which would increase our operating costs. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs may cause us to incur losses. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

As an “emerging growth company,” we are taking advantage of certain temporary exemptions from various reporting requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and an exemption from the requirement to obtain an attestation from our auditors on management’s assessment of our internal control over financial reporting. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them.

The soundness of other financial institutions could adversely affect us.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of default by our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings.

Risks Related to Our Industry

We may be materially and adversely affected by the highly regulated environment in which we operate.

We are subject to extensive federal and state regulation, supervision and examination. A more detailed description of the primary federal and state banking laws and regulations that affect us is contained in Item 1 of this Form 10-K in the section captioned “Supervision and Regulation.” Banking regulations are primarily intended to protect depositors’ funds, FDIC funds, customers and the banking system as a whole, rather than our shareholders.  These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things.

As a bank holding company, we are subject to extensive regulation and supervision and undergo periodic examinations by our regulators, who have extensive discretion and authority to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies and to impose additional restrictions on the activities of bank and bank holding companies.  Failure to comply with applicable laws, regulations or policies could result in sanctions by regulatory agencies, civil monetary penalties, additional restrictions on our activities, and/or damage to our reputation, which could have a material adverse effect on us.  Although we have policies and procedures designed to mitigate the risk of any such violations, there can be no assurance that such violations will not occur.  These regulations may be impacted by the political ideologies of the executive and legislative branches of the U.S. government as well as the heads of regulatory and administrative agencies, which may change as a result of elections.

Current or proposed regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of our business activities and may change certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. These changes also may require us to invest significant management attention and resources to make any necessary changes to operations in order to comply and could therefore also materially and adversely affect our business, financial condition and results of operations.

Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high.

We are required by our regulators and the Basel III Rule to maintain adequate levels of capital to support our operations. We believe our current levels of capital is sufficient to permit us to maintain regulatory capital compliance for the foreseeable future. Nonetheless, we may at some point need to raise additional capital to support continued growth or to address losses.

Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial condition and performance. Accordingly, we may not be able to raise additional capital if needed on terms that are acceptable to us, or at all. If we cannot raise additional capital when needed, our operations and our financial

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condition could be materially and adversely affected. In addition, if we are unable to raise additional capital if required by the Federal Reserve, we may be subject to adverse regulatory action.

We face a risk of noncompliance with and enforcement actions under the Bank Secrecy Act and other anti-money laundering statutes and regulations.

We maintain systems and procedures designed to ensure that we comply with applicable laws and regulations. The federal Bank Secrecy Act, the USA Patriot Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network, established by the Treasury to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service. Federal and state bank regulators also have begun to focus on compliance with Bank Secrecy Act and anti-money laundering regulations. If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including future acquisition plans, which would negatively impact our business, financial condition and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

Changes in accounting standards and policies may negatively affect our performance.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time there are changes in the financial accounting and reporting standards that govern the preparation of our financial statements, such as the implementation of CECL. These changes can be difficult to predict and can materially impact how we report and record our financial condition and results of operations. In some cases, we could be required to apply a new or revised accounting standard retroactively, which could have a negative impact on our reported results.

A new accounting standard may require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition, amount of capital and results of operations.

The FASB has adopted a new accounting standard that is effective for our fiscal year beginning on January 1, 2023. This standard, referred to as CECL, makes significant changes to the accounting for credit losses on financial instruments presented on an amortized cost basis, such as our loans held for investment, and disclosures about them. The new CECL impairment model will require an estimate of expected credit losses, measured over the contractual life of an instrument, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions. The standard provides significant flexibility and requires a high degree of judgment with regards to pooling financial assets with similar risk characteristics and adjusting the relevant historical loss information in order to develop an estimate of expected lifetime losses. Providing for losses over the life of our loan portfolio is a change to the previous method of providing allowances for loan losses that are probable and incurred. This change may require us to increase our allowance for loan losses rapidly in future periods, and greatly increases the types of data we need to collect and review to determine the appropriate level of the allowance for loan losses. It may also result in even small changes to future forecasts having a significant impact on the allowance, which could make the allowance more volatile, and regulators may impose additional capital buffers to absorb this volatility.

We are subject to examinations and challenges by tax authorities that may be costly and time-consuming and may require expensive remedial action or other costs.

In the normal course of business, the Company and the Bank are routinely subject to examinations and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments that both entities have made and the businesses in which they have engaged. Federal and state taxing authorities have over the past few years become increasingly aggressive in challenging tax positions taken by financial institutions. These tax positions may relate to tax compliance, sales and use, franchise, gross receipts, payroll, property and income tax issues, including tax base, apportionment and tax credit planning. The challenges made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. If not resolved in our favor, such challenges could have an adverse effect on our financial condition and results of operations.

A prolonged U.S. government shutdown or default by the U.S. on government obligations would harm our results of operations.

Our results of operations, including revenue, non-interest income, expenses and net interest income, would be adversely affected in the event of widespread financial and business disruption on account of a default by the United States on U.S. government obligations or a prolonged failure to maintain significant U.S. government operations.  Of particular impact to the Company are the

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operations pertaining to the SBA, the USDA Farm Service Agency (FSA) and the FDIC.  Any such failure to maintain such U.S. government operations, and the after-effects of such shutdown, could impede our ability to originate SBA or FSA loans and our ability to sell such loans in the secondary market, which would materially adversely affect our business, results of operations and financial condition.

In addition, many of our investment securities are issued by and some of our loans are made to the U.S. government and government agencies and sponsored entities. Uncertain domestic political conditions, including prior federal government shutdowns and potential future federal government shutdowns or other unresolved political issues, may pose credit default and liquidity risks with respect to investments in financial instruments issued or guaranteed by the federal government and loans to the federal government. Any downgrade in the sovereign credit rating of the United States, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the United States and worldwide. Any such adverse impact could have a material adverse effect on our liquidity, financial condition and results of operations.

Risk Related to Our Stock

Our ability to pay dividends is dependent upon the Bank’s performance.

The Company’s only source of funds to pay dividends is dividends or other distributions it may receive directly from the Bank. The Company’s payment of dividends in the future, if any, will be subject to legal, regulatory and contractual restrictions (including with respect to junior subordinated debentures (and related trust preferred securities (“TruPS”)), which are senior to our shares of preferred and common stock and have a preference on dividends and with respect to our subordinated notes, which restrict the payment of dividends upon an event of default under the notes), and will also depend on the Bank’s earnings, capital requirements, financial condition and other factors considered relevant by our board of directors. Dividends are payable on shares at the discretion of our board of directors, subject to the provisions of the Wisconsin Business Corporation Law, and any regulatory restrictions.

Our stock is relatively thinly traded.

Although our common stock is traded on the Nasdaq Global Market, the average daily trading volume of our common stock is relatively low compared to many public companies. The desired market characteristics of depth, liquidity, and orderliness require the substantial presence of willing buyers and sellers in the marketplace at any given time. In our case, this presence depends on the individual decisions of a relatively small number of investors and general economic and market conditions over which we have no control. Due to the relatively low trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause the stock price to fall more than would be justified by the inherent worth of the Company. Conversely, attempts to purchase a significant amount of our stock could cause the market price to rise above the reasonable inherent worth of the Company.

The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline.

The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, government shutdowns, trade wars, Brexit, or international currency fluctuations, may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein. As a result, period-to-period comparisons should not be relied upon as an indication of future performance. Our stock price could fluctuate significantly in response to our quarterly or annual results, annual projections and the impact of these risk factors on our operating results or financial position.

Although the Company’s common stock is quoted on the Nasdaq Global Market, the volume of trades on any given day has been limited historically, as a result of which shareholders might not have been able to sell or purchase the Company’s common stock at the volume, price or time desired.  In June 2019, the Company’s common stock was removed from the Russell 3000^® Index based on the total market value of shares outstanding.  Removal from this index may have negatively impacted the price, trading volume, and liquidity of the Company’s common stock, in part, because holders attempting to track the composition of that index may have been required to sell the Company’s common stock, which could cause a material decrease in the price at which the Company’s common stock trades.  If the Company’s common stock is added to the Russell 3000^® Index in the future, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to purchase the Company’s common stock, which could impact the price at which the Company’s common stock trades.

We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term shareholder value.

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In January 2020, the Company’s board of directors approved a stock repurchase program, which authorizes the Company to repurchase up to 673,000 shares of its common stock, subject to certain limitations and conditions.  The repurchase program was effective immediately and will continue until January 23, 2023. The repurchase program does not obligate the Company to repurchase any shares of its common stock, and there is no assurance that the Company will do so or that the Company will repurchase shares at favorable prices.  The repurchase program may be suspended or terminated at any time and, even if fully implemented, the program may not enhance long-term shareholder value.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Bank owns its headquarters in Manitowoc, Wisconsin, and branches in Manitowoc, Stevens Point, and Green Bay, Wisconsin and leases its other locations.  The following table provides information related to our leased locations:

Location	Function	Lease Expiration Year
Appleton, WI	Full service banking location		2020
Darlington, WI	Loan production office		2021
Eau Claire, WI	Loan production office		2020
Fond du Lac, WI	Loan production office		2020
Sheboygan, WI	Loan production office		2020

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. We are not presently party to, nor is any of our property the subject of, any legal proceedings, other than ordinary routine litigation incidental to our business, the resolution of which we believe would have a material adverse effect on our business, financial condition, operating results or cash flows. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

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

Market Information

Our common stock is listed on the Nasdaq Global Market under the ticker symbol “ICBK.”  

Holders

We had approximately 360 shareholders of record at March 15, 2020.  The number of shareholders does not reflect persons or entities that hold their stock in nominee or “street” name through various brokerage firms.

Dividends

We pay quarterly dividends on our common stock, and in 2019, our board of directors declared dividends totaling $0.20 per share.  On February 18, 2020, our Board of Directors declared a quarterly dividend totaling $0.07 per share for shareholders of record as of March 6, 2020, and payable on March 20, 2020.

Although we expect to pay dividends according to our dividend policy as of the date of this report, we may elect not to pay dividends. Any declarations of dividends will be at the discretion of our board of directors and is subject to various regulatory requirements, including the requirements of the Federal Reserve relating to the payment of dividends by bank holding companies.  Therefore, there can be no assurance that we will pay any dividends to holders of our stock, or as to the amount of any such dividends.

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Recent Sales of Unregistered Securities

None.

On January 29, 2020, the Company announced that its board of directors approved a stock repurchase program authorizing the purchase of up to an aggregate of 673,000 shares of the Company’s outstanding common stock through January 23, 2023. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions, including pursuant to a Rule 10b5-1 plan, all as effected to the extent permitted by applicable law, including pursuant to the safe harbor provided under Rule 10b-18 of the Exchange Act. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal requirements.

ITEM 6. SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

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ITEM 7. 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 in Item 8 of this Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could 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 “Item 1A - Risk Factors.”

General

The following discussion and analysis presents our financial condition and results of operations on a consolidated basis. However, because we conduct all of our material business operations through the Bank, the discussion and analysis relates to activities primarily conducted at the Bank.

Executive Overview

We are the holding company for Investors Community Bank, which is headquartered in Manitowoc, Wisconsin. 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 net income, net interest margin, efficiency ratio, return on average assets, return on average common shareholders’ equity, earnings per share, and non-performing assets to total assets. We must also maintain appropriate regulatory leverage and risk-based capital ratios. The following table sets forth the key financial metrics we use to measure our performance.

	As of or For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands, except per share data)
Net income	$	16,452		$	14,251		$	10,425
Net interest margin		2.93	%		2.91	%		3.11	%
Efficiency ratio (1)		59.92	%		54.42	%		54.63	%
Return on average assets		1.13	%		0.96	%		0.80	%
Return on average shareholders' equity		10.10	%		9.50	%		7.58	%
Return on average common shareholders' equity (1)		10.31	%		9.74	%		7.77	%
Basic earnings per share	$	2.37		$	2.06		$	1.52
Diluted earnings per share	$	2.36		$	2.04		$	1.49
Non-performing assets to total assets (2)		2.65	%		1.94	%		1.15	%
Adverse classified coverage (1)		39.85	%		57.12	%		51.57	%
Dividend payout ratio		8.47	%		13.73	%		16.11	%
Equity to assets ratio		12.46	%		10.00	%		10.09	%

(1) This measure is not recognized under GAAP and is therefore considered to be a non-GAAP financial measure. See below for a reconciliation of this measure to its most directly comparable GAAP measure.

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

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Efficiency Ratio GAAP to Non-GAAP reconciliation:
Non-interest expense	$	32,684		$	28,283		$	25,992
Less: net gain on sales and write-downs of OREO		(586	)		(642	)		(552	)
Adjusted non-interest expense (non-GAAP)	$	32,098		$	27,641		$	25,440
Net interest income	$	40,782		$	41,955		$	38,885
Non-interest income		13,393			8,833			7,653
Net loss (gain) on sales of securities		(341	)		—			31
Operating revenue	$	53,834		$	50,788		$	46,569
Efficiency ratio		59.62	%		54.42	%		54.63	%

33

	For the Year Ended December 31,
	2019			2018			2017
Return on Average Common Shareholders' Equity GAAP    to Non-GAAP reconciliation:
Return on average common shareholders' equity
Return on average shareholders' equity		10.10	%		9.50	%		7.58	%
Effect of excluding average preferred shareholders' equity		0.21	%		0.24	%		0.19	%
Return on average common shareholders' equity		10.31	%		9.74	%		7.77	%

	December 31, 2019			December 31, 2018			December 31, 2017
	(dollars in thousands)
Adverse classified asset ratio:
Substandard loans	$	94,917		$	120,887		$	83,226
Less: Non-impaired restructured loans		(8,925	)		(5,078	)		(1,072	)
Net substandard loans	$	85,992		$	115,809		$	82,154
Other real estate owned		5,521			6,568			4,565
Substandard unused commitments		2,849			1,625			799
Less: Substandard government guarantees		(7,892	)		(7,111	)		(4,289	)
Total adverse classified assets (non-GAAP)	$	86,470		$	116,891		$	83,229
Total equity (Bank)	$	204,240		$	185,458		$	146,937
Accumulated other comprehensive loss       (gain) on available for sale securities		(2,505	)		2,221			627
Allowance for loan losses		15,267			16,505			13,247
Allowance for unused commitments		—			475			564
Adjusted total equity (non-GAAP)	$	217,002		$	204,659		$	161,375
Adverse classified asset ratio		39.85	%		57.12	%		51.57	%

Critical Accounting Policies and Estimates

Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Our significant accounting policies are discussed in detail in Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Those significant accounting policies that we consider to be most critical are described below. Our policies with respect to the methodology for the determination of goodwill, allowance for loan losses, OREO and fair value of financial instruments involve a degree of complexity and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact our results of operations. These critical policies and their application are reviewed with the board of directors annually and prior to any change in policy.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in an acquisition 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.  Goodwill was $5.0 million at December 31, 2019 and 2018.

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.

As of December 31, 2018 and September 30, 2019, the market value of our stock price dropped below our tangible book value.  We engaged a third party to assist the Company in determining the fair value of the Company as a single reporting unit pursuant to Step 1 of the FASB Accounting Standards Codification (“ASC”) 350-20-35 (the “Step 1 Analysis”) as of December 31, 2018 and September 30, 2019.  The Step 1 Analysis included Income and Market Approaches.  The Income Approach used a discounted cash

34

flow method.  This method estimated value by forecasting income for a forecast period and estimated the terminal value.  These amounts were then discounted back to December 31, 2018 and September 30, 2019.  The Market Approach used the market value of equity to tangible book value multiple of similar  publicly traded commercial banks (e.g. based on total tangible assets, pre-tax return on average assets, located in the Midwest, etc.).  The Market Approach also included the acquisition price to tangible book value multiple on similarly sized banks in the Midwest.  More weighting was placed on the Income Method.   Through the Step 1 Analysis, it was determined there was no impairment charge to goodwill in the year ended December 31, 2018 or 2019.  Goodwill is included on the consolidated balance sheets.  The future value of goodwill could be impacted by the Company’s future earnings, largely related to unanticipated losses from the Company’s loan portfolio.  

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 regulatory requirements, 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, internal 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.

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.

Other Real Estate Owned

Assets acquired through or in lieu of loan foreclosure are initially recorded at lower of cost or fair value less estimated costs to sell, establishing a new cost basis. Subsequent to foreclosure, independent valuations are performed annually, and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense. Costs related to the development and improvement of other real estate owned is capitalized.

Loan Servicing Rights

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 change from quarter-to-quarter as market conditions and projected interest rates change, and 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

35

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.

Fair Value of Financial Instruments

A significant portion of the Company’s assets are financial instruments carried at fair value. This includes securities available for sale and certain impaired loans. The majority of assets carried at fair value are based on either quoted market prices or market prices for similar instruments. For additional disclosures regarding the fair value of financial instruments, see Note 20. “Fair Value Measurements” to our consolidated financial statements.

JOBS Act Transition Period

The Jumpstart Our Business Startups (JOBS) Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, as an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period.

Comparison of Financial Condition at December 31, 2019 and 2018

Total Assets.  Total assets decreased $142.5 million, or 9.4%, from $1.5 billion at December 31, 2018 to $1.4 billion at December 31, 2019.  The decrease was primarily the result of increased loan participations in which the proceeds were used to reduce wholesale funding in order to deleverage the balance sheet.  

Net Loans.  Net loans decreased by $170.3 million, or 14.3%, from $1.2 billion at December 31, 2018 to $1.0 billion at December 31, 2019.  The decrease was primarily the result of increased loan participations; loans that we continue to service increased $90.5 million, or 13.7%, from December 31, 2018 to $751.7 million at December 31, 2019.  

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

	As of  December 31,
	2019						2018						2017						2016						2015
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(dollars in thousands)
Agriculture loans	$	659,725			63.7	%	$	724,508			60.0	%	$	686,430			59.7	%	$	624,632			60.6	%	$	499,320			66.8	%
Commercial real estate    loans		235,936			22.8	%		299,212			24.8	%		292,704			25.5	%		270,475			26.3	%		161,741			21.6	%
Commercial loans		95,787			9.3	%		116,460			9.7	%		114,332			10.0	%		89,944			8.7	%		51,978			6.9	%
Residential real estate    loans		43,958			4.2	%		66,843			5.5	%		55,138			4.8	%		45,276			4.4	%		34,631			4.6	%
Installment and    consumer other		367			0.0	%		272			0.0	%		347			0.0	%		159			0.0	%		519			0.1	%
Total gross loans	$	1,035,773			100.0	%	$	1,207,295			100.0	%	$	1,148,951			100.0	%	$	1,030,486			100.0	%	$	748,189			100.0	%
Allowance for loan    losses		(15,267	)					(16,505	)					(13,247	)					(12,645	)					(10,405	)
Net Loans	$	1,020,506					$	1,190,790					$	1,135,704					$	1,017,841					$	737,784

Loan Servicing.  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.

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The loan servicing portfolio is shown below:  

	As of  December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands)
Total loans:	$	1,035,773		$	1,207,295		$	1,148,951		$	1,030,486		$	748,189
Less:  Non-qualified loan sales included below		(794	)		(827	)		(1,258	)		(1,963	)		(3,945	)
Loans serviced:
Agricultural		692,071			623,725			575,328			562,843			480,133
Commercial		8,318			35,832			22,102			11,038			11,080
Commercial real estate		44,676			1,700			3,236			3,083			4,720
Residential real estate		6,673			—			—			—			—
Total loans serviced		751,738			661,257			600,666			576,964			495,933
Total loans and loans serviced	$	1,786,717		$	1,867,725		$	1,748,359		$	1,605,487		$	1,240,177

Loan Maturity. The following table sets forth certain information at December 31, 2019 regarding scheduled contractual maturities of loans during the periods indicated. The table does not include any estimate of prepayments, which significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below.

	As of December 31, 2019
	Due In One Year or Less		More Than One Year to Five Years		Due After Five Years		Total
	(dollars in thousands)
By Loan Portfolio Class:
Agricultural	$	512,997	$	100,698	$	46,030	$	659,725
Commercial real estate		37,182		119,484		79,270		235,936
Commercial		46,363		32,402		17,022		95,787
Residential real estate		4,666		31,166		8,126		43,958
Installment and consumer other		365		-		2		367
Total loans	$	601,573	$	283,750	$	150,450	$	1,035,773
By Interest Rate Type:
Fixed	$	324,550	$	243,462	$	88,809	$	656,821
Adjustable loans at floor		30,322		1,192		—		31,514
Adjustable		246,701		39,096		61,641		347,438
Total loans	$	601,573	$	283,750	$	150,450	$	1,035,773

Securities. Our securities portfolio is predominately composed of investment grade mortgage-backed securities and U.S. government and agency 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 decreased by $37.2 million, or 19.0%, from $195.9 million at December 31, 2018 to $158.7 million at December 31, 2019, due primarily to the sale of $29.4 million of securities and $24.4 million of normal maturities and paydowns, which was partially offset by $10.1 million of security purchases during 2019.

The following table sets forth the amortized cost and fair values of our securities portfolio at the dates indicated.

	December 31, 2019				December 31, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(dollars in thousands)
Available for sale:
Municipal securities	$	—	$	—	$	34,985	$	34,520	$	33,949	$	33,765
Mortgage-backed securities		149,302		152,769		157,147		154,603		88,242		87,309
U.S. government and agency securities		3,490		3,458		4,368		4,331		4,874		4,956
U.S. treasury securities		2,499		2,506		2,497		2,491		—		—
Total available for sale	$	155,291	$	158,733	$	198,997	$	195,945	$	127,065	$	126,030

At December 31, 2019 and 2018, we had no investments in a single company or entity (other than the U.S. government or an agency of the U.S. government), including both debt and equity securities, that had an aggregate book value in excess of 10% of our equity.

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The following table sets forth the stated maturities and weighted average yields of investment securities at December 31, 2019. Certain mortgage-backed securities have adjustable interest rates and will reprice periodically within the various maturity ranges. These repricing schedules are not reflected in the table below.

	December 31, 2019
	One Year or Less					More Than One Year to Five Years					More Than Five Years to Ten Years					More Than Ten Years					Total
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
	(dollars in thousands)
Mortgage-backed securities	$	—		—		$	12,940		2.63	%	$	31,381		2.50	%	$	104,981		3.03	%	$	149,302		2.88	%
U.S. government and    agency securities		—		—			3,490		2.51	%		—		—			—		—			3,490		2.51	%
U.S. treasury securities		2,499		2.48	%		—		—			—		—			—		—			2,499		2.48	%
Total	$	2,499				$	16,430				$	31,381				$	104,981				$	155,291		2.81	%

Deposits.  Deposits decreased $121.9 million, or 10.0%, from $1.2 billion at December 31, 2018 to $1.1 billion at December 31, 2019.  The changes in our deposit balance mix below reflect our long-term strategy focus on customer relationships in order to secure less volatile and less costly funding and reduce our reliance on wholesale funding (e.g. national time deposits, brokered deposits, and FHLB advances).  Client deposits (demand deposits, money market accounts, certificates of deposit, NOW accounts, and interest checking) increased $81.2 million, or 10.8%, since December 31, 2018, which allowed us to decrease our reliance on wholesale funding deposits by $203.1 million, or 43.3%.  

	December 31, 2019					December 31, 2018					December 31, 2017
	Amount		Percent			Amount		Percent			Amount		Percent
	(dollars in thousands)
Time deposits	$	375,100		34.0	%	$	356,484		29.2	%	$	302,004		27.2	%
National time deposits		99,485		9.0	%		160,445		13.1	%		142,391		12.8	%
Brokered deposits		166,340		15.1	%		308,504		25.2	%		282,616		25.5	%
Money market accounts		247,828		22.5	%		218,929		17.9	%		199,118		18.0	%
Demand, noninterest-bearing		138,489		12.6	%		121,436		9.9	%		125,584		11.3	%
NOW accounts and interest    checking		67,805		6.2	%		51,779		4.2	%		51,613		4.6	%
Savings		6,395		0.6	%		5,770		0.5	%		6,751		0.6	%
Total deposits	$	1,101,442		100.0	%	$	1,223,347		100.0	%	$	1,110,077		100.0	%

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The following tables set forth the average balances and weighted average rates of our deposit products for the periods indicated.

	For the Year Ended December 31,
	2019								2018
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(dollars in thousands)
Time deposits	$	514,825		44.1	%		2.41	%	$	505,118		42.6	%		1.90	%
Brokered deposits		244,226		20.9	%		2.03	%		315,378		26.6	%		1.78	%
Money market accounts		236,218		20.3	%		1.55	%		208,567		17.6	%		1.30	%
Demand, noninterest-bearing		108,356		9.3	%		—			100,819		8.5	%		—
NOW accounts and interest checking		53,311		4.6	%		0.77	%		49,610		4.2	%		0.64	%
Savings		9,181		0.8	%		0.20	%		5,965		0.5	%		0.26	%
Total deposits	$	1,166,117		100.0	%		1.84	%	$	1,185,457		100.0	%		1.57	%
	For the Year Ended December 31,
	2017								2016
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(dollars in thousands)
Time deposits	$	419,918		41.8	%		1.12	%	$	361,944		43.5	%		1.34	%
Brokered deposits		241,866		24.1	%		1.09	%		184,179		22.1	%		1.29	%
Money market accounts		190,740		19.0	%		0.49	%		157,076		18.9	%		0.51	%
Demand, noninterest-bearing		96,172		9.6	%		—			85,199		10.2	%		—
NOW accounts and interest checking		49,124		4.9	%		0.36	%		37,322		4.5	%		0.44	%
Savings		5,987		0.6	%		0.13	%		6,567		0.8	%		0.23	%
Total deposits	$	1,003,807		100.0	%		0.85	%	$	832,287		100.0	%		0.98	%
	For the Year Ended December 31,
	2015
	Average Balance		Percent			Weighted Average Rate
	(dollars in thousands)
Time deposits	$	299,076		29.8	%		1.37	%
Brokered deposits		147,505		14.7	%		1.06	%
Money market accounts		79,438		7.9	%		0.43	%
Demand, noninterest-bearing		62,430		6.2	%		—
NOW accounts and interest checking		28,893		2.9	%		0.38	%
Savings		5,341		0.5	%		0.18	%
Total deposits	$	622,683		62.0	%		1.00	%

The following table sets forth the maturity of time deposits of $100,000 or more, including brokered time deposits, as of the date indicated.

	December 31, 2019
	(dollars in thousands)
3 months or less	$	80,110
Over 3 through 6 months		98,208
Over 6 months through 12 months		99,108
Over 12 months		177,573
Total	$	454,999

Borrowings. The Bank had fixed rate advances outstanding from the FHLB-Chicago in the amount of $44.4 million and $89.4 million on December 31, 2019 and 2018, respectively. The terms of security agreements with the FHLB require the Bank to pledge collateral for such borrowings consisting of qualifying first mortgage loans, certain securities available for sale, and stock in the FHLB. We did not have overnight advances with the FHLB at December 31, 2019 or 2018.  The Bank decreased its FHLB borrowings in 2019 as a result of the increase in core deposits, as discussed above.

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We also have other borrowings as a result of sold loans that do not qualify for sale accounting. These agreements are recorded as financing transactions as we maintain effective control over the transferred loans. The dollar amount of the loans underlying the sale agreements continues to be carried in our loan portfolio, and the transfer is reported as a secured borrowing with pledge of collateral.

The following table sets forth information concerning balances and interest rates on our borrowings at the dates and for the periods indicated.

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
FHLB Advances:
Balance at end of period	$	44,400		$	89,400		$	121,500
Average outstanding during the period	$	66,022		$	105,218		$	127,635
Maximum outstanding at any month-end	$	100,400		$	155,500		$	143,300
Weighted average interest rate during the period		1.98	%		1.67	%		1.37	%
Weighted average interest rate at end of period		1.90	%		1.89	%		1.44	%
Other Borrowings:
Balance at end of period	$	794		$	827		$	1,299
Average outstanding during the period	$	800		$	1,027		$	1,545
Maximum outstanding at any month-end	$	1,412		$	1,278		$	1,825
Weighted average interest rate during the period		4.60	%		4.81	%		5.77	%
Weighted average interest rate at end of period		4.51	%		4.51	%		6.41	%

Comparison of Operating Results for the Years Ended December 31, 2019 and 2018

Net Income.  Net income increased $2.2 million, or 15.4%, for the year ended December 31, 2019 from the year ended December 31, 2018, which represented earnings per share in 2019 of $2.37 (basic) and $2.36 (diluted).  The increase in net income was primarily related to a $3.9 million increase in loan servicing fees and recognition of loan servicing rights due to an increase in the volume of loans sold and serviced during 2019, and a $0.4 million decrease in income tax expense due to the recognition of a $1.4 million credit in connection with our investment in a historical tax credit partnership.  During 2019 provision for loan losses decreased $2.7 million compared to 2018; however, this was partially offset by a $1.2 million decrease in net interest income which was the result of shrinking the loan portfolio, in part through an increase of $90.5 million of loans and loan participations sold on the secondary market and a $3.3 million increase in interest expense.  In addition, non-interest expense increased by $4.4 million in 2019 primarily due to increased employee compensation and benefits related to a 5.3% increase in headcount and a 21.7% increase in benefit costs.  In addition, there were small increases in occupancy costs related to our new headquarters purchased in May 2018 and information processing expenses related to technology initiatives the Company has undertaken.

Interest Income. Total interest and dividend income increased by $2.1 million, or 3.3%, for the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily as the result of the increase in average loan yield by 31 basis points to 5.23% for the year ended December 31, 2019 compared to the year ended December 31, 2018, despite a $50.7 million decrease in average loan balance.  In addition, there was an 87 basis point increase in the yield earned on interest bearing deposits held at other banks which resulted in $0.7 million of additional interest income.  For the year ended December 31, 2019, the average yield of our investment securities portfolio improved by 20 basis points to 2.81% compared to the year ended December 31, 2018, although the volume remained relatively consistent between the two periods.

Interest Expense. Total interest expense for the year ended December 31, 2019 increased by $3.3 million, or 14.8%, to $25.6 million from $22.3 million for the year ended December 31, 2018.  The increase was primarily due to an increase in deposit rates and borrowing costs.  The average cost of funds for the year ended December 31, 2019 was 2.18%, which was 36 basis points higher than the year ended December 31, 2018, and was only partially offset by a $54.1 million, or 4.4%, decrease in the average balance of interest bearing liabilities.  

Net Interest Income.  Net interest income for the year ended December 31, 2019 decreased $1.2 million, or 2.8%, to $40.8 million compared to the year ended December 31, 2018.  

Our average interest-earning assets decreased by $46.5 million, or 3.2%, to $1.4 billion for the year ended December 31, 2019 compared to the same period of 2018.  Our interest rate spread decreased to 2.58% for the year ended December 31, 2019 from 2.64% for the year ended December 31, 2018. Our net interest margin increased to 2.93% for the year ended December 31, 2019 from

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2.91% for the year ended December 31, 2018. The decrease in our interest rate spread reflects yields of interest-earning assets changing in response to target federal funds interest rate cuts quicker than rates on interest-bearing liabilities.  The slight increase in net interest margin reflects a decrease in average of interest earning assets for the year ended December 31, 2019 compared to the prior year.

Provision for Loan Losses.  Based on our analysis of the components of the allowance for loan losses described in “Allowance for Loan Losses” below, we recorded a provision for loan losses of $0.4 million for the year ended December 31, 2019, compared to a $3.2 million for the year ended December 31, 2018, as the result of the decrease in the volume of the loan portfolio, improvement in credit ratings, and improved economic conditions.  For the year ended December 31, 2019, we charged-off $3.9 million in loans, compared to $1.3 million the year ended December 31, 2018, and recovered previously charged-off loans of $2.3 million and $1.3 million for the same periods, respectively.  The total allowance for loan losses was $15.3 million, or 1.47% of total loans, and $16.5 million, or 1.37% of total loans, at December 31, 2019 and 2018, respectively.  Total non-performing loans, excluding performing troubled debt restructurings, were $31.0 million and $23.0 million at December 31, 2019 and 2018, respectively.  This $8.0 million increase was the result of one agricultural customer and one commercial customer migrating to non-accrual status in the fourth quarter of 2019.

Non-Interest Income.  Non-interest income increased by $4.6 million, or 51.6%, to $13.4 million for the year ended December 31, 2019 compared to $8.8 million for the same period of 2018.  The primary factors contributing to the fluctuation in non-interest income were the Bank’s volume and activity in loan servicing fees and loan servicing rights income. For the year ended December 31, 2019, loan servicing fees and recognition of loan servicing rights increased to $10.0 million from $6.1 million for the year ended December 31, 2018, as a result of a $90.5 million increase in loans sold and serviced from $661.3 million at December 31, 2018 to $751.7 million at December 31, 2019.

Non-Interest Expense.  Non-interest expense increased $4.4 million, or 15.6%, to $32.7 million for the year ended December 31, 2019, compared $28.3 million for the same period of 2018, primarily as the result of increased employee compensation and benefits related to a 5.3% increase in headcount and a 21.7% increase in benefit costs.  In addition, there were small increases in occupancy costs related to our new headquarters purchased in May 2018 and information processing expenses related to technology initiatives the Company has undertaken.

Also during 2019, other non-interest expense increased from impairment recognized on an investment in a historical tax credit project of $1.1 million.  The impairment was offset by a $1.4 million benefit to income tax expense when the credit was earned.  

Income Taxes. Income tax expense for the year ended December 31, 2019 was $4.6 million compared to $5.1 million for the year ended December 31, 2018.  The effective tax rates as a percent of pre-tax income were approximately 22% and 26% for the years ended December 31, 2019 and 2018, respectively.  The decrease in income tax expense and the effective tax rate for the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily the result of the Company’s recognition of a $1.4 million tax credit in connection with its investment in a historical tax credit partnership.

Analysis of Net Interest Income

Net interest income represents the difference between income we earn on our interest-earning assets and the expense we pay on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned on such assets and paid on such liabilities.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and rates, income and expenses, and certain other information for the periods indicated. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effects of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

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	For the Year Ended December 31,
	2019								2018								2017
	Average Balance (1)			Income/ Expense		Yields/ Rates			Average Balance (1)			Income/ Expense		Yields/ Rates			Average Balance (1)			Income/ Expense		Yields/ Rates
	(dollars in thousands)
Assets
Investment securities	$	172,500		$	4,843		2.81	%	$	169,302		$	4,425		2.61	%	$	112,439		$	2,158		1.92	%
Loans (2)		1,142,551			59,706		5.23	%		1,193,254			58,706		4.92	%		1,086,836			50,395		4.64	%
Interest bearing deposits due from    other banks		78,517			1,783		2.27	%		77,545			1,086		1.40	%		52,786			499		0.95	%
Total interest-earning assets	$	1,393,568		$	66,332		4.76	%	$	1,440,101		$	64,217		4.46	%	$	1,252,061		$	53,052		4.24	%
Allowance for loan losses		(16,460	)							(15,037	)							(13,550	)
Other assets		77,444								59,291								56,615
Total assets	$	1,454,552							$	1,484,355							$	1,295,126
Liabilities
Savings, NOW, money market,    interest checking	$	316,278		$	4,582		1.45	%	$	282,746		$	3,398		1.20	%	$	245,851		$	1,643		0.67	%
Time deposits		741,483			16,875		2.28	%		801,892			15,251		1.90	%		661,784			10,172		1.54	%
Total interest-bearing deposits	$	1,057,761		$	21,457		2.03	%	$	1,084,638		$	18,649		1.72	%	$	907,635		$	11,815		1.30	%
Other borrowings		913			43		4.71	%		1,027			50		4.81	%		1,545			89		5.76	%
FHLB advances		66,022			1,307		1.98	%		105,218			1,759		1.67	%		127,635			1,748		1.37	%
Subordinated debentures		44,781			2,743		6.13	%		32,721			1,804		5.51	%		15,492			515		3.32	%
Total interest-bearing         liabilities	$	1,169,477		$	25,550		2.18	%	$	1,223,604		$	22,262		1.82	%	$	1,052,307		$	14,167		1.35	%
Non-interest bearing deposits		108,356								100,819								96,172
Other liabilities		13,796								9,883								9,059
Total liabilities		1,291,629								1,334,306								1,157,538
Shareholders' equity		162,923								150,049								137,588
Total liabilities and equity	$	1,454,552							$	1,484,355							$	1,295,126
Net interest income					40,782								41,955								38,885
Interest rate spread (3)							2.58	%							2.64	%							2.89	%
Net interest margin (4)							2.93	%							2.91	%							3.11	%
Ratio of interest-earning assets to    interest-bearing liabilities		1.19								1.18								1.19

(1) Average balances are calculated on amortized cost.

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

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

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

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Rate/Volume Analysis. The following table presents 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 prior 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.

	Year Ended December 31, 2019 v. 2018									Year Ended December 31, 2018 v. 2017
	Increase (Decrease) Due to Change in Average									Increase (Decrease) Due to Change in Average
	Volume			Rate			Net			Volume			Rate			Net
	(dollars in thousands)
Interest Income:
Investment securities	$	85		$	333		$	418		$	1,322		$	945		$	2,267
Loans		(2,160	)		3,160			1,000			5,120			3,191			8,311
Federal funds sold and interest-bearing deposits with    banks		14			683			697			290			297			587
Total interest income		(2,061	)		4,176			2,115			6,732			4,433			11,165
Interest Expense:
Savings, NOW, money market and interest checking	$	433		$	751		$	1,184		$	278		$	1,477		$	1,755
Time deposits		(1,009	)		2,633			1,624			2,394			2,685			5,079
Other borrowings		(5	)		(1	)		(6	)		(26	)		(13	)		(39	)
FHLB advances		(894	)		441			(453	)		(46	)		57			11
Junior subordinated debentures		722			217			939			810			479			1,289
Total interest expense	$	(753	)	$	4,041		$	3,288		$	3,410		$	4,685		$	8,095
Net interest income	$	(1,308	)	$	135		$	(1,173	)	$	3,322		$	(252	)	$	3,070

Risk Management

Overview. Managing risk is an essential part of successfully managing a financial institution. Among our most prominent risk exposures are market risk, credit risk, interest rate risk and liquidity risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or security when it is due. Interest rate risk is the potential reduction of net interest income or the reduction in the value of assets and liabilities as a result of changes in interest rates. Market risk refers to potential losses arising from changes in interest rates, commodity prices, real estate prices and/or other relevant market rates or prices. Liquidity risk is the possible inability to fund obligations to depositors, lenders or borrowers when due. Other risks that we face are operational risk, cyber risk, and reputation risk. Operational risks include risks related to fraud, regulatory compliance, processing errors, technology, and disaster recovery. Cyber risk is the risk of technological intrusion resulting in loss of customer information, loss of data, denial of service attacks, and cyber-theft. Reputation risk is the risk that negative publicity or press, whether true or not, could cause a decline in our customer base or revenue.

Credit Risk Management. Our strategy for credit risk management focuses on having a layered approach to risk involving risk-taking, risk monitoring, and risk mitigation. In our target markets, we field an experienced lending staff supported by a centralized, robust risk management infrastructure working under well-defined credit policies and rigorous underwriting criteria. We have developed portfolio strategies and controls that are conducive to the development of a diversified loan portfolio including a variety of exposure control limits on different portfolio segments and have established an internal lending limit that is substantially below our legal lending limit. Regular total portfolio and loan level monitoring ensures timely risk recognition, provides early warning of potential problems and allows prompt attention to potential problem loans. This strategy emphasizes generally conservative loan-to-value ratios and full recourse to guarantors with substantial net worth on credit exposures. In addition to our portfolio monitoring practices, we have a comprehensive loan review system using both internal and external resources to review at least 30% of portfolio exposure annually. Formal management quarterly problem loan reviews include assessment of risk ratings and loan collateral valuation in order to identify impaired loans.

The Bank takes a proactive approach to managing problem loans. Delinquent loans greater than 15 days are reviewed by the management team weekly. When a borrower fails to make a required loan payment, management takes a number of steps to have the borrower cure the delinquency and restore the loan to a current status. Bankers make the initial contact with the borrower when the loan becomes 15 days past due. If payment is not then received by the 30th day of delinquency, additional points of contact are generally made, the loan risk rating is reassessed, and a plan of collection is identified and pursued for each individual loan. The loan relationship may be downgraded and transferred to a special assets officer, depending on the prospects for the borrower bringing the loan current, the financial strength and commitment of any guarantors, the type and value of the collateral securing the loan and other factors. Collection efforts may lead to a demand of repayments, the initiation of litigation and/or foreclosure on collateral securing the loan. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure sale, the

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assets or real property securing the loan generally are sold by the Bank in a commercially reasonable manner. While we develop loan workout arrangements for most problem loans, we also consider the sale of the non-performing loans. Management regularly informs the board of directors of the amount and status of delinquent loans, all loans rated special mention or worse, all nonaccrual loans, all troubled debt restructures, and all OREO. When a credit is downgraded to “special mention” and/or “substandard,” it is generally transferred to a special assets officer.

The Bank mitigates risk through the direct receipt of milk assignments from agricultural customers.  This practice protects our revenue and ensures that we are actively monitoring the customers’ excess funds and collateral coverages.  As of December 31, 2019, 0.5% of total loans were delinquent 90 days or more.

Non-Performing Assets. We consider foreclosed assets and loans that are maintained on a nonaccrual basis to be non-performing assets. Loans are generally placed on nonaccrual status when collectability is judged to be uncertain or payments have become 90 days or more past due. On loans where the full collection of principal or interest payments is not probable, the accrual of interest income ceases, and any already accrued interest is reversed. Interest income is not accrued on such loans until the borrower’s financial condition and payment record demonstrate an ability to service the debt. Payments received on a nonaccrual loan are first applied to the outstanding principal balance when collectability of principal is in doubt.

Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as OREO until it is sold. Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less costs to sell.  Upon acquiring a property, the Bank engages an independent third party realtor to assist in marketing and selling the property. Management reviews all OREO on a quarterly basis and makes adjustments to listing prices and marketing strategies as deemed appropriate.  On an annual basis all OREO properties are re-appraised by independent third party appraisers.  Any holding costs and declines in fair value after acquisition of the property result in charges to non-interest expense.

