ICBK County Bancorp Inc

County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), a community bank headquartered in Manitowoc, Wisconsin, today reported financial results for the third quarter of 2021. Net income was $4.1 million, or $0.65 per diluted share, for the third quarter of 2021, compared to net income of $6.7 million, or $1.07 per diluted share, and $3.4 million, or $0.52 per diluted share, for the second quarter of 2021 and the third quarter of 2020, respectively. For the nine months ended September 30, 2021, net income was $14.8 million, or $2.34 per diluted share, compared to net income of $1.0 million, or a $0.10 per diluted share, for the nine months ended September 30, 2020. The 2020 net income included a $5.0 million goodwill impairment charge, or $0.77 loss per diluted share.

"We reported another solid quarter as the economy continues to rebound, resulting in increased customer confidence, improved asset quality and in turn, a lower loan loss provision," said Tim Schneider, President of County Bancorp, Inc. "Additionally, our adverse classified asset ratio (a non-GAAP metric) continues to decline and is less than half of what it was at the start of 2021. Finally, the previously announced merger with Nicolet remains on track. We still expect the merger to close on December 3, 2021, and we remain excited about the opportunities that Nicolet’s business model and other product offerings present to our agriculture customers and our community."

Loans

• Total loans increased sequentially by $3.1 million, or 0.3%, to $1.0 billion during the third quarter of 2021. Gross loan growth of $24.9 million was partially offset by $21.8 million in Paycheck Protection Program (“PPP”) loans that were forgiven by the Small Business Administration (“SBA”) during the quarter. The following table sets forth the total PPP loans at the dates indicated:

		September 30, 2021												June 30, 2021
		# of Loans				Balance				Deferred Fee Income				# of Loans				Balance				Deferred Fee Income
		(dollars in thousands)
PPP 1oans - Round 1			9			$	265			$	6				69			$	3,285			$	82
PPP loans - Round 2			107				11,353				490				391				30,115				1,576
Total PPP loans			116			$	11,618			$	496				460			$	33,400			$	1,658
% of Total loans							1.16	%											3.33	%

• As of September 30, 2021, there were two customer relationships with loan balances totaling $0.2 million in payment deferral associated with COVID-19 customer support programs, a reduction of $2.7 million since June 30, 2021.

Deposits and Funding Sources

• Total deposits as of September 30, 2021, were $1.2 billion, an increase of $45.8 million, or 4.0%, from June 30, 2021, and an increase of $131.3 million, or 12.5%, since September 30, 2020.
• Client deposits (demand deposits, NOW accounts, savings accounts, money market accounts, and certificates of deposit) increased by $49.6 million, or 5.2%, from June 30, 2021, to $1.0 billion. Year-over-year, client deposits increased $110.0 million, or 12.3%, since September 30, 2020.
• The Company decreased its reliance on wholesale funding (brokered deposits, national certificate of deposits, and FHLB funding) by $6.8 million, or 2.6%, during the third quarter of 2021.   Wholesale funding represented 20.4% of all funding sources at September 30, 2021 compared to 21.7% and 20.9% at June 30, 2021 and September 30, 2020, respectively.

Shareholders’ Equity

• Book value per share increased to $27.97 per share on September 30, 2021, from $27.68 on June 30, 2021, and $25.71 on September 30, 2020.

Net Interest Income and Margin

• Net interest margin for the quarter ended September 30, 2021, was 2.93%, a decrease of 29 basis points compared to the sequential quarter and an increase of 53 basis points year-over-year. The following table shows the accretive effect the SBA PPP loans had on net interest margin for the periods indicated.

		For the Three Months Ended
		September 30,2021				June 30,2021				September 30,2020
Net interest margin excluding PPP loans			2.68	%			3.12	%			2.28	%
Accretion related to PPP loans:
Impact of interest rate on PPP loans			(0.07	)%			(0.03	)%			(0.31	)%
Impact of PPP fee income recognized			0.34	%			0.14	%			0.45	%
Impact of interest expense on PPP Liquidity Facility program			(0.02	)%			(0.01	)%			(0.02	)%
Total accretion related to PPP loans			0.25	%			0.10	%			0.12	%
Total net interest margin			2.93	%			3.22	%			2.40	%

• Net interest margin excluding PPP loans decreased 44 basis points to 2.68% for the quarter ended September 30, 2021 compared to the quarter ended June 30, 2021, primarily due to the $0.7 million in interest income that was recovered in connection to a nonaccrual loan participation and the pay-off of a $4.0 nonaccrual commercial real estate customer that took place during the second quarter of 2021.
• Total rates paid on interest-bearing deposits decreased by nine basis points to 0.63% for the three months ended September 30, 2021, compared to the three months ended June 30, 2021, and decreased 65 basis points compared to the three months ended September 30, 2020. The steady decline in cost of funds was primarily due to the Company’s focus on gathering lower-cost transactional deposits versus higher cost time deposits and the market-driven drop in the federal funds rates.

