EX-99.1 2 exhibit991earningsrelczwi2.htm EX-99.1 Document

EXHIBIT 99.1
bancorp_logoa34.jpg
Citizens Community Bancorp, Inc. Reports Earnings Of $0.41 Per Share in 2Q22;
Net Interest Margin Expands to 3.46%
Originated Loans Up 6.0% From Prior Quarter

EAU CLAIRE, WI, July 25, 2022 - Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $4.4 million and earnings per diluted share of $0.41 for the quarter ended June 30, 2022, compared to $4.7 million and $0.45 per diluted share for the quarter ended March 31, 2022, and $4.7 million and $0.44 per diluted share for the quarter ended June 30, 2021, respectively. For the first six months of 2022, earnings were $9.1 million, or $0.86 per diluted share, compared to earnings of $10.2 million, or $0.94 per diluted share for the first six months of 2021.
The Company’s second quarter 2022 operating results reflected the following changes from the first quarter of 2022: (1) net interest income increased $1.1 million; (2) an increase in provision for loan losses of $0.4 million due to loan growth; (3) lower gain on sale of loans of $0.3 million; (4) a decrease in the MSR impairment reversals of $0.5 million as a result of no MSR impairment at March 31, 2022 or June 30, 2022; and (5) modestly higher compensation resulting from the annual merit increases effective in late March.
“We experienced strong annualized loan growth of 18% on a linked quarter basis and annualized loan growth through six months of 7%. At the end of the quarter, loan demand and pipeline activity showed some softening due to the effect of higher interest rates, inflation and supply chain delays on new construction projects, and our adjusted credit standards to prudently manage risk. Economic activity in our markets, however, remains strong with unemployment rates remaining below national averages and solid business activity across most industries. I am pleased by our work to closely manage expenses as evidenced by the efficiency ratio of 60% in the quarter,” said Stephen Bianchi, Chairman, President and Chief Executive Officer.
Book value per share was $15.64 at June 30, 2022, compared to $15.72 at March 31, 2022, and $15.33 at June 30, 2021. Tangible book value per share (non-GAAP)1 was $12.36 at June 30, 2022, compared to $12.40 at March 31, 2022, and $11.95 at June 30, 2021. The increase in unrealized losses in the available for sale portfolio lowered both book and tangible book value in the first and second quarters, with the amount of the unrealized loss moderating in the second quarter. Net income and CDI amortization partially offset this unrealized loss impact.









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June 30, 2022 Highlights: (as of or for the 3-month period ended June 30, 2022 compared to March 31, 2022 and June 30, 2021.)

Quarterly earnings of $4.4 million, or $0.41 per diluted share for the quarter ended June 30, 2022, decreased from the quarter ended March 31, 2022, earnings of $4.7 million or $0.45 per diluted share, and decreased from the quarter ended June 30, 2021, earnings of $4.7 million or $0.44 per diluted share.

Earnings for the six months ended June 30, 2022 were $9.1 million, or $0.86 per share, which is a decrease from $10.2 million, or $0.94 per share, for the same period in the prior year. The Company grew net interest income despite lower SBA PPP net loan fee accretion. The decrease in earnings is largely due to lower gain on sale of loans and second quarter 2022 provision for loan losses.

Net interest income increased $1.1 million from the first quarter of 2022 and $1.4 million from the second quarter of 2021 to $14.3 million for the six months ended June 30, 2022.

The net interest margin without SBA PPP net loan fee accretion and loan purchase accretion has increased each quarter over the past five quarters. For the quarter ended June 30, 2022, the net interest margin without SBA PPP net loan fee accretion and loan purchase accretion was 3.29% compared to 2.81% for the year earlier quarter and 3.11% versus the linked quarter. The net interest margin benefited from: 1) the positive impact of nonaccrual loan payoffs and purchased loan credit impairment accretion; 2) increases in loan and investment yields due to both contractual repricing and higher coupons on new loans in excess of portfolio yield; and 3) lower deposit costs. These benefits were partially offset by lower SBA PPP net loan fee accretion and the full quarter impact of subordinated debt issued in early March 2022.
Interest expense on subordinated debt increased approximately $0.3 million in the second quarter from first quarter levels as the first full quarter of interest expense was realized. In the upcoming third quarter of 2022, the write-off of unamortized issuance costs, net of lower interest expense due to the call of the subordinated debt in August, will increase interest expense by approximately $50 thousand. Subordinated debt interest expense will decrease by approximately $250 thousand in the fourth quarter from second quarter levels as the existing subordinated debt is called and repaid in August.

The provision for loan losses for the quarter ended June 30, 2022 was $0.4 million due to loan growth. No loan loss provision was realized during the quarters ended March 31, 2022, June 30, 2021 and March 31, 2021, due to lower CARES Act Section 4013 deferrals, low net charge-off or low net recoveries, decreases in criticized assets and improving economic conditions in our markets.