Troubled debt restructurings occur when we grant borrowers concessions that we would not otherwise grant but for economic or legal reasons pertaining to the borrower’s financial difficulties. Generally, this occurs when the cash flows of the borrower are insufficient to service the loan under its original terms. We may modify the terms of a loan as a troubled debt restructuring by reducing the loan’s stated interest rate, extending the loan’s maturity, allowing for an interest-only payment period, or otherwise restructuring the loan terms to enable payment. We may consider permanently reducing the recorded investment in the loan or structuring a non-accruing secondary note in a troubled debt restructuring as well, but we generally do not make such concessions. Modifications involving a reduction of the stated interest rate of loans are typically for periods ranging from six months to one year. These modifications are made only when there is a reasonable and attainable workout plan that has been agreed to by the borrower and that is in our best interests. Loans classified as troubled debt restructurings are rated “substandard” by the Bank.  Any loans categorized as troubled debt restructurings will continue to retain that designation through the life of the loan.  Once the borrower has demonstrated sustained performance with the modified terms, the loan may be removed from non-performing status.

Volatility in milk prices is a normal aspect of the dairy business.  The dairy industry is currently recovering from a four-year slump in milk prices.  Class III milk prices began declining in 2014 and bottomed out at $12.76 cwt in May 2016.  In June 2016, the Wisconsin dairy economy began to stabilize and recover slightly, and the Class III prices started to stabilize and averaged a price of $16.08 cwt for the 19 month period ending December 31, 2017; however, in 2018, Class III milk prices declined again averaging $14.61 cwt for the year ending December 31, 2018.  During 2019, Class III milk prices further declined to $13.89 cwt in February 2019 before steadily increasing to $19.37 cwt in December 2019.  The amount a farmer actually receives is increased by the amount of fat, protein and other valuable components of the milk sold.  As milk prices ebb and flow, certain farmers may be adversely impacted by sustained periods of lower prices.  Due to the stressed dairy industry, we are experiencing an increase in troubled debt restructuring and non-performing loans; however, we are working closely with our customers as they work through the downturn and return to profitability so that they will be able to make payments on their loans.  Since its formation in 1997, the Bank has worked with distressed customers to work through several economic cycles, and in doing so has experienced less than $6.0 million of agricultural related charge-offs.  We believe that due to the growing market for dairy products, the collateral value of farm real estate will remain solid.  According to a 2019 report, the United States Department of Agriculture, National Agricultural Statistics Service reported the value of Wisconsin farm real estate increased by 1.9% during 2019.

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The following table provides information with respect to our non-performing assets, as well as troubled debt restructured loans and loans 90 days or more past due and still accruing at the dates indicated.

	As of  December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands)
Nonaccrual loans:
Agricultural loans	$	26,415		$	19,173		$	7,653		$	12,323		$	17,705
Commercial loans		1,818			1,773			1,757			3,376			3,712
Commercial real estate loans		2,673			2,037			2,149			4,340			3,162
Residential real estate loans		62			—			—			68			—
Total nonaccrual loans	$	30,968		$	22,983		$	11,559		$	20,107		$	24,579
Other real estate owned (1)		5,521			6,568			4,564			2,763			2,872
Total non-performing assets (2)	$	36,489		$	29,551		$	16,123		$	22,870		$	27,451
Loans 90+ days past due and still accruing		—			—			—			—			—
Performing troubled debt restructured loans		21,784			19,389			9,019			4,300			610
Total non-performing assets and performing troubled debt restructurings	$	58,273		$	48,940		$	25,142		$	27,170		$	28,061
Non-performing loans to total loans		2.99	%		1.90	%		1.01	%		1.95	%		3.29	%
Non-performing loans and loans past due 90 days and still accruing to total loans		2.99	%		1.90	%		1.01	%		1.95	%		3.29	%
Non-performing assets to total assets (2)(3)		2.65	%		1.94	%		1.15	%		1.84	%		3.10	%
Total non-performing assets and performing troubled debt restructurings to total assets		4.23	%		3.22	%		1.80	%		2.19	%		3.17	%

(1) 2017 and 2016 include $0.4 million of bank property transferred from premises and equipment to OREO which is not considered a non-performing asset and is not reflected in this table.

(2) Non-performing assets are defined as nonaccrual loans plus OREO.

(3) Loans are presented before allowance for loan losses and do not include deferred loan origination costs (fees).

Total nonaccrual loans increased by $8.0 million to $31.0 million at December 31, 2019 primarily due to one agricultural and one commercial relationship totaling $9.9 million migrating to non-accrual status.  

The Bank is actively managing its OREO portfolio.  As of December 31, 2019, OREO totaled $5.5 million compared to $6.6 million at December 31, 2018.  The decrease in OREO at December 31, 2019 compared to December 31, 2018, was the result of transferring $6.3 million of properties to OREO which was offset by sales of $6.5 million of OREO and $0.6 million of write-downs of existing OREO properties.  We expect the balance of the OREO in our portfolio and the related expenses to decline as we continue to sell properties.

Performing troubled debt restructured loans increased $2.4 million, or 12.4%, to $21.8 million at December 31, 2019.  The increase is primarily the result of loans within our agriculture portfolio that were modified to give the borrower an interest-only payment period to assist the borrower in working through the recovery of the agricultural economy discussed earlier.

Special Mention and Classified Loans. Federal regulations require us to review and classify loans on a regular basis. There are four classifications for problem loans: special mention, substandard—performing, substandard—impaired, and doubtful. We categorize loans into these risk categories based on relevant information about the ability of borrowers and, if appropriate, guarantors to service their debts, and the quality and projected realizable value of collateral. We analyze loans through quarterly asset quality reviews based on observable risk criteria such as overdrafts, late payments, financial performance and collateral valuations.

“Special mention loans” show potential weakness that deserve the Bank’s management’s close attention.  If left uncorrected, the potential weaknesses may result in the further deterioration of the credit.  We have two categories of “substandard loans.”  “Substandard – performing” credits generally have a well-defined weakness; however, collateral coverage is adequate, the loans are not considered impaired, payments are being made, and the loans are on accrual status.  “Substandard – impaired” credits are inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged. As such they have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful loans” have all the weaknesses inherent in substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss.  When management classifies a loan as substandard or doubtful, a specific allowance for probable and reasonably estimable loan losses is established.

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The following table shows the aggregate amounts of our doubtful, substandard and special mention loans.

	As of  December 31,
	2019		2018		2017		2016		2015
	(dollars in thousands)
Doubtful	$	—	$	—	$	—	$	—	$	—
Substandard impaired		64,439		56,757		33,002		21,440		30,402
Substandard performing		30,478		64,130		50,224		28,876		—
Special mention		9,239		6,566		8,902		15,168		13,911
Total doubtful, substandard, and special mention       loans	$	104,156	$	127,453	$	92,128	$	65,484	$	44,313

Other than as disclosed in the above tables, there are no other loans for which management has serious doubts about the ability of the borrowers to comply with the present loan repayment terms.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses inherent in the loan portfolio. This estimate includes losses associated with specifically identified loans, as well as estimated probable credit losses inherent in the remainder of the loan portfolio. Loan losses are charged against the allowance when, in our judgment, the uncollectability of all or a portion of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the required amount of the allowance using a number of factors, including past loan loss experience, the nature of the portfolio, economic conditions, information about specific borrower situations, and estimated collateral values. We evaluate the adequacy of the allowance for loan losses on a quarterly basis, although we may increase the frequency of our reviews as necessary. When additional allowance for loan loss is necessary, a provision for loan losses is charged to earnings.

Our methodology for assessing the sufficiency of the allowance for loan losses consists of three components: (a) a general component related to performing or “pass rated” credits (the significant majority of the loan portfolio), (b) a general component for classified, yet not impaired credits, and (c) a specific component relating to loans that are individually classified as impaired. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for the entire portfolio.

As disclosed in the notes to the financial statements, our allowance for loan losses is comprised primarily of general reserves of $9.7 million with a limited amount of specific reserves totaling $5.6 million at December 31, 2019. This compares to general reserves of $12.9 million with a limited amount of specific reserves totaling $3.7 million at December 31, 2018.

General Component. The general component of the allowance for loan losses relates to loans that are not determined to be impaired. Management determines the appropriate loss factor for each segment of loans with similar risk characteristics within the portfolio based on that segment’s loss experience and several other quantitative, qualitative and economic factors relevant to each segment. While loan segments generally represent groups of loans with similar risk characteristics, we may include loans categorized by loan grade, or any other characteristic that causes a loan’s risk profile to be similar to a group of loans. We consider estimated credit losses associated with each segment of our portfolio to differ from purely historical loss experience due to qualitative factors including changes in lending policies and procedures and changes in the nature and volume of the loan portfolio; quantitative factors including changes in the volume and severity of past due, nonaccrual, and adversely graded loans, changes in concentrations of credit, and changes in the value of underlying collateral for collateral dependent loans; and economic factors including changes in economic or business conditions and the effect of competition, legal and regulatory requirements on estimated credit losses.  The historical charge-off data is updated on a rolling quarterly basis, with the oldest quarter’s charge-off data being replaced with the most recent quarter’s charge-off data.  We give more weight to the more recent charge-off data for each specific type of loan, as we believe that is more indicative of current trends.  Our quantitative, qualitative, and economic factors are reviewed on a quarterly basis for each loan segment and our historical loss experience is reviewed quarterly to ensure that our analysis is reflective of current conditions in our loan portfolio and economy.

Classified Component. Loans that have been downgraded to special mention or substandard-performing, but are not currently impaired, are considered to have a higher inherent risk of loss than pass rated loans. Management judgment is needed to estimate the additional risk of loss for these types of loans. Risk allocations on non-impaired special mention and substandard-performing loans reflect management’s assessment of the increased risk of loss associated with adversely graded loans. The allocated reserve for these loans is based upon management’s assessment of loss history and risk migration analysis. Additionally, in determining the allocation, management considers the credit attributes of individual loans, including loan to value ratios, past due status, strength and willingness of the guarantors, and other relevant attributes generally found in these groups of loans.

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Specific Component. The specific component of the allowance for loan losses relates to loans that are individually evaluated and determined to be impaired. The allowance for each impaired loan is determined by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the market price reasonably obtainable for the loans or, if the loan is collateral dependent, by the fair value of the collateral less estimated costs to sell.  Collateral valuations are supported by current appraisals, which are discounted by us based upon a liquidation scenario.  We identify a loan as impaired when, based upon current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. We consider a number of factors in determining impairment, including payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower.

Discussion of Allowance for Loan Losses. At December 31, 2019, our allowance for loan losses was $15.3 million, or 1.5% of loans and 49.3% of nonaccrual loans.  At December 31, 2018, our allowance for loan losses was $16.5 million, or 1.4% of loans and 71.8% of nonaccrual loans.  Nonaccrual loans at December 31, 2019 were $31.0 million, or 3.0% of loans, compared to $23.0 million, or 1.9% of loans, at December 31, 2018.

Many factors are evaluated in our analysis of the allowance for loan loss, including milk prices and unemployment rates, economic and business conditions and our most recent historical loss experience. Notwithstanding the improvement in the quantitative, qualitative and economic factors in recent years, we anticipate we will resume making provisions to the allowance for loan losses to support growth in the loan portfolio in the near future, as circumstances warrant.

The allowance for loan losses is maintained at a level that represents management’s best estimate of probable incurred losses in the loan portfolio at the balance sheet date. However, there can be no assurance that the allowance for loan losses will be adequate to cover losses which may be realized in the future or that additional provisions for loan losses will not be required.

The following tables set forth the breakdown of the allowance for loan losses (ALL) by loan category at the dates indicated.

	As of December 31, 2019								As of December 31, 2018								As of December 31, 2017
	Amount		% of ALL			% of Loans in Category			Amount		% of ALL			% of Loans in Category			Amount		% of ALL			% of Loans in Category
	(dollars in thousands)
Agricultural    loans	$	11,737		76.88	%		1.78	%	$	12,258		74.27	%		1.69	%	$	9,712		73.31	%		1.41	%
Commercial real    estate loans		1,913		12.53	%		0.81	%		2,779		16.84	%		0.93	%		1,978		14.93	%		0.68	%
Commercial    loans		1,599		10.47	%		1.67	%		1,414		8.56	%		1.21	%		1,508		11.39	%		1.32	%
Residential real    estate		15		0.10	%		0.03	%		53		0.32	%		0.08	%		47		0.35	%		0.09	%
Installment and    consumer other		3		0.02	%		0.82	%		1		0.01	%		0.04	%		2		0.02	%		0.58	%
Total	$	15,267		100.00	%				$	16,505		100.00	%		1.37	%	$	13,247		100.00	%		1.15	%
	As of December 31, 2016								As of December 31, 2015
	Amount		% of ALL			% of Loans in Category			Amount		% of ALL			% of Loans in Category
	(dollars in thousands)
Agricultural    loans	$	8,173		64.63	%		1.31	%	$	6,355		61.10	%		1.27	%
Commercial real    estate loans		2,762		21.84	%		1.02	%		2,237		21.50	%		1.38	%
Commercial    loans		1,239		9.80	%		1.38	%		1,268		12.20	%		2.44	%
Residential real    estate		470		3.72	%		1.04	%		533		5.10	%		1.54	%
Installment and    consumer other		1		0.01	%		0.63	%		12		0.10	%		2.31	%
Total	$	12,645		100.00	%		1.23	%	$	10,405		100.00	%		1.39	%

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Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	For the Year Ended December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands)
Balance, beginning of period	$	16,505		$	13,247		$	12,645		$	10,405		$	10,603
Provision for loan losses		423			3,195			2,330			2,959			(1,019	)
Loans charged off:
Agriculture loans		61			1,238			—			1,142			1,145
Commercial real estate loans		3,585			42			987			242			162
Commercial loans		282			—			917			277			415
Residential real estate loans		—			—			—			5			178
Installment and consumer other		—			—			—			4			7
Total loans charged off	$	3,928		$	1,280		$	1,904		$	1,670		$	1,907
Recoveries:
Agriculture loans		58			1			43			2			61
Commercial real estate loans		2,106			1,280			92			884			743
Commercial loans		103			61			41			65			1,197
Residential real estate loans		—			—			—			—			727
Installment and consumer other		—			1			—			—			—
Total recoveries	$	2,267		$	1,343		$	176		$	951		$	2,728
Net loans charged off (recovered)	$	1,661		$	(63	)	$	1,728		$	719		$	(821	)
Allowance for loan losses, end of period	$	15,267		$	16,505		$	13,247		$	12,645		$	10,405
Net charge-offs (recoveries) to average loans		0.15	%		(0.01	)%		0.16	%		0.08	%		(0.12	)%
Allowance for loan losses to total loans		1.47	%		1.37	%		1.15	%		1.23	%		1.39	%

Liquidity Management and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. 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 December 31, 2019, the Bank had fixed rate advances outstanding with FHLB of $44.4 million and no borrowings outstanding at the Federal Reserve Bank of Chicago.  The Bank had collateral with unused borrowings available of $95.0 million with FHLB, a $96.0 million line-of-credit available with the Federal Reserve Bank of Chicago, and a $10.0 million line-of-credit with U.S. Bank at December 31, 2019.

Historically, management relied on wholesale funding to finance its lending activities. However, due to the volatility of that funding source, management made a concerted effort in 2019 to reduce its reliance on wholesale funding and fund loan growth through client deposits.  Wholesale funding channels remain available to the Bank should future lending or investment opportunities arise.

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 $21.8 million and $26.2 million, for the years ended December 31, 2019 and 2018, respectively. Net cash provided by (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 purchases, sales and originations, net of repayments was $214.6 million and ($139.8) million, for the years ended December 31, 2019 and 2018, respectively. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts, FHLB advances, and proceeds from the issuances of subordinated debentures, was ($168.5) million and $107.9 million, for the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019, the Bank exceeded all of its regulatory capital requirements to be considered well-capitalized with Tier 1 capital of $201.7 million, or 14.68% of average total assets, which is above the required level to be considered well-capitalized

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of $68.7 million, or 5.0% of average total assets, and total capital of $216.2 million, or 18.7% of risk-weighted assets, which is above the required level to be considered well-capitalized of $115.6 million, or 10.0% of risk-weighted assets. The Bank had Tier 1 of $201.7 million, or 17.45% of risk-weighted assets, which is above the required level to be considered well-capitalized of $92.5 million, or 8.0% of risk-weighted assets, and Tier 1 common equity of $201.7 million, or 17.45% of risk-weighted assets, which is above the required level to be considered well-capitalized of $75.2 million, or 6.5% of risk-weighted assets at December 31, 2019.  For a discussion of certain other sources of liquidity, please see “Comparison of Financial Condition at December 31, 2019 and 2018—Borrowings.”

At the holding company level, our primary sources of liquidity are dividends from the Bank, borrowings and capital offerings. The main uses of liquidity are the payment of interest to holders of our junior subordinated debentures and subordinated notes and interest and payment of dividends to preferred shareholders and common shareholders. There are certain restrictions on the payment of dividends by the Bank to us, which are described in the section captioned “Item I – Business - Supervision and Regulation—Supervision and Regulation of the Bank—Dividend Payments.” At December 31, 2019, there were up to $113.9 million of retained earnings available for the payment of dividends by the Bank to us provided that the Bank remained adequately capitalized and satisfied the capital conservation buffer. The Bank paid us $6.0 million and $2.0 million in dividends during the year ended December 31, 2019 and 2018, respectively.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with GAAP, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions include commitments to extend credit, standby and performance letters of credit, and commitments to originate loans.

Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Bank, is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are usually collateralized and contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the payment or the performance of a Bank customer to a third party. Both standby and performance letters of credit are generally issued for terms of one to four years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting these commitments.  At December 31, 2019, the Company had commitments to extend credit and unused lines of credit, including unused credit card lines, of $171.1 million and standby letters of credit of $3.9 million.  We anticipate that we will have sufficient funds available to meet our current loan origination commitments.

Certificates of deposit that are scheduled to mature in one year or less from December 31, 2019 totaled $378.1 million. If a substantial portion of these deposits are not retained, we may utilize FHLB advances, wholesale deposits, or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At December 31, 2019, we had no irrevocable and stand-by letters of credit from the FHLB.

For the years ended December 31, 2019 and 2018, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Contractual Obligations.  The following table summarizes significant contractual obligations and other commitments as of December 31, 2019:

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	Payments Due by Period
	1 Year or less		1-3 Years		3-5 Years		More than 5 Years		Total
	(dollars in thousands)
Operating lease obligations	$	137,116	$	1,200	$	—	$	—	$	138,316
Certificates of deposit		378,098		211,987		40,715		—		630,800
FHLB advances		18,400		18,000		8,000		—		44,400
Subordinated debentures		—		—		—		44,858		44,858
Other borrowings		—		—		—		794		794
Total contractual       obligations	$	533,614	$	231,187	$	48,715	$	45,652	$	859,168

Effect of Inflation and Changing Prices

The consolidated financial statements and related financial data presented in this Form 10-K have been prepared according to GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs and the effect that general inflation may have on both short-term and long-term interest rates. Virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than do general levels of inflation. Although inflation expectations do affect interest rates, interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General. Market risk refers to potential losses arising from changes in interest rates, commodity prices, such as milk prices, and/or other relevant market rates or prices. We are exposed to market risk as a result of our banking activities. Our market risk is comprised primarily of interest rate risk. As a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit our exposure to changes in market interest rates. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment.

A major source of interest rate risk is a difference in the repricing of assets and liabilities. First, there are differences in the timing of rate changes based on the maturity and/or repricing of assets and liabilities. For example, the rate earned on a commercial real estate loan may be fixed for 10 years, while the rate paid on a certificate of deposit may be fixed only for a few months. Due to these timing differences, net interest income is sensitive to changes in the level and shape of the yield curve. Second, there are differences in the drivers of rate changes of various assets and liabilities known as basis risk. For example, commercial loans may reprice based on one-month LIBOR or prime, while the rate paid on retail money market demand accounts may be only loosely correlated with LIBOR and depend on competitive demand for funds. Due to these basis differences, net interest income is sensitive to changes in spreads between certain indices or repricing rates.

Another important source of interest rate risk relates to the potential exercise of explicit or embedded options for prepayment or withdrawal. For example, most residential real estate loans can be prepaid without penalty, and most consumer deposits can be withdrawn without penalty. The exercise of such options by customers can exacerbate the timing differences discussed above.

Deposit accounts typically react more quickly to changes in market interest rates than loans because of the shorter maturities of deposits. However, given the asset sensitive nature of our balance sheet, a decrease in interest rates may adversely affect our earnings while increases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. Our strategy for managing interest rate risk emphasizes adjustable-rate loans for retention in our loan portfolio, promoting core deposit products and time deposits, adjusting the maturities of borrowings and adjusting the investment portfolio mix and duration.

We have an asset/liability committee, which includes members of management, to communicate, coordinate and control all aspects involving asset-liability management. The committee establishes and monitors the volume, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.

Our goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income and net income and control exposure to interest rate risk within policy limits approved by our board of directors. These limits and guidelines reflect our tolerance for interest rate risk over both short-term and long-term horizons. We analyze our sensitivity to

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changes in interest rates through our net interest income simulation model. Exposures are reported on a monthly basis to the asset/liability committee and at meetings of our board of directors.

Net Interest Income Simulation Analysis. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.

Income simulation is the primary tool for measuring the interest rate risk inherent in our balance sheet at a given point in time by showing the effect on net interest income, over specified time horizons, of a range of interest rate shock scenarios. These simulations take into account repricing, maturity and prepayment characteristics of individual products. We estimate what our net interest income would be for a one- and two-year horizon based on current interest rates. We then calculate what the net interest income would be for the same period under different interest rate assumptions.

These estimates require us to make certain assumptions, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain, and, as a result, we cannot precisely predict the impact of changes in interest rates on our net interest income. Although the net interest income table below provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results

The following table shows the estimated impact on net interest income for the one- and two-year periods beginning December 31, 2019 resulting from potential changes in interest rates. The net interest income simulation analyses assume a static balance sheet and do not include possible future actions that management might undertake to mitigate this risk.

Rate Shift	Net Interest Income Year 1 Forecast		Year 1 Change from Base			Net Interest Income Year 2 Forecast		Year 2 Change from Base
	(dollars in thousands)					(dollars in thousands)
+400 bps	$	54,400		28.91	%	$	52,300		21.06	%
+200 bps		48,300		14.45	%		47,600		10.19	%
+100 bps		45,200		7.11	%		45,300		4.86	%
Base		42,200		0.00	%		43,200		0.00	%
-100 bps		39,000		-7.58	%		40,100		-7.18	%
-200 bps		35,300		-16.35	%		35,600		-17.59	%

As of December 31, 2019, net interest income simulation indicated that our exposure to changing interest rates was within our internal policy guidelines. As the table illustrates, our balance sheet is asset-sensitive over a one and two year time horizon and net interest income would increase as interest rates increase. It should be noted that the magnitude of any possible increase in interest rates is constrained by the low absolute starting levels of rates. While immediate, proportional and severe shifts in interest rates upward were used as part of this analysis, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact.

Depending on the relationship between long-term and short-term interest rates, market conditions and consumer preference, we may place greater emphasis on maximizing our net interest margin than on strictly matching the interest rate sensitivity of our assets and liabilities. We believe that our level of interest rate risk is acceptable using this approach.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENT OF COUNTY BANCORP, INC.

Report of Independent Registered Public Accounting Firm	53
Consolidated Financial Statements
Consolidated Balance Sheets	54
Consolidated Statements of Operations	55
Consolidated Statements of Comprehensive Income	56
Consolidated Statements of Shareholders’ Equity	57
Consolidated Statements of Cash Flows	58
Notes to Consolidated Financial Statements	59

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of County Bancorp, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying balance sheets of County Bancorp, Inc. and Subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting under section 404(b) of the Sarbanes-Oxley Act. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion under section 404(b) of the Sarbanes-Oxley Act.

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

We have served as the Company’s auditor since 2018.

/s/ Plante & Moran, PLLC

Chicago, Illinois

March 13, 2020

53

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2019 and 2018

	2019			2018
	(dollars in thousands except per share data)
ASSETS
Cash and cash equivalents	$	108,457		$	50,952
Interest earning cash at other financial institutions		20,554			10,135
Securities available for sale, at fair value		158,733			195,945
FHLB Stock		1,628			2,978
Loans held for sale		2,151			2,949
Loans, net of allowance for loan losses of $15,267 as of December 31, 2019;    $16,505 as of December 31, 2018		1,020,506			1,190,790
Premises and equipment, net		13,603			16,075
Loan servicing rights		12,509			9,047
Other real estate owned, net		5,521			6,568
Cash surrender value of bank owned life insurance		18,302			17,842
Deferred tax asset, net		1,453			4,346
Goodwill		5,038			5,038
Core deposit intangible, net		225			513
Accrued interest receivable and other assets		10,099			7,849
Total assets	$	1,378,779		$	1,521,027
LIABILITIES
Deposits:
Noninterest-bearing	$	138,489		$	121,436
Interest-bearing		962,953			1,101,911
Total deposits		1,101,442			1,223,347
Other borrowings		794			827
Advances from FHLB		44,400			89,400
Subordinated debentures, net		44,858			44,703
Accrued interest payable and other liabilities		15,256			10,466
Total liabilities		1,206,750			1,368,743
SHAREHOLDERS' EQUITY
Preferred stock - $1,000 stated value; 15,000 shares authorized;     8,000 shares issued		8,000			8,000
Common stock - $0.01 par value; 50,000,000 authorized; 7,178,052 shares issued    and 6,734,132 shares outstanding as of December 31, 2019; 7,153,174 shares issued    and 6,709,480 shares outstanding as of December 31, 2018		28			28
Surplus		54,122			53,162
Retained earnings		113,111			98,475
Treasury stock, at cost, 443,920 and 443,694 shares at December 31,    2019 and 2018, respectively		(5,030	)		(5,030	)
Accumulated other comprehensive gain (loss)		1,798			(2,351	)
Total shareholders' equity		172,029			152,284
Total liabilities and shareholders' equity	$	1,378,779		$	1,521,027

See accompanying notes to the consolidated financial statements

54

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2019 and 2018

	2019		2018
	(dollars in thousands except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	59,706	$	58,706
Taxable securities		4,586		3,727
Tax-exempt securities		257		698
Federal funds sold and other		1,783		1,086
Total interest and dividend income		66,332		64,217
INTEREST EXPENSE
Deposits		21,457		18,649
FHLB advances and other borrowings		1,350		1,809
Subordinated debentures		2,743		1,804
Total interest expense		25,550		22,262
Net interest income		40,782		41,955
Provision for loan losses		423		3,195
Net interest income after provision for loan losses		40,359		38,760
NON-INTEREST INCOME
Services charges		1,657		1,674
Gain on sale of loans, net		146		172
Loan servicing fees		9,998		6,110
Other		1,592		877
Total non-interest income		13,393		8,833
NON-INTEREST EXPENSE
Employee compensation and benefits		19,112		16,785
Occupancy		1,402		1,059
Information processing		2,482		2,164
Professional fees		1,670		1,522
Cost of operation of other real estate owned, net		873		1,087
Investment tax credit impairment		1,149		—
Other		5,996		5,666
Total non-interest expense		32,684		28,283
Income before income taxes		21,068		19,310
Income tax expense		4,616		5,059
NET INCOME	$	16,452	$	14,251
NET INCOME PER SHARE:
Basic	$	2.37	$	2.06
Diluted	$	2.36	$	2.04
Dividends paid per share	$	0.20	$	0.28

See accompanying notes to the consolidated financial statements

55

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31, 2019 and 2018

	2019			2018
	(dollars in thousands)
Net income	$	16,452		$	14,251
Other comprehensive income:
Unrealized gain (loss) on securities available-for-sale		6,835			(2,017	)
Income tax (expense) benefit		(1,861	)		549
Reclassification for realized gains on securities		(341	)		—
Income tax expense		93			—
Total other comprehensive income (loss) on securities     available-for-sale		4,726			(1,468	)
Unrealized loss on derivatives arising during the period		(793	)		(179	)
Income tax benefit		216			49
Total other comprehensive loss on derivatives		(577	)		(130	)
Total other comprehensive income (loss)		4,149			(1,598	)
Comprehensive income	$	20,601		$	12,653

See accompanying notes to the consolidated financial statements

56

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years Ended December 31, 2019 and 2018

	Preferred Stock		Common Stock		Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(dollars in thousands)
Balance at December 31, 2017	$	8,000	$	28	$	52,230	$	86,385		$	(5,030	)	$	(627	)	$	140,986
Net income		—		—		—		14,251			—			—			14,251
Other comprehensive loss		—		—		—		—			—			(1,598	)		(1,598	)
Stock compensation expense		—		—		473		—			—			—			473
Cash dividends declared on common stock		—		—		—		(1,874	)		—			—			(1,874	)
Cash dividends declared on preferred stock		—		—		—		(413	)		—			—			(413	)
Reclassification of stranded tax effects of    rate change		—		—		—		126			—			(126	)		—
Proceeds from sale of common stock (30,217    shares)		—		—		459		—			—			—			459
Balance at December 31, 2018	$	8,000	$	28	$	53,162	$	98,475		$	(5,030	)	$	(2,351	)	$	152,284
Net income		—		—		—		16,452			—			—			16,452
Other comprehensive income		—		—		—		—			—			4,149			4,149
Stock compensation expense		—		—		695		—			—			—			695
Cash dividends declared on common stock		—		—		—		(1,344	)		—			—			(1,344	)
Cash dividends declared on preferred stock		—		—		—		(472	)		—			—			(472	)
Proceeds from sale of common stock (21,224    shares)		—		—		265		—			—			—			265
Balance at December 31, 2019	$	8,000	$	28	$	54,122	$	113,111		$	(5,030	)	$	1,798		$	172,029

See accompanying notes to the consolidated financial statements

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COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2019 and 2018

	2019			2018
	(dollars in thousands)
Cash flows from operating activities
Net income	$	16,452		$	14,251
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of premises and equipment		1,391			1,255
Amortization of core deposit intangible		288			406
Amortization of subordinated debenture costs		155			122
Provision for loan losses		423			3,195
Realized gain on sales of securities available-for-sale		(341	)		—
Realized gain on sales of other real estate owned		(40	)		(231	)
Write-down of other real estate owned		626			873
Realized gain on sales of premises and equipment		(6	)		(1	)
Increase in cash surrender value of bank owned life insurance		(460	)		(453	)
Deferred income tax expense (benefit)		1,401			(483	)
Stock compensation expense		695			473
Net amortization of premiums paid on securities		441			818
Net change in:
Accrued interest receivable and other assets		(405	)		(57	)
Loans held for sale		798			3,626
Loan servicing rights		(3,462	)		(97	)
Accrued interest payable and other liabilities		3,997			2,479
Net cash provided by operating activities		21,953			26,176
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities    available for sale		24,368			23,386
Purchases of securities available for sale		(10,122	)		(96,136	)
Proceeds from sales of securities available-for-sale		29,361			—
Net redemptions (purchases) of FHLB stock		1,184			1,160
Loan originations and principal collections, net		163,546			(64,385	)
Proceeds from sales of premises and equipment		6			—
Purchases of premises and equipment		(659	)		(7,667	)
Proceeds from sales of other real estate owned		6,776			3,854
Net cash provided by (used in) investing activities		214,460			(139,788	)
Cash flows from financing activities
Net increase in demand and savings deposits		52,491			14,530
Net (decrease) increase in certificates of deposits		(174,396	)		98,740
Net change in other borrowings		(33	)		(472	)
Proceeds from FHLB advances		115,000			150,000
Repayment of FHLB advances		(160,000	)		(182,100	)
Proceeds from issuance of common stock		265			459
Increase in subordinated debentures		—			29,058
Dividends paid on preferred stock		(472	)		(413	)
Dividends paid on common stock		(1,344	)		(1,874	)
Net cash (used in) provided by financing activities		(168,489	)		107,928
Net change in cash and cash equivalents		67,924			(5,684	)
Cash and cash equivalents, beginning of period		61,087			66,771
Cash and cash equivalents, end of period	$	129,011		$	61,087
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	23,833		$	20,621
Income taxes		1,725			4,875
Noncash investing activities:
Transfer of assets held for sale from premises and equipment to other assets	$	1,500		$	—
Transfer from loans to other real estate owned		6,315			6,104
Loans charged off		3,928			1,280

See accompanying notes to the consolidated financial statements

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COUNTY BANCORP, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019 and 2018

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of County Bancorp, Inc. and its subsidiaries conform to accounting principles generally accepted in the United States of America and to general practice within the banking industry. The following is a description of the more significant of those policies.

Nature of Business and Significant Concentrations of Credit Risk

The Company is the sole shareholder of Investors Community Bank. The Bank is the sole member of Investors Insurance Services, LLC and ABS 1, LLC, which are both Wisconsin limited liability companies. The Company commenced operations in May 1996; the Bank commenced operations in March 1997. In July 2010, the Bank formed Investors Insurance Services, LLC for the sole purpose of protecting the Bank from liability risk when selling crop insurance. Selling crop insurance had historically been a business function performed within the Bank. In August 2011, the Bank formed ABS 1, LLC for the sole purpose of holding real estate and personal property for sale which was obtained through repossession.

The Bank provides a full range of banking and related financial services, which include real estate lending, business services, and agricultural finance, to individual and corporate customers primarily located within the state of Wisconsin. The Bank’s primary source of revenue is providing loans to customers, who are predominantly engaged in dairy farming and commercial activities. Its primary deposit products are savings and term certificate accounts. The Bank is subject to competition from other financial institutions and is regulated by federal and state banking agencies and undergoes periodic examinations by those agencies.

Agricultural loans, including agricultural operating, real estate and construction loans, represented 63.7% and 60.0% of our total loan portfolio at December 31, 2019 and 2018, respectively. Commercial real estate, including commercial construction loans, represented 22.8% and 24.8% of our total loan portfolio at December 31, 2019 and 2018, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company also has three wholly owned subsidiaries, County Bancorp Statutory Trust II, County Bancorp Statutory Trust III, and Fox River Valley Capital Trust I, that are Delaware statutory trusts which have not been consolidated in accordance with accounting guidance related to variable interest entities.

Use of Estimates in Preparing Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the fair value of the Company in its goodwill impairment assessment, and the valuation of investment securities available for sale, loan servicing rights, other real estate owned, financial instruments, and deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days.

In the normal course of business, the Company maintains balances with correspondent banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to specified limits. Management believes these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal.

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Securities Available for Sale

Available for sale securities are carried at fair value with unrealized gains and losses excluded from earnings and reported separately in other comprehensive income (loss). The Company currently has no securities designated as trading or held-to-maturity. Interest income is recognized at the coupon rate adjusted amortization and accretion of premiums and discounts.  Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. They are included in non-interest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

Declines in the fair value of individual available for sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary impairment. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in non-interest income.

Federal Home Loan Bank Stock

The Bank, as a member of the Federal Home Loan Bank of Chicago (“FHLB”), is required to maintain an investment in the capital stock of the FHLB based on the level of borrowings and other factors, and may invest additional amounts. Based on the redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost which approximates fair value. It is periodically evaluated by management for impairment. Because it is viewed as a long term investment, impairment is based on ultimate recovery of par value. Both stock and cash dividends are reported as income.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. Gains and losses on loan sales (sale proceeds minus carrying value) are recorded in non-interest income and direct loan origination costs and fees are deferred at origination of the loan and are recognized in non-interest income upon sale of the loan.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for unearned income and the allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, non-refundable fees and direct loan origination costs on real estate and commercial loans are amortized over the life of the loan and accounted for as an adjustment of yield of the related loan categories.

The accrual of interest on mortgage and commercial loans is discontinued at the time the principal and interest is 90 days delinquent unless the credit is well-secured and in the process of collection.  Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on nonaccrual loans is applied to reduce the principal balance outstanding.  Once the loans qualify for a return to accrual status, the interest in accounted for on the cash-basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses (hereinafter referred to as “allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance.

The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. The general component covers non-impaired loans and is based on historical losses adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on a weighted average of the actual loss history experienced by the Company over the most recent four years. The Company places more emphasis, or weight, on the more current quarters in the loss history period. This

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actual loss experience is adjusted for economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is generally measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with other nonaccrual loans.

Large groups of small balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for credit quality disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include agricultural, commercial, commercial real estate, residential real estate, and installment and consumer other with risk characteristics described as follows:

Agricultural: Agricultural loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows.  Adverse economic conditions and trends influenced by Class III milk prices and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial: Commercial loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows, and economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial Real Estate: Commercial real estate loans, including land and construction, generally possess a higher inherent risk of loss than other real estate portfolio segments. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability of the properties to produce sufficient cash flow to service debt obligations.

Residential Real Estate: The degree of risk in residential mortgage and home equity lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating.

Installment and Consumer Other: The installment and consumer other loan portfolio is usually comprised of a large number of small loans. Most loans are made directly for consumer purchases. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate the borrowers’ capacity to repay their obligations may be deteriorating.

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Although management believes the allowance to be adequate as of each balance sheet date, ultimate losses may vary from its estimates. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s primary regulator reviews the adequacy of the allowance. The regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations.

Bank Premises and Equipment

Land is carried at cost. Bank premises and equipment are carried at cost, less accumulated depreciation. Depreciation is computed on the straight line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any recognized gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred; significant renewals and improvements are capitalized and a deduction is made from the property accounts for retirements of capitalized renewals or improvements.

Off-Balance Sheet Credit-Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell.

Loan Servicing Rights

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.

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 and are recorded as income when earned. The amortization of loan servicing rights is netted against loan servicing fee income.  

As of January 1, 2020, the Company has elected to make an accounting method change for the valuation of the servicing assets from amortizing cost described above to fair market value.  We believe that the fair value method a more accurate reflection of the value of these assets and is more widely recognized by the SEC, FASB, as well as the investor community.  As a result of this accounting method change, the Company will increase servicing assets and retained earnings by $3.4 million with an after tax effect of $2.6

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million.  The adoption of the change will be recorded through a cumulative effect adjustment to retained earnings as of January 1, 2020.  All future adjustments to fair value will run through the income statement.

Other Real Estate Owned

Land and assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure less estimated costs to sell, establishing a new cost basis with any loss on transfer recorded as a charge against the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Impairment losses on assets to be held and used are measured at the amount by which the carrying amount of a property exceeds its fair value. The evaluation of impairment is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements. Costs of significant asset improvements are capitalized, whereas costs relating to holding assets are expensed. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Cash Surrender Value of Bank Owned Life Insurance

The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized, if lower.

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 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.  There was no impairment charge to goodwill or core deposit intangible related to the Fox River Valley acquisition at December 31, 2019.  

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

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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.  As of December 31, 2019 and 2018, there was no valuation allowance.    

The Company files income taxes 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 2016.

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

Comprehensive Income

Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale and interest rate swap contracts designed as hedges, are reported as a separate component of the equity section of the consolidated balance sheet. Such items, along with net income, are components of comprehensive income.  Accumulated comprehensive income included unrealized gains (losses) on securities available for sale and unrealized losses on interest rate swap contracts of $2,506 and $(577), respectively, net of tax of $(936) and $216, respectively, as of December 31, 2019.  Accumulated comprehensive loss as of December 31, 2018 included unrealized losses on securities available for sale and unrealized losses on interest rate swap contracts of $(2,221) and $(130), respectively, net of tax of $831 and $49, respectively.   

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives consist of interest rate swap agreements that qualify for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received or paid on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded.

We formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses would be recognized immediately in current earnings as noninterest income or expense.

Equity Incentive Plan

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.  All grants and awards out of the equity incentive plan are newly issued shares.

Treasury Stock

Common stock shares repurchased are recorded as treasury stock at cost.

Earnings per Share

Basic earnings per share represent income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the

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assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options, and are determined using the treasury stock method.

Treasury shares are not deemed outstanding for earnings per share calculations.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so.

Advertising Costs

Advertising costs are expensed as incurred.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 20. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Segments

The Company’s operations consist of one segment, community banking.  The operating results of this segment are regularly reviewed by management to make decisions about resource allocations and to assess performance.  Selected information is not presented separately for the Company's reportable segment, as there is no material difference between that information and the corresponding information in the consolidated financial statements.

New Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases: Amendments to the FASB Accounting Standards Codification, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the prior accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU became effective January 1, 2019, and were adopted by the Company retrospectively to the beginning of the adoption period.  Since all of the Company’s leases are operating leases, there was no impact to the consolidated statements of operations; however, a right-of-use asset of $0.2 million and a corresponding liability were recorded on the Company’s balance sheet as of the effective date of the amendment.  

In June 2016, the FASB issued ASU No. 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.    In October 2019, the FASB voted to delay the effective date for the credit losses standard to January 2023 for certain entities, including SEC filers that qualified as smaller reporting companies and private companies.  As a smaller reporting company, the Company was eligible for the delay and will be deferring adoption until January

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2023.  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 has engaged a third-party software consultant to assist in developing our loss model methodology, and is currently gathering historical data.  At this time, the Company is still assessing the impact of this standard on the consolidated financial statements.  The Company is also developing internal control processes and disclosure documentation related to the adoption of this standard.  Management will continue to progress on its implementation project plan and improve the Company’s approach throughout the deferral period.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), to permit entities to better portray the economic results of their hedging strategies in their financial statements.  In addition, the amendments make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP.  The amendment is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including adoption in an interim period.  The Company has chosen to early adopt this amendment in connection with the interest rate swap that commenced on June 15, 2018, and it had no material impact on the Company’s results of operation, financial position, or liquidity.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 842) – Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which focuses on improving the effectiveness of disclosures in the notes to the financial statements.  The amendment is effective for the fiscal years beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company is currently evaluating the effect this standard will have on the Company’s financial statements.

NOTE 2—RESTRICTIONS ON CASH AND CASH EQUIVALENTS

The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2019 and 2018, these reserve balances amounted to approximately $7.2 million and $4.3 million, respectively.