The table below presents the effects of changing rates and volumes on net interest income for the periods indicated.

		Three Months Ended September 30, 2021 v.Three Months Ended June 30, 2021												Three Months Ended September 30, 2021 v.Three Months Ended September 30, 2020
		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		$	(200	)		$	(191	)		$	(391	)		$	589			$	59			$	648
Loans (excluding PPP)			190				(1,082	)			(892	)			69				(92	)			(23	)
PPP loans - round 1			(1,454	)			1,259				(195	)			412				(1,507	)			(1,095	)
PPP loans - round 2			(93	)			671				578				—				1,015				1,015
Total loans			(1,357	)			848				(509	)			481				(584	)			(103	)
Federal funds sold and interest-bearing deposits with banks			21				8				29				(1	)			16				15
Total interest income			(1,536	)			665				(871	)			1,069				(509	)			560
Interest Expense:
Savings, NOW, money market and interest checking		$	48			$	(51	)		$	(3	)		$	638			$	(747	)		$	(109	)
Time deposits			(34	)			(89	)			(123	)			(265	)			(949	)			(1,214	)
Other borrowings			(20	)			5				(15	)			(93	)			(37	)			(130	)
FHLB advances			(30	)			—				(30	)			(10	)			(84	)			(94	)
Junior subordinated debentures			(4	)			3				(1	)			(25	)			48				23
Total interest expense		$	(40	)		$	(132	)		$	(172	)		$	245			$	(1,769	)		$	(1,524	)
Net interest income		$	(1,496	)		$	797			$	(699	)		$	824			$	1,260			$	2,084

The following table sets forth average balances, average yields and rates, and income and expenses for the periods indicated.

		For the Three Months Ended
		September 30, 2021												June 30, 2021												September 30, 2020
		AverageBalance (1)				Income/Expense				Yields/Rates				AverageBalance (1)				Income/Expense				Yields/Rates				AverageBalance (1)				Income/Expense				Yields/Rates
		(dollars in thousands)
Assets
Investment securities		$	352,781			$	2,142				2.41	%		$	386,637			$	2,533				2.63	%		$	256,059			$	1,494				2.32	%
Loans excluding PPP loans (2)			992,594				10,389				4.15	%			974,525				11,281				4.64	%			978,954				10,412				4.23	%
PPP loans - Round 1 (2)			1,666				87				20.72	%			9,344				282				12.11	%			104,429				1,182				4.50	%
PPP loans - Round 2 (2)			21,510				1,015				18.72	%			33,080				437				5.30	%			—				—				—
Total loans (2)			1,015,770				11,491				4.49	%			1,016,949				12,000				4.73	%			1,083,383				11,594				4.26	%
Interest bearing deposits due from other banks			84,756				33				0.15	%			22,085				4				0.07	%			92,701				18				0.08	%
Total interest-earning assets		$	1,453,307			$	13,666				3.73	%		$	1,425,671			$	14,537				4.09	%		$	1,432,143			$	13,106				3.64	%
Allowance for loan losses			(11,519	)											(15,305	)											(18,641	)
Other assets			94,892												91,039												86,109
Total assets		$	1,536,680											$	1,501,405											$	1,499,611
Liabilities
Savings, NOW, money market, interest checking		$	561,715			$	365				0.26	%		$	507,089			$	363				0.29	%		$	406,888			$	469				0.46	%
Time deposits			439,640				1,225				1.11	%			452,443				1,353				1.20	%			499,665				2,444				1.95	%
Total interest-bearing deposits		$	1,001,355			$	1,590				0.63	%		$	959,532			$	1,716				0.72	%		$	906,553			$	2,913				1.28	%
Other borrowings			25,534				28				0.44	%			43,803				43				0.39	%			101,829				158				0.62	%
FHLB advances			86,500				204				0.94	%			101,352				234				0.93	%			89,622				298				1.32	%
Junior subordinated debentures			64,546				1,105				6.79	%			67,213				1,106				6.60	%			65,903				1,082				6.53	%
Total interest-bearing liabilities		$	1,177,935			$	2,927				0.99	%		$	1,171,900			$	3,099				1.06	%		$	1,163,907			$	4,451				1.52	%
Non-interest-bearing deposits			160,980												146,242												147,595
Other liabilities			19,566												12,741												18,314
Total liabilities		$	1,358,481											$	1,330,883											$	1,329,816
Shareholders' equity			178,199												170,522												169,795
Total liabilities and equity		$	1,536,680											$	1,501,405											$	1,499,611
Net interest income						$	10,739											$	11,438											$	8,655
Interest rate spread (3)											2.74	%											3.03	%											2.12	%
Net interest margin (4)											2.93	%											3.22	%											2.40	%
Ratio of interest-earning assets to interest-bearing liabilities			1.23												1.22												1.23