Originated loans, net of SBA PPP loans, increased by $68.4 million during the second quarter of 2022, with strong originations in commercial real estate, commercial operating loans and strong construction loan growth due to loan fundings in our warmer weather construction season. As a result of current market conditions, some residential 10/1 ARM loans were added to the portfolio. The acquired loan portfolio declined $10.2 million. At June 30, 2022 there were no outstanding SBA PPP loans, as the remaining $2.1 million portfolio was repaid during the current quarter.

The allowance for loan losses on originated loans decreased to 1.37% at June 30, 2022, from 1.45% at March 31, 2022. Additionally, loans resulting from Bank acquisitions were effectively marked to market value at the time of their acquisition and were also excluded from this reserve calculation.

Nonperforming assets decreased $1.0 million to $12.6 million at June 30, 2022, compared to $13.6 million one quarter earlier primarily due to net reductions in nonperforming agricultural loans.

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Substandard loans decreased modestly by $4.1 million to $20.7 million at June 30, 2022, compared to $24.8 million at March 31, 2022. The decrease was largely due to nonaccrual loan payoffs of $2.8 million and the upgrade of agricultural loans due to an increase in collateral underlying the loans.

In June 2022, the bank issued the required notice to call $15 million of 6.75% subordinated debt on August 10, 2022.
Stockholders’ equity as a percent of total assets was 9.34% at June 30, 2022, compared to 9.32% at March 31, 2022. Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.53% at June 30, 2022, compared to 7.50% at March 31, 2022. The impact of an increase in unrealized losses in the available for sale portfolio was partially offset by net income and a modestly lower asset size.

In June 2022, the Company notified customers of the St. James, MN branch, with approximately $18.7 million in deposits, that the branch would close in September. To the extent possible, the deposit accounts will be consolidated into various nearby branches.

Balance Sheet and Asset Quality
Total assets decreased modestly by $11.9 million during the quarter to $1.76 billion at June 30, 2022, compared to $1.78 billion at March 31, 2022. This decrease was largely due to a reduction in cash and cash equivalents which shrank $52.6 million and supported loan growth of $56.7 million.
Securities available for sale decreased $10.8 million during the quarter ended June 30, 2022, to $177.1 million from $187.9 million at March 31, 2022. This decrease was primarily due to a reduced market value of the portfolio of $7.3 million associated with higher interest rates. The remaining decrease was due to the net reduction of the portfolio due to principal repayments.
Securities held to maturity decreased $5.6 million to $99.2 million during the quarter ended June 30, 2022, from $104.9 million at March 31, 2022, largely due to principal repayments.
Total loans receivable increased to $1.347 billion at June 30, 2022, from $1.290 billion as of March 31, 2022. The originated loan portfolio, before SBA PPP loans, increased $68.4 million in the quarter. The growth was due to strong net new loan fundings and growth in the construction portfolio of $27.0 million due to strong building activity and related fundings. Acquired loans decreased by $10.2 million. SBA PPP loans decreased $2.1 million during the current quarter to $0 at June 30, 2022, as all SBA PPP loans were repaid.
The allowance for loan losses remained at $16.8 million at June 30, 2022, representing 1.25% of total loans receivable compared to 1.30% of total loans receivable at March 31, 2022. The allowance for loan losses allocated to originated loans as a percentage of originated loans, net of deferred fees and costs, was 1.37% at June 30, 2022, compared to 1.45% at March 31, 2022. For the quarter ended June 30, 2022, the Bank had net charge offs of $393 thousand, the majority of which had a specific reserve at March 31, 2022 and did not impact the allowance for loan loss provision. Approximately 12.9% of the loan portfolio, at June 30, 2022, consists of loans purchased through whole bank acquisitions, resulting in these loans being recorded at fair market value at acquisition.