NOTE 3—SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	3,490	$	—	$	(32	)	$	3,458
U.S treasury securities		2,499		7		—			2,506
Municipal securities		—		—		—			—
Mortgage-backed securities		149,302		3,633		(166	)		152,769
	$	155,291	$	3,640	$	(198	)	$	158,733
December 31, 2018
U.S. government and agency securities	$	4,368	$	—	$	(37	)	$	4,331
U.S treasury securities		2,497		—		(6	)		2,491
Municipal securities		34,985		33		(498	)		34,520
Mortgage-backed securities		157,147		203		(2,747	)		154,603
	$	198,997	$	236	$	(3,288	)	$	195,945

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The amortized cost and fair value of securities at December 31, 2019 and 2018, 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)
December 31, 2019
Due in one year or less	$	2,499	$	2,506
Due from one to five years		—		—
Due from five to ten years		3,490		3,458
Due after ten years		—		—
Mortgage-backed securities		149,302		152,769
	$	155,291	$	158,733
December 31, 2018
Due in one year or less	$	5,848	$	5,843
Due from one to five years		11,113		10,974
Due from five to ten years		8,458		8,382
Due after ten years		16,431		16,143
Mortgage-backed securities		157,147		154,603
	$	198,997	$	195,945

Proceeds from the sale of securities available-for-sale were $29.4 million and the gross gain was $0.3 million for the year ended December 31, 2019.  There were no securities available for sale sold at a loss during 2019.  There were no sales of securities available for sale for the year ended December 31, 2018.

At December 31, 2019 and 2018 no securities were pledged to secure the FHLB advances besides FHLB stock of $1.6 million and $3.0 million, respectively. There were no securities pledged to secure the Federal Reserve Bank line of credit at December 31, 2019 and 2018; however, there were $63.0 million and $53.4 million of securities pledged to secure municipal customer deposits at December 31, 2019 and 2018, respectively.  

Temporarily Impaired Securities

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-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018.

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	—	$	—		$	3,458	$	(32	)	$	3,458	$	(32	)
U.S treasury securities		—		—			—		—			—		—
Municipal securities		—		—			—		—			—		—
Mortgage-backed securities		9,873		(41	)		11,867		(125	)		21,740		(166	)
	$	9,873	$	(41	)	$	15,325	$	(157	)	$	25,198	$	(198	)
December 31, 2018
U.S. government and agency securities	$	—	$	—		$	4,331	$	(37	)	$	4,331	$	(37	)
U.S treasury securities		2,491		(6	)		—		—			2,491		(6	)
Municipal securities		4,291		(15	)		25,377		(483	)		29,668		(498	)
Mortgage-backed securities		41,925		(208	)		83,319		(2,539	)		125,244		(2,747	)
	$	48,707	$	(229	)	$	113,027	$	(3,059	)	$	161,734	$	(3,288	)

The unrealized loss on the investments at December 31, 2019 and 2018 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

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required to sell the investments before recovery of the amortized cost basis, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired at December 31, 2019 and 2018.

Other-Than-Temporary Impairment

The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. There were no securities with material unrealized losses existing longer than 12 months, and no securities with unrealized losses which management believed were other-than-temporarily impaired, at December 31, 2019 or 2018.

At December 31, 2019, 34 debt securities had unrealized losses with aggregate depreciation of 0.78% from the Company’s amortized cost basis. At December 31, 2018, 156 debt securities had unrealized losses with aggregate depreciation of 2.03% from the Company’s amortized cost basis.  These unrealized losses related principally to Government National Mortgage Association mortgage-backed and municipal debt securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Since none of the unrealized losses relate to deterioration in the underlying repayment sources and management has the indent and ability  hold debt securities until maturity,  the decline is not deemed to be other-than-temporary.

NOTE 4—LOANS

The components of the loan portfolio were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Agricultural loans	$	659,725		$	724,508
Commercial real estate loans		235,936			299,212
Commercial loans		95,787			116,460
Residential real estate loans		43,958			66,843
Installment and consumer other		367			272
Total gross loans		1,035,773			1,207,295
Allowance for loan losses		(15,267	)		(16,505	)
Loans, net	$	1,020,506		$	1,190,790

The following table presents the aging of the recorded investment in past due loans at December 31, 2019 and 2018:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
	(dollars in thousands)
December 31, 2019
Agricultural loans	$	1,489	$	71	$	4,974	$	6,534	$	653,191	$	659,725
Commercial real estate loans		—		288		—		288		235,648		235,936
Commercial loans		—		28		228		256		95,531		95,787
Residential real estate loans		—		—		62		62		43,896		43,958
Installment and consumer other		—		—		—		—		367		367
Total	$	1,489	$	387	$	5,264	$	7,140	$	1,028,633	$	1,035,773
December 31, 2018
Agricultural loans	$	460	$	969	$	7,968	$	9,397	$	715,111	$	724,508
Commercial real estate loans		—		—		2,037		2,037		297,175		299,212
Commercial loans		—		—		600		600		115,860		116,460
Residential real estate loans		—		—		—		—		66,843		66,843
Installment and consumer other		—		—		—		—		272		272
Total	$	460	$	969	$	10,605	$	12,034	$	1,195,261	$	1,207,295

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The following table lists information on nonaccrual, restructured, and certain past due loans:

	December 31,
	2019		2018
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	5,264	$	10,605
Nonaccrual loans 30-89 days past due		1,781		868
Nonaccrual loans, less than 30 days past due		23,923		11,510
Restructured loans not on nonaccrual status		21,783		19,389
90 days or more past due and still accruing		—		—

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days on accrual by class of loan:

	December 31,
	2019		2018
	(dollars in thousands)
Agricultural loans	$	26,415	$	19,173
Commercial real estate loans		2,673		2,037
Commercial loans		1,818		1,773
Residential real estate loans		62		—
Total	$	30,968	$	22,983

The average recorded investment in total impaired loans for the years ended December 31, 2019 and 2018 amounted to approximately $60.6 million and $44.9 million, respectively.  Interest income recognized on total impaired loans for the years ended December 31, 2019 and 2018 amounted to approximately $5.7 million and $4.1 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 $2.9 million and $2.0 million for the years ended December 31, 2019 and 2018, respectively.

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The following tables present loans individually evaluated for impairment by class of loans at December 31, 2019 and 2018:

	December 31, 2019
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	14,151	$	14,131	$	—
Commercial real estate loans		—		—		—
Commercial loans		—		—		—
Residential real estate loans		62		62		—
	$	14,213	$	14,193	$	—
With an allowance recorded
Agricultural loans	$	47,225	$	44,702	$	3,515
Commercial real estate loans		3,681		3,682		836
Commercial loans		2,155		1,862		1,238
Residential real estate loans		—		—		—
		53,061		50,246		5,589
Total	$	67,274	$	64,439	$	5,589
	December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	22,218	$	21,654	$	—
Commercial real estate loans		—		—		—
Commercial loans		455		455		—
Residential real estate loans		—		—		—
	$	22,673	$	22,109	$	—
With an allowance recorded
Agricultural loans	$	33,090	$	31,293	$	2,325
Commercial real estate loans		2,037		2,037		583
Commercial loans		1,326		1,318		745
Residential real estate loans		—		—		—
		36,453		34,648		3,653
Total	$	59,126	$	56,757	$	3,653

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Changes in the allowance for loan losses by portfolio segment were as follows:

	December 31, 2019
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	12,258	$	(518	)	$	(61	)	$	58	$	11,737
Commercial real estate loans		2,779		613			(3,585	)		2,106		1,913
Commercial loans		1,414		364			(282	)		103		1,599
Residential real estate loans		53		(38	)		—			—		15
Installment and consumer other		1		2			—			—		3
Total	$	16,505	$	423		$	(3,928	)	$	2,267	$	15,267
	December 31, 2018
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	9,712	$	3,783		$	(1,238	)	$	1	$	12,258
Commercial real estate loans		1,978		(437	)		(42	)		1,280		2,779
Commercial loans		1,508		(155	)		—			61		1,414
Residential real estate loans		47		6			—			—		53
Installment and consumer other		2		(2	)		—			1		1
Total	$	13,247	$	3,195		$	(1,280	)	$	1,343	$	16,505

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The following tables present the balances in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method:  

	December 31, 2019
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	3,515	$	8,222	$	11,737
Commercial real estate loans		836		1,077		1,913
Commercial loans		1,238		361		1,599
Residential real estate loans		—		15		15
Installment and consumer other		—		3		3
Total ending allowance for loan losses		5,589		9,678		15,267
Loans:
Agricultural loans		58,833		600,892		659,725
Commercial real estate loans		3,682		232,254		235,936
Commercial loans		1,862		93,925		95,787
Residential real estate loans		62		43,896		43,958
Installment and consumer other		—		367		367
Total loans		64,439		971,334		1,035,773
Net loans	$	58,850	$	961,656	$	1,020,506
	December 31, 2018
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	2,325	$	9,933	$	12,258
Commercial real estate loans		583		2,196		2,779
Commercial loans		745		669		1,414
Residential real estate loans		—		53		53
Installment and consumer other		—		1		1
Total ending allowance for loan losses		3,653		12,852		16,505
Loans:
Agricultural loans		52,947		671,561		724,508
Commercial real estate loans		2,037		297,175		299,212
Commercial loans		1,773		114,687		116,460
Residential real estate loans		—		66,843		66,843
Installment and consumer other		—		272		272
Total loans		56,757		1,150,538		1,207,295
Net loans	$	53,104	$	1,137,686	$	1,190,790

Troubled Debt Restructurings

The Company had allocated $3.5 million and $2.0 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at December 31, 2019 and 2018, respectively. The Company had no additional lending commitments at December 31, 2019 and 2018 to customers with outstanding loans that are classified as troubled debt restructurings.

A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and recent performance according to the modified terms of the loan. Once this assurance is reached, the TDR is classified as an accruing loan..  At December 31, 2019, there were $41.0 million TDR loans, of which $19.3 million were classified as nonaccrual and $21.7 million were classified as accruing, and there were $0.3 million unfunded commitments on these loans. At December 31, 2018, there were $31.5 million TDR loans, of which $12.1 million were classified as nonaccrual and $19.4 million were classified as accruing. There were $0.3 million unfunded commitments on these loans.      

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The following table provides the number of loans modified in a troubled debt restructuring investment by class for the year ended December 31, 2019 and 2018:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		42	$	17,595		32	$	21,261
Commercial real estate loans		1		1,021		—		—
Commercial loans		4		1,115		1		92
Total		47	$	19,731		33	$	21,353

During the years ended December 31, 2019 and 2018, there were no loans modified as troubled debt restructurings within the previous 12 months that subsequently defaulted.  

The following table provides the troubled debt restructurings for the year ended December 31, 2019 and 2018 grouped by type of concession:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		4	$	844		10	$	4,284
Extension of interest-only payments		24		12,436		22		16,977
Rate concession		1		85		—		—
Capitalized interest		1		152		—		—
Term concession		12		4,078		—		—
Commercial real estate loans
Payment concessions		1		1,021		—		—
Commercial loans
Payment concessions		2		69		—		—
Extension of interest-only payments		2		1,046		1		92
Total		47	$	19,731		33	$	21,353

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. 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 $0.3 million. 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 an average probability of ongoing ability to meet and/or exceed obligations.

Low Satisfactory. Credits classified as low satisfactory may have more inconsistent earnings but have a fair probability of ongoing ability to meet and/or exceed obligations.

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

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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 – impaired 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 – impaired 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 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 was as follows:  

	As of December 31, 2019
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	388,184	$	175,125	$	9,239	$	28,344	$	58,833	$	659,725
Commercial real estate loans		209,279		21,703		—		1,272		3,682		235,936
Commercial loans		83,141		10,091		—		693		1,862		95,787
Residential real estate loans		43,473		254		—		169		62		43,958
Installment and consumer other		367		—		—		—		—		367
Total	$	724,444	$	207,173	$	9,239	$	30,478	$	64,439	$	1,035,773
	As of December 31, 2018
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	495,418	$	133,582	$	564	$	41,997	$	52,947	$	724,508
Commercial real estate loans		253,853		18,968		4,642		19,712		2,037		299,212
Commercial loans		95,842		15,237		1,360		2,248		1,773		116,460
Residential real estate loans		62,787		3,883		—		173		—		66,843
Installment and consumer other		272		—		—		—		—		272
Total	$	908,172	$	171,670	$	6,566	$	64,130	$	56,757	$	1,207,295

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NOTE 5—PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:

	December 31,						Estimated
	2019			2018			Useful Life
	(dollars in thousands)
Land	$	2,240		$	2,240		N/A
Construction in process		1,319			1,593		N/A
Bank premises		10,038			12,810		35-40 years
Furniture, fixtures, and equipment		6,154			5,686		3-7 years
		19,751			22,329
Accumulated depreciation and amortization		(6,148	)		(6,254	)
	$	13,603		$	16,075

Depreciation and amortization expense charged to operations for the years ended December 31, 2019 and 2018 totaled, $1.4 million and $1.3 million, respectively.

As of December 31, 2019, the Company reclassified the Manitowoc, Wisconsin branch location to other assets in a held for sale status.  The net book value of $1.7 million approximates fair value.

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 $751.7 million and $661.3 million at December 31, 2019 and 2018, respectively.

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

	December 31,
	2019			2018
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	9,047		$	8,950
Additions		6,539			2,879
Impairment		(757	)		(597	)
Amortization		(2,320	)		(2,185	)
Balance, end of period	$	12,509		$	9,047

The fair values of these rights were approximately $15.9 million and $13.2 million at December 31, 2019 and 2018, respectively. For December 31, 2019, the fair value of servicing rights was determined using an assumed discount rate of 14% and prepayment speed primarily ranging from 5% to 10%, depending upon the stratification of the specific right and nominal anticipated credit losses.  For December 31, 2018, the fair value of servicing rights was determined using an assumed discount rate of 20% and prepayment speeds primarily ranging from 4% to 9%.

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 an estimated finite life 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 in the years ended December 31, 2019 or 2018.  

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Goodwill:  Goodwill resulted from the acquisition of Fox River Valley on May 13, 2016.  The carrying amount of goodwill was $5.0 million at December 31, 2019 and 2018.

Core deposit intangible:  Core deposit intangible, primarily related to acquired customer relationships, is amortized over its estimated finite life.  The core deposit intangible related to the Fox River Valley acquisition is as follows:  

	December 31,
	2019			2018
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	1,801
Accumulated amortization		(1,576	)		(1,288	)
Net book value	$	225		$	513

NOTE 8—OTHER REAL ESTATE OWNED

Changes in other real estate owned were as follows:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Balance, beginning of period	$	6,568		$	4,962
Assets foreclosed		6,315			6,104
Write-down of other real estate owned		(626	)		(873	)
Net gain on sales of other real estate owned		40			231
Proceeds from sale of other real estate owned		(6,776	)		(3,856	)
Balance, end of period	$	5,521		$	6,568

Income (expenses) attributable to other real estate owned include the following:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Net gain on sales of other real estate owned	$	40		$	231
Write-down of other real estate owned		(626	)		(873	)
Operating expenses, net of rental income		(162	)		(188	)
	$	(748	)	$	(830	)

NOTE 9—DEPOSITS

Deposits are summarized as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Noninterest-bearing	$	138,489	$	121,436
NOW and interest checking		67,805		51,779
Savings		6,395		5,770
Money market accounts		247,828		218,929
Certificates of deposit		375,100		356,484
National time deposits		99,485		160,445
Brokered deposits		166,340		308,504
Total deposits	$	1,101,442	$	1,223,347

Certificates of deposit in amounts of more than $250,000 at December 31, 2019 and 2018 were approximately $240.6 million and $394.1 million, respectively.  

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The scheduled maturities of certificates of deposit were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	378,098	$	377,588
1 to 2 years		161,251		259,722
2 to 3 years		50,736		103,715
3 to 4 years		26,321		41,259
Over 4 years		14,394		22,956
	$	630,800	$	805,240

NOTE 10—ADVANCES FROM FHLB AND OTHER BORROWINGS

The Bank had advances outstanding from the FHLB in the amount of $44.4 million and $89.4 million on December 31, 2019 and 2018, respectively. These advances, rates, and maturities were as follows:

					Amount outstanding as of December 31,
	Maturity	Rate			2019		2018
					(dollars in thousands)
Loan Type
Fixed rate, fixed term	01/02/2019		2.54	%	$	—	$	3,000
Fixed rate, fixed term	01/04/2019		2.55	%		—		12,000
Fixed rate, fixed term	02/27/2019		1.47	%		—		5,000
Fixed rate, fixed term	03/08/2019		1.54	%		—		10,000
Fixed rate, fixed term	07/15/2019		1.11	%		—		8,000
Fixed rate, fixed term	08/12/2019		2.24	%		—		5,000
Fixed rate, fixed term	08/14/2019		1.77	%		—		2,000
Fixed rate, fixed term	02/20/2020		1.71	%		5,000		5,000
Fixed rate, fixed term	07/16/2020		1.85	%		800		800
Fixed rate, fixed term	08/25/2020		1.84	%		3,000		3,000
Fixed rate, fixed term	08/27/2020		1.88	%		5,000		5,000
Fixed rate, fixed term	12/30/2020		2.09	%		4,000		4,000
Fixed rate, fixed term	12/31/2020		1.94	%		600		600
Fixed rate, fixed term	04/12/2021		1.92	%		8,000		8,000
Fixed rate, fixed term	06/15/2021		1.39	%		5,000		5,000
Fixed rate, fixed term	08/16/2021		2.29	%		3,000		3,000
Fixed rate, fixed term	12/30/2021		2.29	%		2,000		2,000
Fixed rate, putable, no call 2 years	01/12/2023		2.03	%		8,000		8,000
					$	44,400	$	89,400

The terms of security agreements with the FHLB require the Bank to pledge collateral for its borrowings. The collateral consists of qualifying first mortgage loans and stock of the FHLB.  At December 31, 2019 and 2018, the Bank had pledged qualifying mortgage loans of $393.7 million and $453.8 million, respectively.

The Bank had no irrevocable letters of credit with the FHLB as of December 31, 2019 and 2018.

Future maturities of borrowings were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	18,400	$	45,000
1 to 2 years		18,000		18,400
2 to 3 years		8,000		18,000
3 to 4 years		—		8,000
	$	44,400	$	89,400

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As of December 31, 2019 and 2018, the Bank also had a line-of-credit available with the Federal Reserve Bank of Chicago.  Borrowings under this line of credit are limited by the amount collateral pledged by the Company, which totaled $127.3 million and $143.4 million in loans at December 31, 2019 and December 31, 2018, respectively.  The borrowings available to the Company were $96.0 million and $111.4 million, as of December 31, 2019 and December 31, 2018, respectively.  There were no outstanding advances included in other borrowings at December 31, 2019 or 2018, respectively.  

As of December 31, 2019 and 2018, the Company had an unsecured credit agreement with U.S. Bank, National Association for a $10.0 million revolving line-of-credit with an interest rate equal to the one-month LIBOR rate plus 2.25%.  The line also bears a non-usage fee of 0.275% per annum.  The non-usage fee for year ended December 31, 2019 and 2018 was $22 thousand and $42 thousand, respectively.  The line did not have an outstanding balance as of December 31, 2019 or 2018.

Other borrowings are borrowings as a result of sold loans that do not qualify for sale accounting. These agreements are recorded as financing transactions as the Bank maintains effective control over the transferred loans. The dollar amount of the loans underlying the sale agreements continues to be carried in the Bank’s loan portfolio, and the transfer is reported as a secured borrowing with pledge of collateral.  At December 31, 2019 and 2018, the amounts of these borrowings were $0.8 million.

The following table sets forth information concerning balances and interest rates on other borrowings as of the dates and for the periods indicated:

	December 31,
	2019			2018
	(dollars in thousands)
Balance outstanding at end of period	$	794		$	827
Average amount outstanding during the period		800			1,027
Maximum amount outstanding at any month end		1,412			1,278
Weighted average interest rate during the period		4.60	%		4.81	%
Weighted average interest rate at end of period		4.51	%		4.51	%

NOTE 11—SUBORDINATED DEBENTURES

In September 2005 and June 2006, the Company formed wholly owned subsidiary business trusts, County Bancorp Statutory Trust II (“Trust II”) and County Bancorp Statutory Trust III (“Trust III”) (together, the “Trusts”), which are both Delaware statutory trusts, for the purpose of issuing capital securities which qualify as Tier 1 capital of the Company. Trust II issued at par $6.0 million of floating rate capital securities in an exempt offering. The capital securities are nonvoting, mandatorily redeemable in 2035, and guaranteed by the Company. Trust III issued at par $6.0 million of floating rate capital securities in an exempt offering. The capital securities are nonvoting, mandatorily redeemable in 2036, and guaranteed by the Company.

The capital securities carry an interest rate identical to that of the related debentures. For Trust II, holders of capital securities are entitled to receive cumulative cash distributions at a rate based on the three month LIBOR plus 1.53% thereafter through maturity, which was 3.44% as of December 31, 2019. For Trust III, holders of capital securities are entitled to receive cumulative cash distributions at a rate based on the three month LIBOR plus 1.69% through maturity, which was 3.60% as of December 31, 2019.  Interest was current through the most recent interest payment date of December 16, 2019.  The distribution rate payable on the capital securities is cumulative and payable quarterly in arrears.

The Company owns all of the outstanding common securities of Trust II and Trust III. The Trusts used the proceeds from the issuance of their capital securities to buy floating rate junior subordinated deferrable interest debentures (“debentures”) issued by the Company. These debentures are the Trusts’ only assets, and interest payments from these debentures finance the distributions paid on the capital securities. These debentures are unsecured, rank junior, and are subordinate in the right of payment to all senior debt of the Company.

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 for a period not exceeding 20 consecutive quarters with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity dates of the debentures. The capital securities are subject to mandatory redemption upon payment of the debentures. The debentures issued to Trust II and Trust III mature on September 15, 2035 and June 15, 2036, respectively, and may be redeemed if certain conditions are met or at any time within 180 days following the occurrence and continuation of certain changes in either tax treatment or the capital treatment of Trust II and Trust III, the debentures, or the capital securities. If the debentures are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest.

The capital securities of Trust II and Trust III have been structured to qualify as Tier 1 capital for regulatory purposes. However, the securities cannot be used to constitute more than 25 percent of the Company’s “core” Tier 1 capital according to regulatory

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requirements. The Company utilized the proceeds of the Trust II issuances for general corporate purposes and Trust III issuances to redeem the securities of County Bancorp Statutory Trust I.

In connection with the merger with Fox River Valley, the Company also acquired all of the common securities of Fox River Valley’s wholly-owned subsidiary, Fox River Valley Capital Trust I, a Delaware statutory trust (the “FRV Trust I”), which issued capital securities that qualify for Tier I 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 capital securities 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 was current through the most recent interest payment date of November 29, 2019.

The FRV Trust I 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 FRV Trust I 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 FRV Trust I), at any time within 90 days following such event.

The FRV Trust I debentures carry an interest rate equal to 5-year LIBOR plus 3.40%, which resets every five years. The current rate is equal to 6.40% through November 30, 2023. Interest payments are due quarterly.

On May 30, 2018, the Company entered into a Subordinated Note Purchase Agreement with certain institutional investors pursuant to which the Company sold and issued $30.0 million in aggregate principal amount of its 5.875% fixed-to-floating rate subordinated notes due 2028 (the “Notes”).  The Notes were issued by the Company to the purchasers at a price equal to 100% of their face amount. The Notes have a stated maturity of June 1, 2028, are redeemable, in whole or in part, on or after June 1, 2023, and at any time upon the occurrences of certain events. The Notes will bear interest at a fixed rate of 5.875% per year, from and including May 30, 2018 to, but excluding, June 1, 2023. From and including June 1, 2023 to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current 3-month LIBOR plus 2.88%.  The notes qualify as Tier II capital of the Company.  The Company incurred $0.9 million of costs related to the issuance of the Notes.  These costs have been capitalized are being amortized over the life of the Notes.    

On September 17, 2018, the Company closed its offer to exchange (the “Exchange Offer”) up to $30,000,000 aggregate principal amount of Notes, which were issued in a private placement to certain institutional investors, for a like principal amount of its new 5.875% fixed-to-floating rate subordinated notes due 2028 registered under the Securities Act of 1933, as amended.  All of the privately-placed Notes were tendered for exchange in the Exchange Offer.

NOTE 12—PREFERRED STOCK

The Company has 15,000 shares of non-cumulative, nonparticipating preferred stock authorized with a $1,000 per share stated value.  This preferred stock pays a quarterly dividend at a variable rate equivalent to the prime rate plus fifty basis points with a minimum dividend of 4.0%.  The variable rate at December 31, 2019 was 5.25%.  There were 8,000 shares issued and outstanding at both December 31, 2019 and 2018.

NOTE 13—INCOME TAXES

Allocation of income tax expense between current and deferred portions consisted of the following:

	December 31,
	2019		2018
	(dollars in thousands)
Current
Federal income tax	$	1,766	$	3,713
State income tax		1,449		1,829
Total current		3,215		5,542
Deferred income tax expense (benefit)		1,401		(483	)
Total income tax expense	$	4,616	$	5,059

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The reasons for the difference between income tax expense and the amount computed by applying the statutory tax rates to income before taxes were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Statutory federal tax rate		21	%		21	%
Income tax at statutory federal rate	$	4,425		$	4,055
Increase (reduction) resulting from:
State income taxes, net of federal income tax benefit		1,319			1,191
Tax exempt interest		(119	)		(193	)
Increase in cash surrender value		(100	)		(95	)
Historical tax credit		(1,465	)		—
Other		556			101
Income tax expense	$	4,616		$	5,059
Effective tax rate		22	%		26	%

The components of the net deferred tax asset were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Deferred tax assets:
Management salary continuation accrued	$	571	$	555
Allowance for loan losses		4,159		4,314
Deferred compensation		842		481
Other real estate owned		265		720
Net operating loss		1,282		1,475
Available for sale investment securities		—		831
Interest rate swap contracts		266		49
Other		63		151
Total deferred tax assets	$	7,448	$	8,576
Deferred tax liabilities
Loan servicing rights		3,407		2,465
Deferred loan costs		220		289
Depreciation and amortization		1,034		1,057
FHLB stock dividend		21		37
Available for sale investment securities		878		—
Other		435		382
Total deferred tax liabilities	$	5,995	$	4,230
Net deferred tax assets	$	1,453	$	4,346

The Company has federal net operating loss carryforwards of approximately $3.6 million as of December 31, 2019.  These losses begin to expire in 2035.  The Company also has state net operating loss carryforwards totaling approximately $8.6 million as of December 31, 2019 which begin to expire in 2032.  These net operating loss carryforwards may be applied against future taxable income.

NOTE 14—OFF-BALANCE SHEET ACTIVITIES

Credit-Related Financial Instruments

The Bank is a party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank follows the same credit policies in making commitments as it does for on-balance sheet instruments.

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Financial instruments with contract amounts representing credit risk as of December 31, 2019 and 2018 were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Commitments to extend credit and unused lines of credit, including unused    credit card lines	$	171,101	$	179,179
Standby letters of credit		3,930		5,635

Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Bank, is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are usually collateralized and contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the payment or the performance of a Bank customer to a third party. Both standby and performance letters of credit are generally issued for terms of one to four years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting these commitments.

NOTE 15—HEDGING ACTIVITIES

On June 15, 2018, the Company executed an interest rate swap to manage interest rate risk on two sets of its trust preferred securities.  This derivative contract involves the receipt of floating rate interest from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value.  This instrument is designated as a cash flow hedge as the receipt of floating rate interest from the counterparty is used to manage interest rate risk associated with three month LIBOR advances.  The change in the fair value of this hedging instrument is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

As of December 31, 2019, the Company had two outstanding interest rate swaps designated as a cash flow hedge each with an aggregate notional value of $6.0 million.  Both interest rate swaps mature on June 15, 2028.  A pre-tax unrealized loss of $0.8 million and $0.2 million was recognized in accumulated other comprehensive income for the years ended December 31, 2019 and December 31, 2018, respectively, and there was no ineffective portion of this hedge.  

The Company is exposed to credit risk in the event of nonperformance by the interest rate swaps counterparty.  The Company minimizes this risk by entering into derivative contracts with only large, stable financial institutions, and the Company has not experienced, and does not expect, any losses from counterparty nonperformance on the interest rate swaps. The Company monitors counterparty risk in accordance with the provisions of FASB ASC 815.  In addition, the interest rate swap agreements contain language outlining collateral-pledging requirements for each counterparty.  Collateral must be posted when the market value exceeds certain threshold limits.  Derivative contracts are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels.  These agreements protect the interests of the Company and its counterparties should either party suffer a credit rating deterioration.  The Company pledged $1.6 million and $0.2 million of cash as collateral to the counterparty as of December 31, 2019 and December 31, 2018, respectively.

NOTE 16—EMPLOYEE BENEFIT PLANS

The Company has a 401(k) plan covering substantially all employees. The Company’s contributions are based upon the discretion of the board of directors. Total expense was $0.8 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively.

On May 1, 2006, the Company entered into salary continuation agreements with five key employees. Under these agreements, the key employees will receive $60,000 per year beginning on the later of attaining age 65 or their separation from service and continuing for 15 years.  During 2011, the Company entered into a salary continuation agreement with an additional key employee. Under this agreement, the key employee will receive amounts ranging between $36,000 and $60,000 annually, depending on the employee’s age

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at separation, commencing upon retirement and continuing for 15 years.  Each of these agreements allow for early retirement opportunities or modifications which may reduce the annual payment.

As of December 31, 2019 and 2018, the Company had accrued $2.1 million and $2.0 million, respectively, in conjunction with these salary continuation agreements.  The payouts under these agreements for the years ending December 31, 2019 and 2018 were $105 thousand in each year. 

NOTE 17—EQUITY INCENTIVE PLAN

In 2016, the Company’s shareholders approved the Company’s 2016 Equity Incentive Compensation Plan (the “Plan”).  Under the Plan, the Company may grant options and stock awards to its directors, officers and employees for shares of the Company’s common stock. Both qualified and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units may be granted and issued, respectively, under the Plan.  As of December 31, 2019, 159,445 shares remained available under the Plan.

The exercise price of options is no less than the market price of the Company’s stock on the date of grant and an option’s maximum term is ten years. Vesting periods for options and restricted stock range from one to five years from the date of grant.  

The Company grants restricted stock awards and restricted stock units to certain members of management and directors.  The shares and units are allotted a grant date value equal to the Nasdaq Official Closing Price on the grant date.

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	December 31,
	2019			2018
Risk-free interest rates	1.42%-2.56%			2.59-2.91%
Dividend yields	0.76%-1.59%			1.03%-1.61%
Expected volatility		34.00	%		36.00	%
Weighted-average expected life of options	7.00 years			7.00 years

The expected volatility is based on historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based on the Company’s history of declaring dividends on its common stock.

The activity of the Company’s outstanding stock options for the years ended December 31, 2019 and 2018 were as follows:

	December 31, 2019							December 31, 2018
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		208,988		$	18.15				228,318		$	17.24
Granted		30,495			19.91				22,675			25.19
Exercised		(21,224	)		12.47				(30,217	)		15.19
Forfeited/expired		(3,355	)		19.88				(11,788	)		21.55
Outstanding, end of period		214,904		$	18.94	$	2,405		208,988		$	18.15	$	209
Options exercisable at period-end		164,083		$	17.96	$	2,023		159,456		$	16.54	$	19
Weighted-average fair value of options granted during the period (2)				$	6.86						$	9.41

(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 December 31, 2019 and 2018. 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.

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Information pertaining to options outstanding at December 31, 2019 and 2018 was as follows:

		December 31, 2019
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		26,400	1.02 Years	$	12.00		26,400	1.02 Years	$	12.00
13.02-14.83			36,220	3.70 Years		13.88		36,220	3.70 Years		13.88
17.14-19.88			100,060	6.42 Years		19.28		78,178	5.62 Years		19.68
20.92-24.98			20,291	8.59 Years		23.42		7,672	7.23 Years		22.82
25.24-27.31			31,933	7.85 Years		26.49		15,613	7.60 Years		26.54
Outstanding, end of period			214,904		$	18.94		164,083		$	17.96
		December 31, 2018
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		45,680	1.52 Years	$	12.00		45,680	1.52 Years	$	12.00
13.02-14.83			36,220	4.70 Years		13.88		32,770	4.63 Years		13.78
17.15-19.88			85,396	6.71 Years		19.58		71,623	6.50 Years		19.63
20.92-24.98			10,714	8.45 Years		23.34		4,101	8.04 Years		22.37
25.24-27.31			30,978	8.78 Years		26.50		5,282	8.24 Years		26.63
Outstanding, end of period			208,988		$	18.15		159,456		$	16.54

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested options, December 31, 2017		85,594		$	6.04
Granted		22,675			9.41
Vested		(40,681	)		5.67
Forfeited/exercised		(18,056	)		6.13
Nonvested options, December 31, 2018		49,532		$	7.86
Granted		30,495			6.86
Vested		(27,528	)		6.94
Forfeited/exercised		(1,678	)		4.88
Nonvested options, December 31, 2019		50,821		$	7.86

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Activity in restricted stock awards and restricted stock units during 2019 and 2018 was as follows:

	December 31, 2019
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		28,701		$	21.02
Granted		—			—
Vested		(15,579	)		19.50
Forfeited/expired		(226	)		27.15
Outstanding, end of period		12,896		$	22.75
	December 31, 2018
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		41,217		$	18.35
Granted		6,611			27.15
Vested		(15,014	)		15.71
Forfeited/expired		(4,113	)		23.51
Outstanding, end of period		28,701		$	21.02

	December 31, 2019
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		11,772		$	27.15
Granted		24,382			17.54
Issued		(3,654	)		27.42
Forfeited/expired		(375	)		18.11
Outstanding, end of period		32,125		$	21.91
	December 31, 2018
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		8,691		$	25.53
Granted		9,840			27.46
Issued		(4,036	)		24.25
Forfeited/expired		(2,723	)		27.41
Outstanding, end of period		11,772		$	27.15

For the years ended December 31, 2019 and 2018, share-based compensation expense, including options, restricted stock awards, and restricted stock units, applicable to the Plan was $0.7 million and $0.5 million, respectively, and the recognized tax benefit related to this expense was $0.2 million and $0.1 million, respectively.

As of December 31, 2019, unrecognized share-based compensation expense related to nonvested options and restricted stock amounted to $0.4 million and is expected to be recognized over a weighted average period of 1.54 years.

NOTE 18—REGULATORY MATTERS

The Company (on a consolidated basis) and 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 Bank’s

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financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (applicable only to the Bank), the Company and 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 Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), of Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations), and of Tier 1 Common Equity (as defined in the regulations) to risk-weighted assets. Management believed, as of December 31, 2019 and 2018, that the Company and Bank met all capital adequacy requirements to which they were subject.

As of December 31, 2019, the most recent notification from the banking regulators categorized the Bank 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 leverage and Tier 1 Common Equity ratios as set forth in the following table.  There were no conditions or events since the notification that management believes have changed the Bank’s category.

The Company’s and 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)
December 31, 2019
Total Capital (to risk weighted assets):
Company		225,094		19.41	%		121,746		10.50	%	Not applicable
Bank		216,198		18.70	%		121,396		10.50	%	$	115,615		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		180,620		15.58	%		98,557		8.50	%	Not applicable
Bank		201,735		17.45	%		98,273		8.50	%		92,492		8.00	%
Tier 1 Capital (to average assets):
Company		180,620		12.42	%		58,182		4.00	%	Not applicable
Bank		201,735		14.68	%		54,962		4.00	%		68,702		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		156,969		13.54	%		81,164		7.00	%	Not applicable
Bank		201,735		17.45	%		80,930		7.00	%		75,150		6.50	%
December 31, 2018
Total Capital (to risk weighted assets):
Company		210,768		15.81	%		131,664		9.875	%	Not applicable
Bank		204,327		15.35	%		131,488		9.875	%	$	133,153		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		164,675		12.35	%		104,998		7.875	%	Not applicable
Bank		187,679		14.09	%		104,858		7.875	%		106,522		8.00	%
Tier 1 Capital (to average assets):
Company		164,675		11.09	%		59,374		4.00	%	Not applicable
Bank		187,679		12.44	%		60,330		4.00	%		75,413		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		141,085		10.58	%		84,999		6.375	%	Not applicable
Bank		187,679		14.09	%		84,885		6.375	%		86,549		6.50	%

(a) The ratios for December 31, 2019 and 2018 include a capital conservation buffer of 2.5% and 1.875%, respectively.

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The Basel III Rule implemented a capital conservation buffer that is added to the minimum requirements for capital adequacy purposes.  The capital conservation buffer was subject to a three-year phase-in period that began on January 1, 2016 and was fully phased in on January 1, 2019 at 2.5%.  As of December 31, 2019 and 2018, the ratios for the Company and the Bank exceeded the fully phased-in conservation buffer.

NOTE 19—RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has granted loans to principal officers and directors and their affiliates.

Activity consisted of the following:

	December 31,
	2019			2018
	(dollars in thousands)
Balance, beginning of period	$	5,637		$	6,969
New loans		2,174			4,055
Repayments		(3,737	)		(5,387	)
Balance, end of period	$	4,074		$	5,637

Deposits from related parties held by the Bank at December 31, 2019 and 2018 amounted to $6.0 million and $5.2 million, respectively.

NOTE 20—FAIR VALUE MEASUREMENTS

Determination of Fair Value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is considered a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy

The Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

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.

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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 that 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 are classified as Level 3.

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Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook 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 ninety days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Advances from FHLB

Current market rates for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Fair values are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Subordinated Debentures

The carrying amounts approximate fair value.

Hedging Activities

Interest rate swap agreements are measured at fair value on a recurring basis.  We measure fair value utilizing models that use primarily market observable inputs, such as forecasted yield curves.

Accrued Interest

The carrying amounts approximate fair value.

Commitments to Extend Credit and Standby Letters of Credit

As of December 31, 2019 and 2018, the carrying and fair values of commitments to extend credit and standby letters of credit are not considered significant.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities 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)
December 31, 2019
Securities available for sale:
U.S. government and agency securities	$	—	$	3,458	$	—	$	3,458
U.S treasury securities		—		2,506		—		2,506
Mortgage-backed securities		—		152,769		—		152,769
Total assets at fair value	$	—	$	158,733	$	—	$	158,733
Derivative instruments, interest rate swaps	$	—	$	972	$	—	$	972
Total liabilities at fair value	$	—	$	972	$	—	$	972
December 31, 2018
Securities available for sale:
U.S. government and agency securities	$	—	$	4,331	$	—	$	4,331
U.S treasury securities		—		2,491		—		2,491
Municipal securities		—		34,520		—		34,520
Mortgage-backed securities		—		154,603		—		154,603
Total assets at fair value	$	—	$	195,945	$	—	$	195,945
Derivative instruments, interest rate swaps	$	—	$	179	$	—	$	179
Total liabilities at fair value	$	—	$	179	$	—	$	179

Assets Measured at Fair Value on a Nonrecurring Basis

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
	(dollars in thousands)
December 31, 2019
Impaired loans	$	—	$	—	$	44,657
Other real estate owned		—		—		5,521
Total assets at fair value	$	—	$	—	$	50,178
December 31, 2018
Impaired loans	$	—	$	—	$	30,995
Other real estate owned		—		—		6,568
Total assets at fair value	$	—	$	—	$	37,563

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

December 31, 2019
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	5%-64% (29%)
December 31, 2018
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	16%-54% (32%)

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* 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.

Impaired Loans

In accordance with the provisions of the loan impairment guidance, impairment was measured for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. Impaired loans for which an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria.

Impairment amounts on impaired loans represent specific valuation allowance and write-downs during the period presented on impaired loans that were individually evaluated for impairment based on the estimated fair value of the collateral less estimated selling costs, excluding impaired loans fully charged-off.

Other Real Estate Owned

Foreclosed assets are recorded at fair value based on property appraisals, less estimated selling costs, at the date of the transfer with any impairment amount charged to the allowance for loan losses. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or fair value, less estimated selling costs with changes in fair value or any impairment amount recorded in the other non-interest expense. Values are estimated using Level 3 inputs based on customized discounting criteria. The carrying value of foreclosed assets is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs.

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

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	108,457	$	108,457	$	50,952	$	50,952	1
Interest earning cash at other financial institutions		20,554		20,554		10,135		10,135	1
FHLB Stock		1,628		1,628		2,978		2,978	2
Securities available for sale		158,733		158,733		195,945		195,945	2
Loans, net of allowance for loan losses		1,020,506		1,024,062		1,190,790		1,187,330	3
Loans held for sale		2,151		2,151		2,949		2,949	3
Accrued interest receivable		2,571		2,571		3,878		3,878	2
Loan servicing rights		12,509		15,921		9,047		13,198	3
Financial liabilities:
Deposits:
Time		640,925		635,558		805,240		801,267	2
Other deposits		460,517		460,517		418,107		418,107	1
Other borrowings		794		794		827		827	3
Advances from FHLB		44,400		44,578		89,400		88,725	2
Subordinated debentures		44,858		44,858		44,703		44,703	3
Accrued interest payable		4,769		4,769		4,013		4,013	2
Derivative instruments, interest rate swaps		972		972		179		179	2

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NOTE 21—EARNINGS PER SHARE

Earnings per common share (“EPS”) was computed based on the following:

	For the Year Ended
	December 31,
	2019		2018
	(dollars in thousands except share data)
Net income from continuing operations	$	16,452	$	14,251
Less:  preferred stock dividends		472		413
Income available to common shareholders for basic EPS	$	15,980	$	13,838
Average number of common shares issued		7,163,650		7,177,212
Less: weighted average treasury shares		443,873		442,206
Plus: weighted average nonvested equity incentive plan shares		27,804		30,955
Weighted average number of common shares outstanding		6,747,581		6,704,051
Effect of dilutive options		21,344		68,876
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,768,925		6,772,927

NOTE 22—DIVIDEND AND CAPITAL RESTRICTIONS

Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by the Bank to the Company. In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. Cash dividends paid to the Company by the Bank were $6.0 million and $2.0 million for the years ended December 31, 2019 and 2018, respectively.

NOTE 23—SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the financial statements were issued. Events or transactions occurring after December 31, 2019, but prior to issuance that provided additional evidence about conditions that existed at December 31, 2019, have been recognized in the financial statements for the year ended December 31, 2019. Events or transactions that provided evidence about conditions that did not exist at December 31, 2019, but arose before the consolidated financial statements were issued have not been recognized in the consolidated financial statements for the year ended December 31, 2019.

On January 29, 2020, the Company announced the authorization of a stock repurchase plan that allows for the repurchase of up to 673,000 shares of its common stock through January 23, 2023.