(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.

Provision for Loan Losses

• A recovery of provision for loan losses of $0.6 million was recorded for the three months ended September 30, 2021, compared to a recovery of provision for loan losses of $4.3 million for the three months ended June 30, 2021. The recovery of provision during for the third quarter was primarily the result of a $14.0 million decrease in substandard rated loans and corresponding reserves related to the inherent risk associated with those loans.
• Year-over-over, provision for loan losses decreased $0.7 million compared to the three months ended September 30, 2020. The reduction was primarily the result of the improvement in asset quality and the reduction in the inherent risk in the loan portfolio associated with COVID-19.   

Non-Interest Income

• Total non-interest income for the three months ended September 30, 2021, increased $1.0 million, or 42.4%, to $3.2 million from the three months ended June 30, 2021, primarily due to the $1.5 million loss on security sales in the second quarter. Year-over-year non-interest income decreased $0.5 million, or 12.7%, from the three months ended September 30, 2020, primarily due to fewer loans sold on the secondary market during the quarter and loans paying off resulting in a loss in loan serving rights.
• Loan servicing fees quarter-over-quarter were virtually unchanged and increased $0.2 million year-over-year. The weighted average servicing fees were unchanged from the three months ended June 30, 2021 and increased three basis points from the quarter ended September 30, 2020. In addition, loans sold with servicing retained decreased $13.8 million, or 1.6%, and increased $41.5 million, or 5.2%, from June 30, 2021 and September 30, 2020, respectively.

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Non-Interest Income
Service charges		$	137			$	165			$	119			$	108			$	108
Crop insurance commission			309				291				301				517				271
Gain on sale of residential loans, net			69				89				93				219				17
Loan servicing fees			2,287				2,278				2,158				1,974				2,054
Gain on sale of service-retained loans, net			1,631				1,784				1,587				1,828				1,268
Loan servicing right pay-down losses			(1,696	)			(1,162	)			(1,119	)			(635	)			(551	)
Total loan servicing right income			(65	)			622				468				1,193				717
Gain (loss) on sale of securities			—				(1,453	)			—				—				101
Referral fees			—				—				319				64				110
Other			469				259				254				283				294
Total non-interest income		$	3,206			$	2,251			$	3,712			$	4,358			$	3,672

• Loans sold that the Company continued to service were $839.4 million as of September 30, 2021, a decrease of $13.8 million, or 1.6%, compared to June 30, 2021. The decrease was primarily the result of excess liquidity which resulted in the need for fewer loans to be sold on the secondary market. Loans sold and continued to service increased $41.5 million, or 5.2%, compared to September 30, 2020.

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Loan servicing rights, end of period		$	19,413			$	19,478			$	18,864			$	18,396			$	17,203
Loans serviced, end of period			839,357				853,176				841,893				812,560				797,819
Loan servicing rights as a % of loans serviced			2.31	%			2.28	%			2.24	%			2.26	%			2.16	%
Total loan servicing fees		$	2,287			$	2,278			$	2,158			$	1,974			$	2,054
Average loans serviced			846,267				847,535				827,227				805,190				779,939
Annualized loan servicing fees as a % of average loans serviced			1.08	%			1.08	%			1.04	%			0.98	%			1.05	%

Non-Interest Expense

• Total non-interest expense for the three months ended September 30, 2021, increased $0.3 million, or 3.1%, from the second quarter of 2021 to $9.0 million, and increased $1.4 million, or 17.9%, from the three months ended September 30, 2020.
• Employee compensation and benefits expense decreased for the three months ended September 30, 2021, by $0.6 million, or 9.0%, to $5.8 million compared to the three months ended June 30, 2021. The change was primarily the result of adjustments made to employee benefit programs as a result of the merger that was announced in the second quarter of 2021.
• During the three months ended September 30, 2021, the Company made a $0.3 million one-time charitable contribution to further agricultural education in addition to normal giving.