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Allowance for Loan Losses Percentages
(in thousands, except ratios)
June 30, 2022March 31, 2022December 31, 2021June 30, 2021
Originated loans, net of deferred fees and costs$1,174,701 $1,106,409 $1,107,555 $877,534 
SBA PPP loans, net of deferred fees— 2,032 8,457 71,508 
Acquired loans, net of unamortized discount 172,154 181,734 194,951 232,516 
Loans, end of period$1,346,855 $1,290,175 $1,310,963 $1,181,558 
SBA PPP loans, net of deferred fees— (2,032)(8,457)(71,508)
Loans, net of SBA PPP loans and deferred fees$1,346,855 $1,288,143 $1,302,506 $1,110,050 
Allowance for loan losses allocated to originated loans$16,053 $16,001 $15,830 $15,059 
Allowance for loan losses allocated to other loans772 817 1,083 1,786 
Allowance for loan losses$16,825 $16,818 $16,913 $16,845 
ALL as a percentage of loans, end of period1.25 %1.30 %1.29 %1.43 %
ALL as a percentage of loans, net of SBA PPP loans and deferred fees1.25 %1.31 %1.30 %1.52 %
ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs1.37 %1.45 %1.43 %1.72 %
Nonperforming assets decreased to $12.6 million or 0.71% of total assets at June 30, 2022, compared to $13.6 million or 0.77% of total assets at March 31, 2022. This decrease was primarily due to the payoff of acquired non-accruing loans. Acquired nonaccrual loans decreased to $2.7 million at June 30, 2022 from $5.3 million at March 31, 2022. Originated nonperforming assets were $8.5 million, or 0.48% of total assets for the most recent quarter.
(in thousands)
June 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
Special mention loan balances$17,274 $1,849 $4,536 $2,548 $12,308 
Substandard loan balances20,680 24,822 22,817 27,137 25,890 
Criticized loans, end of period$37,954 $26,671 $27,353 $29,685 $38,198 
Special mention loans increased $15.4 million, primarily due to the addition of two loans in the second quarter of 2022. One is a commercial real estate loan for $5.4 million secured by a hotel and has rebounded more slowly from the pandemic due to reliance on seasonal events and company meetings. Performance year to date and current bookings show good progress. The second special mention loan is a $10.4 million C&I fully secured working capital loan. Negotiations are ongoing with the borrower to improve the loan structure and performance of the business.
Substandard loans decreased modestly by $4.1 million to $20.7 million at June 30, 2022, compared to $24.8 million at March 31, 2022. The decrease in the second quarter was largely due to nonaccrual loan payoffs of $2.8 million and the upgrade of agricultural loans due to an increase in collateral underlying the loans.
Deposits decreased $28.0 million to $1.40 billion at June 30, 2022, from $1.43 billion at March 31, 2022. The decrease was largely due to a decline in certificate of deposit accounts and, to a lesser extent, expected decreases and reductions due to seasonal fluctuations in deposits. Certificate of deposit account balances decreased $19.5 million in the second quarter with some of those maturing deposits moving to money market accounts. The decrease in certificate of deposit account balances was due to the Company choosing not to match higher rate local retail certificate competition.
The Company did not repurchase any shares in the second quarter. As of June 30, 2022, approximately 354 thousand shares remain available for repurchase under the current share repurchase authorization.





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Review of Operations
Net interest income was $14.3 million for the second quarter ended June 30, 2022, compared to $13.2 million for the first quarter ended March 31, 2022, and $12.8 million for the quarter ended June 30, 2021. Compared to the first quarter of 2022 and second quarter of 2021, net interest income increased due to the growth in the loan and investment portfolios. “Net interest income was positively impacted by the contractual increase in loan and investment yields, the reduction in deposit yields, and interest income realized on nonaccrual loan payoffs of $0.40 million. Second quarter’s net interest income, exclusive of accelerated accretion from non-accrual loan payoffs and interest income on non-accrual loans, was approximately $13.5 million. We expect the net interest income in the 3rd and 4th quarters to increase from the adjusted $13.5 million net interest income level due to the combination of larger loan volume and, in the 4th quarter, savings on sub-debt repayments,” said Jim Broucek, Executive Vice President and Chief Financial Officer.
The net interest margin (“NIM”) increased to 3.46% in the second quarter ended June 30, 2022, compared to 3.25% for the first quarter ended March 31, 2022, and increased from 3.22% for the quarter ended June 30, 2021.
The table below shows the impact of accretion related to purchased credit impaired loans and SBA PPP net loan fees on interest income and NIM.

Net interest income and net interest margin analysis:
(in thousands, except yields and rates)
Three months ended
June 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
Net Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest MarginNet Interest IncomeNet Interest Margin
As reported$14,267 3.46 %$13,167 3.25 %$14,384 3.50 %$13,688 3.34 %$12,831 3.22 %
Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans$(70)(0.02)%$(26)(0.01)%$(2)— %$(8)— %$(37)(0.01)%
Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences$(308)(0.08)%$(11)— %$(200)(0.05)%$(12)— %$— — %
Less scheduled accretion interest$(255)(0.06)%$(264)(0.07)%$(264)(0.06)%$(261)(0.06)%$(265)(0.07)%
Without loan purchase accretion$13,634 3.30 %$12,866 3.17 %$13,918 3.39 %$13,407 3.28 %$12,529 3.14 %
Less SBA PPP net loan fee accretion$(39)(0.01)%$(259)(0.06)%$(1,251)(0.30)%$(1,878)(0.46)%$(1,309)(0.33)%
Without SBA PPP net loan fee accretion and loan purchase accretion$13,595 3.29 %$12,607 3.11 %$12,667 3.09 %$11,529 2.82 %$11,220 2.81 %