On February 18, 2020, our Board of Directors declared a quarterly dividend totaling $0.07 per share for shareholders of record as of March 6, 2020, and payable on March 20, 2020.

On March 2, 2020, the Company finalized the sale of its branch location in Manitowoc, Wisconsin for $1.5 million which resulted in a net loss on the sale of assets of $0.3 million.  In addition to the sale, the Company entered into a 10-year triple-net lease agreement with the purchaser to leaseback a portion of the building for $13 thousand per month, which will result in the Company recording a right-of-use asset of $1.4 million in the first quarter of 2020.

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NOTE 24 – UNAUDITED INTERIM FINANCIAL DATA

Unaudited quarterly financial data for the periods indicated is summarized below:

	2019
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	15,239		$	16,759		$	17,208	$	17,126
Interest expense		5,701			6,507			6,776		6,566
Net interest income		9,538			10,252			10,432		10,560
Provision for  loan losses		(51	)		(1,154	)		876		752
Net interest income after provision for loan losses		9,589			11,406			9,556		9,808
Non-interest income		3,722			4,034			2,887		2,750
Non-interest expense		10,265			7,668			7,446		7,305
Income tax expense		(258	)		2,090			1,293		1,491
Net income	$	3,304		$	5,682		$	3,704	$	3,762
Basic earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Diluted earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Dividends declared per share	$	0.05		$	0.05		$	0.05	$	0.05
	2018
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	17,110		$	16,651		$	15,763	$	14,693
Interest expense		6,367			6,047			5,425		4,423
Net interest income		10,743			10,604			10,338		10,270
Provision for  loan losses		1,572			993			533		97
Net interest income after provision for loan losses		9,171			9,611			9,805		10,173
Non-interest income		2,320			2,157			2,316		2,040
Non-interest expense		7,538			7,023			6,937		6,785
Income tax expense		1,123			1,228			1,334		1,374
Net income	$	2,830		$	3,517		$	3,850	$	4,054
Basic earnings per share	$	0.41		$	0.51		$	0.56	$	0.59
Diluted earnings per share	$	0.40		$	0.50		$	0.55	$	0.58
Dividends declared per share	$	0.07		$	0.07		$	0.07	$	0.07

NOTE 25 – COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

	December 31, 2019		December 31, 2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	5,016	$	4,490
Investment in bank subsidiary		204,240		185,458
Goodwill		5,038		5,038
Other assets		3,566		2,344
Total assets	$	217,860	$	197,330
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	$	1,239	$	343
Subordinated debentures		44,858		44,703
Shareholders' equity		171,763		152,284
Total liabilities and shareholders' equity	$	217,860	$	197,330

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CONDENSED STATEMENTS OF OPERATIONS

	December 31, 2019			December 31, 2018
	(dollars in thousands)
INTEREST AND DIVIDEND INCOME	$	147		$	2,112
EXPENSES
Interest expense		2,743			1,804
Other operating expenses		1,398			1,409
Total expenses		4,141			3,213
Income before income taxes and equity in undistributed net income of subsidiary		(3,994	)		(1,101	)
Income tax benefit		1,085			837
Equity in undistributed net income of subsidiary		19,361			14,515
NET INCOME	$	16,452		$	14,251

CONDENSED STATEMENT OF CASH FLOWS

	For the year ended
	December 31, 2019			December 31, 2018
	(dollars in thousands)
Cash flows from operating activities
Net income	$	16,452		$	14,251
Adjustments to reconcile net income to cash provided by operating activities:
Equity in undistributed net income of subsidiary		(19,361	)		(14,515	)
Amortization of core deposit intangible		288			406
Amortization of subordinated debenture costs		155			122
Net change in:
Other assets		(1,559	)		1,967
Other liabilities		102			(58	)
Net cash provided by (used in) operating activities		(3,923	)		2,173
Cash flows from investing activities
Dividends received from (contributions to) subsidiary		6,000			(25,000	)
Net cash provided by (used in) investing activities		6,000			(25,000	)
Cash flows from financing activities
Proceeds from issuance of common stock		265			459
Increase in subordinated debentures		—			29,058
Dividends paid on preferred stock		(472	)		(413	)
Dividends paid on common stock		(1,344	)		(1,874	)
Net cash provided by (used in) financing activities		(1,551	)		27,230
Net change in cash and cash equivalents		526			4,403
Cash and cash equivalents, beginning of period		4,490			87
Cash and cash equivalents, end of period	$	5,016		$	4,490

93

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosures 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 Exchange Act) as of December 31, 2019. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2019, our disclosure controls and procedures were 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.

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 December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

REPORT BY COUNTY BANCORP, INC.’S MANAGEMENT

ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining an effective system of internal control over financial reporting, as such term is defined in Section 13a-15(f) of the Exchange Act. The Company’s system of internal control over financial reporting is designed 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. There are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of internal control over financial reporting 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.

Management maintains a comprehensive system of internal controls intended to ensure that transactions are executed in accordance with management’s authorization, assets are safeguarded and financial records are reliable. Management also takes steps to see that information and communication flows are effective and to monitor performance, including performance of internal control procedures.

Management assessed the Company’s systems of internal control over financial reporting as of December 31, 2019. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management believed that as of December 31, 2019, the Company maintained effective internal control over financial reporting based on those criteria.  Our auditors will not be required to formally opine on the effectiveness of our internal control over financial reporting until we are no longer an “emerging growth company” as defined in the JOBS Act as we availed ourselves of the exemptions available to us under the JOBS Act.

ITEM 9B. OTHER INFORMATION

None.

94

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item 10 will be included in the Company’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders under the captions “Proposal 1: Election of Directors” and “Corporate Governance Matters” and is incorporated herein by reference. The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item 11 will be included in the Company’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders under the captions “Executive Compensation,” “Proposal 1: Election of Directors” and “Corporate Governance Matters” and is incorporated herein by reference.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

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

Information required by this Item 12 will be included in the Company’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation” and is incorporated herein by reference.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

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

Information required by this Item 13 will be included in the Company’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders under the captions “Corporate Governance Matters” and “Certain Relationships and Related Party Transactions” and is incorporated herein by reference.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this Item 14 will be included in the Company’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders under the caption “Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm” and is incorporated herein by reference.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The Consolidated Financial Statements listed on the Index included under “Item 8. Financial Statements and Supplementary Data” are filed as a part of this Form 10-K. All financial statement schedules have been included in the Consolidated Financial Statements or are either not applicable or not significant.

95

ExhibitNumber	Exhibit Description
3.1	Third Amended and Restated Articles of Incorporation of County Bancorp, Inc.  (Incorporated by reference to Exhibit 3.1 of County Bancorp, Inc.’s annual report on Form 10-K filed on March 15, 2018)
3.2	Third Amended and Restated Bylaws of County Bancorp, Inc. as of November 20, 2018 (Incorporated by reference to Exhibit 3.1 of County Bancorp, Inc.’s current report on Form 8-K filed on November 27, 2018)
4.1	Instruments Defining the Rights of Security Holders, Including Indentures. County Bancorp, Inc., agrees to furnish the SEC, upon its request, a copy of any instrument that defines the rights of holders of long-term debt of County Bancorp, Inc. and its consolidated and unconsolidated subsidiaries for which consolidated or unconsolidated financial statements are required to be filed and that authorizes total amount of securities not in excess of 10% of the total assets of County Bancorp, Inc. on a consolidated basis.
4.2	Form of Common Stock Certificate of County Bancorp, Inc. (Incorporated by reference to Exhibit 4.2 of County Bancorp, Inc.’s Registration Statement on Form S-1 (File No. 333-200081) filed on November 10, 2014)
4.3	Description of the Company’s common stock (Filed herewith)
4.4	Indenture, dated May 30, 2018, by and between County Bancorp, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 of County Bancorp, Inc.’s current report on Form 8-K filed on May 30, 2018)
4.5	Forms of 5.875% Fixed to Floating Rate Subordinated Note due June 1, 2028 (included as Exhibit A-1 and Exhibit A-2 to the Indenture filed as Exhibit 4.1 of County Bancorp, Inc.’s current report on Form 8-K filed on May 30, 2018)
10.1+	Employment Agreement among County Bancorp, Inc., Investors Community Bank and Timothy J. Schneider, dated as of August 7, 2017 (Incorporated by reference to Exhibit 10.2 of County Bancorp, Inc.’s quarterly report on Form 10-Q filed on August 8, 2017)
10.2+	Employment Agreement among County Bancorp, Inc., Investors Community Bank and Mark R. Binversie, dated as of August 7, 2017 (Incorporated by reference to Exhibit 10.3 of County Bancorp, Inc. quarterly report on Form 10-Q filed on August 8, 2017)
10.3+	Transition Plan of Wayne Mueller (Incorporated by reference to Exhibit 10.5 of County Bancorp, Inc.’s Registration Statement on Form S-1 (File No. 333-200081) filed on November 10, 2014)
10.4+	Form of Investors Community Bank Salary Continuation Agreement (Incorporated by reference to Exhibit 10.6 of  County Bancorp, Inc.’s Registration Statement on Form S-1 (File No. 333-200081) filed on November 10, 2014)
10.5+	County Bancorp, Inc. Investors Community Bank Management Employees’ Elective Deferred Compensation Plan, as amended and restated April 18, 2017 (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s current report on Form 8-K  filed on April 24, 2017)
10.6+	County Bancorp, Inc. 2016 Long Term Incentive Plan (Incorporated by reference to Exhibit 4.4 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)
10.7+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Stock Appreciation Right Award Agreement (Incorporated by reference to Exhibit 4.5 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)
10.8+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Incentive Stock Option Award Agreement (Incorporated by reference to Exhibit 4.6 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)
10.9+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Restricted Stock Award Agreement (Incorporated by reference to Exhibit 4.7 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)
10.10+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Restricted Stock Unit Award Agreement (Incorporated by reference to Exhibit 4.8 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)

96

ExhibitNumber	Exhibit Description
10.11+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Nonqualified Stock Option Award Agreement (Incorporated by reference to Exhibit 4.9 of County Bancorp, Inc.’s Registration Statement on Form S-8 (File No. 333-213536) filed on September 8, 2016)
10.12+	Form of County Bancorp, Inc. 2016 Long Term Incentive Plan Deferred Restricted Stock Unit Award Agreement (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s current report on Form 8-K filed on February 24, 2017)
10.13+	First Amendment to the County Bancorp, Inc. 2016 Long Term Incentive Plan, effective November 15, 2016 (Incorporated by reference to Exhibit 10.16 of County Bancorp, Inc.’s annual report on Form 10-K filed on March 23, 2017)
10.14+	Employment Agreement among County Bancorp, Inc., Investors Community Bank and David A. Coggins, dated as of August 7, 2017 (Incorporated by reference to Exhibit 10.4 of County Bancorp, Inc.’s quarterly report on Form 10-Q filed on August 8, 2017)
10.15+	Employment Agreement among County Bancorp, Inc., Investors Community Bank and Glen L. Stiteley, dated as of August 15, 2017 (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s current report on Form 8-K filed on July 20, 2017)
10.16 +	Employment Agreement among County Bancorp, Inc., Investors Community Bank and Mark A. Miller, dated as of August 7, 2017 (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s quarterly report on Form 10-Q filed on May 9, 2019)
10.17	Form of Pre-Retirement Split Dollar Agreement (Filed herewith)
10.18	Credit Agreement, dated as of September 14, 2017, by and between County Bancorp, Inc. and U.S. Bank National Association (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s current report on Form 8-K filed on September 18, 2017)
10.19	Second Amendment to Credit Agreement, dated as of September 25, 2019, by and between County Bancorp, Inc. and U.S. Bank National Association (Incorporated by reference to Exhibit 10.1 of County Bancorp, Inc.’s quarterly report on Form 10-Q filed on November 7, 2019)
21.1	Subsidiaries (Filed herewith)
23.1	Consent of Plante Moran PLLC (Filed herewith)
31.1	Certification of the President pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (Filed herewith)
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (Filed herewith)
32.1	Certification of the President pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350 (Filed herewith)
32.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350 (Filed herewith)
101.INS	XBRL Instance Document (Filed herewith)
101.SCH	XBRL Taxonomy Extension Schena Document (Filed herewith)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (Filed herewith)
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document (Filed herewith)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (Filed herewith)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (Filed herewith)

+ Indicates a management contract or compensation plan or arrangement.

ITEM 16. FORM 10-K SUMMARY

None.

97

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			COUNTY BANCORP, INC
Date:	March 13, 2020	By:	/s/ Timothy J. Schneider
			Timothy J. Schneider
			President (principal executive officer)

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

Name	Title		Date
/s/Timothy J. Schneider Timothy J. Schneider	President (principal executive officer) and Director	March 13, 2020
/s/Glen L. Stiteley	Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)	March 13, 2020
Glen L. Stiteley
/s/ William C. Censky	Chairman of the Board and Director	March 13, 2020
William C. Censky
/s/ Mark R. Binversie	Director	March 13, 2020
Mark R. Binversie
/s/ Lynn D. Davis	Director	March 13, 2020
Lynn D. Davis
/s/ Jacob B. Eisen	Director	March 13, 2020
Jacob B. Eisen
/s/ Edson P. Foster, Jr.	Director	March 13, 2020
Edson P. Foster, Jr.
/s/ Vicki L. Leinbach	Director	March 13, 2020
Vicki L. Leinbach
/s/ Robert E. Matzke	Director	March 13, 2020
Robert E. Matzke
/s/ Wayne D. Mueller	Director	March 13, 2020
Wayne D. Mueller
/s/Patrick J. Roe	Director	March 13, 2020
Patrick J. Roe
/s/Kathi P. Seifert	Director	March 13, 2020
Kathi P. Seifert
	Director
Andrew J. Steimle
/s/ Gary J. Ziegelbauer	Director	March 13, 2020
Gary J. Ziegelbauer

98

EX-4.3

Exhibit 4.3

DESCRIPTION OF THE COMPANY’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

The following description of the material terms of the common stock of County Bancorp, Inc. (the “Company,” which is also referred to herein as “we,” “our” or “us”) is only a summary. This summary does not purport to be a complete description of the terms and conditions of the Company’s common stock in all respects and is subject to and qualified in its entirety by reference to the Company’s Third Amended and Restated Articles of Incorporation (“Articles of Incorporation”) and the Company’s Third Amended and Restated Bylaws (“Bylaws”), each of which are filed as an exhibit to the Annual Report on Form 10-K of which this Exhibit is a part, as well as the Wisconsin Business Corporation Law, as amended (the “WBCL”), and any other documents referenced in the summary and from which the summary is derived.

General

Our Articles of Incorporation provide that we are authorized to issue, without shareholder action, a total of 50,000,000 shares of common stock, par value $0.01 per share, and 600,000 shares of preferred stock, par value $0.01 per share. Our Articles of Incorporation currently designate 15,000 shares of preferred stock as Series B Nonvoting Noncumulative Perpetual Preferred Stock (the “Series B Preferred Stock”), and 585,000 shares of preferred stock are not classified. The unclassified preferred stock may be issued in one or more series and with such terms and conditions, at such times and for such consideration as our board of directors may determine.

Common Stock

General. Under our Articles of Incorporation, we have the authority to issue 50,000,000 shares of our common stock, par value $0.01 per share. Our common stock is listed for trading on the Nasdaq Global Market under the symbol “ICBK.”

Rights and Preferences. Holders of the Company’s common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Company’s common stock. The rights, preferences and privileges of the holders of the Company’s common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of the Company’s preferred stock that the Company may designate in the future and the Series B Preferred Stock.

Fully Paid and Nonassessable. All outstanding shares of the Company common stock are fully paid and non-assessable.

Voting Rights. Each share of common stock is entitled to one vote per share on all matters with respect to which shareholders are entitled to vote. Under the Company’s Articles of Incorporation and the WBCL, shareholder approval is required for various matters, including the election of directors, and other “extraordinary” corporate decisions and transactions, such as the amendment of the Articles of Incorporation to authorize additional shares of common stock or to make certain changes to the corporate name, a merger with another company, the dissolution of the Company, or a sale of substantially all of the Company’s assets. The Company’s Articles of Incorporation and Bylaws provide for a classified board of directors consisting of three classes, as nearly equal as possible, with each class serving staggered three-year terms.

Liquidation Rights. In the event of the liquidation or dissolution of the Company (whether voluntary or involuntary), each holder of common stock would be entitled to recover, after payment of all of the Company’s debts and liabilities, and subject to any liquidation preferences established for any shares of preferred stock that are outstanding or might be issued in the future, a pro rata portion of all assets of the Company available for distribution to holders of common stock.

Dividend Rights. Subject to the rights and preferences of any shares of preferred stock that have been issued or might be issued in the future, holders of shares of common stock are entitled to receive such dividends as may be declared by the board of directors out of funds legally available for that purpose.

Preferred Stock

Series B Nonvoting Noncumulative Perpetual Preferred Stock

General. Our Articles of Incorporation currently authorize 15,000 shares of preferred stock designated as Series B Nonvoting Noncumulative Perpetual Preferred Stock, $0.01 par value per share.

Voting Rights. Shares of Series B Preferred Stock are not entitled to any voting rights, except for those voting rights that may not be denied under the WBCL. Under the WBCL, Series B Preferred Stock would be entitled to vote on, among other items, increases and decreases in the number of authorized shares of Series B Preferred Stock, any change that is prejudicial to the holders of outstanding Series B Preferred Stock, and any exchange or reclassification of all or part of the shares of Series B Preferred Stock into shares of another class.

Dividends. Shares of Series B Preferred Stock are entitled to non-cumulative dividends equal to the sum of the “Prime rate” (the highest quoted base rate on corporate loans at large U.S. money center commercial banks) and 0.50%, but in no case will the dividend rate be less than 4.00% per annum. Dividends payable with respect to Series B Preferred Stock have no preference in right of payment over dividends payable with respect to common stock or any other class or series of the Company’s capital stock.

Liquidation and Rank. In the event of a liquidation, dissolution, or winding up of the Company (whether voluntary or involuntary), holders of shares of Series B Preferred Stock would be entitled to receive $1,000 per share of Series B Preferred Stock, plus any declared but unpaid dividend from the preceding quarter, and any unpaid and accumulated quarterly dividend prorated from the first day of the calendar quarter in which the liquidation, dissolution, or winding up occurs to the effective date of such liquidation or dissolution. Shares of Series B Preferred Stock are entitled to this payment upon liquidation or dissolution before any payment can be made or any assets distributed to the holders of common stock or any other class or series of the Company’s capital stock.

Conversion. Each share of Series B Preferred Stock is convertible into share(s) of common stock upon the occurrence of one of two events: (i) the Company fails to pay a quarterly dividend in full within 15 calendar days of the applicable payment date on eight separate occasions, or (ii) the Company pays a dividend on any other class or series of common or preferred stock after it has omitted payment of four dividends on the Series B Preferred Stock. The conversion feature on the Series B Preferred Stock is triggered regardless of whether: (i) the omitted dividends occur with respect to consecutive or non‑consecutive payment dates; or (ii) subsequent to the 15th calendar day referred to in this paragraph the Company pays such dividend. When converted, each share of Series B Preferred Stock will be exchanged for that number of shares of common stock having an aggregate value equal to the sum of: (i) $1,000; (ii) any declared but unpaid dividend from the preceding quarter; and (iii) the unpaid and

accumulated quarterly dividend prorated from the first day of the calendar quarter in which the conversion right was exercised to the issuance of the common stock. For purposes of converting Series B Preferred Stock, the per-share value of the common stock would be the most recent per-share appraised value of the common stock on an undiluted basis. However, if no appraisal has been performed within the 18 months next preceding the date of valuation, then the per share value of the common stock is calculated by multiplying the ratio that the most recent per-share appraised value bears to per-share book value as of the date of such appraisal, by per share book value based on the Company’s audited financial statements as of the year-end next preceding the year in which the valuation occurs. Any holder of Series B Preferred Stock who exercises conversion rights is required to exercise such rights as to all of the holder’s shares of Series B Preferred Stock. However, the amount of common stock issued to any individual can never exceed 10% or more of the then-issued and outstanding shares of common stock, unless any required regulatory approval is obtained; provided, however, that in lieu of seeking and obtaining such regulatory approval, such holder of Series B Preferred Stock may elect to convert only a portion of the share of Series B Preferred Stock held, and shall retain ownership of the remainder and have an ongoing right to exercise the conversion right to those remaining shares of Series B Preferred Stock.

Preferred Stock—Not Classified

General. Our Articles of Incorporation currently authorize 600,000 shares of preferred stock, $0.01 par value per share. Of the 600,000 shares, 15,000 are currently designated as Series B Preferred Stock and 585,000 shares of preferred stock are not classified. Our board of directors, without further approval of our shareholders, has the authority to fix the dividend rights and terms, conversion rights, voting rights, redemption rights and terms, liquidation preferences, sinking funds and any other rights, preferences, privileges and restrictions applicable to each series of preferred stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock.

Anti-Takeover Provisions.

General. Certain provisions of the Company’s Articles of Incorporation and Bylaws and of the WBCL discussed below may delay or make more difficult acquisitions or changes of control of the Company unless they are approved by the board of directors. These provisions could have the effect of discouraging third parties from making proposals which shareholders may otherwise consider to be in their best interests. These provisions may also make it more difficult for third parties to replace the Company’s current management without the concurrence of the board of directors. Management of the Company may consider proposing additional provisions, either by way of amendments to the Articles of Incorporation or Bylaws, or otherwise, for adoption at a shareholders’ meeting, which could contain further limitations on unsolicited takeover attempts.

Articles of Incorporation; Bylaws. These provisions of our Articles of Incorporation and our Bylaws include the following:

Number of Directors; Vacancies; Removal. The Company’s board of directors is divided into three classes serving staggered three-year terms. As a result, at least two shareholders’ meetings will generally be required for shareholders to change a majority of the directors. The board of directors is authorized to create new directorships and to fill the positions it creates. The board of directors (or its remaining members, even though less than a quorum) is also empowered to fill vacancies on the board of directors occurring for any reason. Any director appointed to fill a vacancy or to a newly created directorship will hold office until the next election for the class of directors to which the new director has

been appointed. Shareholders may remove directors for cause at a special shareholders’ meeting called for that purpose at which a quorum is present and a majority of the votes are cast in favor of removal of the director. These provisions of the Bylaws could prevent shareholders from removing incumbent directors without cause and filling the resulting vacancies with their own nominees.

Limitations on Right to Call Special Meetings; Shareholder Proposal Notice Requirements. The Company’s Bylaws provide that shareholders may act at a meeting of shareholders. The chairman of the board, the president or the board of directors may call special meetings of shareholders and are required to call special meetings upon written demand by holders of common stock with at least 10% of the votes entitled to be cast at the special meeting. Additionally, our Bylaws require that shareholder proposals meet certain advanced notice and minimum informational requirements. These provisions could have the effect of delaying until the next annual shareholders’ meeting shareholder actions which are favored by the holders of a majority of our outstanding voting securities.

Amendments to the Articles of Incorporation. The WBCL allows amendments to the Articles of Incorporation at any time to add or change a provision that is required or permitted to be included in a corporation’s articles of incorporation or to delete a provision that is not required to be included in the articles of incorporation. The board of directors may propose one or more amendments to the Company’s Articles of Incorporation for submission to shareholders and may condition its submission of the proposed amendment on any basis if the board of directors notifies each shareholder, whether or not entitled to vote, of the related shareholders’ meeting and includes certain information regarding the proposed amendment in that meeting notice.

Amendments to the Bylaws. The shareholders may amend or repeal the existing Bylaws and adopt new bylaws by a majority vote of the shareholders in attendance and constituting a quorum at a shareholders’ meeting. The Bylaws also provide that the board of directors may amend or repeal the existing Bylaws and adopt new bylaws by the vote of at least a majority of the directors present at a meeting at which a quorum is present. However, the board of directors may not amend, repeal or readopt any bylaw adopted by shareholders if that bylaw so provides, and the board of directors may not amend or repeal a bylaw adopted or amended by shareholders that fixes a greater or lower quorum requirement or a greater voting requirement for the board of directors than otherwise is provided in the WBCL, unless the bylaws expressly provide that it may be amended or repealed by a specified vote of the board of directors. Further, a bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for shareholders or voting groups of shareholders than otherwise is provided in the WBCL may not be adopted, amended or repealed by the board of directors. Action by the board of directors that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect, except where a different voting requirement is specified in the bylaws. In addition, the board of directors may not amend, alter or repeal a bylaw if the Articles of Incorporation, the particular bylaw or the WBCL reserve this power exclusively to the shareholders.

Authorized Shares of Capital Stock. Authorized but unissued shares of our common stock and preferred stock under our Articles of Incorporation could (within the limits imposed by applicable law and Nasdaq Marketplace Rules) be issued in one or more transactions that could make a change of control of us more difficult, and therefore more unlikely. The additional authorized shares could be used to discourage persons from attempting to gain control of us by diluting the voting power of shares then outstanding or increasing the voting power of persons who would support the board of directors in a potential takeover situation, including by preventing or delaying a proposed business combination that is opposed by the board of directors although perceived to be desirable by some shareholders.

Sole and Exclusive Forum. Our Bylaws provide that, unless we consent in writing to an alternative forum, the courts of the State of Wisconsin shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the Company to the Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the WBCL, the Articles of Incorporation or the Bylaws of the Company, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said courts having personal jurisdiction over the indispensable parties named as defendants therein. However, Section 27 of the Securities Exchange Act of 1934, as amended, or Exchange Act, creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, Section 22 of the Securities Act of 1933, as amended, or Securities Act, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, there is uncertainty as to whether a court would enforce such a provision, and our shareholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this provision of our Bylaws. The exclusive forum provision, if enforced, may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. The enforceability of similar exclusive forum provisions in other companies’ charter documents has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could find the provision of our Bylaws to be inapplicable or unenforceable.

Wisconsin Law.

Interested Shareholder Statute.  The Company is subject to Sections 180.1140 to 180.1144 of the WBCL, which prohibit a Wisconsin corporation from engaging in a “business combination” with an interested shareholder for a period of three years following the interested shareholder’s stock acquisition date, unless before such date, the board of directors of the corporation approved either the business combination or the purchase of stock made by the interested shareholder on that stock acquisition date.

The Company may engage in a business combination with an interested shareholder after the expiration of the three-year period with respect to such shareholder only if one or more of the following is satisfied:

• the Company’s board of directors approved the acquisition of stock before such shareholder’s acquisition date;

• the business combination is approved by a majority of the outstanding voting stock not beneficially owned by such shareholder; or

• the consideration to be received by shareholders meets certain fair price requirements of the statute with respect to form and amount.

Section 180.1140 defines a business combination between a “resident domestic corporation” and an “interested stockholder” to include the following:

• a merger or share exchange with an interested stockholder or a corporation that is, or after the merger or share exchange would be, an affiliate or associate of an interested shareholder;

• a sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets to or with an interested stockholder or affiliate or associate of an interested stockholder equal to 5% or more of the aggregate market value of the assets or outstanding stock of the resident domestic corporation or 10% of its earning power or income;

• the issuance or transfer of stock or rights to purchase stock with an aggregate market value equal to 5% or more of the outstanding stock of the resident domestic corporation; and

• certain other transactions involving an interested stockholder.

Section 180.1140(8)(a) defines an “interested stockholder” as a person who beneficially owns, directly or indirectly, at least 10% of the voting power of the outstanding voting stock of a resident domestic corporation or who is an affiliate or associate of the resident domestic corporation and beneficially owned at least 10% of the voting power of the then outstanding voting stock within the last three years.

Section 180.1140(9)(a) defines a “resident domestic corporation” as a Wisconsin corporation that, as of the relevant date, satisfies any of the following: (i) its principal offices are located in Wisconsin; (ii) it has significant business operations located in Wisconsin; (iii) more than 10% of the holders of record of its shares are residents of Wisconsin; or (iv) more than 10% of its shares are held of record by residents in Wisconsin. The Company is a resident domestic corporation for purposes of these statutory provisions.

Wisconsin Fair Price Statute. Sections 180.1130 to 180.1133 of the WBCL provide that certain mergers, share exchanges or sales, leases, exchanges or other dispositions of assets in a transaction involving a “significant shareholder” require a supermajority vote of shareholders in addition to any approval otherwise required, unless shareholders receive a fair price for their shares that satisfies a statutory formula. A “significant shareholder” for this purpose is defined as a person or group who beneficially owns, directly or indirectly, 10% or more of the voting stock of the corporation, or is an affiliate of the corporation and beneficially owned, directly or indirectly, 10% or more of the voting stock of the corporation within the last two years. Any business combination to which the statute applies must be approved by 80% of the voting power of the corporation’s stock and at least two-thirds of the voting power of the corporation’s stock not beneficially owned by the significant shareholder who is a party to the relevant transaction or any of its affiliates or associates, in each case voting together as a single group, unless the following standards have been met:

• the aggregate value of the per share consideration is at least equal to the highest of:

o the highest per share price paid for any shares of the same class of common stock of the corporation by the significant shareholder either in the transaction in which it became a significant shareholder or within two years before the date of the business combination, whichever is higher;

o the market value per share of the same class of the corporation’s common stock on the date of commencement of any tender offer by the significant shareholder, the date on which the person became a significant shareholder or the date of the

first public announcement of the proposed business combination, whichever is higher; or

o the highest preferential amount per share of the same class or series of common stock in a liquidation or dissolution to which holders of the shares would be entitled; and

• either cash, or the form of consideration used by the significant shareholder to acquire the largest number of shares, is offered.

Wisconsin Control Share Voting Restrictions Statute. Pursuant to Section 180.1150 of the WBCL, unless otherwise provided in the articles of incorporation or otherwise specified by the board of directors, the voting power of shares of a resident domestic corporation held by any person, including shares issuable upon conversion of convertible securities or upon exercise of options or warrants, in excess of 20% of the voting power in the election of directors is limited to 10% of the full voting power of those shares. The Company is governed by the provisions of this section because neither the Company’s Articles of Incorporation, nor any resolution adopted by the Company’s board of directors, provides or specifies otherwise.

Wisconsin Defensive Action Restrictions. Section 180.1134 of the WBCL provides that, in addition to the vote otherwise required by law or the articles of incorporation of a resident domestic corporation, the approval of the holders of a majority of the shares entitled to vote on the proposal is required before such corporation can take certain actions while a takeover offer is being made or after a takeover offer has been publicly announced and before it is concluded. This statute requires shareholder approval for the corporation to do either of the following: (i) acquire more than 5% of its outstanding voting shares at a price above the market value from any individual or organization that owns more than 3% of the voting shares and has held such shares for less than two years, unless the resident domestic corporation makes at least an equal offer to acquire all voting shares and all securities that may be converted into voting shares; or (ii) sell or option assets of the resident domestic corporation that amount to at least 10% of the market value of the resident domestic corporation, unless the corporation has at least three directors who are not officers or employees of the resident domestic corporation and a majority of the directors who are not officers or employees of the resident domestic corporation vote not to have this provision apply to the resident domestic corporation.

Constituency or Stakeholder Provision. Pursuant to Section 180.0827 of the WBCL, in discharging his or her duties to the Company and in determining what he or she believes to be in the Company’s best interests, a director or officer may, in addition to considering the effects of any action on shareholders, consider the effects of the action on employees, suppliers, customers, the communities in which the Company operates and any other factors that the director or officer considers pertinent.

The Bank Holding Company Act of 1956. The ability of a third party to acquire our stock is also limited under applicable U.S. banking laws, including regulatory approval requirements. The Bank Holding Company Act of 1956, as amended, requires any “bank holding company” to obtain the approval of the Federal Reserve before acquiring, directly or indirectly, more than 5% of our outstanding common stock. Federal law also prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator. “Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company but may arise under certain circumstances between 10% and 24.99% ownership.

EX-10.17

Exhibit 10.17

PRE- RETIREMENT SPLIT DOLLAR AGREEMENT

THIS PRE-RETIREMENT SPLIT DOLLAR AGREEMENT (the “Agreement”) is adopted asofthe __ dayof _________20__ (the “Effective Date”), by and between Investors Community Bank, a Wisconsin banking association located in Manitowoc, Wisconsin (the “Company”), and [_________] (the“Executive”).

WITNESSETH:

WHEREAS, the Executive is currently an employee and officer of the Company;

WHEREAS, to encourage the Executive to remain an employee of the Company, the Company is willing to divide the death proceeds of a life insurance policy on the Executive’s life, and the Company will pay life insurance premiums from its general assets; and

WHEREAS, in consideration of entering into this Agreement, the Executive is hereby waiving all rights and interests under the Survivor Income Benefit Agreement previously entered into by the parties.

NOW, THEREFORE, in consideration of the mutual undertakings set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:

ARTICLE 1
GENERAL DEFINITIONS

The following terms shall have the meanings specified:

1.1“Annual Base Salary” means the Executive’s annual rate of base pay, excluding bonuses, special payments or equity-based compensation.  For purposes of this Agreement, Annual Base Salary will include amounts voluntarily deferred pursuant to Company deferred compensation plans.

1.2“Disability” means that the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expectedtoresultindeathorcanbeexpectedtolastforacontinuousperiodofnotlessthantwelve (12) months.

1.3“Insured” means theExecutive.

1.4“Insurer” means each life insurance carrier in which there is a Split Dollar Policy Endorsement attached to thisAgreement.

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1.5“Net Death Proceeds” means the total death proceeds of the Policy minus the cash surrendervalue.

1.6“Policy” means the specific life insurance policy issued by theInsurer.

1.7“Termination of Employment” means that the Executive has incurred a separation of service (within the meaning of section 409A of the Internal Revenue Code of 1986, as amended,and the guidance and regulations issued thereunder) and ceases to be employed by the Company for any reason.

ARTICLE 2
POLICY OWNERSHIP/INTERESTS

2.1Company Ownership. The Company is the sole owner of the Policy and shall have the right to exercise all incidentsofownership. The Company shall be the beneficiary ofthe remaining death proceeds of the Policy after payment of the Executive’s Interest as provided herein. The Company shall at all times be entitled to the Policy’s cash surrender value, as that term is defined in the Policy, less any Policy loans and unpaid interest or cash withdrawals previously incurred by the Company and any applicable Policy surrender charges. The cash surrender value shall be determined as of the date of the surrender of the Policy or death of the Executive, as the case maybe.

2.2Executive’sInterest.The “Executive’s Interest” shall mean an amount equalto the lesser of (i) the Executive’s Annual Base Salary; or (ii) the Net Death Proceeds, in each case as determined at Executive’s time of death. Notwithstanding the preceding, neither the Executive, the Executive’s transferee, nor the Executive’s beneficiary shall have any rights with respect to all or any portion of the Policy following the Executive’s Termination of Employment, unless such Termination of Employment is due to death or Disability, in which such events this Agreement shall remain in place.

ARTICLE 3
PREMIUMS

3.1Premium Payment. The Company shall pay any premiums due on thePolicy.

3.2Economic Benefit. The Company shall determine the economic benefit attributable to the Executive based on the life insurance premium factor for the Executive’s age multiplied by the amount of current life insurance protection payable to the Executive’s beneficiary. The “life insurance premium factor” is the minimum amount required to be imputed under Treasury Regulation § 1.61-22(d)(3)(ii), or any subsequent applicableauthority.

3.3Imputed Income. The Company shall impute the economic benefit to the Executive on an annual basis by adding the economic benefit to the Executive’s Form W-2, or, if applicable, Form1099.

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ARTICLE 4
BENEFICIARY DESIGNATION

4.1The Executive shall have the right and power to designate one or more “Beneficiary” or “Beneficiaries” to receive the Executive’s Interest payable upon the death of the Executive, and to elect and change a payment option for such Beneficiary, subject to any right or interest the Company may have in such proceeds, as provided in this Agreement.

4.2A divorce will automatically revoke the portion of a Beneficiary Designation Form designating the former spouse as a Beneficiary. The former spouse will be a Beneficiary under this Agreement only if a new Beneficiary Designation Form naming the former spouse as Beneficiary is filed after the date the dissolution decree is entered.

4.3In the event the Insured fails to designate a Beneficiary, any benefits hereunder shall be payable to the estate of the Insured.

ARTICLE 5
INSURER

The Insurer shall be bound only by the terms of the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Agreement.

ARTICLE 6
CLAIMS AND REVIEW PROCEDURES

6.1Claims Procedure. Company shall notify Executive if Executive makes a claim for benefits under this Agreement in writing, within 90 days of Executive’s written application for benefits, of his eligibility or noneligibility for benefits under the Agreement. If Company determines that the Executive is not eligible for benefits or full benefits, the notice shall set forth (a) the specific reasons for the denial, (b) a specific reference to the provisions of the Agreement on which the denial is based, (c) a description of any additional information or material necessary for the Executive to perfect his claim, and a description of why it is needed, and (d) an explanation of the Agreement's claims review procedure and other appropriate information as to the steps to be taken if the Executive wishes to have the claim reviewed. If Company determines that there are special circumstances requiring additional time to make a decision, Company shall notify the Executive of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90days.

6.2Review Procedure. If the Executive is determined by Company not to be eligible for benefits, or if the Executive believes that he or she is entitled to greater or different benefits, the Executive shall have the opportunity to have such claim reviewed by Company by filing a petition for review with Company within 60 days after receipt of the notice issued by Company. The petition shall state the specific reasons the Executive believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by Company of the petition, Company shall give the Executive (and counsel, if any) an opportunity to present his or her position to Company verbally or in writing, and the Executive (or counsel) shall have the right to review the

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pertinent documents. Company shall notify the Executive of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner to be understood by the Executive and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60 daysat the election of Company, but notice of this deferral shall be given to theExecutive.

ARTICLE 7
AMENDMENTS AND TERMINATION

This Agreement will automatically terminate upon the Executive’s Termination of Employment for any reason other than the Executive’s death or Disability. This Agreement may be amended or terminated, in whole or in part, by the Company at its sole discretion.

ARTICLE 8
MISCELLANEOUS

8.1Binding Effect. This Agreement shall bind the Executive and the Company and their beneficiaries, survivors, executors, administrators and transferees, and any Policybeneficiary.

8.2Assignment. The executive may not, without the prior written consent of the Company, assign to any individual, trust or other organization, any right, title or interest in the subject Policy(ies) nor any rights, options, privileges or duties created under this Agreement.

8.3No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Company, nor doesit interfere with the Company’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at anytime.

8.4Governing Law. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED IN THE STATE OF WISCONSIN AND THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN SHALL GOVERN THE VALIDITY, CONSTRUCTION, AND ENFORCEMENT OF THIS AGREEMENT. THE PARTIES CONSENT TO THE VENUE AND JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN ASHLAND COUNTY, WISCONSIN, IN ANY ACTION BROUGHT TO ENFORCE THE TERMS OF THIS AGREEMENT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE JURISDICTION (BOTH SUBJECT MATTER AND PERSONAL) OF ANY SUCH COURT AND IRREVOCABLY AND UNCONDITIONALLY WAIVE (1) ANY OBJECTION ANY PARTY MIGHT NOW OR HEREAFTER HAVE TO THE VENUE IN ANY SUCH COURT AND (2) ANY CLAIM THAT ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENTFORUM.

8.5Reorganization. The Company shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm or person unless such succeeding or continuing company, firm or person agrees to assume and discharge the obligations of the Company under thisAgreement, subject to the terms and conditions of this

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Agreement, including the amendment and termination rights provided in ARTICLE 7, as of the date such action.

8.6Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Agreement by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his or her last known address as shown on the records of the Company. The date of such mailing shall be deemed the date of such mailed notice, consent ordemand.

8.7Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forthherein.

8.8Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limitedto:

(a)Interpreting the provisions of thisAgreement;

(b)Establishingandrevisingthemethodofaccountingforthis

(c)Agreement;

(d)Maintaining a record of benefit payments;and

(e)Establishing rules and prescribing any forms necessary or desirable to administer thisAgreement.

8.9Named Fiduciary. The Company shall be the named fiduciary and planadministrator under the Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors andthe delegation of ministerial duties to qualifiedindividuals.

8.10Survivor Income Benefit Agreement.  As of the Effective Date, that certain Survivor Income Benefit Agreement, entered into by and between the executive and the Company is hereby cancelled, null and void, and the Executive shall have no rights or interests thereunder.

[Signature Page to Split Dollar Agreement]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

EXECUTIVE:COMPANY:

THE BANK

By:  

EXECUTIVE
Title:  

6

SPLIT DOLLAR POLICY

ENDORSEMENT BANK NAME

SPLIT DOLLAR AGREEMENT

Policy No. Insured:  

PursuanttothetermsoftheTHEBANKSPLITDOLLARAGREEMENTdated __________ 1, 20XX, the undersigned Owner requests that the above-referenced policy issued by Northwestern Mutual Life (“Insurer”) provide for the following beneficiary designation and limited contract ownership rights to theInsured:

1.Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of its interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner as to the amount of proceeds it is entitled to receive under thisparagraph.

2.Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sumto:

PRIMARY BENEFICIARY, RELATIONSHIP, SOCIAL SECURITY NUMBER

CONTINGENT BENEFICIARY, RELATIONSHIP, SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under this paragraph, to elect any optional method of settlement for the proceeds paid under this paragraph which are available under the terms of the policy and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise said rights. The Owner retains all contract rights not granted to the Insured under thisparagraph.

3.Itisagreedbytheundersignedthatthisdesignationandlimitedassignmentofrightsshallbesubjectin all respects to the contractual terms of thepolicy.

4.Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under thepolicy.

The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is being executed.

Signedat __________County, Wisconsin as of this ____dayof _____________, 20XX.

INSURED:OWNER:

THE BANK

By:  

EXECUTIVE
Print Name:  

EX-21.1

Exhibit 21.1

Subsidiaries of County Bancorp, Inc.

Exact Name of Subsidiaries of Registrant as Specified in their Charter	State or Other Jurisdiction of Incorporation or Organization
Investors Community Bank	Wisconsin
County Bancorp Statutory Trust II	Delaware
County Bancorp Statutory Trust III	Delaware
Fox Valley River Trust I	Delaware
Investors Insurance Services, LLC (subsidiary of Investors Community Bank)	Wisconsin
ABS 1, LLC (subsidiary of Investors Community Bank)	Wisconsin

1176577.v1

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CountyBancorp,Inc.

