The accompanying unaudited consolidated financial statements ~~for the~~ ~~nine months ended September 30, 2017 and 2016 are unaudited. In the opinion of the management of~~have been prepared by Ames National Corporation (the ~~"Company"~~“Company”)~~, these financial statements reflect all adjustments, consisting only~~ pursuant to the rules and regulations of ~~normal recurring accruals, necessary to present fairly these consolidated financial statements. The results of operations for~~ the ~~interim periods are not necessarily indicative of results which may be expected for an entire year.~~Securities and Exchange Commission (the “SEC”). Certain information and ~~footnote~~note disclosures normally included in ~~complete~~annual financial statements prepared in accordance with generally accepted accounting principles ~~generally accepted in the United States of America~~ have been condensed or omitted ~~in accordance with~~pursuant to those rules and regulations, although the ~~requirements for interim financial statements. The~~company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these interim financial statements ~~and notes thereto should~~ be read in conjunction with the year-end audited financial statements contained in the Company's Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016 (the~~2021 (the “Annual Report”). In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present the financial results for the interim periods reported. The results of operations for the interim periods are not necessarily indicative of results which may be expected for an entire year. The consolidated financial statements include the accounts of the Company and its wholly-owned banking subsidiaries (the “Banks”). All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications: Certain reclassifications have been made to the prior period’s consolidated financial statements to present them on a basis comparable with the current period’s consolidated financial statements. Interest-bearing deposits in financial institutions and federal funds sold were reclassified as cash and cash equivalents in 2021 resulting in net cash used in investing activities decreasing by approximately $61 million. No other reclassifications were significant. The reclassifications had no effect on stockholders’ equity and net income of the prior periods.

Goodwill: Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill resulting from acquisitions is not amortized, but is tested for impairment annually or whenever events change and circumstances indicate that it is more likely than not that an impairment loss has occurred. Goodwill is tested for impairment ~~using a two-step process that begins~~ with an estimation of the fair value of a reporting unit. ~~The second step, if necessary, measures the amount of impairment, if any.~~

The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. As none of the Company’s reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to the Company’s stock price. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions and selecting an appropriate control premium. ~~At September 30, 2017,~~The Company ~~management has performed~~completed a quantitative assessment of goodwill ~~impairment assessment and determined~~as of October 1, 2021 which indicated that goodwill was not impaired. Subsequently, the Company determined there were no adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded there is 0 impairment of goodwill as of March 31, 2022.

~~New and Pending Accounting Pronouncements:~~ ~~In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-01, Financial Instruments—Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities.~~ The update enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information by updating certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among other changes, the update includes requiring changes in fair value of equity securities with readily determinable fair value to be recognized in net income and clarifies that entities should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entities' other deferred tax assets. Among other items the ASC requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017, and is to be applied on a modified retrospective basis. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements, but does not expect the guidance to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU requires a lessee to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. Unlike current GAAP, which requires that only capital leases be recognized on the balance sheet, the ASC requires that both types of leases by recognized on the balance sheet. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company~~’s consolidated financial statements.~~

New and Pending Accounting Pronouncements:In June 2016, the FASB issued ASU No. ~~2016-13,~~2016-13, Financial Instruments-Credit Losses (Topic ~~326)~~326): Measurement of Credit Losses on Financial ~~Instruments.~~Instruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ~~For public~~In October 2019, the FASB voted to approve amendments to the effective date of ASU No.2016-13 for smaller reporting companies, ~~this update will be~~as defined by the SEC, and other non-SEC reporting entities. The amendment delays the effective date for our Company until interim and annual periods beginning after December 15, ~~2019.~~2022. The Company continues collecting and retaining loan and credit data and evaluating various loss estimation models, along with refining the implementation of the software and its approach for determining the expected credit losses under the new guidance. The impact of ASU No.2016-13 on the Company’s financial statements is unknown at this time. The Company will continue to evaluate the extent of the potential impact.