The Bank continued to manage deposit interest rates, primarily as maturing certificate of deposit accounts were rolled into lower-costing money market accounts. In the second quarter, the Company’s overall CD portfolio cost of funds decreased 50 basis points from the first quarter of 2022 and 78 basis points from the second quarter of 2021. At June 30, 2022, the Bank had approximately $39.5 million of certificate of deposit accounts (“CD’s”) maturing in the third quarter of 2022 with a weighted average cost of approximately 0.91%.
Loan loss provisions for the quarter ended June 30, 2022, were $0.4 million. Based on loan growth alone, the provision would have been $0.950 million. However, upgrades in the classification of substandard loans due, to improving collateral positions and loan payoffs with $0.55 million of specific reserves at March 31, 2022, partially offset the provision due to growth. In addition, the majority of the second quarter charge-offs of $0.4 million had been provided for in previous quarters, and the charge-offs reduced specific reserves. There were no loan loss provisions for the quarters ended March 31, 2022, June 30, 2021 or March 31, 2021. Continued improving economic conditions in our
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markets, as evidenced by unemployment rates below the national average in our two largest population centers, have resulted in improving overall economic trends for businesses.
Non-interest income decreased to $2.4 million in the quarter ended June 30, 2022, compared to $2.7 million in the quarter ended March 31, 2022 and $3.8 million in the quarter ended June 30, 2021. The decrease in the second quarter of 2022 compared to the first quarter of 2022 was largely due to a decrease in gain on sale of loans of $0.3 million largely due to lower mortgage originations. Loan servicing income and loan fees and service charges were also lower. Relative to the comparable quarter one year earlier, non-interest income was lower as a result of the following factors: (1) lower gain on sale of loans; (2) lower loan servicing income; and (3) lower loan fees and service charges.
Total non-interest expense increased $0.8 million in the second quarter of 2022 to $10.5 million, compared to $9.7 million for the quarter ended March 31, 2022, and increased from $10.2 million for the quarter ended June 30, 2021. The increase from the first quarter of 2022 was largely due to an increase in MSR expenses of $0.52 million and an increase in compensation of $0.2 million largely due to the impact of annual merit increases in late March. Expenses in the first quarter of 2022 reflected an MSR impairment reversal of $0.57 million. The increase from the second quarter of 2021 of $0.3 million was largely due to the 2022 merit increases and new market tax credit depletion of $0.2 million. In the first quarter of 2022, the Company purchased new market tax credits for $4.1 million. These tax credits, which are included in other assets, are being expensed in lock step with the related tax credit realization and will result in a lower tax rate.
Provision for income taxes decreased to $1.4 million in the second quarter of 2022 from $1.5 million in the first quarter of 2022. The provision for income taxes also decreased to $2.9 million for the first six months of 2022 from $3.7 million for the first six months of 2021. Both decreases are due to lower pre-tax income and a lower tax rate due to the impact of the tax credits noted above. The tax credits are expected to be realized over the next seven years. The effective tax rate was 24.4% in the second quarter of 2022, compared to 24.2% the previous quarter and 26.8% for the comparable prior year quarter. The effective tax rate for the first half of 2022 was 24.3% compared to 26.4% for the same period in the prior year.
These financial results are preliminary until the Form 10-Q is filed in August 2022.

About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 25 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, ag operators and consumers, including residential mortgage loans.

Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “on pace,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; our ability to successfully execute
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our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for loan losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. Stockholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2022 and the Company’s subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.

Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of goodwill, and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.

Contact: Steve Bianchi, CEO
(715)-836-9994

(CZWI-ER)