Manitowoc,Wisconsin

We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of County Bancorp, Inc. for the year ended December 31, 2019 of our report dated March 13, 2020 included in its Registration Statement on Form S-3 (no. 333-218100) and Forms S-8 (no. 333-213536 and 333-204483), relating to the financial statements and financial statement schedules for the year ended December 31, 2019 listed in the accompanying index.

 /s/ Plante & Moran, PLLC

Chicago, Illinois

March 13, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy J. Schneider, certify that:

1. I have reviewed this annual report on Form 10-K 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 registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: March 13, 2020

	/s/ Timothy J. Schneider
Timothy J. Schneider
President

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Glen L. Stiteley, certify that:

1.I have reviewed this annual report on Form 10-K 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;

3Based 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;

4The 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) an 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 registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: March 13, 2020

	/s/ Glen L. Stiteley
Glen L. Stiteley
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 Annual Report of County Bancorp, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2019 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Timothy J. Schneider, President of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

/s/ Timothy J. Schneider

Timothy J. Schneider

President

March 13, 2020

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to County Bancorp, Inc. and will be retained by County Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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 Annual Report of County Bancorp, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2019 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Glen L. Stiteley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

/s/ Glen L. Stiteley

Glen L. Stiteley

Chief Financial Officer

March 13, 2020

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to County Bancorp, Inc. and will be retained by County Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2019

Postemployment Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 16—EMPLOYEE BENEFIT PLANS

The Company has a 401(k) plan covering substantially all employees. The Company’s contributions are based upon the discretion of the board of directors. Total expense was $0.8 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively.

On May 1, 2006, the Company entered into salary continuation agreements with five key employees. Under these agreements, the key employees will receive $60,000 per year beginning on the later of attaining age 65 or their separation from service and continuing for 15 years.  During 2011, the Company entered into a salary continuation agreement with an additional key employee. Under this agreement, the key employee will receive amounts ranging between $36,000 and $60,000 annually, depending on the employee’s age at separation, commencing upon retirement and continuing for 15 years.  Each of these agreements allow for early retirement opportunities or modifications which may reduce the annual payment.

As of December 31, 2019 and 2018, the Company had accrued $2.1 million and $2.0 million, respectively, in conjunction with these salary continuation agreements.  The payouts under these agreements for the years ending December 31, 2019 and 2018 were $105 thousand in each year. 

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PREFERRED STOCK

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

PREFERRED STOCK

NOTE 12—PREFERRED STOCK

The Company has 15,000 shares of non-cumulative, nonparticipating preferred stock authorized with a $1,000 per share stated value.  This preferred stock pays a quarterly dividend at a variable rate equivalent to the prime rate plus fifty basis points with a minimum dividend of 4.0%.  The variable rate at December 31, 2019 was 5.25%.  There were 8,000 shares issued and outstanding at both December 31, 2019 and 2018.

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Regulatory Matters - Additional Information (Detail)		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2019	Dec. 31, 2018
Regulatory Capital Requirements [Abstract]
Capital conservative buffer period	3 years
Capital conservative buffer percentage	2.50%	2.50%	1.875%

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 20—FAIR VALUE MEASUREMENTS

Determination of Fair Value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is considered a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy

The Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

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 that 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 are classified as Level 3.

Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook 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 ninety days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Advances from FHLB

Current market rates for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Fair values are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Subordinated Debentures

The carrying amounts approximate fair value.

Hedging Activities

Interest rate swap agreements are measured at fair value on a recurring basis.  We measure fair value utilizing models that use primarily market observable inputs, such as forecasted yield curves.

Accrued Interest

The carrying amounts approximate fair value.

Commitments to Extend Credit and Standby Letters of Credit

As of December 31, 2019 and 2018, the carrying and fair values of commitments to extend credit and standby letters of credit are not considered significant.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities 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)
December 31, 2019
Securities available for sale:
U.S. government and agency securities	$	—	$	3,458	$	—	$	3,458
U.S treasury securities		—		2,506		—		2,506
Mortgage-backed securities		—		152,769		—		152,769
Total assets at fair value	$	—	$	158,733	$	—	$	158,733
Derivative instruments, interest rate swaps	$	—	$	972	$	—	$	972
Total liabilities at fair value	$	—	$	972	$	—	$	972
December 31, 2018
Securities available for sale:
U.S. government and agency securities	$	—	$	4,331	$	—	$	4,331
U.S treasury securities		—		2,491		—		2,491
Municipal securities		—		34,520		—		34,520
Mortgage-backed securities		—		154,603		—		154,603
Total assets at fair value	$	—	$	195,945	$	—	$	195,945
Derivative instruments, interest rate swaps	$	—	$	179	$	—	$	179
Total liabilities at fair value	$	—	$	179	$	—	$	179

Assets Measured at Fair Value on a Nonrecurring Basis

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
	(dollars in thousands)
December 31, 2019
Impaired loans	$	—	$	—	$	44,657
Other real estate owned		—		—		5,521
Total assets at fair value	$	—	$	—	$	50,178
December 31, 2018
Impaired loans	$	—	$	—	$	30,995
Other real estate owned		—		—		6,568
Total assets at fair value	$	—	$	—	$	37,563

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

December 31, 2019
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	5%-64% (29%)
December 31, 2018
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	16%-54% (32%)

* 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.

Impaired Loans

In accordance with the provisions of the loan impairment guidance, impairment was measured for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. Impaired loans for which an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria.

Impairment amounts on impaired loans represent specific valuation allowance and write-downs during the period presented on impaired loans that were individually evaluated for impairment based on the estimated fair value of the collateral less estimated selling costs, excluding impaired loans fully charged-off.

Other Real Estate Owned

Foreclosed assets are recorded at fair value based on property appraisals, less estimated selling costs, at the date of the transfer with any impairment amount charged to the allowance for loan losses. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or fair value, less estimated selling costs with changes in fair value or any impairment amount recorded in the other non-interest expense. Values are estimated using Level 3 inputs based on customized discounting criteria. The carrying value of foreclosed assets is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs.

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

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	108,457	$	108,457	$	50,952	$	50,952	1
Interest earning cash at other financial institutions		20,554		20,554		10,135		10,135	1
FHLB Stock		1,628		1,628		2,978		2,978	2
Securities available for sale		158,733		158,733		195,945		195,945	2
Loans, net of allowance for loan losses		1,020,506		1,024,062		1,190,790		1,187,330	3
Loans held for sale		2,151		2,151		2,949		2,949	3
Accrued interest receivable		2,571		2,571		3,878		3,878	2
Loan servicing rights		12,509		15,921		9,047		13,198	3
Financial liabilities:
Deposits:
Time		640,925		635,558		805,240		801,267	2
Other deposits		460,517		460,517		418,107		418,107	1
Other borrowings		794		794		827		827	3
Advances from FHLB		44,400		44,578		89,400		88,725	2
Subordinated debentures		44,858		44,858		44,703		44,703	3
Accrued interest payable		4,769		4,769		4,013		4,013	2
Derivative instruments, interest rate swaps		972		972		179		179	2

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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 - Level 3 Inputs - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	$ 50,178	$ 37,563
Impaired Loans
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	44,657	30,995
Other Real Estate Owned
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	$ 5,521	$ 6,568

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Equity Incentive Plan - Schedule of Outstanding Stock Options Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018
Number of Options
Options, Outstanding beginning of year		208,988	228,318
Options, Granted		30,495	22,675
Options, Exercised		(21,224)	(30,217)
Options, Forfeited/expired		(3,355)	(11,788)
Options, Outstanding end of period		214,904	208,988
Options exercisable at period-end		164,083	159,456
Weighted-Average Exercise Price
Weighted-Average Exercise price, Outstanding, beginning of year		$ 18.15	$ 17.24
Weighted-Average Exercise Price, Granted		19.91	25.19
Weighted-Average Exercise Price, Exercised		12.47	15.19
Weighted-Average Exercise Price, Forfeited/expired		19.88	21.55
Weighted-Average Exercise Price, Outstanding, end of period		18.94	18.15
Weighted-Average Exercise Price, Options exercisable at period-end		17.96	16.54
Weighted-average fair value of options granted during the period		$ 6.86	$ 9.41
Aggregate Intrinsic Value
Aggregate Intrinsic Value, Outstanding, end of period	[1]	$ 2,405	$ 209
Aggregate Intrinsic Value, Options exercisable at period-end	[1]	$ 2,023	$ 19
Black-Scholes Option Pricing Model
Weighted-Average Exercise Price
Weighted-average fair value of options granted during the period	[2]	$ 6.86	$ 9.41

[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 December 31, 2019 and 2018. 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.

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Loans - Number of Loans Modified in Troubled Debt Restructuring Investment by Class (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	47	33
Recorded Investment | $	$ 19,731	$ 21,353
Agricultural Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	42	32
Recorded Investment | $	$ 17,595	$ 21,261
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	1
Recorded Investment | $	$ 1,021
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan	4	1
Recorded Investment | $	$ 1,115	$ 92

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Loans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Average recorded investment in total impaired loans	$ 60,600,000	$ 44,900,000
Interest income recognized on total impaired loans	5,700,000	4,100,000
Interest income recognized for nonaccrual loans	2,900,000	2,000,000
Specific reserve to customers whose loan terms have been modified in TDR	3,500,000	2,000,000
Additional lending commitments to customers with outstanding loans that are classified as TDRs	0	0
TDR loans amount	19,731,000	21,353,000
Non-accrual amount	30,968,000	22,983,000
Loans modified as troubled debt restructurings	0	0
Minimum exposure for annual internal credit review	300,000
TDR Loans
Accounts Notes And Loans Receivable [Line Items]
TDR loans amount	31,500,000	41,000,000
Non-accrual amount	12,100,000	19,300,000
Accruing amount	19,400,000	21,700,000
TDR loans, unfunded commitments	$ 300,000	$ 300,000

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Hedging Activities - Additional Information (Detail)		12 Months Ended
	Jun. 15, 2018 Security	Dec. 31, 2019 USD ($) Swap	Dec. 31, 2018 USD ($)
Interest Rate Swap
Derivative [Line Items]
Number of trust preferred securities | Security	2
Number of outstanding interest rate swap | Swap		2
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging
Derivative [Line Items]
Pre-tax unrealized gain recognized in accumulated other comprehensive income		$ 800,000	$ 200,000
Ineffective portion of cash flow hedge		0	0
Cash collateral for derivative instrument		1,600,000	$ 200,000
Interest Rate Swap One | Designated as Hedging Instrument | Cash Flow Hedging
Derivative [Line Items]
Aggregate notional value		$ 6,000,000
Maturity date		Jun. 15, 2028
Interest Rate Swap Two | Designated as Hedging Instrument | Cash Flow Hedging
Derivative [Line Items]
Aggregate notional value		$ 6,000,000
Maturity date		Jun. 15, 2028

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EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

Earnings per common share (“EPS”) was computed based on the following:

	For the Year Ended
	December 31,
	2019		2018
	(dollars in thousands except share data)
Net income from continuing operations	$	16,452	$	14,251
Less:  preferred stock dividends		472		413
Income available to common shareholders for basic EPS	$	15,980	$	13,838
Average number of common shares issued		7,163,650		7,177,212
Less: weighted average treasury shares		443,873		442,206
Plus: weighted average nonvested equity incentive plan shares		27,804		30,955
Weighted average number of common shares outstanding		6,747,581		6,704,051
Effect of dilutive options		21,344		68,876
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,768,925		6,772,927

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DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

Summary of Deposits

Deposits are summarized as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Noninterest-bearing	$	138,489	$	121,436
NOW and interest checking		67,805		51,779
Savings		6,395		5,770
Money market accounts		247,828		218,929
Certificates of deposit		375,100		356,484
National time deposits		99,485		160,445
Brokered deposits		166,340		308,504
Total deposits	$	1,101,442	$	1,223,347

Scheduled Maturities of Certificates of Deposit

The scheduled maturities of certificates of deposit were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	378,098	$	377,588
1 to 2 years		161,251		259,722
2 to 3 years		50,736		103,715
3 to 4 years		26,321		41,259
Over 4 years		14,394		22,956
	$	630,800	$	805,240

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EQUITY INCENTIVE PLAN (Tables)

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Schedule of Assumptions for Fair Value Option

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	December 31,
	2019			2018
Risk-free interest rates	1.42%-2.56%			2.59-2.91%
Dividend yields	0.76%-1.59%			1.03%-1.61%
Expected volatility		34.00	%		36.00	%
Weighted-average expected life of options	7.00 years			7.00 years

Schedule of Outstanding Stock Options Activity

The activity of the Company’s outstanding stock options for the years ended December 31, 2019 and 2018 were as follows:

	December 31, 2019							December 31, 2018
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		208,988		$	18.15				228,318		$	17.24
Granted		30,495			19.91				22,675			25.19
Exercised		(21,224	)		12.47				(30,217	)		15.19
Forfeited/expired		(3,355	)		19.88				(11,788	)		21.55
Outstanding, end of period		214,904		$	18.94	$	2,405		208,988		$	18.15	$	209
Options exercisable at period-end		164,083		$	17.96	$	2,023		159,456		$	16.54	$	19
Weighted-average fair value of options granted during the period (2)				$	6.86						$	9.41

(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 December 31, 2019 and 2018. 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.

Schedule of Information Pertaining Options Outstanding

Information pertaining to options outstanding at December 31, 2019 and 2018 was as follows:

		December 31, 2019
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		26,400	1.02 Years	$	12.00		26,400	1.02 Years	$	12.00
13.02-14.83			36,220	3.70 Years		13.88		36,220	3.70 Years		13.88
17.14-19.88			100,060	6.42 Years		19.28		78,178	5.62 Years		19.68
20.92-24.98			20,291	8.59 Years		23.42		7,672	7.23 Years		22.82
25.24-27.31			31,933	7.85 Years		26.49		15,613	7.60 Years		26.54
Outstanding, end of period			214,904		$	18.94		164,083		$	17.96
		December 31, 2018
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		45,680	1.52 Years	$	12.00		45,680	1.52 Years	$	12.00
13.02-14.83			36,220	4.70 Years		13.88		32,770	4.63 Years		13.78
17.15-19.88			85,396	6.71 Years		19.58		71,623	6.50 Years		19.63
20.92-24.98			10,714	8.45 Years		23.34		4,101	8.04 Years		22.37
25.24-27.31			30,978	8.78 Years		26.50		5,282	8.24 Years		26.63
Outstanding, end of period			208,988		$	18.15		159,456		$	16.54

Schedule Of Share Based Compensation Non Vested Stock Options Activity Table Text Block

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested options, December 31, 2017		85,594		$	6.04
Granted		22,675			9.41
Vested		(40,681	)		5.67
Forfeited/exercised		(18,056	)		6.13
Nonvested options, December 31, 2018		49,532		$	7.86
Granted		30,495			6.86
Vested		(27,528	)		6.94
Forfeited/exercised		(1,678	)		4.88
Nonvested options, December 31, 2019		50,821		$	7.86

Activity in Restricted Stock Awards and Restricted Stock Units

Activity in restricted stock awards and restricted stock units during 2019 and 2018 was as follows:

	December 31, 2019
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		28,701		$	21.02
Granted		—			—
Vested		(15,579	)		19.50
Forfeited/expired		(226	)		27.15
Outstanding, end of period		12,896		$	22.75
	December 31, 2018
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		41,217		$	18.35
Granted		6,611			27.15
Vested		(15,014	)		15.71
Forfeited/expired		(4,113	)		23.51
Outstanding, end of period		28,701		$	21.02

	December 31, 2019
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		11,772		$	27.15
Granted		24,382			17.54
Issued		(3,654	)		27.42
Forfeited/expired		(375	)		18.11
Outstanding, end of period		32,125		$	21.91
	December 31, 2018
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		8,691		$	25.53
Granted		9,840			27.46
Issued		(4,036	)		24.25
Forfeited/expired		(2,723	)		27.41
Outstanding, end of period		11,772		$	27.15

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Allowance for loan losses	$ 15,267	$ 16,505
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	7,178,052	7,153,174
Common Stock, shares outstanding	6,734,132	6,709,480
Treasury Stock, shares	443,920	443,694

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Advances from FHLB and Other Borrowings - Balances and Interest Rates on Other Borrowings (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Other Borrowings:
Balance outstanding at end of period	$ 794	$ 827
Average amount outstanding during the period	800	1,027
Maximum amount outstanding at any month end	$ 1,412	$ 1,278
Weighted average interest rate during the period	4.60%	4.81%
Weighted average interest rate at end of period	4.51%	4.51%

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Goodwill and Core Deposit Intangible - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill And Intangible Assets [Line Items]
Impairment charge to goodwill	$ 0	$ 0
Goodwill	5,038,000	5,038,000
Fox River Valley
Goodwill And Intangible Assets [Line Items]
Goodwill	$ 5,000,000	5,000,000
Core Deposit
Goodwill And Intangible Assets [Line Items]
Intangible assets, amortization period on accelerated basis	66 months
Impairment charge to intangible assets	$ 0	$ 0

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Deposits - Summary of Deposits (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Noninterest-bearing	$ 138,489	$ 121,436
NOW and interest checking	67,805	51,779
Savings	6,395	5,770
Money market accounts	247,828	218,929
Certificates of deposit	375,100	356,484
National time deposits	99,485	160,445
Brokered deposits	166,340	308,504
Total deposits	$ 1,101,442	$ 1,223,347

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Statement Of Stockholders Equity [Abstract]
Proceeds from sale of common stock, shares	21,224	30,217

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Income Taxes - Reconciliation of Statutory Federal Tax Rate to Effective Tax Rate (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Statutory federal tax rate									21.00%	21.00%
Income tax at statutory federal rate									$ 4,425	$ 4,055
Increase (reduction) resulting from:
State income taxes, net of federal income tax benefit									1,319	1,191
Tax exempt interest									(119)	(193)
Increase in cash surrender value									(100)	(95)
Historical tax credit									(1,465)
Other									556	101
Total income tax expense	$ (258)	$ 2,090	$ 1,293	$ 1,491	$ 1,123	$ 1,228	$ 1,334	$ 1,374	$ 4,616	$ 5,059
Effective tax rate									22.00%	26.00%

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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	Dec. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 155,291	$ 198,997
Unrealized Gains	3,640	236
Unrealized Losses	(198)	(3,288)
Fair Value	158,733	195,945
U.S. Government and Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	3,490	4,368
Unrealized Losses	(32)	(37)
Fair Value	3,458	4,331
US Treasury Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	2,499	2,497
Unrealized Gains	7
Unrealized Losses		(6)
Fair Value	2,506	2,491
Municipal Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost		34,985
Unrealized Gains		33
Unrealized Losses		(498)
Fair Value		34,520
Mortgage-backed Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	149,302	157,147
Unrealized Gains	3,633	203
Unrealized Losses	(166)	(2,747)
Fair Value	$ 152,769	$ 154,603

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UNAUDITED INTERIM FINANCIAL DATA (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of Unaudited Quarterly Financial Data

Unaudited quarterly financial data for the periods indicated is summarized below:

	2019
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	15,239		$	16,759		$	17,208	$	17,126
Interest expense		5,701			6,507			6,776		6,566
Net interest income		9,538			10,252			10,432		10,560
Provision for  loan losses		(51	)		(1,154	)		876		752
Net interest income after provision for loan losses		9,589			11,406			9,556		9,808
Non-interest income		3,722			4,034			2,887		2,750
Non-interest expense		10,265			7,668			7,446		7,305
Income tax expense		(258	)		2,090			1,293		1,491
Net income	$	3,304		$	5,682		$	3,704	$	3,762
Basic earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Diluted earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Dividends declared per share	$	0.05		$	0.05		$	0.05	$	0.05
	2018
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	17,110		$	16,651		$	15,763	$	14,693
Interest expense		6,367			6,047			5,425		4,423
Net interest income		10,743			10,604			10,338		10,270
Provision for  loan losses		1,572			993			533		97
Net interest income after provision for loan losses		9,171			9,611			9,805		10,173
Non-interest income		2,320			2,157			2,316		2,040
Non-interest expense		7,538			7,023			6,937		6,785
Income tax expense		1,123			1,228			1,334		1,374
Net income	$	2,830		$	3,517		$	3,850	$	4,054
Basic earnings per share	$	0.41		$	0.51		$	0.56	$	0.59
Diluted earnings per share	$	0.40		$	0.50		$	0.55	$	0.58
Dividends declared per share	$	0.07		$	0.07		$	0.07	$	0.07

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Loans - Components of Loan Portfolio (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 1,035,773	$ 1,207,295
Allowance for loan losses	(15,267)	(16,505)
Loans, net	1,020,506	1,190,790
Agricultural Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	659,725	724,508
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	235,936	299,212
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	95,787	116,460
Residential Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	43,958	66,843
Installment and Consumer Other
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 367	$ 272

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GOODWILL AND CORE DEPOSIT INTANGIBLE (Tables)

12 Months Ended

Dec. 31, 2019

Core Deposit

Finite Lived Intangible Assets [Line Items]

Core Deposit Intangible

	December 31,
	2019			2018
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	1,801
Accumulated amortization		(1,576	)		(1,288	)
Net book value	$	225		$	513

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COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 108,457	$ 50,952
Goodwill	5,038	5,038
Total assets	1,378,779	1,521,027
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	1,206,750	1,368,743
Shareholders' equity	172,029	152,284	$ 140,986
Total liabilities and shareholders' equity	1,378,779	1,521,027
Parent Company
ASSETS
Cash and cash equivalents	5,016	4,490
Investment in bank subsidiary	204,240	185,458
Goodwill	5,038	5,038
Other assets	3,566	2,344
Total assets	217,860	197,330
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	1,239	343
Subordinated debentures	44,858	44,703
Shareholders' equity	171,763	152,284
Total liabilities and shareholders' equity	$ 217,860	$ 197,330

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 23—SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the financial statements were issued. Events or transactions occurring after December 31, 2019, but prior to issuance that provided additional evidence about conditions that existed at December 31, 2019, have been recognized in the financial statements for the year ended December 31, 2019. Events or transactions that provided evidence about conditions that did not exist at December 31, 2019, but arose before the consolidated financial statements were issued have not been recognized in the consolidated financial statements for the year ended December 31, 2019.

On January 29, 2020, the Company announced the authorization of a stock repurchase plan that allows for the repurchase of up to 673,000 shares of its common stock through January 23, 2023.

On February 18, 2020, our Board of Directors declared a quarterly dividend totaling $0.07 per share for shareholders of record as of March 6, 2020, and payable on March 20, 2020.

On March 2, 2020, the Company finalized the sale of its branch location in Manitowoc, Wisconsin for $1.5 million which resulted in a net loss on the sale of assets of $0.3 million.  In addition to the sale, the Company entered into a 10-year triple-net lease agreement with the purchaser to leaseback a portion of the building for $13 thousand per month, which will result in the Company recording a right-of-use asset of $1.4 million in the first quarter of 2020.

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SECURITIES AVAILABLE FOR SALE (Tables)

12 Months Ended

Dec. 31, 2019

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 are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	3,490	$	—	$	(32	)	$	3,458
U.S treasury securities		2,499		7		—			2,506
Municipal securities		—		—		—			—
Mortgage-backed securities		149,302		3,633		(166	)		152,769
	$	155,291	$	3,640	$	(198	)	$	158,733
December 31, 2018
U.S. government and agency securities	$	4,368	$	—	$	(37	)	$	4,331
U.S treasury securities		2,497		—		(6	)		2,491
Municipal securities		34,985		33		(498	)		34,520
Mortgage-backed securities		157,147		203		(2,747	)		154,603
	$	198,997	$	236	$	(3,288	)	$	195,945

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

The amortized cost and fair value of securities at December 31, 2019 and 2018, 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)
December 31, 2019
Due in one year or less	$	2,499	$	2,506
Due from one to five years		—		—
Due from five to ten years		3,490		3,458
Due after ten years		—		—
Mortgage-backed securities		149,302		152,769
	$	155,291	$	158,733
December 31, 2018
Due in one year or less	$	5,848	$	5,843
Due from one to five years		11,113		10,974
Due from five to ten years		8,458		8,382
Due after ten years		16,431		16,143
Mortgage-backed securities		157,147		154,603
	$	198,997	$	195,945

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-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018.

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	—	$	—		$	3,458	$	(32	)	$	3,458	$	(32	)
U.S treasury securities		—		—			—		—			—		—
Municipal securities		—		—			—		—			—		—
Mortgage-backed securities		9,873		(41	)		11,867		(125	)		21,740		(166	)
	$	9,873	$	(41	)	$	15,325	$	(157	)	$	25,198	$	(198	)
December 31, 2018
U.S. government and agency securities	$	—	$	—		$	4,331	$	(37	)	$	4,331	$	(37	)
U.S treasury securities		2,491		(6	)		—		—			2,491		(6	)
Municipal securities		4,291		(15	)		25,377		(483	)		29,668		(498	)
Mortgage-backed securities		41,925		(208	)		83,319		(2,539	)		125,244		(2,747	)
	$	48,707	$	(229	)	$	113,027	$	(3,059	)	$	161,734	$	(3,288	)

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OTHER REAL ESTATE OWNED

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

OTHER REAL ESTATE OWNED

NOTE 8—OTHER REAL ESTATE OWNED

Changes in other real estate owned were as follows:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Balance, beginning of period	$	6,568		$	4,962
Assets foreclosed		6,315			6,104
Write-down of other real estate owned		(626	)		(873	)
Net gain on sales of other real estate owned		40			231
Proceeds from sale of other real estate owned		(6,776	)		(3,856	)
Balance, end of period	$	5,521		$	6,568

Income (expenses) attributable to other real estate owned include the following:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Net gain on sales of other real estate owned	$	40		$	231
Write-down of other real estate owned		(626	)		(873	)
Operating expenses, net of rental income		(162	)		(188	)
	$	(748	)	$	(830	)

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LOANS

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

LOANS

NOTE 4—LOANS

The components of the loan portfolio were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Agricultural loans	$	659,725		$	724,508
Commercial real estate loans		235,936			299,212
Commercial loans		95,787			116,460
Residential real estate loans		43,958			66,843
Installment and consumer other		367			272
Total gross loans		1,035,773			1,207,295
Allowance for loan losses		(15,267	)		(16,505	)
Loans, net	$	1,020,506		$	1,190,790

The following table presents the aging of the recorded investment in past due loans at December 31, 2019 and 2018:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
	(dollars in thousands)
December 31, 2019
Agricultural loans	$	1,489	$	71	$	4,974	$	6,534	$	653,191	$	659,725
Commercial real estate loans		—		288		—		288		235,648		235,936
Commercial loans		—		28		228		256		95,531		95,787
Residential real estate loans		—		—		62		62		43,896		43,958
Installment and consumer other		—		—		—		—		367		367
Total	$	1,489	$	387	$	5,264	$	7,140	$	1,028,633	$	1,035,773
December 31, 2018
Agricultural loans	$	460	$	969	$	7,968	$	9,397	$	715,111	$	724,508
Commercial real estate loans		—		—		2,037		2,037		297,175		299,212
Commercial loans		—		—		600		600		115,860		116,460
Residential real estate loans		—		—		—		—		66,843		66,843
Installment and consumer other		—		—		—		—		272		272
Total	$	460	$	969	$	10,605	$	12,034	$	1,195,261	$	1,207,295

The following table lists information on nonaccrual, restructured, and certain past due loans:

	December 31,
	2019		2018
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	5,264	$	10,605
Nonaccrual loans 30-89 days past due		1,781		868
Nonaccrual loans, less than 30 days past due		23,923		11,510
Restructured loans not on nonaccrual status		21,783		19,389
90 days or more past due and still accruing		—		—

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days on accrual by class of loan:

	December 31,
	2019		2018
	(dollars in thousands)
Agricultural loans	$	26,415	$	19,173
Commercial real estate loans		2,673		2,037
Commercial loans		1,818		1,773
Residential real estate loans		62		—
Total	$	30,968	$	22,983

The average recorded investment in total impaired loans for the years ended December 31, 2019 and 2018 amounted to approximately $60.6 million and $44.9 million, respectively.  Interest income recognized on total impaired loans for the years ended December 31, 2019 and 2018 amounted to approximately $5.7 million and $4.1 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 $2.9 million and $2.0 million for the years ended December 31, 2019 and 2018, respectively.

The following tables present loans individually evaluated for impairment by class of loans at December 31, 2019 and 2018:

	December 31, 2019
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	14,151	$	14,131	$	—
Commercial real estate loans		—		—		—
Commercial loans		—		—		—
Residential real estate loans		62		62		—
	$	14,213	$	14,193	$	—
With an allowance recorded
Agricultural loans	$	47,225	$	44,702	$	3,515
Commercial real estate loans		3,681		3,682		836
Commercial loans		2,155		1,862		1,238
Residential real estate loans		—		—		—
		53,061		50,246		5,589
Total	$	67,274	$	64,439	$	5,589
	December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	22,218	$	21,654	$	—
Commercial real estate loans		—		—		—
Commercial loans		455		455		—
Residential real estate loans		—		—		—
	$	22,673	$	22,109	$	—
With an allowance recorded
Agricultural loans	$	33,090	$	31,293	$	2,325
Commercial real estate loans		2,037		2,037		583
Commercial loans		1,326		1,318		745
Residential real estate loans		—		—		—
		36,453		34,648		3,653
Total	$	59,126	$	56,757	$	3,653

Changes in the allowance for loan losses by portfolio segment were as follows:

	December 31, 2019
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	12,258	$	(518	)	$	(61	)	$	58	$	11,737
Commercial real estate loans		2,779		613			(3,585	)		2,106		1,913
Commercial loans		1,414		364			(282	)		103		1,599
Residential real estate loans		53		(38	)		—			—		15
Installment and consumer other		1		2			—			—		3
Total	$	16,505	$	423		$	(3,928	)	$	2,267	$	15,267
	December 31, 2018
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	9,712	$	3,783		$	(1,238	)	$	1	$	12,258
Commercial real estate loans		1,978		(437	)		(42	)		1,280		2,779
Commercial loans		1,508		(155	)		—			61		1,414
Residential real estate loans		47		6			—			—		53
Installment and consumer other		2		(2	)		—			1		1
Total	$	13,247	$	3,195		$	(1,280	)	$	1,343	$	16,505

The following tables present the balances in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method:  

	December 31, 2019
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	3,515	$	8,222	$	11,737
Commercial real estate loans		836		1,077		1,913
Commercial loans		1,238		361		1,599
Residential real estate loans		—		15		15
Installment and consumer other		—		3		3
Total ending allowance for loan losses		5,589		9,678		15,267
Loans:
Agricultural loans		58,833		600,892		659,725
Commercial real estate loans		3,682		232,254		235,936
Commercial loans		1,862		93,925		95,787
Residential real estate loans		62		43,896		43,958
Installment and consumer other		—		367		367
Total loans		64,439		971,334		1,035,773
Net loans	$	58,850	$	961,656	$	1,020,506
	December 31, 2018
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	2,325	$	9,933	$	12,258
Commercial real estate loans		583		2,196		2,779
Commercial loans		745		669		1,414
Residential real estate loans		—		53		53
Installment and consumer other		—		1		1
Total ending allowance for loan losses		3,653		12,852		16,505
Loans:
Agricultural loans		52,947		671,561		724,508
Commercial real estate loans		2,037		297,175		299,212
Commercial loans		1,773		114,687		116,460
Residential real estate loans		—		66,843		66,843
Installment and consumer other		—		272		272
Total loans		56,757		1,150,538		1,207,295
Net loans	$	53,104	$	1,137,686	$	1,190,790

Troubled Debt Restructurings

The Company had allocated $3.5 million and $2.0 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at December 31, 2019 and 2018, respectively. The Company had no additional lending commitments at December 31, 2019 and 2018 to customers with outstanding loans that are classified as troubled debt restructurings.

A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and recent performance according to the modified terms of the loan. Once this assurance is reached, the TDR is classified as an accruing loan..  At December 31, 2019, there were $41.0 million TDR loans, of which $19.3 million were classified as nonaccrual and $21.7 million were classified as accruing, and there were $0.3 million unfunded commitments on these loans. At December 31, 2018, there were $31.5 million TDR loans, of which $12.1 million were classified as nonaccrual and $19.4 million were classified as accruing. There were $0.3 million unfunded commitments on these loans.      

The following table provides the number of loans modified in a troubled debt restructuring investment by class for the year ended December 31, 2019 and 2018:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		42	$	17,595		32	$	21,261
Commercial real estate loans		1		1,021		—		—
Commercial loans		4		1,115		1		92
Total		47	$	19,731		33	$	21,353

During the years ended December 31, 2019 and 2018, there were no loans modified as troubled debt restructurings within the previous 12 months that subsequently defaulted.

The following table provides the troubled debt restructurings for the year ended December 31, 2019 and 2018 grouped by type of concession:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		4	$	844		10	$	4,284
Extension of interest-only payments		24		12,436		22		16,977
Rate concession		1		85		—		—
Capitalized interest		1		152		—		—
Term concession		12		4,078		—		—
Commercial real estate loans
Payment concessions		1		1,021		—		—
Commercial loans
Payment concessions		2		69		—		—
Extension of interest-only payments		2		1,046		1		92
Total		47	$	19,731		33	$	21,353

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. 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 $0.3 million. 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 an average probability of ongoing ability to meet and/or exceed obligations.

Low Satisfactory. Credits classified as low satisfactory may have more inconsistent earnings but have a fair probability of ongoing ability to meet and/or exceed obligations.

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 – impaired 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 – impaired 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 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 was as follows:  

	As of December 31, 2019
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	388,184	$	175,125	$	9,239	$	28,344	$	58,833	$	659,725
Commercial real estate loans		209,279		21,703		—		1,272		3,682		235,936
Commercial loans		83,141		10,091		—		693		1,862		95,787
Residential real estate loans		43,473		254		—		169		62		43,958
Installment and consumer other		367		—		—		—		—		367
Total	$	724,444	$	207,173	$	9,239	$	30,478	$	64,439	$	1,035,773
	As of December 31, 2018
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	495,418	$	133,582	$	564	$	41,997	$	52,947	$	724,508
Commercial real estate loans		253,853		18,968		4,642		19,712		2,037		299,212
Commercial loans		95,842		15,237		1,360		2,248		1,773		116,460
Residential real estate loans		62,787		3,883		—		173		—		66,843
Installment and consumer other		272		—		—		—		—		272
Total	$	908,172	$	171,670	$	6,566	$	64,130	$	56,757	$	1,207,295

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 108,457	$ 50,952
Interest earning cash at other financial institutions	20,554	10,135
Securities available for sale, at fair value	158,733	195,945
FHLB Stock	1,628	2,978
Loans held for sale	2,151	2,949
Loans, net of allowance for loan losses of $15,267 as of December 31, 2019; $16,505 as of December 31, 2018	1,020,506	1,190,790
Premises and equipment, net	13,603	16,075
Loan servicing rights	12,509	9,047
Other real estate owned, net	5,521	6,568
Cash surrender value of bank owned life insurance	18,302	17,842
Deferred tax asset, net	1,453	4,346
Goodwill	5,038	5,038
Accrued interest receivable and other assets	10,099	7,849
Total assets	1,378,779	1,521,027
Deposits:
Noninterest-bearing	138,489	121,436
Interest-bearing	962,953	1,101,911
Total deposits	1,101,442	1,223,347
Other borrowings	794	827
Advances from FHLB	44,400	89,400
Subordinated debentures, net	44,858	44,703
Accrued interest payable and other liabilities	15,256	10,466
Total liabilities	1,206,750	1,368,743
SHAREHOLDERS' EQUITY
Preferred stock - $1,000 stated value; 15,000 shares authorized; 8,000 shares issued	8,000	8,000
Common stock - $0.01 par value; 50,000,000 authorized; 7,178,052 shares issued and 6,734,132 shares outstanding as of December 31, 2019; 7,153,174 shares issued and 6,709,480 shares outstanding as of December 31, 2018	28	28
Surplus	54,122	53,162
Retained earnings	113,111	98,475
Treasury stock, at cost, 443,920 and 443,694 shares at December 31, 2019 and 2018, respectively	(5,030)	(5,030)
Accumulated other comprehensive gain (loss)	1,798	(2,351)
Total shareholders' equity	172,029	152,284
Total liabilities and shareholders' equity	1,378,779	1,521,027
Core Deposit
ASSETS
Core deposit intangible, net	$ 225	$ 513

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Advances from FHLB and Other Borrowings - Future Maturities of Borrowings (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Federal Home Loan Banks [Abstract]
1 year or less	$ 18,400	$ 45,000
1 to 2 years	18,000	18,400
2 to 3 years	8,000	18,000
3 to 4 years		8,000
Advances from FHLB	$ 44,400	$ 89,400

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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	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Transfers And Servicing [Abstract]
Balance, beginning of period	$ 9,047	$ 8,950
Additions	6,539	2,879
Impairment	(757)	(597)
Amortization	(2,320)	(2,185)
Balance, end of period	$ 12,509	$ 9,047

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Other Real Estate Owned - Income (Expenses) Attributable to Other Real Estate Owned (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Real Estate Owned Disclosure Of Detailed Components [Abstract]
Net gain on sales of other real estate owned	$ 40	$ 231
Write-down of other real estate owned	(626)	(873)
Operating expenses, net of rental income	(162)	(188)
Total Expenses	$ (748)	$ (830)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Surplus	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2017	$ 140,986	$ 8,000	$ 28	$ 52,230	$ 86,385	$ (5,030)	$ (627)
Net income	14,251				14,251
Other comprehensive income (loss)	(1,598)						(1,598)
Stock compensation expense	473			473
Cash dividends declared on common stock	(1,874)				(1,874)
Cash dividends declared on preferred stock	(413)				(413)
Reclassification of stranded tax effects of rate change					126		(126)
Proceeds from sale of common stock	459			459
Balance at Dec. 31, 2018	152,284	8,000	28	53,162	98,475	(5,030)	(2,351)
Net income	16,452				16,452
Other comprehensive income (loss)	4,149						4,149
Stock compensation expense	695			695
Cash dividends declared on common stock	(1,344)				(1,344)
Cash dividends declared on preferred stock	(472)				(472)
Proceeds from sale of common stock	265			265
Balance at Dec. 31, 2019	$ 172,029	$ 8,000	$ 28	$ 54,122	$ 113,111	$ (5,030)	$ 1,798

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Income Taxes - Allocation of Income Tax Expense between Current and Deferred Portions (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Current
Federal income tax									$ 1,766	$ 3,713
State income tax									1,449	1,829
Total current									3,215	5,542
Deferred income tax expense (benefit)									1,401	(483)
Total income tax expense	$ (258)	$ 2,090	$ 1,293	$ 1,491	$ 1,123	$ 1,228	$ 1,334	$ 1,374	$ 4,616	$ 5,059

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Loans - Schedule of Aging of Recorded Investment in Past Due Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	$ 7,140	$ 12,034
Loans Not Past Due	1,028,633	1,195,261
Total Loans	1,035,773	1,207,295
Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	1,489	460
Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	387	969
Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	5,264	10,605
Agricultural Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	6,534	9,397
Loans Not Past Due	653,191	715,111
Total Loans	659,725	724,508
Agricultural Loans | Financing Receivables 30 To 59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	1,489	460
Agricultural Loans | Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	71	969
Agricultural Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	4,974	7,968
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	288	2,037
Loans Not Past Due	235,648	297,175
Total Loans	235,936	299,212
Commercial Real Estate Loans | Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	288
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		2,037
Commercial Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	256	600
Loans Not Past Due	95,531	115,860
Total Loans	95,787	116,460
Commercial Loans | Financing Receivables 60 To 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	28
Commercial Loans | Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	228	600
Residential Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Past Due	62
Loans Not Past Due	43,896	66,843
Total Loans	43,958	66,843
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	62
Installment and Consumer Other
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Not Past Due	367	272
Total Loans	$ 367	$ 272

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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	Dec. 31, 2019	Dec. 31, 2018
Available For Sale Securities [Abstract]
Due in one year or less, Amortized Cost	$ 2,499	$ 5,848
Due from one to five years, Amortized Cost		11,113
Due from five to ten years, Amortized Cost	3,490	8,458
Due after ten years, Amortized Cost	0	16,431
Mortgage-backed securities, Amortized Cost	149,302	157,147
Amortized Cost	155,291	198,997
Due in one year or less, Fair Value	2,506	5,843
Due from one to five years, Fair Value		10,974
Due from five to ten years, Fair Value	3,458	8,382
Due after ten years, Fair Value	0	16,143
Mortgage-backed securities, Fair Value	152,769	154,603
Fair Value	$ 158,733	$ 195,945

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COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheets

CONDENSED BALANCE SHEETS

	December 31, 2019		December 31, 2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	5,016	$	4,490
Investment in bank subsidiary		204,240		185,458
Goodwill		5,038		5,038
Other assets		3,566		2,344
Total assets	$	217,860	$	197,330
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	$	1,239	$	343
Subordinated debentures		44,858		44,703
Shareholders' equity		171,763		152,284
Total liabilities and shareholders' equity	$	217,860	$	197,330

Condensed Statements of Operations

CONDENSED STATEMENTS OF OPERATIONS

	December 31, 2019			December 31, 2018
	(dollars in thousands)
INTEREST AND DIVIDEND INCOME	$	147		$	2,112
EXPENSES
Interest expense		2,743			1,804
Other operating expenses		1,398			1,409
Total expenses		4,141			3,213
Income before income taxes and equity in undistributed net income of subsidiary		(3,994	)		(1,101	)
Income tax benefit		1,085			837
Equity in undistributed net income of subsidiary		19,361			14,515
NET INCOME	$	16,452		$	14,251

Condensed Statement of Cash Flows

CONDENSED STATEMENT OF CASH FLOWS

	For the year ended
	December 31, 2019			December 31, 2018
	(dollars in thousands)
Cash flows from operating activities
Net income	$	16,452		$	14,251
Adjustments to reconcile net income to cash provided by operating activities:
Equity in undistributed net income of subsidiary		(19,361	)		(14,515	)
Amortization of core deposit intangible		288			406
Amortization of subordinated debenture costs		155			122
Net change in:
Other assets		(1,559	)		1,967
Other liabilities		102			(58	)
Net cash provided by (used in) operating activities		(3,923	)		2,173
Cash flows from investing activities
Dividends received from (contributions to) subsidiary		6,000			(25,000	)
Net cash provided by (used in) investing activities		6,000			(25,000	)
Cash flows from financing activities
Proceeds from issuance of common stock		265			459
Increase in subordinated debentures		—			29,058
Dividends paid on preferred stock		(472	)		(413	)
Dividends paid on common stock		(1,344	)		(1,874	)
Net cash provided by (used in) financing activities		(1,551	)		27,230
Net change in cash and cash equivalents		526			4,403
Cash and cash equivalents, beginning of period		4,490			87
Cash and cash equivalents, end of period	$	5,016		$	4,490

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DIVIDEND AND CAPITAL RESTRICTIONS

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

DIVIDEND AND CAPITAL RESTRICTIONS

NOTE 22—DIVIDEND AND CAPITAL RESTRICTIONS

Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by the Bank to the Company. In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. Cash dividends paid to the Company by the Bank were $6.0 million and $2.0 million for the years ended December 31, 2019 and 2018, respectively.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Nature of Business and Significant Concentrations of Credit Risk

Nature of Business and Significant Concentrations of Credit Risk

The Company is the sole shareholder of Investors Community Bank. The Bank is the sole member of Investors Insurance Services, LLC and ABS 1, LLC, which are both Wisconsin limited liability companies. The Company commenced operations in May 1996; the Bank commenced operations in March 1997. In July 2010, the Bank formed Investors Insurance Services, LLC for the sole purpose of protecting the Bank from liability risk when selling crop insurance. Selling crop insurance had historically been a business function performed within the Bank. In August 2011, the Bank formed ABS 1, LLC for the sole purpose of holding real estate and personal property for sale which was obtained through repossession.