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Non-Interest Expense
Employee compensation and benefits		$	5,846			$	6,426			$	5,582			$	6,687			$	4,766
Occupancy			331				293				279				297				321
Information processing			640				664				661				656				641
Professional fees			503				450				802				582				555
Business development			227				289				307				136				305
Charitable contributions			301				50				50				41				47
OREO expenses (income)			(2	)			52				23				20				47
Writedown of OREO			—				—				—				148				—
Net loss (gain) on sale of OREO			—				—				17				(326	)			9
Net loss (gain) on sale of fixed assets			(7	)			(1,075	)			(6	)			9				(2	)
Merger expenses			322				385				—				—				—
Depreciation and amortization			211				484				257				289				295
Other			665				747				792				955				683
Total non-interest expense		$	9,037			$	8,765			$	8,764			$	9,494			$	7,667

Asset Quality

• Asset quality continued to improve during the third quarter of 2021. Substandard performing loans decreased by $11.6 million, or 41.7%, to $16.2 million at September 30, 2021, compared to June 30, 2021, primarily due to the pay-off of 4 customer relationships.
• Substandard impaired loans decreased by $2.5 million, or 8.2%, to $27.9 million at September 30, 2021, compared to June 30, 2021, primarily due to the payoff from one commercial customer relationship. The following table presents loan balances by credit grade as of the dates indicated:

		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Loans by risk category:
Sound/Acceptable/Satisfactory/Low Satisfactory		$	828,794			$	821,970			$	757,160			$	716,313			$	800,451
Watch			124,625				121,242				165,823				190,101				185,254
Special Mention			7,465				566				605				2,501				1,851
Substandard Performing			16,181				27,742				38,961				40,420				41,577
Substandard Impaired			27,892				30,370				49,115				46,950				46,793
Total loans		$	1,004,957			$	1,001,890			$	1,011,664			$	996,285			$	1,075,926
Adverse classified asset ratio (1)			19.02	%			24.72	%			39.61	%			39.43	%			42.64	%

(1)   This is a non-GAAP financial measure. A reconciliation to GAAP is included at the end of this earnings release.

Non-Performing Assets

• Non-performing assets decreased in the third quarter of 2021 by $2.2 million, or 7.0%, primarily due to the $2.5 million substandard impaired loan pay-off discussed above.
• Performing troubled debt restructurings (“TDRs”) not on nonaccrual decreased $1.0 million, or 12.5%, in the third quarter of 2021 to $6.7 million on September 30, 2021 from June 30, 2021. The decrease was primarily due to one commercial customer that had loans that were re-underwritten and were no longer a TDR due to improved performance and financial trends.

		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Non-Performing Assets:
Nonaccrual loans		$	27,892			$	30,071			$	43,973			$	41,624			$	41,351
Other real estate owned			914				914				739				1,077				3,064
Total non-performing assets		$	28,806			$	30,985			$	44,712			$	42,701			$	44,415
Performing TDRs not on nonaccrual		$	6,686			$	7,641			$	13,495			$	18,592			$	19,036
Non-performing assets as a % of total loans			2.87	%			3.09	%			4.42	%			4.29	%			4.13	%
Non-performing assets as a % of total assets			1.87	%			2.04	%			3.00	%			2.90	%			2.98	%
Allowance for loan losses as a % of total loans			1.07	%			1.14	%			1.49	%			1.49	%			1.73	%
Net charge-offs (recoveries) quarter-to-date		$	118			$	(662	)		$	(32	)		$	3,386			$	(1	)

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company, founded in May 1996, and its wholly owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin. The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches it has developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending. It also serves business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin. Its customers are served from its full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and its loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