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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)
June 30, 2022 (unaudited)March 31, 2022 (unaudited)December 31, 2021 (audited)June 30, 2021 (unaudited)
Assets
Cash and cash equivalents$31,743 $84,364 $47,691 $128,440 
Other interest-bearing deposits1,505 1,511 1,511 1,512 
Securities available for sale “AFS”177,068 187,905 203,068 243,746 
Securities held to maturity “HTM”99,249 104,894 71,141 59,582 
Equity investments1,365 1,291 1,328 297 
Other investments14,899 15,084 15,305 14,966 
Loans receivable1,346,855 1,290,176 1,310,963 1,181,558 
Allowance for loan losses(16,825)(16,818)(16,913)(16,845)
Loans receivable, net1,330,030 1,273,358 1,294,050 1,164,713 
Loans held for sale1,172 2,528 6,670 3,109 
Mortgage servicing rights, net4,520 4,614 4,161 3,862 
Office properties and equipment, net21,589 21,393 21,169 21,121 
Accrued interest receivable4,243 4,179 3,916 4,898 
Intangible assets3,100 3,499 3,898 4,696 
Goodwill31,498 31,498 31,498 31,498 
Foreclosed and repossessed assets, net1,437 1,368 1,408 145 
Bank owned life insurance (“BOLI”)24,622 24,464 24,312 23,991 
Other assets15,567 13,519 8,502 7,896 
TOTAL ASSETS$1,763,607 $1,775,469 $1,739,628 $1,714,472 
Liabilities and Stockholders’ Equity
Liabilities:
Deposits$1,400,210 $1,428,223 $1,387,535 $1,371,226 
Federal Home Loan Bank (“FHLB”) advances102,030 85,530 111,527 111,496 
Other borrowings87,124 87,062 58,426 58,380 
Other liabilities9,500 9,160 11,274 9,354 
Total liabilities1,598,864 1,609,975 1,568,762 1,550,456 
Stockholders’ equity:
Common stock— $0.01 par value, authorized 30,000,000; 10,530,415, 10,526,781 10,502,442, and 10,696,075 shares issued and outstanding, respectively105 105 105 107 
Additional paid-in capital119,987 119,789 119,925 121,732 
Retained earnings56,928 52,562 50,675 40,117 
Accumulated other comprehensive (loss) income (12,277)(6,962)161 2,060 
Total stockholders’ equity164,743 165,494 170,866 164,016 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,763,607 $1,775,469 $1,739,628 $1,714,472 
        Note: Certain items previously reported were reclassified for consistency with the current presentation.
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CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
 Three Months EndedSix Months Ended
June 30, 2022 (unaudited)March 31, 2022 (unaudited)June 30, 2021 (unaudited)June 30, 2022 (unaudited)June 30, 2021 (unaudited)
Interest and dividend income: 
Interest and fees on loans$14,893 $13,767 $13,960 $28,660 $28,477 
Interest on investments1,810 1,609 1,518 3,419 2,621 
Total interest and dividend income16,703 15,376 15,478 32,079 31,098 
Interest expense:
Interest on deposits985 1,068 1,521 2,053 3,235 
Interest on FHLB borrowed funds297 311 384 608 795 
Interest on other borrowed funds1,154 830 742 1,984 1,473 
Total interest expense2,436 2,209 2,647 4,645 5,503 
Net interest income before provision for loan losses14,267 13,167 12,831 27,434 25,595 
Provision for loan losses400 — — 400 — 
Net interest income after provision for loan losses13,867 13,167 12,831 27,034 25,595 
Non-interest income:
Service charges on deposit accounts482 488 395 970 793 
Interchange income614 549 647 1,163 1,177 
Loan servicing income600 701 825 1,301 1,718 
Gain on sale of loans414 722 1,522 1,136 3,117 
Loan fees and service charges141 92 151 233 429 
Net (losses) gains on investment securities(75)(37)37 (112)272 
Other196 198 216 394 463 
Total non-interest income2,372 2,713 3,793 5,085 7,969 
Non-interest expense:
Compensation and related benefits5,589 5,398 5,449 10,987 11,018 
Occupancy1,343 1,365 1,314 2,708 2,630 
Data processing1,415 1,301 1,422 2,716 2,792 
Amortization of intangible assets399 399 399 798 798 
Mortgage servicing rights expense, net195 (327)441 (132)(9)
Advertising, marketing and public relations250 212 194 462 357 
FDIC premium assessment118 115 82 233 247 
Professional services368 402 362 770 864 
Gains on repossessed assets, net(2)(7)(29)(9)(146)
New market tax credit depletion162 163 — 325 — 
Other625 647 564 1,272 1,136 
Total non-interest expense10,462 9,668 10,198 20,130 19,687 
Income before provision for income taxes5,777 6,212 6,426 11,989 13,877 
Provision for income taxes1,411 1,506 1,720 2,917 3,665 
Net income attributable to common stockholders$4,366 $4,706 $4,706 $9,072 $10,212 
Per share information:
Basic earnings $0.41 $0.45 $0.44 $0.86 $0.94 
Diluted earnings$0.41 $0.45 $0.44 $0.86 $0.94 
Cash dividends paid$— $0.26 $— $0.26 $0.23 
Book value per share at end of period$15.64 $15.72 $15.33 $15.64 $15.33 
Tangible book value per share at end of period (non-GAAP)$12.36 $12.40 $11.95 $12.36 $11.95 
Note: Certain items previously reported were reclassified for consistency with the current presentation.
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Loan Composition (in thousands)June 30, 2022March 31, 2022December 31, 2021June 30, 2021
Originated Loans:
Commercial/Agricultural real estate:
Commercial real estate$596,001 $575,289 $578,395 $420,565 
Agricultural real estate57,323 52,683 52,372 42,925 
Multi-family real estate175,964 175,471 174,050 113,790 
Construction and land development114,017 86,997 78,613 89,586 
C&I/Agricultural operating:
Commercial and industrial124,113 108,422 107,937 80,783 
Agricultural operating20,287 24,020 26,202 23,014 
Residential mortgage:
Residential mortgage65,707 59,875 63,855 72,965 
Purchased HELOC loans3,419 3,487 3,871 4,949 
Consumer installment:
Originated indirect paper12,736 14,508 15,971 20,377 
Other consumer7,472 7,842 8,473 10,296 
Originated loans before SBA PPP loans1,177,039 1,108,594 1,109,739 879,250 
SBA PPP loans— 2,071 8,755 74,925 
Total originated loans$1,177,039 $1,110,665 $1,118,494 $954,175 
Acquired Loans:
Commercial/Agricultural real estate:
Commercial real estate$106,916 $114,485 $120,070 $139,497 
Agricultural real estate20,484 23,033 26,123 29,740 
Multi-family real estate3,965 4,016 4,299 7,401 
Construction and land development1,171 883 907 1,202 
C&I/Agricultural operating:
Commercial and industrial14,889 12,600 14,230 19,701 
Agricultural operating4,182 4,737 5,386 4,893 
Residential mortgage:
Residential mortgage22,868 24,898 27,135 33,781 
Consumer installment:
Other consumer313 349 401 648 
Total acquired loans$174,788 $185,001 $198,551 $236,863 
Total Loans:
Commercial/Agricultural real estate:
Commercial real estate$702,917 $689,774 $698,465 $560,062 
Agricultural real estate77,807 75,716 78,495 72,665 
Multi-family real estate179,929 179,487 178,349 121,191 
Construction and land development115,188 87,880 79,520 90,788 
C&I/Agricultural operating:
Commercial and industrial139,002 121,022 122,167 100,484 
Agricultural operating24,469 28,757 31,588 27,907 
Residential mortgage:
Residential mortgage88,575 84,773 90,990 106,746 
Purchased HELOC loans3,419 3,487 3,871 4,949 
Consumer installment:
Originated indirect paper12,736 14,508 15,971 20,377 
Other consumer7,785 8,191 8,874 10,944 
Gross loans before SBA PPP loans1,351,827 1,293,595 1,308,290 1,116,113 
SBA PPP loans— 2,071 8,755 74,925 
Gross loans$1,351,827 $1,295,666 $1,317,045 $1,191,038 
Unearned net deferred fees and costs and loans in process(2,338)(2,223)(2,482)(5,133)
Unamortized discount on acquired loans(2,634)(3,267)(3,600)(4,347)
Total loans receivable$1,346,855 $1,290,176 $1,310,963 $1,181,558 
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Nonperforming Originated and Acquired Assets
(in thousands, except ratios)
June 30, 2022March 31, 2022December 31, 2021June 30, 2021
Nonperforming assets:
Originated nonperforming assets:
Nonaccrual loans$7,770 $6,602 $6,448 $2,420 
Accruing loans past due 90 days or more700 398 63 88 
Total originated nonperforming loans (“NPL”)8,470 7,000 6,511 2,508 
Other real estate owned (“OREO”)— — — — 
Other collateral owned10 16 
Total originated nonperforming assets (“NPAs”)$8,480 $7,008 $6,513 $2,524 
Acquired nonperforming assets:
Nonaccrual loans$2,664 $5,256 $5,217 $5,655 
Accruing loans past due 90 days or more14 — 97 454 
Total acquired nonperforming loans (“NPL”)2,678 5,256 5,314 6,109 
Other real estate owned (“OREO”)1,427 1,360 1,406 129 
Other collateral owned— — — — 
Total acquired nonperforming assets (“NPAs”)$4,105 $6,616 $6,720 $6,238 
Total nonperforming assets (“NPAs”)$12,585 $13,624 $13,233 $8,762 
Loans, end of period$1,346,855 $1,290,176 $1,310,963 $1,181,558 
Total assets, end of period$1,763,607 $1,775,469 $1,739,628 $1,714,472 
Ratios:
Originated NPLs to total loans0.63 %0.54 %0.50 %0.21 %
Acquired NPLs to total loans0.20 %0.41 %0.41 %0.52 %
Originated NPAs to total assets0.48 %0.40 %0.37 %0.15 %
Acquired NPAs to total assets0.23 %0.37 %0.39 %0.36 %





