The Bank provides a full range of banking and related financial services, which include real estate lending, business services, and agricultural finance, to individual and corporate customers primarily located within the state of Wisconsin. The Bank’s primary source of revenue is providing loans to customers, who are predominantly engaged in dairy farming and commercial activities. Its primary deposit products are savings and term certificate accounts. The Bank is subject to competition from other financial institutions and is regulated by federal and state banking agencies and undergoes periodic examinations by those agencies.

Agricultural loans, including agricultural operating, real estate and construction loans, represented 63.7% and 60.0% of our total loan portfolio at December 31, 2019 and 2018, respectively. Commercial real estate, including commercial construction loans, represented 22.8% and 24.8% of our total loan portfolio at December 31, 2019 and 2018, respectively.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company also has three wholly owned subsidiaries, County Bancorp Statutory Trust II, County Bancorp Statutory Trust III, and Fox River Valley Capital Trust I, that are Delaware statutory trusts which have not been consolidated in accordance with accounting guidance related to variable interest entities.

Use of Estimates in Preparing Financial Statements

Use of Estimates in Preparing Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the fair value of the Company in its goodwill impairment assessment, and the valuation of investment securities available for sale, loan servicing rights, other real estate owned, financial instruments, and deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days.

In the normal course of business, the Company maintains balances with correspondent banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to specified limits. Management believes these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal.

Securities Available for Sale

Securities Available for Sale

Available for sale securities are carried at fair value with unrealized gains and losses excluded from earnings and reported separately in other comprehensive income (loss). The Company currently has no securities designated as trading or held-to-maturity. Interest income is recognized at the coupon rate adjusted amortization and accretion of premiums and discounts.  Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. They are included in non-interest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

Declines in the fair value of individual available for sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary impairment. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in non-interest income.

Federal Home Loan Bank Stock

Federal Home Loan Bank Stock

The Bank, as a member of the Federal Home Loan Bank of Chicago (“FHLB”), is required to maintain an investment in the capital stock of the FHLB based on the level of borrowings and other factors, and may invest additional amounts. Based on the redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost which approximates fair value. It is periodically evaluated by management for impairment. Because it is viewed as a long term investment, impairment is based on ultimate recovery of par value. Both stock and cash dividends are reported as income.

Loans Held for Sale

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. Gains and losses on loan sales (sale proceeds minus carrying value) are recorded in non-interest income and direct loan origination costs and fees are deferred at origination of the loan and are recognized in non-interest income upon sale of the loan.

Loans

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for unearned income and the allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, non-refundable fees and direct loan origination costs on real estate and commercial loans are amortized over the life of the loan and accounted for as an adjustment of yield of the related loan categories.

The accrual of interest on mortgage and commercial loans is discontinued at the time the principal and interest is 90 days delinquent unless the credit is well-secured and in the process of collection.  Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on nonaccrual loans is applied to reduce the principal balance outstanding.  Once the loans qualify for a return to accrual status, the interest in accounted for on the cash-basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses (hereinafter referred to as “allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance.

The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. The general component covers non-impaired loans and is based on historical losses adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on a weighted average of the actual loss history experienced by the Company over the most recent four years. The Company places more emphasis, or weight, on the more current quarters in the loss history period. This actual loss experience is adjusted for economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is generally measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with other nonaccrual loans.

Large groups of small balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for credit quality disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include agricultural, commercial, commercial real estate, residential real estate, and installment and consumer other with risk characteristics described as follows:

Agricultural: Agricultural loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows.  Adverse economic conditions and trends influenced by Class III milk prices and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial: Commercial loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows, and economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial Real Estate: Commercial real estate loans, including land and construction, generally possess a higher inherent risk of loss than other real estate portfolio segments. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability of the properties to produce sufficient cash flow to service debt obligations.

Residential Real Estate: The degree of risk in residential mortgage and home equity lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating.

Installment and Consumer Other: The installment and consumer other loan portfolio is usually comprised of a large number of small loans. Most loans are made directly for consumer purchases. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate the borrowers’ capacity to repay their obligations may be deteriorating.

Although management believes the allowance to be adequate as of each balance sheet date, ultimate losses may vary from its estimates. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s primary regulator reviews the adequacy of the allowance. The regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations.

Bank Premises and Equipment

Bank Premises and Equipment

Land is carried at cost. Bank premises and equipment are carried at cost, less accumulated depreciation. Depreciation is computed on the straight line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any recognized gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred; significant renewals and improvements are capitalized and a deduction is made from the property accounts for retirements of capitalized renewals or improvements.

Off-Balance Sheet Credit Related Financial Instruments

Off-Balance Sheet Credit-Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell.

Loan Servicing Rights

Loan Servicing Rights

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.

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 and are recorded as income when earned. The amortization of loan servicing rights is netted against loan servicing fee income.  

As of January 1, 2020, the Company has elected to make an accounting method change for the valuation of the servicing assets from amortizing cost described above to fair market value.  We believe that the fair value method a more accurate reflection of the value of these assets and is more widely recognized by the SEC, FASB, as well as the investor community.  As a result of this accounting method change, the Company will increase servicing assets and retained earnings by $3.4 million with an after tax effect of $2.6 million.  The adoption of the change will be recorded through a cumulative effect adjustment to retained earnings as of January 1, 2020.  All future adjustments to fair value will run through the income statement.

Other Real Estate Owned

Other Real Estate Owned

Land and assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure less estimated costs to sell, establishing a new cost basis with any loss on transfer recorded as a charge against the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Impairment losses on assets to be held and used are measured at the amount by which the carrying amount of a property exceeds its fair value. The evaluation of impairment is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements. Costs of significant asset improvements are capitalized, whereas costs relating to holding assets are expensed. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Cash Surrender Value of Bank Owned Life Insurance

Cash Surrender Value of Bank Owned Life Insurance

The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized, if lower.

Goodwill and Core Deposit Intangible

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 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.  There was no impairment charge to goodwill or core deposit intangible related to the Fox River Valley acquisition at December 31, 2019.  

Income Taxes

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.  As of December 31, 2019 and 2018, there was no valuation allowance.    

The Company files income taxes 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 2016.

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

Comprehensive Income

Comprehensive Income

Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale and interest rate swap contracts designed as hedges, are reported as a separate component of the equity section of the consolidated balance sheet. Such items, along with net income, are components of comprehensive income.  Accumulated comprehensive income included unrealized gains (losses) on securities available for sale and unrealized losses on interest rate swap contracts of $2,506 and $(577), respectively, net of tax of $(936) and $216, respectively, as of December 31, 2019.  Accumulated comprehensive loss as of December 31, 2018 included unrealized losses on securities available for sale and unrealized losses on interest rate swap contracts of $(2,221) and $(130), respectively, net of tax of $831 and $49, respectively.   

Derivatives

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives consist of interest rate swap agreements that qualify for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received or paid on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded.

We formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses would be recognized immediately in current earnings as noninterest income or expense.

Equity Incentive Plan

Equity Incentive Plan

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.  All grants and awards out of the equity incentive plan are newly issued shares.

Treasury Stock

Treasury Stock

Common stock shares repurchased are recorded as treasury stock at cost.

Earnings per Share

Earnings per Share

Basic earnings per share represent income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options, and are determined using the treasury stock method.

Treasury shares are not deemed outstanding for earnings per share calculations.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 20. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Segments

Segments

The Company’s operations consist of one segment, community banking.  The operating results of this segment are regularly reviewed by management to make decisions about resource allocations and to assess performance.  Selected information is not presented separately for the Company's reportable segment, as there is no material difference between that information and the corresponding information in the consolidated financial statements.

New Accounting Pronouncements

New Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases: Amendments to the FASB Accounting Standards Codification, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the prior accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU became effective January 1, 2019, and were adopted by the Company retrospectively to the beginning of the adoption period.  Since all of the Company’s leases are operating leases, there was no impact to the consolidated statements of operations; however, a right-of-use asset of $0.2 million and a corresponding liability were recorded on the Company’s balance sheet as of the effective date of the amendment.  

In June 2016, the FASB issued ASU No. 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.    In October 2019, the FASB voted to delay the effective date for the credit losses standard to January 2023 for certain entities, including SEC filers that qualified as smaller reporting companies and private companies.  As a smaller reporting company, the Company was eligible for the delay and will be deferring adoption until January 2023.  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 has engaged a third-party software consultant to assist in developing our loss model methodology, and is currently gathering historical data.  At this time, the Company is still assessing the impact of this standard on the consolidated financial statements.  The Company is also developing internal control processes and disclosure documentation related to the adoption of this standard.  Management will continue to progress on its implementation project plan and improve the Company’s approach throughout the deferral period.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), to permit entities to better portray the economic results of their hedging strategies in their financial statements.  In addition, the amendments make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP.  The amendment is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including adoption in an interim period.  The Company has chosen to early adopt this amendment in connection with the interest rate swap that commenced on June 15, 2018, and it had no material impact on the Company’s results of operation, financial position, or liquidity.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 842) – Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which focuses on improving the effectiveness of disclosures in the notes to the financial statements.  The amendment is effective for the fiscal years beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company is currently evaluating the effect this standard will have on the Company’s financial statements.

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LOAN SERVICING RIGHTS (Tables)

12 Months Ended

Dec. 31, 2019

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: 

	December 31,
	2019			2018
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	9,047		$	8,950
Additions		6,539			2,879
Impairment		(757	)		(597	)
Amortization		(2,320	)		(2,185	)
Balance, end of period	$	12,509		$	9,047

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Unaudited Interim Financial Data - Schedule of Unaudited Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 15,239	$ 16,759	$ 17,208	$ 17,126	$ 17,110	$ 16,651	$ 15,763	$ 14,693	$ 66,332	$ 64,217
Interest expense	5,701	6,507	6,776	6,566	6,367	6,047	5,425	4,423	25,550	22,262
Net interest income	9,538	10,252	10,432	10,560	10,743	10,604	10,338	10,270	40,782	41,955
Provision for loan losses	(51)	(1,154)	876	752	1,572	993	533	97	423	3,195
Net interest income after provision for loan losses	9,589	11,406	9,556	9,808	9,171	9,611	9,805	10,173	40,359	38,760
Non-interest income	3,722	4,034	2,887	2,750	2,320	2,157	2,316	2,040	13,393	8,833
Non-interest expense	10,265	7,668	7,446	7,305	7,538	7,023	6,937	6,785	32,684	28,283
Income tax expense	(258)	2,090	1,293	1,491	1,123	1,228	1,334	1,374	4,616	5,059
NET INCOME	$ 3,304	$ 5,682	$ 3,704	$ 3,762	$ 2,830	$ 3,517	$ 3,850	$ 4,054	$ 16,452	$ 14,251
Basic earnings per share	$ 0.47	$ 0.82	$ 0.53	$ 0.54	$ 0.41	$ 0.51	$ 0.56	$ 0.59	$ 2.37	$ 2.06
Diluted earnings per share	0.47	0.82	0.53	0.54	0.40	0.50	0.55	0.58	$ 2.36	$ 2.04
Dividends declared per share	$ 0.05	$ 0.05	$ 0.05	$ 0.05	$ 0.07	$ 0.07	$ 0.07	$ 0.07

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DEPOSITS

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

DEPOSITS

NOTE 9—DEPOSITS

Deposits are summarized as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Noninterest-bearing	$	138,489	$	121,436
NOW and interest checking		67,805		51,779
Savings		6,395		5,770
Money market accounts		247,828		218,929
Certificates of deposit		375,100		356,484
National time deposits		99,485		160,445
Brokered deposits		166,340		308,504
Total deposits	$	1,101,442	$	1,223,347

Certificates of deposit in amounts of more than $250,000 at December 31, 2019 and 2018 were approximately $240.6 million and $394.1 million, respectively.  

The scheduled maturities of certificates of deposit were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	378,098	$	377,588
1 to 2 years		161,251		259,722
2 to 3 years		50,736		103,715
3 to 4 years		26,321		41,259
Over 4 years		14,394		22,956
	$	630,800	$	805,240

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PREMISES AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

PREMISES AND EQUIPMENT

NOTE 5—PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:

	December 31,						Estimated
	2019			2018			Useful Life
	(dollars in thousands)
Land	$	2,240		$	2,240		N/A
Construction in process		1,319			1,593		N/A
Bank premises		10,038			12,810		35-40 years
Furniture, fixtures, and equipment		6,154			5,686		3-7 years
		19,751			22,329
Accumulated depreciation and amortization		(6,148	)		(6,254	)
	$	13,603		$	16,075

Depreciation and amortization expense charged to operations for the years ended December 31, 2019 and 2018 totaled, $1.4 million and $1.3 million, respectively.

As of December 31, 2019, the Company reclassified the Manitowoc, Wisconsin branch location to other assets in a held for sale status.  The net book value of $1.7 million approximates fair value.

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Related Party Transactions - Related Party Loan Activities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Balance, beginning of period	$ 5,637	$ 6,969
New loans	2,174	4,055
Repayments	(3,737)	(5,387)
Balance, end of period	$ 4,074	$ 5,637

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EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 21—EARNINGS PER SHARE

Earnings per common share (“EPS”) was computed based on the following:

	For the Year Ended
	December 31,
	2019		2018
	(dollars in thousands except share data)
Net income from continuing operations	$	16,452	$	14,251
Less:  preferred stock dividends		472		413
Income available to common shareholders for basic EPS	$	15,980	$	13,838
Average number of common shares issued		7,163,650		7,177,212
Less: weighted average treasury shares		443,873		442,206
Plus: weighted average nonvested equity incentive plan shares		27,804		30,955
Weighted average number of common shares outstanding		6,747,581		6,704,051
Effect of dilutive options		21,344		68,876
Weighted average number of common shares outstanding    used to calculate diluted earnings per common share		6,768,925		6,772,927

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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	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Impaired Loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Valuation Techniques	icbk:EvaluationOfCollateralMember	icbk:EvaluationOfCollateralMember
Unobservable Inputs	Estimation of value	Estimation of value
Other Real Estate Owned
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Valuation Techniques	icbk:AppraisalMember	icbk:AppraisalMember
Unobservable Inputs	Appraisal adjustment	Appraisal adjustment
Other Real Estate Owned | Minimum | Measurement Input, Comparability Adjustment
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	0.05	0.16
Other Real Estate Owned | Maximum | Measurement Input, Comparability Adjustment
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	0.64	0.54
Other Real Estate Owned | Weighted Average | Measurement Input, Comparability Adjustment
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Range (Average)	0.29	0.32

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EQUITY INCENTIVE PLAN

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

EQUITY INCENTIVE PLAN

NOTE 17—EQUITY INCENTIVE PLAN

In 2016, the Company’s shareholders approved the Company’s 2016 Equity Incentive Compensation Plan (the “Plan”).  Under the Plan, the Company may grant options and stock awards to its directors, officers and employees for shares of the Company’s common stock. Both qualified and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units may be granted and issued, respectively, under the Plan.  As of December 31, 2019, 159,445 shares remained available under the Plan.

The exercise price of options is no less than the market price of the Company’s stock on the date of grant and an option’s maximum term is ten years. Vesting periods for options and restricted stock range from one to five years from the date of grant.  

The Company grants restricted stock awards and restricted stock units to certain members of management and directors.  The shares and units are allotted a grant date value equal to the Nasdaq Official Closing Price on the grant date.

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	December 31,
	2019			2018
Risk-free interest rates	1.42%-2.56%			2.59-2.91%
Dividend yields	0.76%-1.59%			1.03%-1.61%
Expected volatility		34.00	%		36.00	%
Weighted-average expected life of options	7.00 years			7.00 years

The expected volatility is based on historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based on the Company’s history of declaring dividends on its common stock.

The activity of the Company’s outstanding stock options for the years ended December 31, 2019 and 2018 were as follows:

	December 31, 2019							December 31, 2018
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (1)
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		208,988		$	18.15				228,318		$	17.24
Granted		30,495			19.91				22,675			25.19
Exercised		(21,224	)		12.47				(30,217	)		15.19
Forfeited/expired		(3,355	)		19.88				(11,788	)		21.55
Outstanding, end of period		214,904		$	18.94	$	2,405		208,988		$	18.15	$	209
Options exercisable at period-end		164,083		$	17.96	$	2,023		159,456		$	16.54	$	19
Weighted-average fair value of options granted during the period (2)				$	6.86						$	9.41

(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 December 31, 2019 and 2018. 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.

Information pertaining to options outstanding at December 31, 2019 and 2018 was as follows:

		December 31, 2019
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		26,400	1.02 Years	$	12.00		26,400	1.02 Years	$	12.00
13.02-14.83			36,220	3.70 Years		13.88		36,220	3.70 Years		13.88
17.14-19.88			100,060	6.42 Years		19.28		78,178	5.62 Years		19.68
20.92-24.98			20,291	8.59 Years		23.42		7,672	7.23 Years		22.82
25.24-27.31			31,933	7.85 Years		26.49		15,613	7.60 Years		26.54
Outstanding, end of period			214,904		$	18.94		164,083		$	17.96
		December 31, 2018
		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	12.00		45,680	1.52 Years	$	12.00		45,680	1.52 Years	$	12.00
13.02-14.83			36,220	4.70 Years		13.88		32,770	4.63 Years		13.78
17.15-19.88			85,396	6.71 Years		19.58		71,623	6.50 Years		19.63
20.92-24.98			10,714	8.45 Years		23.34		4,101	8.04 Years		22.37
25.24-27.31			30,978	8.78 Years		26.50		5,282	8.24 Years		26.63
Outstanding, end of period			208,988		$	18.15		159,456		$	16.54

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested options, December 31, 2017		85,594		$	6.04
Granted		22,675			9.41
Vested		(40,681	)		5.67
Forfeited/exercised		(18,056	)		6.13
Nonvested options, December 31, 2018		49,532		$	7.86
Granted		30,495			6.86
Vested		(27,528	)		6.94
Forfeited/exercised		(1,678	)		4.88
Nonvested options, December 31, 2019		50,821		$	7.86

Activity in restricted stock awards and restricted stock units during 2019 and 2018 was as follows:

	December 31, 2019
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		28,701		$	21.02
Granted		—			—
Vested		(15,579	)		19.50
Forfeited/expired		(226	)		27.15
Outstanding, end of period		12,896		$	22.75
	December 31, 2018
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		41,217		$	18.35
Granted		6,611			27.15
Vested		(15,014	)		15.71
Forfeited/expired		(4,113	)		23.51
Outstanding, end of period		28,701		$	21.02

	December 31, 2019
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		11,772		$	27.15
Granted		24,382			17.54
Issued		(3,654	)		27.42
Forfeited/expired		(375	)		18.11
Outstanding, end of period		32,125		$	21.91
	December 31, 2018
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		8,691		$	25.53
Granted		9,840			27.46
Issued		(4,036	)		24.25
Forfeited/expired		(2,723	)		27.41
Outstanding, end of period		11,772		$	27.15

For the years ended December 31, 2019 and 2018, share-based compensation expense, including options, restricted stock awards, and restricted stock units, applicable to the Plan was $0.7 million and $0.5 million, respectively, and the recognized tax benefit related to this expense was $0.2 million and $0.1 million, respectively.

As of December 31, 2019, unrecognized share-based compensation expense related to nonvested options and restricted stock amounted to $0.4 million and is expected to be recognized over a weighted average period of 1.54 years.

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INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13—INCOME TAXES

Allocation of income tax expense between current and deferred portions consisted of the following:

	December 31,
	2019		2018
	(dollars in thousands)
Current
Federal income tax	$	1,766	$	3,713
State income tax		1,449		1,829
Total current		3,215		5,542
Deferred income tax expense (benefit)		1,401		(483	)
Total income tax expense	$	4,616	$	5,059

The reasons for the difference between income tax expense and the amount computed by applying the statutory tax rates to income before taxes were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Statutory federal tax rate		21	%		21	%
Income tax at statutory federal rate	$	4,425		$	4,055
Increase (reduction) resulting from:
State income taxes, net of federal income tax benefit		1,319			1,191
Tax exempt interest		(119	)		(193	)
Increase in cash surrender value		(100	)		(95	)
Historical tax credit		(1,465	)		—
Other		556			101
Income tax expense	$	4,616		$	5,059
Effective tax rate		22	%		26	%

The components of the net deferred tax asset were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Deferred tax assets:
Management salary continuation accrued	$	571	$	555
Allowance for loan losses		4,159		4,314
Deferred compensation		842		481
Other real estate owned		265		720
Net operating loss		1,282		1,475
Available for sale investment securities		—		831
Interest rate swap contracts		266		49
Other		63		151
Total deferred tax assets	$	7,448	$	8,576
Deferred tax liabilities
Loan servicing rights		3,407		2,465
Deferred loan costs		220		289
Depreciation and amortization		1,034		1,057
FHLB stock dividend		21		37
Available for sale investment securities		878		—
Other		435		382
Total deferred tax liabilities	$	5,995	$	4,230
Net deferred tax assets	$	1,453	$	4,346

The Company has federal net operating loss carryforwards of approximately $3.6 million as of December 31, 2019.  These losses begin to expire in 2035.  The Company also has state net operating loss carryforwards totaling approximately $8.6 million as of December 31, 2019 which begin to expire in 2032.  These net operating loss carryforwards may be applied against future taxable income.

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Equity Incentive Plan - Shares Outstanding by Price Range (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Number Outstanding	214,904	208,988	228,318
Weighted Average Exercise Price	$ 18.94	$ 18.15	$ 17.24
Number Exercisable	164,083	159,456
Weighted Average Exercise Price	$ 17.96	$ 16.54
Exercise Price Range 1 [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise price, upper limit	$ 12.00	$ 12.00
Number Outstanding	26,400	45,680
Outstanding Weighted Average Remaining Contractual Life	1 year 7 days	1 year 6 months 7 days
Weighted Average Exercise Price	$ 12.00	$ 12.00
Number Exercisable	26,400	45,680
Exercisable Weighted Average Remaining Contractual Life	1 year 7 days	1 year 6 months 7 days
Weighted Average Exercise Price	$ 12.00	$ 12.00
Exercise Price Range 2 [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise price, lower limit	13.02	13.02
Range of exercise price, upper limit	$ 14.83	$ 14.83
Number Outstanding	36,220	36,220
Outstanding Weighted Average Remaining Contractual Life	3 years 8 months 12 days	4 years 8 months 12 days
Weighted Average Exercise Price	$ 13.88	$ 13.88
Number Exercisable	36,220	32,770
Exercisable Weighted Average Remaining Contractual Life	3 years 8 months 12 days	4 years 7 months 17 days
Weighted Average Exercise Price	$ 13.88	$ 13.78
Exercise Price Range 3 [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise price, lower limit	17.14	17.15
Range of exercise price, upper limit	$ 19.88	$ 19.88
Number Outstanding	100,060	85,396
Outstanding Weighted Average Remaining Contractual Life	6 years 5 months 1 day	6 years 8 months 15 days
Weighted Average Exercise Price	$ 19.28	$ 19.58
Number Exercisable	78,178	71,623
Exercisable Weighted Average Remaining Contractual Life	5 years 7 months 13 days	6 years 6 months
Weighted Average Exercise Price	$ 19.68	$ 19.63
Exercise Price Range 4 [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise price, lower limit	20.92	20.92
Range of exercise price, upper limit	$ 24.98	$ 24.98
Number Outstanding	20,291	10,714
Outstanding Weighted Average Remaining Contractual Life	8 years 7 months 2 days	8 years 5 months 12 days
Weighted Average Exercise Price	$ 23.42	$ 23.34
Number Exercisable	7,672	4,101
Exercisable Weighted Average Remaining Contractual Life	7 years 2 months 23 days	8 years 14 days
Weighted Average Exercise Price	$ 22.82	$ 22.37
Exercise Price Range 5 [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise price, lower limit	25.24	25.24
Range of exercise price, upper limit	$ 27.31	$ 27.31
Number Outstanding	31,933	30,978
Outstanding Weighted Average Remaining Contractual Life	7 years 10 months 6 days	8 years 9 months 10 days
Weighted Average Exercise Price	$ 26.49	$ 26.50
Number Exercisable	15,613	5,282
Exercisable Weighted Average Remaining Contractual Life	7 years 7 months 6 days	8 years 2 months 26 days
Weighted Average Exercise Price	$ 26.54	$ 26.63

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Loans - Summary of Troubled Debt Restructurings Grouped by Type of Concession (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	47	33
Recorded Investment | $	$ 19,731	$ 21,353
Agricultural Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	42	32
Recorded Investment | $	$ 17,595	$ 21,261
Agricultural Loans | Payment Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	4	10
Recorded Investment | $	$ 844	$ 4,284
Agricultural Loans | Extension of Interest-Only Payments
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	24	22
Recorded Investment | $	$ 12,436	$ 16,977
Agricultural Loans | Rate concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	1
Recorded Investment | $	$ 85
Agricultural Loans | Capitalized interest
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	1
Recorded Investment | $	$ 152
Agricultural Loans | Term concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	12
Recorded Investment | $	$ 4,078
Commercial Real Estate Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	1
Recorded Investment | $	$ 1,021
Commercial Real Estate Loans | Payment Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	1
Recorded Investment | $	$ 1,021
Commercial Loans
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	4	1
Recorded Investment | $	$ 1,115	$ 92
Commercial Loans | Payment Concessions
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2
Recorded Investment | $	$ 69
Commercial Loans | Extension of Interest-Only Payments
Financing Receivable Allowance For Credit Losses [Line Items]
Number of Loans | Loan	2	1
Recorded Investment | $	$ 1,046	$ 92

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Loans - Impairment by Class of Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans Receivable Evaluated For Impairment [Line Items]
Impaired Loans with No Related Allowance Recorded, unpaid principal balance	$ 14,213	$ 22,673
Impaired Loans with No Related Allowance Recorded, recorded investment	14,193	22,109
Impaired Loans with No Related Allowance Recorded, allowance for loan losses allocated	0	0
Impaired Loans with an Allowance Recorded, unpaid principal balance	53,061	36,453
Impaired Loans with an Allowance Recorded, recorded investment	50,246	34,648
Impaired Loans with an Allowance Recorded, allowance for loan losses allocated	5,589	3,653
Unpaid principal balance	67,274	59,126
Recorded investment	64,439	56,757
Allowance for loan losses allocated	5,589	3,653
Agricultural Loans
Loans Receivable Evaluated For Impairment [Line Items]
Impaired Loans with No Related Allowance Recorded, unpaid principal balance	14,151	22,218
Impaired Loans with No Related Allowance Recorded, recorded investment	14,131	21,654
Impaired Loans with No Related Allowance Recorded, allowance for loan losses allocated	0	0
Impaired Loans with an Allowance Recorded, unpaid principal balance	47,225	33,090
Impaired Loans with an Allowance Recorded, recorded investment	44,702	31,293
Impaired Loans with an Allowance Recorded, allowance for loan losses allocated	3,515	2,325
Commercial Real Estate Loans
Loans Receivable Evaluated For Impairment [Line Items]
Impaired Loans with No Related Allowance Recorded, unpaid principal balance	0	0
Impaired Loans with No Related Allowance Recorded, recorded investment	0	0
Impaired Loans with No Related Allowance Recorded, allowance for loan losses allocated	0	0
Impaired Loans with an Allowance Recorded, unpaid principal balance	3,681	2,037
Impaired Loans with an Allowance Recorded, recorded investment	3,682	2,037
Impaired Loans with an Allowance Recorded, allowance for loan losses allocated	836	583
Commercial Loans
Loans Receivable Evaluated For Impairment [Line Items]
Impaired Loans with No Related Allowance Recorded, unpaid principal balance	0	455
Impaired Loans with No Related Allowance Recorded, recorded investment	0	455
Impaired Loans with No Related Allowance Recorded, allowance for loan losses allocated	0	0
Impaired Loans with an Allowance Recorded, unpaid principal balance	2,155	1,326
Impaired Loans with an Allowance Recorded, recorded investment	1,862	1,318
Impaired Loans with an Allowance Recorded, allowance for loan losses allocated	1,238	745
Residential Real Estate Loans
Loans Receivable Evaluated For Impairment [Line Items]
Impaired Loans with No Related Allowance Recorded, unpaid principal balance	62	0
Impaired Loans with No Related Allowance Recorded, recorded investment	62	0
Impaired Loans with No Related Allowance Recorded, allowance for loan losses allocated	0	0
Impaired Loans with an Allowance Recorded, unpaid principal balance	0	0
Impaired Loans with an Allowance Recorded, recorded investment	0	0
Impaired Loans with an Allowance Recorded, allowance for loan losses allocated	$ 0	$ 0

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Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Compensation And Retirement Disclosure [Abstract]
Employee Benefit Expense	$ 800	$ 700
Description of Postemployment Benefits	On May 1, 2006, the Company entered into salary continuation agreements with five key employees. Under these agreements, the key employees will receive $60,000 per year beginning on the later of attaining age 65 or their separation from service and continuing for 15 years. During 2011, the Company entered into a salary continuation agreement with an additional key employee. Under this agreement, the key employee will receive amounts ranging between $36,000 and $60,000 annually, depending on the employee’s age at separation, commencing upon retirement and continuing for 15 years. Each of these agreements allow for early retirement opportunities or modifications which may reduce the annual payment.
Employee Benefit payable	$ 2,100	2,000
Payouts under salary continuation agreements	$ 105	$ 105

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OTHER REAL ESTATE OWNED (Tables)

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

Schedule of Other Real Estate Owned

Changes in other real estate owned were as follows:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Balance, beginning of period	$	6,568		$	4,962
Assets foreclosed		6,315			6,104
Write-down of other real estate owned		(626	)		(873	)
Net gain on sales of other real estate owned		40			231
Proceeds from sale of other real estate owned		(6,776	)		(3,856	)
Balance, end of period	$	5,521		$	6,568

Income (Expenses) Attributable to Other Real Estate Owned

Income (expenses) attributable to other real estate owned include the following:

	For the Year Ended December 31,
		2019			2018
	(dollars in thousands)
Net gain on sales of other real estate owned	$	40		$	231
Write-down of other real estate owned		(626	)		(873	)
Operating expenses, net of rental income		(162	)		(188	)
	$	(748	)	$	(830	)

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OFF-BALANCE SHEET ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2019

Investments All Other Investments [Abstract]

Financial Instruments, Contract Amount Representing Credit Risk

Financial instruments with contract amounts representing credit risk as of December 31, 2019 and 2018 were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Commitments to extend credit and unused lines of credit, including unused    credit card lines	$	171,101	$	179,179
Standby letters of credit		3,930		5,635

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities 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)
December 31, 2019
Securities available for sale:
U.S. government and agency securities	$	—	$	3,458	$	—	$	3,458
U.S treasury securities		—		2,506		—		2,506
Mortgage-backed securities		—		152,769		—		152,769
Total assets at fair value	$	—	$	158,733	$	—	$	158,733
Derivative instruments, interest rate swaps	$	—	$	972	$	—	$	972
Total liabilities at fair value	$	—	$	972	$	—	$	972
December 31, 2018
Securities available for sale:
U.S. government and agency securities	$	—	$	4,331	$	—	$	4,331
U.S treasury securities		—		2,491		—		2,491
Municipal securities		—		34,520		—		34,520
Mortgage-backed securities		—		154,603		—		154,603
Total assets at fair value	$	—	$	195,945	$	—	$	195,945
Derivative instruments, interest rate swaps	$	—	$	179	$	—	$	179
Total liabilities at fair value	$	—	$	179	$	—	$	179

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
	(dollars in thousands)
December 31, 2019
Impaired loans	$	—	$	—	$	44,657
Other real estate owned		—		—		5,521
Total assets at fair value	$	—	$	—	$	50,178
December 31, 2018
Impaired loans	$	—	$	—	$	30,995
Other real estate owned		—		—		6,568
Total assets at fair value	$	—	$	—	$	37,563

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:

December 31, 2019
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	5%-64% (29%)
December 31, 2018
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	16%-54% (32%)

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.

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 were as follows:

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	108,457	$	108,457	$	50,952	$	50,952	1
Interest earning cash at other financial institutions		20,554		20,554		10,135		10,135	1
FHLB Stock		1,628		1,628		2,978		2,978	2
Securities available for sale		158,733		158,733		195,945		195,945	2
Loans, net of allowance for loan losses		1,020,506		1,024,062		1,190,790		1,187,330	3
Loans held for sale		2,151		2,151		2,949		2,949	3
Accrued interest receivable		2,571		2,571		3,878		3,878	2
Loan servicing rights		12,509		15,921		9,047		13,198	3
Financial liabilities:
Deposits:
Time		640,925		635,558		805,240		801,267	2
Other deposits		460,517		460,517		418,107		418,107	1
Other borrowings		794		794		827		827	3
Advances from FHLB		44,400		44,578		89,400		88,725	2
Subordinated debentures		44,858		44,858		44,703		44,703	3
Accrued interest payable		4,769		4,769		4,013		4,013	2
Derivative instruments, interest rate swaps		972		972		179		179	2

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Securities Available for Sale - Schedule of Fair Value and Gross Unrealized Losses of Entity's Investments (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	$ 9,873	$ 48,707
Investments with unrealized losses less than 12 months, unrealized losses	(41)	(229)
Investments with unrealized losses 12 months or greater, fair value	15,325	113,027
Investments with unrealized losses 12 months or greater, unrealized losses	(157)	(3,059)
Investments with unrealized losses, fair value	25,198	161,734
Investments with unrealized losses, unrealized losses	(198)	(3,288)
U.S. Government and Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses 12 months or greater, fair value	3,458	4,331
Investments with unrealized losses 12 months or greater, unrealized losses	(32)	(37)
Investments with unrealized losses, fair value	3,458	4,331
Investments with unrealized losses, unrealized losses	(32)	(37)
US Treasury Securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value		2,491
Investments with unrealized losses less than 12 months, unrealized losses		(6)
Investments with unrealized losses, fair value		2,491
Investments with unrealized losses, unrealized losses		(6)
Municipal Securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value		4,291
Investments with unrealized losses less than 12 months, unrealized losses		(15)
Investments with unrealized losses 12 months or greater, fair value		25,377
Investments with unrealized losses 12 months or greater, unrealized losses		(483)
Investments with unrealized losses, fair value		29,668
Investments with unrealized losses, unrealized losses		(498)
Mortgage-backed Securities
Schedule Of Available For Sale Securities [Line Items]
Investments with unrealized losses less than 12 months, fair value	9,873	41,925
Investments with unrealized losses less than 12 months, unrealized losses	(41)	(208)
Investments with unrealized losses 12 months or greater, fair value	11,867	83,319
Investments with unrealized losses 12 months or greater, unrealized losses	(125)	(2,539)
Investments with unrealized losses, fair value	21,740	125,244
Investments with unrealized losses, unrealized losses	$ (166)	$ (2,747)

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Restrictions on Cash and Cash Equivalents - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Federal Reserve Bank Advances [Member]
Cash and Cash Equivalents [Line Items]
Federal reserve bank reserve balance	$ 7.2	$ 4.3

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net income	$ 16,452,000	$ 14,251,000
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of premises and equipment	1,391,000	1,255,000
Amortization of core deposit intangible	288,000	406,000
Amortization of subordinated debenture costs	155,000	122,000
Provision for loan losses	423,000	3,195,000
Realized gain on sales of securities available-for-sale	(341,000)
Realized gain on sales of other real estate owned	(40,000)	(231,000)
Write-down of other real estate owned	626,000	873,000
Realized gain on sales of premises and equipment	(6,000)	(1,000)
Increase in cash surrender value of bank owned life insurance	(460,000)	(453,000)
Deferred income tax expense (benefit)	1,401,000	(483,000)
Stock compensation expense	695,000	473,000
Net amortization of premiums paid on securities	441,000	818,000
Net change in:
Accrued interest receivable and other assets	(405,000)	(57,000)
Loans held for sale	798,000	3,626,000
Loan servicing rights	(3,462,000)	(97,000)
Accrued interest payable and other liabilities	3,997,000	2,479,000
Net cash provided by operating activities	21,953,000	26,176,000
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available for sale	24,368,000	23,386,000
Purchases of securities available for sale	(10,122,000)	(96,136,000)
Proceeds from sales of securities available-for-sale	29,361,000	0
Net redemptions (purchases) of FHLB stock	1,184,000	1,160,000
Loan originations and principal collections, net	163,546,000	(64,385,000)
Proceeds from sales of premises and equipment	6,000
Purchases of premises and equipment	(659,000)	(7,667,000)
Proceeds from sales of other real estate owned	6,776,000	3,854,000
Net cash provided by (used in) investing activities	214,460,000	(139,788,000)
Cash flows from financing activities
Net increase in demand and savings deposits	52,491,000	14,530,000
Net (decrease) increase in certificates of deposits	(174,396,000)	98,740,000
Net change in other borrowings	(33,000)	(472,000)
Proceeds from FHLB advances	115,000,000	150,000,000
Repayment of FHLB advances	(160,000,000)	(182,100,000)
Proceeds from issuance of common stock	265,000	459,000
Increase in subordinated debentures		29,058,000
Dividends paid on preferred stock	(472,000)	(413,000)
Dividends paid on common stock	(1,344,000)	(1,874,000)
Net cash (used in) provided by financing activities	(168,489,000)	107,928,000
Net change in cash and cash equivalents	67,924,000	(5,684,000)
Cash and cash equivalents, beginning of period	61,087,000	66,771,000
Cash and cash equivalents, end of period	129,011,000	61,087,000
Cash paid during the period for:
Interest	23,833,000	20,621,000
Income taxes	1,725,000	4,875,000
Noncash investing activities:
Transfer of assets held for sale from premises and equipment to other assets	1,500,000
Transfer from loans to other real estate owned	6,315,000	6,104,000
Loans charged off	$ 3,928,000	$ 1,280,000

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Income Taxes - Components of Net Deferred Tax Asset (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Management salary continuation accrued	$ 571	$ 555
Allowance for loan losses	4,159	4,314
Deferred compensation	842	481
Other real estate owned	265	720
Net operating loss	1,282	1,475
Available for sale investment securities		831
Interest rate swap contracts	266	49
Other	63	151
Total deferred tax assets	7,448	8,576
Deferred tax liabilities
Loan servicing rights	3,407	2,465
Deferred loan costs	220	289
Depreciation and amortization	1,034	1,057
FHLB stock dividend	21	37
Available for sale investment securities	878
Other	435	382
Total deferred tax liabilities	5,995	4,230
Net deferred tax assets	$ 1,453	$ 4,346

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Deposits - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Certificates of deposit in amounts of 250,000 or more	$ 240.6	$ 394.1

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Advances From FHLB and Other Borrowings - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Advances from FHLB	$ 44,400,000	$ 89,400,000
Irrevocable letters of credit	0	0
Other borrowings	794,000	827,000
Collateralized Loan Obligations
Debt Instrument [Line Items]
Other borrowings	800,000	800,000
Federal Reserve Bank Of Chicago
Debt Instrument [Line Items]
Line of credit amount outstanding	127,300,000	143,400,000
Line of credit, available borrowing amount	96,000,000	111,400,000
Other borrowings	0	0
U S Bank National Association | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit amount outstanding	0	0
Line of credit facility maximum borrowing capacity	$ 10,000,000	$ 10,000,000
Line of credit, non-usage fee percentage per annum	0.275%	0.275%
Line of credit, non-usage fee	$ 22,000	$ 42,000
U S Bank National Association | Revolving Credit Facility | One month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%	2.25%
Mortgage Loans
Debt Instrument [Line Items]
Pledged qualifying mortgage loans	$ 393,700,000	$ 453,800,000

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Premises and Equipment - Summary of Premises and Equipment - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 1.4	$ 1.3
Manitowoc, Wisconsin
Property, Plant and Equipment [Line Items]
Net book value	$ 1.7

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Goodwill and Core Deposit Intangible - Core Deposit Intangible (Detail) - Core Deposit - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Core deposit intangible:
Net book value	$ 225	$ 513
Fox River Valley
Core deposit intangible:
Gross carrying amount	1,801	1,801
Accumulated amortization	(1,576)	(1,288)
Net book value	$ 225	$ 513

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Subordinated Debentures - Additional Information (Detail) - USD ($)			12 Months Ended
	Sep. 17, 2018	May 30, 2018	Dec. 31, 2019	Jun. 30, 2006	Sep. 30, 2005
Debt Instrument [Line Items]
Time period after occurrence and continuation of certain changes which debt redemption may occur			180 days
Fox River Valley Capital Trust I
Debt Instrument [Line Items]
Interest rate			6.40%
Junior subordinated debentures owned amount			$ 100,000
Minimum
Debt Instrument [Line Items]
Percentage ownership constituting triggering event			25.00%
5-year LIBOR | Fox River Valley Capital Trust I
Debt Instrument [Line Items]
Basis spread on variable rate			3.40%
Trust Preferred Securities Subject to Mandatory Redemption | Fox River Valley Capital Trust I
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 | Fox River Valley Capital Trust I
Debt Instrument [Line Items]
Floating rate capital securities			$ 500,000
Trust II
Debt Instrument [Line Items]
Maturity date			Sep. 15, 2035
Trust II | Three month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.53%
Interest rate			3.44%
Trust II | Trust Preferred Securities Subject to Mandatory Redemption
Debt Instrument [Line Items]
Floating rate capital securities					$ 6,000,000
Trust III
Debt Instrument [Line Items]
Interest rate			3.60%
Maturity date			Jun. 15, 2036
Trust III | Three month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.69%
Trust III | Trust Preferred Securities Subject to Mandatory Redemption
Debt Instrument [Line Items]
Floating rate capital securities				$ 6,000,000
Subordinated Notes
Debt Instrument [Line Items]
Aggregate principal amount of note sold and issued		$ 30,000,000
Fixed-to-floating rate		5.875%
Maturity date		Jun. 01, 2028
Debt instrument sale price to face amount percentage		100.00%
Fixed interest rate		5.875%
Frequency of interest payment			quarterly
Costs incurred related to the issuance of the Notes		$ 900,000
Subordinated Notes | Private Placement
Debt Instrument [Line Items]
Fixed-to-floating rate	5.875%
Subordinated Notes | Maximum | Private Placement
Debt Instrument [Line Items]
Aggregate principal amount outstanding	$ 30,000,000
Subordinated Notes | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.88%
Description of variable rate basis			3-month LIBOR

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
INTEREST AND DIVIDEND INCOME
Loans, including fees	$ 59,706	$ 58,706
Taxable securities	4,586	3,727
Tax-exempt securities	257	698
Federal funds sold and other	1,783	1,086
Total interest and dividend income	66,332	64,217
INTEREST EXPENSE
Deposits	21,457	18,649
FHLB advances and other borrowings	1,350	1,809
Subordinated debentures	2,743	1,804
Total interest expense	25,550	22,262
Net interest income	40,782	41,955
Provision for loan losses	423	3,195
Net interest income after provision for loan losses	40,359	38,760
NON-INTEREST INCOME
Gain on sale of loans, net	146	172
Other	1,592	877
Total non-interest income	13,393	8,833
NON-INTEREST EXPENSE
Employee compensation and benefits	19,112	16,785
Occupancy	1,402	1,059
Information processing	2,482	2,164
Professional fees	1,670	1,522
Cost of operation of other real estate owned, net	873	1,087
Investment tax credit impairment	1,149
Other	5,996	5,666
Total non-interest expense	32,684	28,283
Income before income taxes	21,068	19,310
Income tax expense	4,616	5,059
NET INCOME	$ 16,452	$ 14,251
NET INCOME PER SHARE:
Basic	$ 2.37	$ 2.06
Diluted	2.36	2.04
Dividends paid per share	$ 0.20	$ 0.28
Services Charges
NON-INTEREST INCOME
Non-interest income	$ 1,657	$ 1,674
Loan Servicing Fees
NON-INTEREST INCOME
Non-interest income	$ 9,998	$ 6,110

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GOODWILL AND CORE DEPOSIT INTANGIBLE

12 Months Ended

Dec. 31, 2019

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 an estimated finite life 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 in the years ended December 31, 2019 or 2018.  