Forward-Looking Statements

This press release includes "forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission, including (1) the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; (2) the risk that integration of the Company’s operations with those of Nicolet will be materially delayed or will be more costly or difficult than expected; (3) the parties’ inability to meet expectations regarding the timing of the proposed merger; (4) changes to tax legislation and their potential effects on the accounting for the merger; (5) the failure to satisfy conditions to completion of the proposed merger; (7) the failure of the proposed merger to close for any other reason; (8) diversion of management’s attention from ongoing business operations and opportunities due to the proposed merger; (9) the challenges of integrating and retaining key employees; (10) the effect of the announcement of the proposed merger on Nicolet’s, the Company’s or the combined company’s respective customer and employee relationships and operating results; (11) the possibility that the proposed merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (12) dilution caused by Nicolet’s issuance of additional shares of Nicolet common stock in connection with the merger; and (13) the effects of the COVID-19 pandemic and its effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Investor Relations ContactGlen L. StiteleyEVP - CFO, Investors Community BankPhone: (920) 686-5658 Email: gstiteley@icbk.com        

County Bancorp, Inc.Consolidated Financial Summary(Unaudited)		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands, except per share data)
Period-End Balance Sheet:
Assets
Cash and cash equivalents		$	105,548			$	72,745			$	17,820			$	19,500			$	53,283
Securities available-for-sale, at fair value			338,211				349,334				385,240				352,854				298,476
Loans held for sale			11,139				15,805				5,789				35,976				2,593
Agricultural loans			631,833				613,514				609,482				606,881				619,617
Commercial loans			322,715				319,878				317,625				313,265				317,782
Paycheck Protection Plan loans			11,618				33,400				46,249				37,790				98,421
Multi-family real estate loans			31,885				30,310				33,287				33,457				35,496
Residential real estate loans			4,988				4,563				4,776				4,627				4,489
Installment and consumer other			1,918				225				245				265				121
Total loans			1,004,957				1,001,890				1,011,664				996,285				1,075,926
Allowance for loan losses			(10,715	)			(11,466	)			(15,082	)			(14,808	)			(18,649	)
Net loans			994,242				990,424				996,582				981,477				1,057,277
Other assets			90,854				88,764				85,897				82,551				80,426
Total Assets		$	1,539,994			$	1,517,072			$	1,491,328			$	1,472,358			$	1,492,055
Liabilities and Shareholders' Equity
Demand deposits		$	168,008			$	158,880			$	139,838			$	163,202			$	158,798
NOW accounts and interest checking			143,843				136,180				95,591				96,624				78,026
Savings			17,258				9,059				8,431				7,367				11,900
Money market accounts			415,813				394,486				390,741				344,250				325,900
Time deposits			262,658				259,386				278,591				304,580				322,992
Brokered deposits			157,583				159,087				159,034				80,456				101,808
National time deposits			16,333				18,648				26,302				44,347				50,747
Total deposits			1,181,496				1,135,726				1,098,528				1,040,826				1,050,171
Federal Reserve Discount Window advances			11,497				34,174				47,255				47,531				99,693
FHLB advances			85,000				88,000				100,000				129,000				84,600
Subordinated debentures			67,598				67,519				67,179				67,111				67,025
Other liabilities			17,083				16,841				12,028				16,114				20,656
Total Liabilities			1,362,674				1,342,260				1,324,990				1,300,582				1,322,145
Shareholders' equity			177,320				174,812				166,338				171,776				169,910
Total Liabilities and Shareholders' Equity		$	1,539,994			$	1,517,072			$	1,491,328			$	1,472,358			$	1,492,055
Stock Price Information:
High - Quarter-to-date		$	37.24			$	35.82			$	26.46			$	23.72			$	22.00
Low - Quarter-to-date		$	32.29			$	22.85			$	19.66			$	18.20			$	17.04
Market price - Quarter-end		$	36.06			$	33.96			$	23.97			$	22.08			$	18.80
Book value per share		$	27.97			$	27.68			$	25.99			$	26.42			$	25.72
Tangible book value per share (1)		$	27.97			$	27.68			$	25.98			$	26.42			$	25.71
Common shares outstanding			6,053,369				6,026,748				6,094,450				6,197,965				6,294,675

(1) This is a non-GAAP financial measure. A reconciliation to GAAP is included below.