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Nonperforming Assets
(in thousand, except ratios)
June 30, 2022March 31, 2022December 31, 2021June 30, 2021
Nonperforming assets:
Nonaccrual loans
Commercial real estate$5,275 $5,503 $5,374 $1,027 
Agricultural real estate3,169 3,454 3,490 3,716 
Construction and land development43 129 — — 
Commercial and industrial (“C&I”)211 284 298 313 
Agricultural operating555 1,064 993 1,163 
Residential mortgage1,122 1,334 1,433 1,768 
Consumer installment59 90 77 88 
Total nonaccrual loans$10,434 $11,858 $11,665 $8,075 
Accruing loans past due 90 days or more714 398 160 542 
Total nonperforming loans (“NPLs”)11,148 12,256 11,825 8,617 
Foreclosed and repossessed assets, net1,437 1,368 1,408 145 
Total nonperforming assets (“NPAs”)$12,585 $13,624 $13,233 $8,762 
Troubled Debt Restructurings (“TDRs”)$8,712 $10,231 $12,523 $16,597 
Nonaccrual TDRs$2,549 $4,586 $4,539 $4,861 
Loans, end of period$1,346,855 $1,290,176 $1,310,963 $1,181,558 
Total assets, end of period$1,763,607 $1,775,469 $1,739,628 $1,714,472 
Ratios:
NPLs to total loans0.83 %0.95 %0.90 %0.73 %
NPAs to total assets0.71 %0.77 %0.76 %0.51 %