Goodwill:  Goodwill resulted from the acquisition of Fox River Valley on May 13, 2016.  The carrying amount of goodwill was $5.0 million at December 31, 2019 and 2018.

Core deposit intangible:  Core deposit intangible, primarily related to acquired customer relationships, is amortized over its estimated finite life.  The core deposit intangible related to the Fox River Valley acquisition is as follows:  

	December 31,
	2019			2018
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	1,801
Accumulated amortization		(1,576	)		(1,288	)
Net book value	$	225		$	513

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SECURITIES AVAILABLE FOR SALE

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE 3—SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale are as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	3,490	$	—	$	(32	)	$	3,458
U.S treasury securities		2,499		7		—			2,506
Municipal securities		—		—		—			—
Mortgage-backed securities		149,302		3,633		(166	)		152,769
	$	155,291	$	3,640	$	(198	)	$	158,733
December 31, 2018
U.S. government and agency securities	$	4,368	$	—	$	(37	)	$	4,331
U.S treasury securities		2,497		—		(6	)		2,491
Municipal securities		34,985		33		(498	)		34,520
Mortgage-backed securities		157,147		203		(2,747	)		154,603
	$	198,997	$	236	$	(3,288	)	$	195,945

The amortized cost and fair value of securities at December 31, 2019 and 2018, 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)
December 31, 2019
Due in one year or less	$	2,499	$	2,506
Due from one to five years		—		—
Due from five to ten years		3,490		3,458
Due after ten years		—		—
Mortgage-backed securities		149,302		152,769
	$	155,291	$	158,733
December 31, 2018
Due in one year or less	$	5,848	$	5,843
Due from one to five years		11,113		10,974
Due from five to ten years		8,458		8,382
Due after ten years		16,431		16,143
Mortgage-backed securities		157,147		154,603
	$	198,997	$	195,945

Proceeds from the sale of securities available-for-sale were $29.4 million and the gross gain was $0.3 million for the year ended December 31, 2019.  There were no securities available for sale sold at a loss during 2019.  There were no sales of securities available for sale for the year ended December 31, 2018.

At December 31, 2019 and 2018 no securities were pledged to secure the FHLB advances besides FHLB stock of $1.6 million and $3.0 million, respectively. There were no securities pledged to secure the Federal Reserve Bank line of credit at December 31, 2019 and 2018; however, there were $63.0 million and $53.4 million of securities pledged to secure municipal customer deposits at December 31, 2019 and 2018, respectively.  

Temporarily Impaired Securities

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-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018.

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
December 31, 2019
U.S. government and agency securities	$	—	$	—		$	3,458	$	(32	)	$	3,458	$	(32	)
U.S treasury securities		—		—			—		—			—		—
Municipal securities		—		—			—		—			—		—
Mortgage-backed securities		9,873		(41	)		11,867		(125	)		21,740		(166	)
	$	9,873	$	(41	)	$	15,325	$	(157	)	$	25,198	$	(198	)
December 31, 2018
U.S. government and agency securities	$	—	$	—		$	4,331	$	(37	)	$	4,331	$	(37	)
U.S treasury securities		2,491		(6	)		—		—			2,491		(6	)
Municipal securities		4,291		(15	)		25,377		(483	)		29,668		(498	)
Mortgage-backed securities		41,925		(208	)		83,319		(2,539	)		125,244		(2,747	)
	$	48,707	$	(229	)	$	113,027	$	(3,059	)	$	161,734	$	(3,288	)

The unrealized loss on the investments at December 31, 2019 and 2018 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 did not consider these investments to be other-than-temporarily impaired at December 31, 2019 and 2018.

Other-Than-Temporary Impairment

The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. There were no securities with material unrealized losses existing longer than 12 months, and no securities with unrealized losses which management believed were other-than-temporarily impaired, at December 31, 2019 or 2018.

At December 31, 2019, 34 debt securities had unrealized losses with aggregate depreciation of 0.78% from the Company’s amortized cost basis. At December 31, 2018, 156 debt securities had unrealized losses with aggregate depreciation of 2.03% from the Company’s amortized cost basis.  These unrealized losses related principally to Government National Mortgage Association mortgage-backed and municipal debt securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Since none of the unrealized losses relate to deterioration in the underlying repayment sources and management has the indent and ability hold debt securities until maturity, the decline is not deemed to be other-than-temporary.

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SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

SUBORDINATED DEBENTURES

NOTE 11—SUBORDINATED DEBENTURES

In September 2005 and June 2006, the Company formed wholly owned subsidiary business trusts, County Bancorp Statutory Trust II (“Trust II”) and County Bancorp Statutory Trust III (“Trust III”) (together, the “Trusts”), which are both Delaware statutory trusts, for the purpose of issuing capital securities which qualify as Tier 1 capital of the Company. Trust II issued at par $6.0 million of floating rate capital securities in an exempt offering. The capital securities are nonvoting, mandatorily redeemable in 2035, and guaranteed by the Company. Trust III issued at par $6.0 million of floating rate capital securities in an exempt offering. The capital securities are nonvoting, mandatorily redeemable in 2036, and guaranteed by the Company.

The capital securities carry an interest rate identical to that of the related debentures. For Trust II, holders of capital securities are entitled to receive cumulative cash distributions at a rate based on the three month LIBOR plus 1.53% thereafter through maturity, which was 3.44% as of December 31, 2019. For Trust III, holders of capital securities are entitled to receive cumulative cash distributions at a rate based on the three month LIBOR plus 1.69% through maturity, which was 3.60% as of December 31, 2019.  Interest was current through the most recent interest payment date of December 16, 2019.  The distribution rate payable on the capital securities is cumulative and payable quarterly in arrears.

The Company owns all of the outstanding common securities of Trust II and Trust III. The Trusts used the proceeds from the issuance of their capital securities to buy floating rate junior subordinated deferrable interest debentures (“debentures”) issued by the Company. These debentures are the Trusts’ only assets, and interest payments from these debentures finance the distributions paid on the capital securities. These debentures are unsecured, rank junior, and are subordinate in the right of payment to all senior debt of the Company.

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 for a period not exceeding 20 consecutive quarters with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity dates of the debentures. The capital securities are subject to mandatory redemption upon payment of the debentures. The debentures issued to Trust II and Trust III mature on September 15, 2035 and June 15, 2036, respectively, and may be redeemed if certain conditions are met or at any time within 180 days following the occurrence and continuation of certain changes in either tax treatment or the capital treatment of Trust II and Trust III, the debentures, or the capital securities. If the debentures are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest.

The capital securities of Trust II and Trust III have been structured to qualify as Tier 1 capital for regulatory purposes. However, the securities cannot be used to constitute more than 25 percent of the Company’s “core” Tier 1 capital according to regulatory requirements. The Company utilized the proceeds of the Trust II issuances for general corporate purposes and Trust III issuances to redeem the securities of County Bancorp Statutory Trust I.

In connection with the merger with Fox River Valley, the Company also acquired all of the common securities of Fox River Valley’s wholly-owned subsidiary, Fox River Valley Capital Trust I, a Delaware statutory trust (the “FRV Trust I”), which issued capital securities that qualify for Tier I 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 capital securities 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 was current through the most recent interest payment date of November 29, 2019.

The FRV Trust I 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 FRV Trust I 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 FRV Trust I), at any time within 90 days following such event.

The FRV Trust I debentures carry an interest rate equal to 5-year LIBOR plus 3.40%, which resets every five years. The current rate is equal to 6.40% through November 30, 2023. Interest payments are due quarterly.

On May 30, 2018, the Company entered into a Subordinated Note Purchase Agreement with certain institutional investors pursuant to which the Company sold and issued $30.0 million in aggregate principal amount of its 5.875% fixed-to-floating rate subordinated notes due 2028 (the “Notes”).  The Notes were issued by the Company to the purchasers at a price equal to 100% of their face amount. The Notes have a stated maturity of June 1, 2028, are redeemable, in whole or in part, on or after June 1, 2023, and at any time upon the occurrences of certain events. The Notes will bear interest at a fixed rate of 5.875% per year, from and including May 30, 2018 to, but excluding, June 1, 2023. From and including June 1, 2023 to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current 3-month LIBOR plus 2.88%.  The notes qualify as Tier II capital of the Company.  The Company incurred $0.9 million of costs related to the issuance of the Notes.  These costs have been capitalized are being amortized over the life of the Notes.    

On September 17, 2018, the Company closed its offer to exchange (the “Exchange Offer”) up to $30,000,000 aggregate principal amount of Notes, which were issued in a private placement to certain institutional investors, for a like principal amount of its new 5.875% fixed-to-floating rate subordinated notes due 2028 registered under the Securities Act of 1933, as amended.  All of the privately-placed Notes were tendered for exchange in the Exchange Offer.

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UNAUDITED INTERIM FINANCIAL DATA

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

UNAUDITED INTERIM FINANCIAL DATA

NOTE 24 – UNAUDITED INTERIM FINANCIAL DATA

Unaudited quarterly financial data for the periods indicated is summarized below:

	2019
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	15,239		$	16,759		$	17,208	$	17,126
Interest expense		5,701			6,507			6,776		6,566
Net interest income		9,538			10,252			10,432		10,560
Provision for  loan losses		(51	)		(1,154	)		876		752
Net interest income after provision for loan losses		9,589			11,406			9,556		9,808
Non-interest income		3,722			4,034			2,887		2,750
Non-interest expense		10,265			7,668			7,446		7,305
Income tax expense		(258	)		2,090			1,293		1,491
Net income	$	3,304		$	5,682		$	3,704	$	3,762
Basic earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Diluted earnings per share	$	0.47		$	0.82		$	0.53	$	0.54
Dividends declared per share	$	0.05		$	0.05		$	0.05	$	0.05
	2018
	Fourth Quarter			Third Quarter			Second Quarter		First Quarter
	(dollars in thousands, except share data)
Interest income	$	17,110		$	16,651		$	15,763	$	14,693
Interest expense		6,367			6,047			5,425		4,423
Net interest income		10,743			10,604			10,338		10,270
Provision for  loan losses		1,572			993			533		97
Net interest income after provision for loan losses		9,171			9,611			9,805		10,173
Non-interest income		2,320			2,157			2,316		2,040
Non-interest expense		7,538			7,023			6,937		6,785
Income tax expense		1,123			1,228			1,334		1,374
Net income	$	2,830		$	3,517		$	3,850	$	4,054
Basic earnings per share	$	0.41		$	0.51		$	0.56	$	0.59
Diluted earnings per share	$	0.40		$	0.50		$	0.55	$	0.58
Dividends declared per share	$	0.07		$	0.07		$	0.07	$	0.07

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LOANS (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Components of Loan Portfolio

The components of the loan portfolio were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Agricultural loans	$	659,725		$	724,508
Commercial real estate loans		235,936			299,212
Commercial loans		95,787			116,460
Residential real estate loans		43,958			66,843
Installment and consumer other		367			272
Total gross loans		1,035,773			1,207,295
Allowance for loan losses		(15,267	)		(16,505	)
Loans, net	$	1,020,506		$	1,190,790

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 December 31, 2019 and 2018:

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
	(dollars in thousands)
December 31, 2019
Agricultural loans	$	1,489	$	71	$	4,974	$	6,534	$	653,191	$	659,725
Commercial real estate loans		—		288		—		288		235,648		235,936
Commercial loans		—		28		228		256		95,531		95,787
Residential real estate loans		—		—		62		62		43,896		43,958
Installment and consumer other		—		—		—		—		367		367
Total	$	1,489	$	387	$	5,264	$	7,140	$	1,028,633	$	1,035,773
December 31, 2018
Agricultural loans	$	460	$	969	$	7,968	$	9,397	$	715,111	$	724,508
Commercial real estate loans		—		—		2,037		2,037		297,175		299,212
Commercial loans		—		—		600		600		115,860		116,460
Residential real estate loans		—		—		—		—		66,843		66,843
Installment and consumer other		—		—		—		—		272		272
Total	$	460	$	969	$	10,605	$	12,034	$	1,195,261	$	1,207,295

Nonaccrual, Restructured and Certain Past Due Loans

The following table lists information on nonaccrual, restructured, and certain past due loans:

	December 31,
	2019		2018
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	5,264	$	10,605
Nonaccrual loans 30-89 days past due		1,781		868
Nonaccrual loans, less than 30 days past due		23,923		11,510
Restructured loans not on nonaccrual status		21,783		19,389
90 days or more past due and still accruing		—		—

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

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days on accrual by class of loan:

	December 31,
	2019		2018
	(dollars in thousands)
Agricultural loans	$	26,415	$	19,173
Commercial real estate loans		2,673		2,037
Commercial loans		1,818		1,773
Residential real estate loans		62		—
Total	$	30,968	$	22,983

Schedule of Loans Individually Evaluated for Impairment

The following tables present loans individually evaluated for impairment by class of loans at December 31, 2019 and 2018:

	December 31, 2019
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	14,151	$	14,131	$	—
Commercial real estate loans		—		—		—
Commercial loans		—		—		—
Residential real estate loans		62		62		—
	$	14,213	$	14,193	$	—
With an allowance recorded
Agricultural loans	$	47,225	$	44,702	$	3,515
Commercial real estate loans		3,681		3,682		836
Commercial loans		2,155		1,862		1,238
Residential real estate loans		—		—		—
		53,061		50,246		5,589
Total	$	67,274	$	64,439	$	5,589
	December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(dollars in thousands)
With no related allowance:
Agricultural loans	$	22,218	$	21,654	$	—
Commercial real estate loans		—		—		—
Commercial loans		455		455		—
Residential real estate loans		—		—		—
	$	22,673	$	22,109	$	—
With an allowance recorded
Agricultural loans	$	33,090	$	31,293	$	2,325
Commercial real estate loans		2,037		2,037		583
Commercial loans		1,326		1,318		745
Residential real estate loans		—		—		—
		36,453		34,648		3,653
Total	$	59,126	$	56,757	$	3,653

Changes in Allowance for Loan Losses by Portfolio Segment

Changes in the allowance for loan losses by portfolio segment were as follows:

	December 31, 2019
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	12,258	$	(518	)	$	(61	)	$	58	$	11,737
Commercial real estate loans		2,779		613			(3,585	)		2,106		1,913
Commercial loans		1,414		364			(282	)		103		1,599
Residential real estate loans		53		(38	)		—			—		15
Installment and consumer other		1		2			—			—		3
Total	$	16,505	$	423		$	(3,928	)	$	2,267	$	15,267
	December 31, 2018
	Beginning Balance		Provision for Loan Losses			Loans Charged Off			Loan Recoveries		Ending Balance
	(dollars in thousands)
Agricultural loans	$	9,712	$	3,783		$	(1,238	)	$	1	$	12,258
Commercial real estate loans		1,978		(437	)		(42	)		1,280		2,779
Commercial loans		1,508		(155	)		—			61		1,414
Residential real estate loans		47		6			—			—		53
Installment and consumer other		2		(2	)		—			1		1
Total	$	13,247	$	3,195		$	(1,280	)	$	1,343	$	16,505

Balances in Allowance for Loan Losses and Recorded Investment 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 investment in loans by portfolio segment and based on impairment method:  

	December 31, 2019
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	3,515	$	8,222	$	11,737
Commercial real estate loans		836		1,077		1,913
Commercial loans		1,238		361		1,599
Residential real estate loans		—		15		15
Installment and consumer other		—		3		3
Total ending allowance for loan losses		5,589		9,678		15,267
Loans:
Agricultural loans		58,833		600,892		659,725
Commercial real estate loans		3,682		232,254		235,936
Commercial loans		1,862		93,925		95,787
Residential real estate loans		62		43,896		43,958
Installment and consumer other		—		367		367
Total loans		64,439		971,334		1,035,773
Net loans	$	58,850	$	961,656	$	1,020,506
	December 31, 2018
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	2,325	$	9,933	$	12,258
Commercial real estate loans		583		2,196		2,779
Commercial loans		745		669		1,414
Residential real estate loans		—		53		53
Installment and consumer other		—		1		1
Total ending allowance for loan losses		3,653		12,852		16,505
Loans:
Agricultural loans		52,947		671,561		724,508
Commercial real estate loans		2,037		297,175		299,212
Commercial loans		1,773		114,687		116,460
Residential real estate loans		—		66,843		66,843
Installment and consumer other		—		272		272
Total loans		56,757		1,150,538		1,207,295
Net loans	$	53,104	$	1,137,686	$	1,190,790

TDRs by Loan Class

The following table provides the number of loans modified in a troubled debt restructuring investment by class for the year ended December 31, 2019 and 2018:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		42	$	17,595		32	$	21,261
Commercial real estate loans		1		1,021		—		—
Commercial loans		4		1,115		1		92
Total		47	$	19,731		33	$	21,353

Summary of Troubled Debt Restructurings Grouped by Type of Concession

The following table provides the troubled debt restructurings for the year ended December 31, 2019 and 2018 grouped by type of concession:

	Year ended December 31, 2019				Year ended December 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		4	$	844		10	$	4,284
Extension of interest-only payments		24		12,436		22		16,977
Rate concession		1		85		—		—
Capitalized interest		1		152		—		—
Term concession		12		4,078		—		—
Commercial real estate loans
Payment concessions		1		1,021		—		—
Commercial loans
Payment concessions		2		69		—		—
Extension of interest-only payments		2		1,046		1		92
Total		47	$	19,731		33	$	21,353

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 was as follows:  

	As of December 31, 2019
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	388,184	$	175,125	$	9,239	$	28,344	$	58,833	$	659,725
Commercial real estate loans		209,279		21,703		—		1,272		3,682		235,936
Commercial loans		83,141		10,091		—		693		1,862		95,787
Residential real estate loans		43,473		254		—		169		62		43,958
Installment and consumer other		367		—		—		—		—		367
Total	$	724,444	$	207,173	$	9,239	$	30,478	$	64,439	$	1,035,773
	As of December 31, 2018
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	495,418	$	133,582	$	564	$	41,997	$	52,947	$	724,508
Commercial real estate loans		253,853		18,968		4,642		19,712		2,037		299,212
Commercial loans		95,842		15,237		1,360		2,248		1,773		116,460
Residential real estate loans		62,787		3,883		—		173		—		66,843
Installment and consumer other		272		—		—		—		—		272
Total	$	908,172	$	171,670	$	6,566	$	64,130	$	56,757	$	1,207,295

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COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS - Condensed Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Condensed Income Statements Captions [Line Items]
INTEREST AND DIVIDEND INCOME	$ 15,239	$ 16,759	$ 17,208	$ 17,126	$ 17,110	$ 16,651	$ 15,763	$ 14,693	$ 66,332	$ 64,217
EXPENSES
Interest expense	5,701	6,507	6,776	6,566	6,367	6,047	5,425	4,423	25,550	22,262
Income before income taxes and equity in undistributed net income of subsidiary									(21,068)	(19,310)
Income tax benefit	258	(2,090)	(1,293)	(1,491)	(1,123)	(1,228)	(1,334)	(1,374)	(4,616)	(5,059)
NET INCOME	$ 3,304	$ 5,682	$ 3,704	$ 3,762	$ 2,830	$ 3,517	$ 3,850	$ 4,054	16,452	14,251
Parent Company
Condensed Income Statements Captions [Line Items]
INTEREST AND DIVIDEND INCOME									147	2,112
EXPENSES
Interest expense									2,743	1,804
Other operating expenses									1,398	1,409
Total expenses									4,141	3,213
Income before income taxes and equity in undistributed net income of subsidiary									(3,994)	(1,101)
Income tax benefit									1,085	837
Equity in undistributed net income of subsidiary									19,361	14,515
NET INCOME									$ 16,452	$ 14,251

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Dividend and Capital Restrictions - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Regulated Operations [Abstract]
Cash dividends paid	$ 6.0	$ 2.0

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Regulatory Matters - Summary of Actual Capital Amounts and Ratios of Company's and Bank's (Parenthetical) (Detail)		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2019	Dec. 31, 2018
Regulatory Capital Requirements [Abstract]
Capital conservative buffer percentage	2.50%	2.50%	1.875%

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 158,733	$ 195,945
Fair Value on a Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	158,733	195,945
Total liabilities at fair value	972	179
Fair Value on a Recurring Basis | Derivative Instruments, Interest Rate Swaps
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total liabilities at fair value	972	179
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	3,458	4,331
Fair Value on a Recurring Basis | US Treasury Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	2,506	2,491
Fair Value on a Recurring Basis | Mortgage-backed Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	152,769	154,603
Fair Value on a Recurring Basis | Municipal Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value		34,520
Fair Value on a Recurring Basis | Level 2 Inputs
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	158,733	195,945
Total liabilities at fair value	972	179
Fair Value on a Recurring Basis | Level 2 Inputs | Derivative Instruments, Interest Rate Swaps
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total liabilities at fair value	972	179
Fair Value on a Recurring Basis | Level 2 Inputs | U.S. Government and Agency Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	3,458	4,331
Fair Value on a Recurring Basis | Level 2 Inputs | US Treasury Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	2,506	2,491
Fair Value on a Recurring Basis | Level 2 Inputs | Mortgage-backed Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 152,769	154,603
Fair Value on a Recurring Basis | Level 2 Inputs | Municipal Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value		$ 34,520

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 19—RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has granted loans to principal officers and directors and their affiliates.

Activity consisted of the following:

	December 31,
	2019			2018
	(dollars in thousands)
Balance, beginning of period	$	5,637		$	6,969
New loans		2,174			4,055
Repayments		(3,737	)		(5,387	)
Balance, end of period	$	4,074		$	5,637

Deposits from related parties held by the Bank at December 31, 2019 and 2018 amounted to $6.0 million and $5.2 million, respectively.

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Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Net income from continuing operations	$ 3,304	$ 5,682	$ 3,704	$ 3,762	$ 2,830	$ 3,517	$ 3,850	$ 4,054	$ 16,452	$ 14,251
Less: preferred stock dividends									472	413
Income available to common shareholders for basic EPS									$ 15,980	$ 13,838
Average number of common shares issued									7,163,650	7,177,212
Less: weighted average treasury shares									443,873	442,206
Plus: weighted average nonvested equity incentive plan shares									27,804	30,955
Weighted average number of common shares outstanding									6,747,581	6,704,051
Effect of dilutive options									21,344	68,876
Weighted average number of common shares outstanding used to calculate diluted earnings per common share									6,768,925	6,772,927

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HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

HEDGING ACTIVITIES

NOTE 15—HEDGING ACTIVITIES

On June 15, 2018, the Company executed an interest rate swap to manage interest rate risk on two sets of its trust preferred securities.  This derivative contract involves the receipt of floating rate interest from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value.  This instrument is designated as a cash flow hedge as the receipt of floating rate interest from the counterparty is used to manage interest rate risk associated with three month LIBOR advances.  The change in the fair value of this hedging instrument is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

As of December 31, 2019, the Company had two outstanding interest rate swaps designated as a cash flow hedge each with an aggregate notional value of $6.0 million.  Both interest rate swaps mature on June 15, 2028.  A pre-tax unrealized loss of $0.8 million and $0.2 million was recognized in accumulated other comprehensive income for the years ended December 31, 2019 and December 31, 2018, respectively, and there was no ineffective portion of this hedge.  

The Company is exposed to credit risk in the event of nonperformance by the interest rate swaps counterparty.  The Company minimizes this risk by entering into derivative contracts with only large, stable financial institutions, and the Company has not experienced, and does not expect, any losses from counterparty nonperformance on the interest rate swaps. The Company monitors counterparty risk in accordance with the provisions of FASB ASC 815.  In addition, the interest rate swap agreements contain language outlining collateral-pledging requirements for each counterparty.  Collateral must be posted when the market value exceeds certain threshold limits.  Derivative contracts are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels.  These agreements protect the interests of the Company and its counterparties should either party suffer a credit rating deterioration.  The Company pledged $1.6 million and $0.2 million of cash as collateral to the counterparty as of December 31, 2019 and December 31, 2018, respectively.

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ADVANCES FROM FHLB AND OTHER BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Advances Outstanding from FHLB

The Bank had advances outstanding from the FHLB in the amount of $44.4 million and $89.4 million on December 31, 2019 and 2018, respectively. These advances, rates, and maturities were as follows:

					Amount outstanding as of December 31,
	Maturity	Rate			2019		2018
					(dollars in thousands)
Loan Type
Fixed rate, fixed term	01/02/2019		2.54	%	$	—	$	3,000
Fixed rate, fixed term	01/04/2019		2.55	%		—		12,000
Fixed rate, fixed term	02/27/2019		1.47	%		—		5,000
Fixed rate, fixed term	03/08/2019		1.54	%		—		10,000
Fixed rate, fixed term	07/15/2019		1.11	%		—		8,000
Fixed rate, fixed term	08/12/2019		2.24	%		—		5,000
Fixed rate, fixed term	08/14/2019		1.77	%		—		2,000
Fixed rate, fixed term	02/20/2020		1.71	%		5,000		5,000
Fixed rate, fixed term	07/16/2020		1.85	%		800		800
Fixed rate, fixed term	08/25/2020		1.84	%		3,000		3,000
Fixed rate, fixed term	08/27/2020		1.88	%		5,000		5,000
Fixed rate, fixed term	12/30/2020		2.09	%		4,000		4,000
Fixed rate, fixed term	12/31/2020		1.94	%		600		600
Fixed rate, fixed term	04/12/2021		1.92	%		8,000		8,000
Fixed rate, fixed term	06/15/2021		1.39	%		5,000		5,000
Fixed rate, fixed term	08/16/2021		2.29	%		3,000		3,000
Fixed rate, fixed term	12/30/2021		2.29	%		2,000		2,000
Fixed rate, putable, no call 2 years	01/12/2023		2.03	%		8,000		8,000
					$	44,400	$	89,400

Future Maturities of Borrowings

Future maturities of borrowings were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	18,400	$	45,000
1 to 2 years		18,000		18,400
2 to 3 years		8,000		18,000
3 to 4 years		—		8,000
	$	44,400	$	89,400

Balances and Interest Rates on Other Borrowings

The following table sets forth information concerning balances and interest rates on other borrowings as of the dates and for the periods indicated:

	December 31,
	2019			2018
	(dollars in thousands)
Balance outstanding at end of period	$	794		$	827
Average amount outstanding during the period		800			1,027
Maximum amount outstanding at any month end		1,412			1,278
Weighted average interest rate during the period		4.60	%		4.81	%
Weighted average interest rate at end of period		4.51	%		4.51	%

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REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2019

Regulatory Capital Requirements [Abstract]

Summary of Actual Capital Amounts and Ratios of Company’s and Bank's

The Company’s and 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)
December 31, 2019
Total Capital (to risk weighted assets):
Company		225,094		19.41	%		121,746		10.50	%	Not applicable
Bank		216,198		18.70	%		121,396		10.50	%	$	115,615		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		180,620		15.58	%		98,557		8.50	%	Not applicable
Bank		201,735		17.45	%		98,273		8.50	%		92,492		8.00	%
Tier 1 Capital (to average assets):
Company		180,620		12.42	%		58,182		4.00	%	Not applicable
Bank		201,735		14.68	%		54,962		4.00	%		68,702		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		156,969		13.54	%		81,164		7.00	%	Not applicable
Bank		201,735		17.45	%		80,930		7.00	%		75,150		6.50	%
December 31, 2018
Total Capital (to risk weighted assets):
Company		210,768		15.81	%		131,664		9.875	%	Not applicable
Bank		204,327		15.35	%		131,488		9.875	%	$	133,153		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		164,675		12.35	%		104,998		7.875	%	Not applicable
Bank		187,679		14.09	%		104,858		7.875	%		106,522		8.00	%
Tier 1 Capital (to average assets):
Company		164,675		11.09	%		59,374		4.00	%	Not applicable
Bank		187,679		12.44	%		60,330		4.00	%		75,413		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		141,085		10.58	%		84,999		6.375	%	Not applicable
Bank		187,679		14.09	%		84,885		6.375	%		86,549		6.50	%

(a) The ratios for December 31, 2019 and 2018 include a capital conservation buffer of 2.5% and 1.875%, respectively.

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Equity Incentive Plan - Fair Value Pricing Assumptions (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-free interest rates, minimum	1.42%	2.59%
Risk-free interest rates, maximum	2.56%	2.91%
Expected volatility	34.00%	36.00%
Weighted-average expected life of options	7 years	7 years
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividend yields	0.76%	1.03%
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividend yields	1.59%	1.61%

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Loans - Balances in Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Loans individually evaluated for impairment	$ 58,850	$ 53,104
Loans collectively evaluated for impairment	961,656	1,137,686
Loans, net	1,020,506	1,190,790
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	5,589	3,653
Allowance for loan losses collectively evaluated for impairment	9,678	12,852
Total	15,267	16,505
Loans:
Loans individually evaluated for impairment	64,439	56,757
Loans collectively evaluated for impairment	971,334	1,150,538
Total Loans	1,035,773	1,207,295
Agricultural Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	3,515	2,325
Allowance for loan losses collectively evaluated for impairment	8,222	9,933
Total	11,737	12,258
Loans:
Loans individually evaluated for impairment	58,833	52,947
Loans collectively evaluated for impairment	600,892	671,561
Total Loans	659,725	724,508
Commercial Real Estate Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	836	583
Allowance for loan losses collectively evaluated for impairment	1,077	2,196
Total	1,913	2,779
Loans:
Loans individually evaluated for impairment	3,682	2,037
Loans collectively evaluated for impairment	232,254	297,175
Total Loans	235,936	299,212
Commercial Loans
Allowance for loan losses:
Allowance for loan losses individually evaluated for impairment	1,238	745
Allowance for loan losses collectively evaluated for impairment	361	669
Total	1,599	1,414
Loans:
Loans individually evaluated for impairment	1,862	1,773
Loans collectively evaluated for impairment	93,925	114,687
Total Loans	95,787	116,460
Residential Real Estate Loans
Allowance for loan losses:
Allowance for loan losses collectively evaluated for impairment	15	53
Total	15	53
Loans:
Loans individually evaluated for impairment	62
Loans collectively evaluated for impairment	43,896	66,843
Total Loans	43,958	66,843
Installment and Consumer Other
Allowance for loan losses:
Allowance for loan losses collectively evaluated for impairment	3	1
Total	3	1
Loans:
Loans collectively evaluated for impairment	367	272
Total Loans	$ 367	$ 272

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Loans - Recorded Investment in Nonaccrual Loans and Loans Past Due 90 Days or More (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	$ 30,968	$ 22,983
Agricultural Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	26,415	19,173
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	2,673	2,037
Commercial Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	1,818	$ 1,773
Residential Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in nonaccrual and loans past due 90 days or more	$ 62

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Off-Balance Sheet Activities - Additional Information (Detail) - Standby and Performance Letters of Credit	12 Months Ended
	Dec. 31, 2019
Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Debt Instrument, Term	1 year
Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Debt Instrument, Term	4 years

XML

Premises and Equipment - Summary of Premises and Equipment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 19,751	$ 22,329
Accumulated depreciation and amortization	(6,148)	(6,254)
Property, Plant and Equipment, Net	13,603	16,075
Land
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,240	2,240
Construction in Process
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,319	1,593
Bank Premises
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 10,038	12,810
Bank Premises | Minimum
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Life	35 years
Bank Premises | Maximum
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Life	40 years
Furniture, Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 6,154	$ 5,686
Furniture, Fixtures and Equipment | Minimum
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Life	3 years
Furniture, Fixtures and Equipment | Maximum
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Life	7 years

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Equity Incentive Plan - Activity in Restricted Stock Awards and Restricted Stock Units (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restricted Stock Awards
Number of Non-Vested Shares
Outstanding, beginning of year	28,701	41,217
Granted		6,611
Vested	(15,579)	(15,014)
Forfeited/expired	(226)	(4,113)
Outstanding, end of period	12,896	28,701
Weighted Average Grant Date Fair Value
Weighted Average Grant Price Outstanding, Beginning of year	$ 21.02	$ 18.35
Weighted Average Grant Price Outstanding, Granted		27.15
Weighted Average Grant Price, Vested	19.50	15.71
Weighted Average Grant Price, Forfeited or expired	27.15	23.51
Weighted Average Grant Price Outstanding, End of year	$ 22.75	$ 21.02
Restricted Stock Units
Number of Non-Vested Shares
Outstanding, beginning of year	11,772	8,691
Granted	24,382	9,840
Issued	(3,654)	(4,036)
Forfeited/expired	(375)	(2,723)
Outstanding, end of period	32,125	11,772
Weighted Average Grant Date Fair Value
Weighted Average Grant Price Outstanding, Beginning of year	$ 27.15	$ 25.53
Weighted Average Grant Price Outstanding, Granted	17.54	27.46
Weighted Average Grant Price Outstanding, Issued	27.42	24.25
Weighted Average Grant Price, Forfeited or expired	18.11	27.41
Weighted Average Grant Price Outstanding, End of year	$ 21.91	$ 27.15

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REGULATORY MATTERS

12 Months Ended

Dec. 31, 2019

Regulatory Capital Requirements [Abstract]

REGULATORY MATTERS

NOTE 18—REGULATORY MATTERS

The Company (on a consolidated basis) and 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 Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (applicable only to the Bank), the Company and 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 Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), of Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations), and of Tier 1 Common Equity (as defined in the regulations) to risk-weighted assets. Management believed, as of December 31, 2019 and 2018, that the Company and Bank met all capital adequacy requirements to which they were subject.

As of December 31, 2019, the most recent notification from the banking regulators categorized the Bank 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 leverage and Tier 1 Common Equity ratios as set forth in the following table.  There were no conditions or events since the notification that management believes have changed the Bank’s category.

The Company’s and 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)
December 31, 2019
Total Capital (to risk weighted assets):
Company		225,094		19.41	%		121,746		10.50	%	Not applicable
Bank		216,198		18.70	%		121,396		10.50	%	$	115,615		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		180,620		15.58	%		98,557		8.50	%	Not applicable
Bank		201,735		17.45	%		98,273		8.50	%		92,492		8.00	%
Tier 1 Capital (to average assets):
Company		180,620		12.42	%		58,182		4.00	%	Not applicable
Bank		201,735		14.68	%		54,962		4.00	%		68,702		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		156,969		13.54	%		81,164		7.00	%	Not applicable
Bank		201,735		17.45	%		80,930		7.00	%		75,150		6.50	%
December 31, 2018
Total Capital (to risk weighted assets):
Company		210,768		15.81	%		131,664		9.875	%	Not applicable
Bank		204,327		15.35	%		131,488		9.875	%	$	133,153		10.00	%
Tier 1 Capital (to risk weighted assets):
Company		164,675		12.35	%		104,998		7.875	%	Not applicable
Bank		187,679		14.09	%		104,858		7.875	%		106,522		8.00	%
Tier 1 Capital (to average assets):
Company		164,675		11.09	%		59,374		4.00	%	Not applicable
Bank		187,679		12.44	%		60,330		4.00	%		75,413		5.00	%
Tier 1 Common Equity (to risk weighted assets):
Company		141,085		10.58	%		84,999		6.375	%	Not applicable
Bank		187,679		14.09	%		84,885		6.375	%		86,549		6.50	%

(a) The ratios for December 31, 2019 and 2018 include a capital conservation buffer of 2.5% and 1.875%, respectively.

The Basel III Rule implemented a capital conservation buffer that is added to the minimum requirements for capital adequacy purposes.  The capital conservation buffer was subject to a three-year phase-in period that began on January 1, 2016 and was fully phased in on January 1, 2019 at 2.5%.  As of December 31, 2019 and 2018, the ratios for the Company and the Bank exceeded the fully phased-in conservation buffer.

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Fair Value Measurements - Estimated Fair Values and Related Carrying or Notional Amounts of Financial Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financial assets:
Interest earning cash at other financial institutions	$ 20,554	$ 10,135
Securities available for sale	158,733	195,945
Level 3 Inputs
Financial assets:
Loan servicing rights	15,900	13,200
Carrying Amount | Level 1 Inputs
Financial assets:
Cash and cash equivalents	108,457	50,952
Interest earning cash at other financial institutions	20,554	10,135
Carrying Amount | Level 2 Inputs
Financial assets:
FHLB Stock	1,628	2,978
Securities available for sale	158,733	195,945
Accrued interest receivable	2,571	3,878
Financial liabilities:
Advances from FHLB	44,400	89,400
Accrued interest payable	4,769	4,013
Derivative instruments, interest rate swaps	972	179
Carrying Amount | Level 3 Inputs
Financial assets:
Loans, net of allowance for loan losses	1,020,506	1,190,790
Loans held for sale	2,151	2,949
Loan servicing rights	12,509	9,047
Financial liabilities:
Other borrowings	794	827
Subordinated debentures	44,858	44,703
Fair Value | Level 1 Inputs
Financial assets:
Cash and cash equivalents	108,457	50,952
Interest earning cash at other financial institutions	20,554	10,135
Fair Value | Level 2 Inputs
Financial assets:
FHLB Stock	1,628	2,978
Securities available for sale	158,733	195,945
Accrued interest receivable	2,571	3,878
Financial liabilities:
Advances from FHLB	44,578	88,725
Accrued interest payable	4,769	4,013
Derivative instruments, interest rate swaps	972	179
Fair Value | Level 3 Inputs
Financial assets:
Loans, net of allowance for loan losses	1,024,062	1,187,330
Loans held for sale	2,151	2,949
Loan servicing rights	15,921	13,198
Financial liabilities:
Other borrowings	794	827
Subordinated debentures	44,858	44,703
Bank Time Deposits | Carrying Amount | Level 2 Inputs
Financial liabilities:
Deposits	640,925	805,240
Bank Time Deposits | Fair Value | Level 2 Inputs
Financial liabilities:
Deposits	635,558	801,267
Other Deposits | Carrying Amount | Level 1 Inputs
Financial liabilities:
Deposits	460,517	418,107
Other Deposits | Fair Value | Level 1 Inputs
Financial liabilities:
Deposits	$ 460,517	$ 418,107

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OFF-BALANCE SHEET ACTIVITIES

12 Months Ended

Dec. 31, 2019

Investments All Other Investments [Abstract]

OFF-BALANCE SHEET ACTIVITIES

NOTE 14—OFF-BALANCE SHEET ACTIVITIES

Credit-Related Financial Instruments

The Bank is a party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank follows the same credit policies in making commitments as it does for on-balance sheet instruments.

Financial instruments with contract amounts representing credit risk as of December 31, 2019 and 2018 were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Commitments to extend credit and unused lines of credit, including unused    credit card lines	$	171,101	$	179,179
Standby letters of credit		3,930		5,635

Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Bank, is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are usually collateralized and contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the payment or the performance of a Bank customer to a third party. Both standby and performance letters of credit are generally issued for terms of one to four years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting these commitments.