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands, except per share data)
Selected Income Statement Data:
Interest and Dividend Income
Loans, including fees		$	11,491			$	12,000			$	11,523			$	12,737			$	11,594
Taxable securities			1,821				2,205				1,887				1,777				1,293
Tax-exempt securities			260				261				246				201				167
Federal funds sold and other			94				71				58				10				52
Total interest and dividend income			13,666				14,537				13,714				14,725				13,106
Interest Expense
Deposits			1,590				1,716				2,069				2,482				2,914
FHLB advances and other borrowed funds			232				277				321				362				456
Subordinated debentures			1,106				1,106				1,106				1,107				1,082
Total interest expense			2,928				3,099				3,496				3,951				4,452
Net interest income			10,738				11,438				10,218				10,774				8,654
Provision for loan losses			(634	)			(4,278	)			242				(455	)			79
Net interest income after provision for loan losses			11,372				15,716				9,976				11,229				8,575
Non-Interest Income
Services charges			137				165				119				108				108
Crop insurance commission			309				291				301				517				271
Gain on sale of residential loans, net			69				89				93				219				17
Loan servicing fees			2,287				2,278				2,158				1,974				2,054
Gain on sale of service-retained loans, net			1,631				1,784				1,587				1,828				1,268
Loan servicing right pay-down losses			(1,696	)			(1,162	)			(1,119	)			(635	)			(551	)
Total loan servicing right income			(65	)			622				468				1,193				717
Gain (loss) on sale of securities			—				(1,453	)			—				—				101
Referral fees (1)			—				—				319				64				110
Other			469				259				254				283				294
Total non-interest income			3,206				2,251				3,712				4,358				3,672
Non-Interest Expense
Employee compensation and benefits			5,846				6,426				5,582				6,687				4,766
Occupancy			331				293				279				297				321
Information processing			640				664				661				656				641
Professional fees			503				450				802				582				555
Business development			227				289				307				136				305
Contributions			301				50				50				41				47
OREO expenses (income)			(2	)			52				23				20				47
Writedown of OREO			—				—				—				148				—
Net loss (gain) on sale of OREO			—				—				17				(326	)			9
Net loss (gain) on sale of fixed assets			(7	)			(1,075	)			(6	)			9				(2	)
Merger expenses			322				385				—				—				—
Depreciation and amortization			211				484				257				289				295
Other			665				747				792				955				683
Total non-interest expense			9,037				8,765				8,764				9,494				7,667
Income before income taxes			5,541				9,202				4,924				6,093				4,580
Income tax expense			1,433				2,459				996				1,575				1,164
NET INCOME		$	4,108			$	6,743			$	3,928			$	4,518			$	3,416
Basic earnings per share		$	0.66			$	1.08			$	0.62			$	0.70			$	0.52
Diluted earnings per share		$	0.65			$	1.07			$	0.62			$	0.70			$	0.52
Dividends declared per share		$	0.10			$	0.10			$	0.10			$	0.10			$	0.07

(1)   Referral fees in prior quarters reclassed to non-interest income to match current classification

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands, except share data)
Other Data:
Return on average assets (1)			1.07	%			1.80	%			1.06	%			1.23	%			0.91	%
Return on average shareholders' equity (1)			9.22	%			15.82	%			9.11	%			10.56	%			8.05	%
Return on average common shareholders' equity (1)(2)			9.47	%			16.40	%			9.29	%			10.88	%			8.25	%
Efficiency ratio (1)(2)			64.86	%			64.98	%			62.84	%			63.86	%			62.66	%
Equity to assets ratio			11.51	%			11.52	%			11.15	%			11.67	%			11.39	%
Tangible common equity to tangible assets (2)			10.99	%			10.99	%			10.62	%			11.12	%			10.85	%
Common Share Data:
Net income from continuing operations		$	4,108			$	6,743			$	3,928			$	4,518			$	3,416
Less: Preferred stock dividends			80				79				81				80				80
Income available to common shareholders		$	4,028			$	6,664			$	3,847			$	4,438			$	3,336
Weighted average number of common shares issued			7,260,493				7,242,997				7,218,358				7,206,238				7,202,000
Less: Weighted average treasury shares			1,223,728				1,179,271				1,080,089				957,573				882,153
Plus: Weighted average non-vested restricted stock units			97,891				97,915				63,991				67,529				66,492
Weighted average number of common shares outstanding			6,134,656				6,161,641				6,202,260				6,316,194				6,386,339
Effect of dilutive options			81,216				46,438				34,465				28,025				20,915
Weighted average number of common shares outstanding used to calculate diluted earnings per common share			6,215,872				6,208,079				6,236,725				6,344,219				6,407,254

(1)   Annualized(2)   This is a non-GAAP financial measure. A reconciliation to GAAP is included below.