Deposit Composition
(in thousands)
June 30, 2022March 31, 2022December 31, 2021June 30, 2021
Non-interest bearing demand deposits$276,815 $269,481 $276,631 $253,097 
Interest bearing demand deposits401,857 423,251 396,231 375,005 
Savings accounts239,322 241,072 222,674 220,698 
Money market accounts328,718 321,409 288,985 263,390 
Certificate accounts153,498 173,010 203,014 259,036 
Total deposits$1,400,210 $1,428,223 $1,387,535 $1,371,226 
















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Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)
 Three months ended June 30, 2022Three months ended March 31, 2022Three months ended June 30, 2021
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate (1)
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate (1)
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate (1)
Average interest earning assets:
Cash and cash equivalents$25,195 $43 0.68 %$35,208 $13 0.15 %$113,561 $28 0.10 %
Loans receivable1,328,661 14,893 4.50 %1,304,141 13,767 4.28 %1,186,439 13,960 4.72 %
Interest bearing deposits1,509 2.13 %1,511 2.15 %1,754 2.06 %
Investment securities (1)285,332 1,593 2.23 %288,261 1,416 1.99 %283,557 1,308 1.85 %
Other investments14,969 166 4.45 %15,258 172 4.57 %15,020 173 4.62 %
Total interest earning assets (1)$1,655,666 $16,703 4.05 %$1,644,379 $15,376 3.79 %$1,600,331 $15,478 3.88 %
Average interest bearing liabilities:
Savings accounts$230,784 $125 0.22 %$224,557 $94 0.17 %$219,804 $99 0.18 %
Demand deposits410,468 300 0.29 %410,890 217 0.21 %360,314 257 0.29 %
Money market accounts323,907 287 0.36 %299,004 216 0.29 %258,638 182 0.28 %
CD’s134,338 223 0.67 %161,203 464 1.17 %240,224 868 1.45 %
IRA’s35,701 50 0.56 %37,067 77 0.84 %39,970 115 1.15 %
Total deposits$1,135,198 $985 0.35 %$1,132,721 $1,068 0.38 %$1,118,950 $1,521 0.55 %
FHLB advances and other borrowings186,050 1,451 3.13 %166,118 1,141 2.79 %171,261 1,126 2.64 %
Total interest bearing liabilities$1,321,248 $2,436 0.74 %$1,298,839 $2,209 0.69 %$1,290,211 $2,647 0.82 %
Net interest income$14,267 $13,167 $12,831 
Interest rate spread3.31 %3.10 %3.06 %
Net interest margin (1)3.46 %3.25 %3.22 %
Average interest earning assets to average interest bearing liabilities1.25 1.27 1.24 

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $0, $1 and $1 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
 

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 Six months ended June 30, 2022Six months ended June 30, 2021
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate (1)
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate (1)
Average interest earning assets:
Cash and cash equivalents$30,174 $56 0.37 %$121,557 $57 0.09 %
Loans receivable1,316,469 28,660 4.39 %1,199,925 28,477 4.79 %
Interest bearing deposits1,510 15 2.00 %2,591 29 2.26 %
Investment securities (1)286,789 3,009 2.10 %243,492 2,193 1.82 %
Other investments15,112 339 4.52 %15,029 342 4.59 %
Total interest earning assets (1)$1,650,054 $32,079 3.92 %$1,582,594 $31,098 3.96 %
Average interest bearing liabilities:
Savings accounts$227,687 $219 0.19 %$208,787 $182 0.18 %
Demand deposits410,678 517 0.25 %345,576 507 0.30 %
Money market accounts311,524 503 0.33 %256,391 384 0.30 %
CD’s147,696 687 0.94 %253,063 1,911 1.52 %
IRA’s36,381 127 0.70 %40,421 251 1.25 %
Total deposits$1,133,966 $2,053 0.37 %$1,104,238 $3,235 0.59 %
FHLB advances and other borrowings176,139 2,592 2.97 %175,922 2,268 2.60 %
Total interest bearing liabilities$1,310,105 $4,645 0.71 %$1,280,160 $5,503 0.87 %
Net interest income$27,434 $25,595 
Interest rate spread3.21 %3.09 %
Net interest margin (1)3.35 %3.26 %
Average interest earning assets to average interest bearing liabilities1.26 1.24 
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the six months ended June 30, 2022 and June 30, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $1 and $2 thousand for the six months ended June 30, 2022 and June 30, 2021, respectively.