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Regulatory Matters - Summary of Actual Capital Amounts and Ratios of Company's and Bank's (Detail) - USD ($) $ in Thousands		Dec. 31, 2019	Dec. 31, 2018
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to risk weighted assets), Actual Amount		$ 225,094	$ 210,768
Total Capital (to risk weighted assets), Actual Ratio		19.41%	15.81%
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Amount	[1]	$ 121,746	$ 131,664
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Ratio	[1]	10.50%	9.875%
Total Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 0	$ 0
Tier 1 Capital (to risk weighted assets), Actual Amount		$ 180,620	$ 164,675
Tier 1 Capital (to risk weighted assets), Actual Ratio		15.58%	12.35%
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 98,557	$ 104,998
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	8.50%	7.875%
Tier 1 Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 0	$ 0
Tier 1 Capital (to average assets), Actual Amount		$ 180,620	$ 164,675
Tier 1 Capital (to average assets), Actual Ratio		12.42%	11.09%
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Amount	[1]	$ 58,182	$ 59,374
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		$ 0	$ 0
Tier 1 Common Equity (to risk weighted assets), Actual Amount		$ 156,969	$ 141,085
Tier 1 Common Equity (to risk weighted assets), Actual Ratio		13.54%	10.58%
Tier 1 Common Equity (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 81,164	$ 84,999
Tier 1 Common Equity (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	7.00%	6.375%
Tier 1 Common Equity (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 0	$ 0
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to risk weighted assets), Actual Amount		$ 216,198	$ 204,327
Total Capital (to risk weighted assets), Actual Ratio		18.70%	15.35%
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Amount	[1]	$ 121,396	$ 131,488
Total Capital (to risk weighted assets), Minimum For Capital Adequacy Purpose, Ratio	[1]	10.50%	9.875%
Total Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 115,615	$ 133,153
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		$ 201,735	$ 187,679
Tier 1 Capital (to risk weighted assets), Actual Ratio		17.45%	14.09%
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 98,273	$ 104,858
Tier 1 Capital (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	8.50%	7.875%
Tier 1 Capital (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 92,492	$ 106,522
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		$ 201,735	$ 187,679
Tier 1 Capital (to average assets), Actual Ratio		14.68%	12.44%
Tier 1 Capital (to average assets), Minimum To Be Adequately Capitalized Under Prompt Corrective Action Provisions, Amount	[1]	$ 54,962	$ 60,330
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		$ 68,702	$ 75,413
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 (to risk weighted assets), Actual Amount		$ 201,735	$ 187,679
Tier 1 Common Equity (to risk weighted assets), Actual Ratio		17.45%	14.09%
Tier 1 Common Equity (to risk weighted assets), Minimum For Capital Adequacy Purposes, Amount	[1]	$ 80,930	$ 84,885
Tier 1 Common Equity (to risk weighted assets), Minimum For Capital Adequacy Purposes, Ratio	[1]	7.00%	6.375%
Tier 1 Common Equity (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount		$ 75,150	$ 86,549
Tier 1 Common Equity (to risk weighted assets), Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio		6.50%	6.50%

[1] The ratios for December 31, 2019 and 2018 include a capital conservation buffer of 2.5% and 1.875%, respectively.

XML

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Deposits from related parties	$ 6.0	$ 5.2

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Allocation of Income Tax Expense between Current and Deferred Portions

Allocation of income tax expense between current and deferred portions consisted of the following:

	December 31,
	2019		2018
	(dollars in thousands)
Current
Federal income tax	$	1,766	$	3,713
State income tax		1,449		1,829
Total current		3,215		5,542
Deferred income tax expense (benefit)		1,401		(483	)
Total income tax expense	$	4,616	$	5,059

Reconciliation of Statutory Federal Tax Rate to Effective Tax Rate

The reasons for the difference between income tax expense and the amount computed by applying the statutory tax rates to income before taxes were as follows:

	December 31,
	2019			2018
	(dollars in thousands)
Statutory federal tax rate		21	%		21	%
Income tax at statutory federal rate	$	4,425		$	4,055
Increase (reduction) resulting from:
State income taxes, net of federal income tax benefit		1,319			1,191
Tax exempt interest		(119	)		(193	)
Increase in cash surrender value		(100	)		(95	)
Historical tax credit		(1,465	)		—
Other		556			101
Income tax expense	$	4,616		$	5,059
Effective tax rate		22	%		26	%

Components of Net Deferred Tax Asset

The components of the net deferred tax asset were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
Deferred tax assets:
Management salary continuation accrued	$	571	$	555
Allowance for loan losses		4,159		4,314
Deferred compensation		842		481
Other real estate owned		265		720
Net operating loss		1,282		1,475
Available for sale investment securities		—		831
Interest rate swap contracts		266		49
Other		63		151
Total deferred tax assets	$	7,448	$	8,576
Deferred tax liabilities
Loan servicing rights		3,407		2,465
Deferred loan costs		220		289
Depreciation and amortization		1,034		1,057
FHLB stock dividend		21		37
Available for sale investment securities		878		—
Other		435		382
Total deferred tax liabilities	$	5,995	$	4,230
Net deferred tax assets	$	1,453	$	4,346

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Schedule of Related Party Loan Activities

Activity consisted of the following:

	December 31,
	2019			2018
	(dollars in thousands)
Balance, beginning of period	$	5,637		$	6,969
New loans		2,174			4,055
Repayments		(3,737	)		(5,387	)
Balance, end of period	$	4,074		$	5,637

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Loans - Risk Category of Loans by Class of Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Long Term Debt [Line Items]
Total gross loans	$ 1,035,773	$ 1,207,295
Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	659,725	724,508
Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	235,936	299,212
Commercial Loans
Long Term Debt [Line Items]
Total gross loans	95,787	116,460
Residential Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	43,958	66,843
Installment and Consumer Other
Long Term Debt [Line Items]
Total gross loans	367	272
Sound/ Acceptable/ Satisfactory/ Low Satisfactory
Long Term Debt [Line Items]
Total gross loans	724,444	908,172
Sound/ Acceptable/ Satisfactory/ Low Satisfactory | Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	388,184	495,418
Sound/ Acceptable/ Satisfactory/ Low Satisfactory | Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	209,279	253,853
Sound/ Acceptable/ Satisfactory/ Low Satisfactory | Commercial Loans
Long Term Debt [Line Items]
Total gross loans	83,141	95,842
Sound/ Acceptable/ Satisfactory/ Low Satisfactory | Residential Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	43,473	62,787
Sound/ Acceptable/ Satisfactory/ Low Satisfactory | Installment and Consumer Other
Long Term Debt [Line Items]
Total gross loans	367	272
Watch
Long Term Debt [Line Items]
Total gross loans	207,173	171,670
Watch | Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	175,125	133,582
Watch | Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	21,703	18,968
Watch | Commercial Loans
Long Term Debt [Line Items]
Total gross loans	10,091	15,237
Watch | Residential Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	254	3,883
Special Mention
Long Term Debt [Line Items]
Total gross loans	9,239	6,566
Special Mention | Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	9,239	564
Special Mention | Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans		4,642
Special Mention | Commercial Loans
Long Term Debt [Line Items]
Total gross loans		1,360
Substandard Performing
Long Term Debt [Line Items]
Total gross loans	30,478	64,130
Substandard Performing | Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	28,344	41,997
Substandard Performing | Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	1,272	19,712
Substandard Performing | Commercial Loans
Long Term Debt [Line Items]
Total gross loans	693	2,248
Substandard Performing | Residential Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	169	173
Substandard Impaired
Long Term Debt [Line Items]
Total gross loans	64,439	56,757
Substandard Impaired | Agricultural Loans
Long Term Debt [Line Items]
Total gross loans	58,833	52,947
Substandard Impaired | Commercial Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	3,682	2,037
Substandard Impaired | Commercial Loans
Long Term Debt [Line Items]
Total gross loans	1,862	$ 1,773
Substandard Impaired | Residential Real Estate Loans
Long Term Debt [Line Items]
Total gross loans	$ 62

XML

Equity Incentive Plan - Non Vested Options (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested options, beginning balance	49,532	85,594
Granted	30,495	22,675
Vested	(27,528)	(40,681)
Forfeited/exercised	(1,678)	(18,056)
Nonvested options, ending balance	50,821	49,532
Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, Nonvested options, beginning balance	$ 7.86	$ 6.04
Weighted average grant date fair value, Granted	6.86	9.41
Weighted average grant date fair value, Vested	6.94	5.67
Weighted average grant date fair value, Forfeited/exercised	4.88	6.13
Weighted average grant date fair value, Nonvested options, ending balance	$ 7.86	$ 7.86

XML

Equity Incentive Plan - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair Value Assumptions, Method Used	Black-Scholes option-pricing model
Share-based compensation expense	$ 695	$ 473
Unrecognized share-based compensation expense related to nonvested options and restricted stock amounted	400
Stock Options, Restricted Stock Awards, and Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	700	500
Tax benefit from compensation	$ 200	$ 100
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized share-based compensation expense related to nonvested options and restricted stock amounted, weighted average period of recognition	1 year 6 months 14 days
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
Maximum | Restricted Stock Awards
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
Minimum | Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	1 year
2016 Equity Incentive Compensation Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares remained available under the Plan	159,445

XML

Loans - Changes in Allowance for Loan Losses by Portfolio Segment (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				$ 16,505				$ 13,247	$ 16,505	$ 13,247
Provision for loan losses	$ (51)	$ (1,154)	$ 876	752	$ 1,572	$ 993	$ 533	97	423	3,195
Loans Charged Off									(3,928)	(1,280)
Loan Recoveries									2,267	1,343
Ending Balance	15,267				16,505				15,267	16,505
Agricultural Loans
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				12,258				9,712	12,258	9,712
Provision for loan losses									(518)	3,783
Loans Charged Off									(61)	(1,238)
Loan Recoveries									58	1
Ending Balance	11,737				12,258				11,737	12,258
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				2,779				1,978	2,779	1,978
Provision for loan losses									613	(437)
Loans Charged Off									(3,585)	(42)
Loan Recoveries									2,106	1,280
Ending Balance	1,913				2,779				1,913	2,779
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				1,414				1,508	1,414	1,508
Provision for loan losses									364	(155)
Loans Charged Off									(282)
Loan Recoveries									103	61
Ending Balance	1,599				1,414				1,599	1,414
Residential Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				53				47	53	47
Provision for loan losses									(38)	6
Ending Balance	15				53				15	53
Installment and Consumer Other
Accounts Notes And Loans Receivable [Line Items]
Beginning Balance				$ 1				$ 2	1	2
Provision for loan losses									2	(2)
Loan Recoveries										1
Ending Balance	$ 3				$ 1				$ 3	$ 1

XML

Loans - Nonaccrual, Restructured and Certain Past Due Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	$ 7,140	$ 12,034
Restructured loans not on nonaccrual status	21,783	19,389
Financing Receivables Equal To Greater Than 90 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	5,264	10,605
Financing Receivables 30 To 89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	1,781	868
Financing Receivables 1 To 29 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Nonaccrual loans, past due	$ 23,923	$ 11,510

XML

Off-Balance Sheet Activities - Financial Instruments, Contract Amount Representing Credit Risk (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	$ 3,930	$ 5,635
Commitments to extend credit and unused lines of credit, including unused credit card lines
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	$ 171,101	$ 179,179

XML

Securities Available for Sale - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Schedule Of Available For Sale Securities [Line Items]
Proceeds from sales of securities available for sale	$ 29,361,000	$ 0
Gross realized gain on available for sale securities	300,000
Gross realized loss on available for sale securities	0
FHLB Stock, at cost	$ 1,628,000	$ 2,978,000
Number of debt securities | Loan	34	156
Aggregate Depreciation Percentage	0.78%	2.03%
Reported Value Measurement
Schedule Of Available For Sale Securities [Line Items]
FHLB Stock, at cost	$ 1,600,000	$ 3,000,000
Reported Value Measurement | Collateralized Federal Home Loan Bank Advances
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Securities Pledged as Collateral	0	0
Reported Value Measurement | Federal Reserve Bank Line Of Credit
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Securities Pledged as Collateral	0	0
Reported Value Measurement | Municipal Customer Deposits
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 63,000,000	$ 53,400,000

XML

Summary of Significant Accounting Policies - Additional Information (Detail)		12 Months Ended
	Jan. 01, 2020 USD ($)	Dec. 31, 2019 USD ($) Subsidiary Segment	Dec. 31, 2018 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Operations Commenced Date		May 01, 1996
Number of wholly-owned subsidiaries | Subsidiary		3
Goodwill		$ 5,038,000	$ 5,038,000
Impairment charge to goodwill		$ 0	0
Income tax examination percentage		50.00%
Deferred tax asset, valuation allowance		$ 0	0
Unrealized gains (losses) on securities available for sale		2,506,000	(2,221,000)
Unrealized gains (losses) on securities available for sale, net of tax		(936,000)	831,000
Unrealized losses on interest rate swap contracts		(577,000)	(130,000)
Income tax benefit		$ 216,000	49,000
Number of operating segment | Segment		1
Accounting Standards Update 2016-02
Summary Of Significant Accounting Policies [Line Items]
Operating lease, right-of-use asset		$ 200,000
Core Deposit
Summary Of Significant Accounting Policies [Line Items]
Amortization period on accelerated basis		66 months
Impairment charge to intangible assets		$ 0	0
Intangible assets, net		$ 225,000	$ 513,000
Subsequent Event | Accounting Method Change for Valuing Servicing Assets from Amortizing Cost to Fair Market Value
Summary Of Significant Accounting Policies [Line Items]
Change in accounting method resulting in increased servicing assets	$ 3,400,000
Change in accounting method resulting in increased retained earnings	3,400,000
After tax effect of change in servicing assets and retained earnings	$ 2,600,000
Sales Revenue Product Line | Credit Concentration Risk | Agricultural Loans
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage		63.70%	60.00%
Sales Revenue Product Line | Credit Concentration Risk | Commercial Real Estate Loans
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage		22.80%	24.80%
Investors Community Bank
Summary Of Significant Accounting Policies [Line Items]
Operations Commenced Date		Mar. 01, 1997
Investors Insurance Services L L C
Summary Of Significant Accounting Policies [Line Items]
Business, Formation Date		Jul. 01, 2010
ABS 1, LLC
Summary Of Significant Accounting Policies [Line Items]
Business, Formation Date		Aug. 01, 2011

XML

Advances from FHLB and Other Borrowings - Advances Outstanding from FHLB (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2019
Debt Instrument [Line Items]
Advances from FHLB	$ 89,400	$ 44,400
Fixed rate, short term, Advance for FHLB, 1
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jan. 02, 2019
Advances from FHLB, Rate	2.54%
Advances from FHLB	$ 3,000
Fixed rate, fixed term, Advance for FHLB, 2
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jan. 04, 2019
Advances from FHLB, Rate	2.55%
Advances from FHLB	$ 12,000
Fixed rate, fixed term, Advance for FHLB, 3
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Feb. 27, 2019
Advances from FHLB, Rate	1.47%
Advances from FHLB	$ 5,000
Fixed rate, fixed term, Advance for FHLB, 4
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Mar. 08, 2019
Advances from FHLB, Rate	1.54%
Advances from FHLB	$ 10,000
Fixed rate, fixed term, Advance for FHLB, 5
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jul. 15, 2019
Advances from FHLB, Rate	1.11%
Advances from FHLB	$ 8,000
Fixed rate, fixed term, Advance for FHLB, 6
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Aug. 12, 2019
Advances from FHLB, Rate	2.24%
Advances from FHLB	$ 5,000
Fixed rate, fixed term, Advance for FHLB, 7
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Aug. 14, 2019
Advances from FHLB, Rate	1.77%
Advances from FHLB	$ 2,000
Fixed rate, fixed term, Advance for FHLB, 8
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Feb. 20, 2020
Advances from FHLB, Rate	1.71%
Advances from FHLB	$ 5,000	5,000
Fixed rate, fixed term, Advance for FHLB, 9
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jul. 16, 2020
Advances from FHLB, Rate	1.85%
Advances from FHLB	$ 800	800
Fixed rate, fixed term, Advance for FHLB, 10
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Aug. 25, 2020
Advances from FHLB, Rate	1.84%
Advances from FHLB	$ 3,000	3,000
Fixed rate, fixed term, Advance for FHLB, 11
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Aug. 27, 2020
Advances from FHLB, Rate	1.88%
Advances from FHLB	$ 5,000	5,000
Fixed rate, fixed term, Advance for FHLB, 12
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Dec. 30, 2020
Advances from FHLB, Rate	2.09%
Advances from FHLB	$ 4,000	4,000
Fixed rate, fixed term, Advance for FHLB, 13
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Dec. 31, 2020
Advances from FHLB, Rate	1.94%
Advances from FHLB	$ 600	600
Fixed rate, fixed term, Advance for FHLB, 14
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Apr. 12, 2021
Advances from FHLB, Rate	1.92%
Advances from FHLB	$ 8,000	8,000
Fixed rate, fixed term, Advance for FHLB, 15
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jun. 15, 2021
Advances from FHLB, Rate	1.39%
Advances from FHLB	$ 5,000	5,000
Fixed rate, fixed term, Advance for FHLB, 16
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Aug. 16, 2021
Advances from FHLB, Rate	2.29%
Advances from FHLB	$ 3,000	3,000
Fixed rate, fixed term, Advance for FHLB, 17
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Dec. 30, 2021
Advances from FHLB, Rate	2.29%
Advances from FHLB	$ 2,000	2,000
Fixed rate, putable, no call 2 years
Debt Instrument [Line Items]
Advances from FHLB, Maturity	Jan. 12, 2023
Advances from FHLB, Rate	2.03%
Advances from FHLB	$ 8,000	$ 8,000

XML

Document and Entity Information - USD ($)

12 Months Ended

Dec. 31, 2019

Mar. 13, 2020

Jun. 30, 2019

Cover [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

Accelerated Filer

Entity Small Business

true

Entity Emerging Growth Company

true

Entity Shell Company

false

Entity Ex Transition Period

false

Document Type

10-K

Document Period End Date

Dec. 31, 2019

Amendment Flag

false

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity File Number

001-36808

Entity Tax Identification Number

39-1850431

Entity Address, Address Line One

2400 S. 44th Street

Entity Address, City or Town

Manitowoc

Entity Address, State or Province

WI

Entity Address, Postal Zip Code

54221

City Area Code

920

Local Phone Number

686-9998

Entity Incorporation, State or Country Code

WI

Title of 12(b) Security

Common Stock, $0.01 par value per share

Security Exchange Name

NASDAQ

Document Annual Report

true

Document Transition Report

false

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Public Float

$ 89,844,369

Entity Common Stock, Shares Outstanding

6,507,268

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of County Bancorp, Inc. for its 2020 annual meeting of shareholders are incorporated by reference into Part III hereof to the extent indicated in such Part.  The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the Company’s 2019 fiscal year.

XML

Loan Servicing Rights - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Servicing Assets at Fair Value [Line Items]
Unpaid principal balance of mortgage	$ 751.7	$ 661.3
Servicing assets and servicing liabilities at fair value, assumptions used to estimate fair value, discount rate	14.00%	20.00%
Level 3 Inputs
Servicing Assets at Fair Value [Line Items]
Loan servicing rights, fair value	$ 15.9	$ 13.2
Minimum
Servicing Assets at Fair Value [Line Items]
Servicing assets and servicing liabilities at fair value, assumptions used to estimate fair value, Prepayment speed	5.00%	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	10.00%	9.00%

XML

Other Real Estate Owned - Summary of Changes in Other Real Estate Owned (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Real Estate Owned Disclosure Of Detailed Components [Abstract]
Balance, beginning of period	$ 6,568	$ 4,962
Assets foreclosed	6,315	6,104
Write-down of other real estate owned	(626)	(873)
Net gain on sales of other real estate owned	40	231
Proceeds from sale of other real estate owned	(6,776)	(3,856)
Balance, end of period	$ 5,521	$ 6,568

XML

Preferred Stock - Additional Information (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Preferred Stock [Line Item]
Non-cumulative, nonparticipating preferred stock authorized	15,000	15,000
Non-cumulative, nonparticipating preferred stock stated value	$ 1,000	$ 1,000
Preferred stock, conversion basis point	0.50%
Preferred stock, variable dividend rate	5.25%
Preferred stock, shares issued	8,000	8,000
Preferred stock, shares outstanding	8,000	8,000
Minimum
Preferred Stock [Line Item]
Preferred stock, dividend rate	4.00%

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 16,452	$ 14,251
Other comprehensive income:
Unrealized gain (loss) on securities available-for-sale	6,835	(2,017)
Income tax (expense) benefit	(1,861)	549
Reclassification for realized gains on securities	(341)
Income tax expense	93
Total other comprehensive income (loss) on securities available-for-sale	4,726	(1,468)
Unrealized loss on derivatives arising during the period	(793)	(179)
Income tax benefit	216	49
Total other comprehensive loss on derivatives	(577)	(130)
Total other comprehensive income (loss)	4,149	(1,598)
Comprehensive income	$ 20,601	$ 12,653

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of County Bancorp, Inc. and its subsidiaries conform to accounting principles generally accepted in the United States of America and to general practice within the banking industry. The following is a description of the more significant of those policies.

Nature of Business and Significant Concentrations of Credit Risk

The Company is the sole shareholder of Investors Community Bank. The Bank is the sole member of Investors Insurance Services, LLC and ABS 1, LLC, which are both Wisconsin limited liability companies. The Company commenced operations in May 1996; the Bank commenced operations in March 1997. In July 2010, the Bank formed Investors Insurance Services, LLC for the sole purpose of protecting the Bank from liability risk when selling crop insurance. Selling crop insurance had historically been a business function performed within the Bank. In August 2011, the Bank formed ABS 1, LLC for the sole purpose of holding real estate and personal property for sale which was obtained through repossession.

The Bank provides a full range of banking and related financial services, which include real estate lending, business services, and agricultural finance, to individual and corporate customers primarily located within the state of Wisconsin. The Bank’s primary source of revenue is providing loans to customers, who are predominantly engaged in dairy farming and commercial activities. Its primary deposit products are savings and term certificate accounts. The Bank is subject to competition from other financial institutions and is regulated by federal and state banking agencies and undergoes periodic examinations by those agencies.

Agricultural loans, including agricultural operating, real estate and construction loans, represented 63.7% and 60.0% of our total loan portfolio at December 31, 2019 and 2018, respectively. Commercial real estate, including commercial construction loans, represented 22.8% and 24.8% of our total loan portfolio at December 31, 2019 and 2018, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company also has three wholly owned subsidiaries, County Bancorp Statutory Trust II, County Bancorp Statutory Trust III, and Fox River Valley Capital Trust I, that are Delaware statutory trusts which have not been consolidated in accordance with accounting guidance related to variable interest entities.

Use of Estimates in Preparing Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the fair value of the Company in its goodwill impairment assessment, and the valuation of investment securities available for sale, loan servicing rights, other real estate owned, financial instruments, and deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days.

In the normal course of business, the Company maintains balances with correspondent banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to specified limits. Management believes these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal.

Securities Available for Sale

Available for sale securities are carried at fair value with unrealized gains and losses excluded from earnings and reported separately in other comprehensive income (loss). The Company currently has no securities designated as trading or held-to-maturity. Interest income is recognized at the coupon rate adjusted amortization and accretion of premiums and discounts.  Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. They are included in non-interest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

Declines in the fair value of individual available for sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary impairment. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in non-interest income.

Federal Home Loan Bank Stock

The Bank, as a member of the Federal Home Loan Bank of Chicago (“FHLB”), is required to maintain an investment in the capital stock of the FHLB based on the level of borrowings and other factors, and may invest additional amounts. Based on the redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost which approximates fair value. It is periodically evaluated by management for impairment. Because it is viewed as a long term investment, impairment is based on ultimate recovery of par value. Both stock and cash dividends are reported as income.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. Gains and losses on loan sales (sale proceeds minus carrying value) are recorded in non-interest income and direct loan origination costs and fees are deferred at origination of the loan and are recognized in non-interest income upon sale of the loan.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for unearned income and the allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, non-refundable fees and direct loan origination costs on real estate and commercial loans are amortized over the life of the loan and accounted for as an adjustment of yield of the related loan categories.

The accrual of interest on mortgage and commercial loans is discontinued at the time the principal and interest is 90 days delinquent unless the credit is well-secured and in the process of collection.  Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on nonaccrual loans is applied to reduce the principal balance outstanding.  Once the loans qualify for a return to accrual status, the interest in accounted for on the cash-basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses (hereinafter referred to as “allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance.

The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. The general component covers non-impaired loans and is based on historical losses adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on a weighted average of the actual loss history experienced by the Company over the most recent four years. The Company places more emphasis, or weight, on the more current quarters in the loss history period. This actual loss experience is adjusted for economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is generally measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with other nonaccrual loans.

Large groups of small balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for credit quality disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include agricultural, commercial, commercial real estate, residential real estate, and installment and consumer other with risk characteristics described as follows:

Agricultural: Agricultural loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows.  Adverse economic conditions and trends influenced by Class III milk prices and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial: Commercial loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows, and economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial Real Estate: Commercial real estate loans, including land and construction, generally possess a higher inherent risk of loss than other real estate portfolio segments. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability of the properties to produce sufficient cash flow to service debt obligations.

Residential Real Estate: The degree of risk in residential mortgage and home equity lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating.

Installment and Consumer Other: The installment and consumer other loan portfolio is usually comprised of a large number of small loans. Most loans are made directly for consumer purchases. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate the borrowers’ capacity to repay their obligations may be deteriorating.

Although management believes the allowance to be adequate as of each balance sheet date, ultimate losses may vary from its estimates. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s primary regulator reviews the adequacy of the allowance. The regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations.

Bank Premises and Equipment

Land is carried at cost. Bank premises and equipment are carried at cost, less accumulated depreciation. Depreciation is computed on the straight line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any recognized gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred; significant renewals and improvements are capitalized and a deduction is made from the property accounts for retirements of capitalized renewals or improvements.

Off-Balance Sheet Credit-Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell.

Loan Servicing Rights

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.

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 and are recorded as income when earned. The amortization of loan servicing rights is netted against loan servicing fee income.  

As of January 1, 2020, the Company has elected to make an accounting method change for the valuation of the servicing assets from amortizing cost described above to fair market value.  We believe that the fair value method a more accurate reflection of the value of these assets and is more widely recognized by the SEC, FASB, as well as the investor community.  As a result of this accounting method change, the Company will increase servicing assets and retained earnings by $3.4 million with an after tax effect of $2.6 million.  The adoption of the change will be recorded through a cumulative effect adjustment to retained earnings as of January 1, 2020.  All future adjustments to fair value will run through the income statement.

Other Real Estate Owned

Land and assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure less estimated costs to sell, establishing a new cost basis with any loss on transfer recorded as a charge against the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Impairment losses on assets to be held and used are measured at the amount by which the carrying amount of a property exceeds its fair value. The evaluation of impairment is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements. Costs of significant asset improvements are capitalized, whereas costs relating to holding assets are expensed. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense.

Cash Surrender Value of Bank Owned Life Insurance

The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized, if lower.

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 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.  There was no impairment charge to goodwill or core deposit intangible related to the Fox River Valley acquisition at December 31, 2019.  

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.  As of December 31, 2019 and 2018, there was no valuation allowance.    

The Company files income taxes 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 2016.

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

Comprehensive Income

Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale and interest rate swap contracts designed as hedges, are reported as a separate component of the equity section of the consolidated balance sheet. Such items, along with net income, are components of comprehensive income.  Accumulated comprehensive income included unrealized gains (losses) on securities available for sale and unrealized losses on interest rate swap contracts of $2,506 and $(577), respectively, net of tax of $(936) and $216, respectively, as of December 31, 2019.  Accumulated comprehensive loss as of December 31, 2018 included unrealized losses on securities available for sale and unrealized losses on interest rate swap contracts of $(2,221) and $(130), respectively, net of tax of $831 and $49, respectively.   

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives consist of interest rate swap agreements that qualify for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received or paid on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded.

We formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses would be recognized immediately in current earnings as noninterest income or expense.

Equity Incentive Plan

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.  All grants and awards out of the equity incentive plan are newly issued shares.

Treasury Stock

Common stock shares repurchased are recorded as treasury stock at cost.

Earnings per Share

Basic earnings per share represent income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options, and are determined using the treasury stock method.

Treasury shares are not deemed outstanding for earnings per share calculations.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so.

Advertising Costs

Advertising costs are expensed as incurred.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 20. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Segments

The Company’s operations consist of one segment, community banking.  The operating results of this segment are regularly reviewed by management to make decisions about resource allocations and to assess performance.  Selected information is not presented separately for the Company's reportable segment, as there is no material difference between that information and the corresponding information in the consolidated financial statements.

New Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases: Amendments to the FASB Accounting Standards Codification, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the prior accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU became effective January 1, 2019, and were adopted by the Company retrospectively to the beginning of the adoption period.  Since all of the Company’s leases are operating leases, there was no impact to the consolidated statements of operations; however, a right-of-use asset of $0.2 million and a corresponding liability were recorded on the Company’s balance sheet as of the effective date of the amendment.  

In June 2016, the FASB issued ASU No. 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.    In October 2019, the FASB voted to delay the effective date for the credit losses standard to January 2023 for certain entities, including SEC filers that qualified as smaller reporting companies and private companies.  As a smaller reporting company, the Company was eligible for the delay and will be deferring adoption until January 2023.  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 has engaged a third-party software consultant to assist in developing our loss model methodology, and is currently gathering historical data.  At this time, the Company is still assessing the impact of this standard on the consolidated financial statements.  The Company is also developing internal control processes and disclosure documentation related to the adoption of this standard.  Management will continue to progress on its implementation project plan and improve the Company’s approach throughout the deferral period.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), to permit entities to better portray the economic results of their hedging strategies in their financial statements.  In addition, the amendments make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP.  The amendment is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including adoption in an interim period.  The Company has chosen to early adopt this amendment in connection with the interest rate swap that commenced on June 15, 2018, and it had no material impact on the Company’s results of operation, financial position, or liquidity.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 842) – Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which focuses on improving the effectiveness of disclosures in the notes to the financial statements.  The amendment is effective for the fiscal years beginning after December 15, 2019.  The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company is currently evaluating the effect this standard will have on the Company’s financial statements.

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Income Taxes - Additional Information (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Federal
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 3.6
Net operating loss carryforwards, expiration year	2035
State
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 8.6
Net operating loss carryforwards, expiration year	2032

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Deposits - Scheduled Maturities of Certificates of Deposit (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Banking And Thrift [Abstract]
1 year or less	$ 378,098	$ 377,588
1 to 2 years	161,251	259,722
2 to 3 years	50,736	103,715
3 to 4 years	26,321	41,259
Over 4 years	14,394	22,956
Certificates of deposit	$ 630,800	$ 805,240

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ADVANCES FROM FHLB AND OTHER BORROWINGS

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

ADVANCES FROM FHLB AND OTHER BORROWINGS

NOTE 10—ADVANCES FROM FHLB AND OTHER BORROWINGS

The Bank had advances outstanding from the FHLB in the amount of $44.4 million and $89.4 million on December 31, 2019 and 2018, respectively. These advances, rates, and maturities were as follows:

					Amount outstanding as of December 31,
	Maturity	Rate			2019		2018
					(dollars in thousands)
Loan Type
Fixed rate, fixed term	01/02/2019		2.54	%	$	—	$	3,000
Fixed rate, fixed term	01/04/2019		2.55	%		—		12,000
Fixed rate, fixed term	02/27/2019		1.47	%		—		5,000
Fixed rate, fixed term	03/08/2019		1.54	%		—		10,000
Fixed rate, fixed term	07/15/2019		1.11	%		—		8,000
Fixed rate, fixed term	08/12/2019		2.24	%		—		5,000
Fixed rate, fixed term	08/14/2019		1.77	%		—		2,000
Fixed rate, fixed term	02/20/2020		1.71	%		5,000		5,000
Fixed rate, fixed term	07/16/2020		1.85	%		800		800
Fixed rate, fixed term	08/25/2020		1.84	%		3,000		3,000
Fixed rate, fixed term	08/27/2020		1.88	%		5,000		5,000
Fixed rate, fixed term	12/30/2020		2.09	%		4,000		4,000
Fixed rate, fixed term	12/31/2020		1.94	%		600		600
Fixed rate, fixed term	04/12/2021		1.92	%		8,000		8,000
Fixed rate, fixed term	06/15/2021		1.39	%		5,000		5,000
Fixed rate, fixed term	08/16/2021		2.29	%		3,000		3,000
Fixed rate, fixed term	12/30/2021		2.29	%		2,000		2,000
Fixed rate, putable, no call 2 years	01/12/2023		2.03	%		8,000		8,000
					$	44,400	$	89,400

The terms of security agreements with the FHLB require the Bank to pledge collateral for its borrowings. The collateral consists of qualifying first mortgage loans and stock of the FHLB.  At December 31, 2019 and 2018, the Bank had pledged qualifying mortgage loans of $393.7 million and $453.8 million, respectively.

The Bank had no irrevocable letters of credit with the FHLB as of December 31, 2019 and 2018.

Future maturities of borrowings were as follows:

	December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	18,400	$	45,000
1 to 2 years		18,000		18,400
2 to 3 years		8,000		18,000
3 to 4 years		—		8,000
	$	44,400	$	89,400

As of December 31, 2019 and 2018, the Bank also had a line-of-credit available with the Federal Reserve Bank of Chicago.  Borrowings under this line of credit are limited by the amount collateral pledged by the Company, which totaled $127.3 million and $143.4 million in loans at December 31, 2019 and December 31, 2018, respectively.  The borrowings available to the Company were $96.0 million and $111.4 million, as of December 31, 2019 and December 31, 2018, respectively.  There were no outstanding advances included in other borrowings at December 31, 2019 or 2018, respectively.  

As of December 31, 2019 and 2018, the Company had an unsecured credit agreement with U.S. Bank, National Association for a $10.0 million revolving line-of-credit with an interest rate equal to the one-month LIBOR rate plus 2.25%.  The line also bears a non-usage fee of 0.275% per annum.  The non-usage fee for year ended December 31, 2019 and 2018 was $22 thousand and $42 thousand, respectively.  The line did not have an outstanding balance as of December 31, 2019 or 2018.

Other borrowings are borrowings as a result of sold loans that do not qualify for sale accounting. These agreements are recorded as financing transactions as the Bank maintains effective control over the transferred loans. The dollar amount of the loans underlying the sale agreements continues to be carried in the Bank’s loan portfolio, and the transfer is reported as a secured borrowing with pledge of collateral.  At December 31, 2019 and 2018, the amounts of these borrowings were $0.8 million.

The following table sets forth information concerning balances and interest rates on other borrowings as of the dates and for the periods indicated:

	December 31,
	2019			2018
	(dollars in thousands)
Balance outstanding at end of period	$	794		$	827
Average amount outstanding during the period		800			1,027
Maximum amount outstanding at any month end		1,412			1,278
Weighted average interest rate during the period		4.60	%		4.81	%
Weighted average interest rate at end of period		4.51	%		4.51	%

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LOAN SERVICING RIGHTS

12 Months Ended

Dec. 31, 2019

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 $751.7 million and $661.3 million at December 31, 2019 and 2018, respectively.

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

	December 31,
	2019			2018
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	9,047		$	8,950
Additions		6,539			2,879
Impairment		(757	)		(597	)
Amortization		(2,320	)		(2,185	)
Balance, end of period	$	12,509		$	9,047

The fair values of these rights were approximately $15.9 million and $13.2 million at December 31, 2019 and 2018, respectively. For December 31, 2019, the fair value of servicing rights was determined using an assumed discount rate of 14% and prepayment speed primarily ranging from 5% to 10%, depending upon the stratification of the specific right and nominal anticipated credit losses.  For December 31, 2018, the fair value of servicing rights was determined using an assumed discount rate of 20% and prepayment speeds primarily ranging from 4% to 9%.

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RESTRICTIONS ON CASH AND CASH EQUIVALENTS

12 Months Ended

Dec. 31, 2019

Cash And Cash Equivalents [Abstract]

RESTRICTIONS ON CASH AND CASH EQUIVALENTS

NOTE 2—RESTRICTIONS ON CASH AND CASH EQUIVALENTS

The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2019 and 2018, these reserve balances amounted to approximately $7.2 million and $4.3 million, respectively.

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COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS - Condensed Statement of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net income	$ 3,304	$ 5,682	$ 3,704	$ 3,762	$ 2,830	$ 3,517	$ 3,850	$ 4,054	$ 16,452	$ 14,251
Adjustments to reconcile net income to cash provided by operating activities:
Amortization of core deposit intangible									288	406
Amortization of subordinated debenture costs									155	122
Net change in:
Net cash provided by operating activities									21,953	26,176
Cash flows from investing activities
Net cash provided by (used in) investing activities									214,460	(139,788)
Cash flows from financing activities
Proceeds from issuance of common stock									265	459
Increase in subordinated debentures										29,058
Dividends paid on preferred stock									(472)	(413)
Dividends paid on common stock									(1,344)	(1,874)
Net cash (used in) provided by financing activities									(168,489)	107,928
Net change in cash and cash equivalents									67,924	(5,684)
Cash and cash equivalents, beginning of period				61,087				66,771	61,087	66,771
Cash and cash equivalents, end of period	129,011				61,087				129,011	61,087
Parent Company
Cash flows from operating activities
Net income									16,452	14,251
Adjustments to reconcile net income to cash provided by operating activities:
Equity in undistributed net income of subsidiary									(19,361)	(14,515)
Amortization of core deposit intangible									288	406
Amortization of subordinated debenture costs									155	122
Net change in:
Other assets									(1,559)	1,967
Other liabilities									102	(58)
Net cash provided by operating activities									(3,923)	2,173
Cash flows from investing activities
Dividends received from (contributions to) subsidiary									6,000	(25,000)
Net cash provided by (used in) investing activities									6,000	(25,000)
Cash flows from financing activities
Proceeds from issuance of common stock									265	459
Increase in subordinated debentures										29,058
Dividends paid on preferred stock									(472)	(413)
Dividends paid on common stock									(1,344)	(1,874)
Net cash (used in) provided by financing activities									(1,551)	27,230
Net change in cash and cash equivalents									526	4,403
Cash and cash equivalents, beginning of period				$ 4,490				$ 87	4,490	87
Cash and cash equivalents, end of period	$ 5,016				$ 4,490				$ 5,016	$ 4,490

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Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Mar. 02, 2020	Feb. 18, 2020	Jan. 29, 2020	Dec. 31, 2019	Mar. 31, 2020
Subsidiaries | Manitowoc, Wisconsin
Subsequent Event [Line Items]
Lessor, Lease description				Company entered into a 10-year triple-net lease agreement with the purchaser to leaseback a portion of the building for $13 thousand per month, which will result in the Company recording a right-of-use asset of $1.4 million in the first quarter of 2020.
Subsidiaries | Manitowoc, Wisconsin | Scenario Forecast | Bank Premises
Subsequent Event [Line Items]
Sale leaseback value					$ 13
Operating lease, right-of-use asset					$ 1,400
Subsequent Event
Subsequent Event [Line Items]
Quarterly dividend payable, amount per share		$ 0.07
Quarterly dividend payable, declared date		Feb. 18, 2020
Quarterly dividend payable, record date		Mar. 06, 2020
Quarterly dividend payable date		Mar. 20, 2020
Subsequent Event | Subsidiaries | Manitowoc, Wisconsin
Subsequent Event [Line Items]
Sale of branch	$ 1,500
Gain (Loss) on sale of assets in subsidiary	$ 300
Lease, term of contract	10 years
Subsequent Event | Common Stock
Subsequent Event [Line Items]
Stock repurchase program expiration month and year			2023-01
Subsequent Event | Common Stock | Maximum
Subsequent Event [Line Items]
Common stock, number of shares authorized to be repurchased			673,000

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COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS

NOTE 25 – COUNTY BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

	December 31, 2019		December 31, 2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	5,016	$	4,490
Investment in bank subsidiary		204,240		185,458
Goodwill		5,038		5,038
Other assets		3,566		2,344
Total assets	$	217,860	$	197,330
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	$	1,239	$	343
Subordinated debentures		44,858		44,703
Shareholders' equity		171,763		152,284
Total liabilities and shareholders' equity	$	217,860	$	197,330

CONDENSED STATEMENTS OF OPERATIONS

	December 31, 2019			December 31, 2018
	(dollars in thousands)
INTEREST AND DIVIDEND INCOME	$	147		$	2,112
EXPENSES
Interest expense		2,743			1,804
Other operating expenses		1,398			1,409
Total expenses		4,141			3,213
Income before income taxes and equity in undistributed net income of subsidiary		(3,994	)		(1,101	)
Income tax benefit		1,085			837
Equity in undistributed net income of subsidiary		19,361			14,515
NET INCOME	$	16,452		$	14,251

CONDENSED STATEMENT OF CASH FLOWS

	For the year ended
	December 31, 2019			December 31, 2018
	(dollars in thousands)
Cash flows from operating activities
Net income	$	16,452		$	14,251
Adjustments to reconcile net income to cash provided by operating activities:
Equity in undistributed net income of subsidiary		(19,361	)		(14,515	)
Amortization of core deposit intangible		288			406
Amortization of subordinated debenture costs		155			122
Net change in:
Other assets		(1,559	)		1,967
Other liabilities		102			(58	)
Net cash provided by (used in) operating activities		(3,923	)		2,173
Cash flows from investing activities
Dividends received from (contributions to) subsidiary		6,000			(25,000	)
Net cash provided by (used in) investing activities		6,000			(25,000	)
Cash flows from financing activities
Proceeds from issuance of common stock		265			459
Increase in subordinated debentures		—			29,058
Dividends paid on preferred stock		(472	)		(413	)
Dividends paid on common stock		(1,344	)		(1,874	)
Net cash provided by (used in) financing activities		(1,551	)		27,230
Net change in cash and cash equivalents		526			4,403
Cash and cash equivalents, beginning of period		4,490			87
Cash and cash equivalents, end of period	$	5,016		$	4,490

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PREMISES AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Summary of Premises and Equipment

Premises and equipment consisted of the following:

	December 31,						Estimated
	2019			2018			Useful Life
	(dollars in thousands)
Land	$	2,240		$	2,240		N/A
Construction in process		1,319			1,593		N/A
Bank premises		10,038			12,810		35-40 years
Furniture, fixtures, and equipment		6,154			5,686		3-7 years
		19,751			22,329
Accumulated depreciation and amortization		(6,148	)		(6,254	)
	$	13,603		$	16,075