Non-GAAP Financial Measures:

		For the Three Months Ended
		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands)
Return on average common shareholders' equity reconciliation (1):
Return on average shareholders' equity			9.22	%			15.82	%			9.11	%			10.56	%			8.05	%
Effect of excluding average preferred shareholders' equity			0.25	%			0.58	%			0.18	%			0.32	%			0.20	%
Return on average common shareholders' equity			9.47	%			16.40	%			9.29	%			10.88	%			8.25	%
Efficiency ratio (2):
Non-interest expense		$	9,037			$	8,765			$	8,764			$	9,494			$	7,667
Net gain (loss) on sales and write-downs of OREO			—				—				(17	)			178				(9	)
Net gain (loss) on sale of fixed assets			7				1,075				6				(9	)			2
Adjusted non-interest expense (non-GAAP)		$	9,044			$	9,840			$	8,753			$	9,663			$	7,660
Net interest income		$	10,738			$	11,438			$	10,218			$	10,774			$	8,654
Non-interest income			3,206				2,251				3,712				4,358				3,672
Net loss (gain) on sales of securities			—				1,453				—				—				(101	)
Operating revenue		$	13,944			$	15,142			$	13,930			$	15,132			$	12,225
Efficiency ratio			64.86	%			64.98	%			62.84	%			63.86	%			62.66	%

(1)   Management uses the return on average common shareholders’ equity to review our core operating results and our performance.(2)   In our judgment, the adjustments made to non-interest expense allow investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

Non-GAAP Financial Measures (continued):

		September 30,2021				June 30,2021				March 31,2021				December 31,2020				September 30,2020
		(dollars in thousands, except per share data)
Tangible book value per share and tangible common equity to tangible assets reconciliation (1):
Common equity		$	169,320			$	166,812			$	158,338			$	163,776			$	161,910
Less: Core deposit intangible, net of amortization			2				12				29				54				86
Tangible common equity (non-GAAP)		$	169,318			$	166,800			$	158,309			$	163,722			$	161,824
Common shares outstanding			6,053,369				6,026,748				6,094,450				6,197,965				6,294,675
Tangible book value per share		$	27.97			$	27.68			$	25.98			$	26.42			$	25.71
Total assets		$	1,539,994			$	1,517,072			$	1,491,328			$	1,472,358			$	1,492,055
Less: Core deposit intangible, net of amortization			2				12				29				54				86
Tangible assets (non-GAAP)		$	1,539,992			$	1,517,060			$	1,491,299			$	1,472,304			$	1,491,969
Tangible common equity to tangible assets			10.99	%			10.99	%			10.62	%			11.12	%			10.85	%
Adverse classified asset ratio (2):
Substandard loans		$	44,073			$	58,112			$	88,076			$	87,370			$	88,370
Other real estate owned			914				914				739				1,077				3,064
Substandard unused commitments			1,824				2,130				5,091				4,049				5,124
Less: Substandard government guarantees			(6,162	)			(8,007	)			(8,485	)			(8,960	)			(7,002	)
Total adverse classified assets (non-GAAP)		$	40,649			$	53,149			$	85,421			$	83,536			$	89,556
Total equity (Bank)		$	207,180			$	209,416			$	202,200			$	205,743			$	200,011
Accumulated other comprehensive gain on available for sale securities			(4,129	)			(5,854	)			(1,652	)			(8,686	)			(8,640	)
Allowance for loan losses			10,715				11,466				15,082				14,808				18,649
Adjusted total equity (non-GAAP)		$	213,766			$	215,028			$	215,630			$	211,865			$	210,020
Adverse classified asset ratio			19.02	%			24.72	%			39.61	%			39.43	%			42.64	%

(1)   In our judgment, the adjustments made to book value, equity and assets allow investors to better assess our capital adequacy and net worth by removing the effect of goodwill and intangible assets that are unrelated to our core business.(2)   The adjustments made to non-performing assets allow management to better assess asset quality and monitor the amount of capital coverage necessary for non-performing assets.