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The following table reports key financial metric ratios based on a net income basis:
 Three Months EndedSix Months Ended
June 30, 2022March 31, 2022June 30, 2021June 30, 2022June 30, 2021
Ratios based on net income:
Return on average assets (annualized)0.99 %1.09 %1.10 %1.04 %1.22 %
Return on average equity (annualized)10.63 %11.38 %11.63 %11.00 %12.78 %
Return on average tangible common equity1 (annualized)
14.41 %15.32 %15.91 %14.85 %17.48 %
Efficiency ratio60 %58 %59 %59 %57 %
Net interest margin with loan purchase accretion3.46 %3.25 %3.22 %3.35 %3.26 %
Net interest margin without loan purchase accretion3.30 %3.17 %3.14 %3.24 %3.17 %


Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)

Tangible book value per share at end of periodJune 30, 2022March 31, 2022June 30, 2021
Total stockholders’ equity$164,743 $165,494 $164,016 
Less: Goodwill(31,498)(31,498)(31,498)
Less: Intangible assets(3,100)(3,499)(4,696)
Tangible common equity (non-GAAP)$130,145 $130,497 $127,822 
Ending common shares outstanding10,530,415 10,526,781 10,696,075 
Book value per share$15.64 $15.72 $15.33 
Tangible book value per share (non-GAAP)$12.36 $12.40 $11.95 


Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)

Tangible common equity as a percent of tangible assets at end of period June 30, 2022March 31, 2022June 30, 2021
Total stockholders’ equity$164,743 $165,494 $164,016 
Less: Goodwill(31,498)(31,498)(31,498)
Less: Intangible assets(3,100)(3,499)(4,696)
Tangible common equity (non-GAAP)$130,145 $130,497 $127,822 
Total Assets$1,763,607 $1,775,469 $1,714,472 
Less: Goodwill(31,498)(31,498)(31,498)
Less: Intangible assets(3,100)(3,499)(4,696)
Tangible Assets (non-GAAP)$1,729,009 $1,740,472 $1,678,278 
Total stockholders’ equity to total assets ratio9.34 %9.32 %9.57 %
Tangible common equity as a percent of tangible assets (non-GAAP)7.53 %7.50 %7.62 %






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Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)
Three Months EndedSix Months Ended
June 30, 2022March 31, 2022June 30, 2021June 30, 2022June 30, 2021
Total stockholders’ equity$164,743 $165,494 $164,016 $164,743 $164,016 
Less: Goodwill(31,498)(31,498)(31,498)(31,498)(31,498)
Less: Intangible assets(3,100)(3,499)(4,696)(3,100)(4,696)
Tangible common equity (non-GAAP)$130,145 $130,497 $127,822 $130,145 $127,822 
Average tangible common equity (non-GAAP)$129,939 $132,550 $125,967 $131,351 $124,593 
GAAP earnings after income taxes$4,366 $4,706 $4,706 $9,072 $10,212 
Amortization of intangible assets, net of tax302 302 292 604 587 
Tangible net income$4,668 $5,008 $4,998 $9,676 $10,799 
Return on average tangible common equity (annualized)14.41 %15.32 %15.91 %14.85 %17.48 %

Reconciliation of Efficiency Ratio
(in thousands, except ratios)
 Three Months EndedSix Months Ended
June 30, 2022March 31, 2022June 30, 2021June 30, 2022June 30, 2021
Non-interest expense (GAAP)$10,462 $9,668 $10,198 $20,130 $19,687 
Less amortization of intangibles(399)(399)(399)(798)(798)
Efficiency ratio numerator (GAAP) $10,063 $9,269 $9,799 $19,332 $18,889 
Non-interest income$2,372 $2,713 $3,793 $5,085 $7,969 
Loss (Gain) on investment securities75 37 (37)112 (272)
Net interest margin14,267 13,167 12,831 27,434 25,595 
Efficiency ratio denominator (GAAP)$16,714 $15,917 $16,587 $32,631 $33,292 
Efficiency ratio (GAAP)60 %58 %59 %59 %57 %

1Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.
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