In March 2022, the FASB issued ASU No.2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this ASU improve the usefulness of information provided to investors about certain loan refinancing, restructurings, and write-offs. The amendments eliminate the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU No.2016-13. It also enhances disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Lastly, the amendments require that a public business entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases. The Company is currently ~~planning for the implementation of this accounting standard. It is too early to assess~~evaluating the impact ~~that the guidance will have on the Company’s consolidated financial statements.~~

~~In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606):~~ ~~Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40)~~ ~~. The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics~~ of the Codification. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017. The guidance does not apply to revenues associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP. Based upon management’s revenue recognition analysis, the Company does not expect the guidance to have a material impactASU on the Company's consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~. The guidance in this update eliminates the Step 2 from the goodwill impairment test. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. The Company does not expect the guidance to have a material impact on the Company's consolidated financial statements.

On ~~August~~February 9, ~~2017,~~ 2022, the Company declared a cash dividend on its common stock, payable on ~~November 15, 2017~~ May 13, 2022to stockholders of record as of ~~November 1, 2017,~~ April 29, 2022, equal to ~~$0.22~~$0.27 per share.

Earnings per share amounts were calculated using the weighted average shares outstanding during the periods presented. The weighted average outstanding shares for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016 were 9,310,913.~~2021 was 9,092,167 and 9,122,747, respectively. The Company had no0 potentially dilutive securities outstanding during the periods presented.

The Company is party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. No material changes in the Company’s off-balance sheet arrangements have occurred since December 31, ~~2016.~~2021.

Table of Contents

5.	Fair Value Measurements

5~~. Fair Value Measurements~~

A~~ssets~~Assets and liabilities carried at fair value are required to be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value.

Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. ~~A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.~~

Level 2: Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatility, prepayment speeds, credit risk); or inputs derived principally from or can be corroborated by observable market data by correlation or other means.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The following table presents the balances of assets measured at fair value on a recurring basis by level as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016.~~ 2021 (in thousands):

Description

Total

Level 1

Level 2

Level 3

2017

U.S. government treasuries
$ 4,449 $ 4,449 $ - $ -
U.S. government agencies
112,657 - 112,657 -
U.S. government mortgage-backed securities
81,956 - 81,956 -
State and political subdivisions
243,438 - 243,438 -
Corporate bonds
60,834 - 60,834 -
Equity securities, other
3,276 34 3,242 -

$ 506,610 $ 4,483 $ 502,127 $ -

2016

U.S. government treasuries
$ 4,368 $ 4,368 $ - $ -
U.S. government agencies
110,209 - 110,209 -
U.S. government mortgage-backed securities
82,858 - 82,858 -
State and political subdivisions
264,448 - 264,448 -
Corporate bonds
51,184 - 51,184 -
Equity securities, other
3,013 - 3,013 -

$ 516,080 $ 4,368 $ 511,712 $ -

~~Table of Contents~~

Description	Total		Level 1		Level 2		Level 3

2022

U.S. government treasuries	$	200,887	$	200,887	$	0	$	0
U.S. government agencies		112,168		0		112,168		0
U.S. government mortgage-backed securities		142,507		0		142,507		0
State and political subdivisions		289,213		0		289,213		0
Corporate bonds		79,122		0		79,122		0

	$	823,897	$	200,887	$	623,010	$	0

2021

U.S. government treasuries	$	190,479	$	190,479	$	0	$	0
U.S. government agencies		116,014		0		116,014		0
U.S. government mortgage-backed securities		149,601		0		149,601		0
State and political subdivisions		292,859		0		292,859		0
Corporate bonds		82,050		0		82,050		0

	$	831,003	$	190,479	$	640,524	$	0

Level 1 securities include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. ~~U.S~~U.S. government agencies, mortgage-backed securities, state and political subdivisions, and most corporate bonds ~~and other equity securities~~ are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

~~The Company's~~ ~~policy is to recognize transfers between levels at the end~~

Table of ~~each reporting period, if applicable. There were no transfers between levels of the fair value hierarchy during the three or nine months ended September 30, 2017.~~

Contents

Certain assets 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 or a change in previously recognized impairment). The following table presents the assets carried on the balance sheet (after specific reserves) by caption and by level within the valuation hierarchy as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016.~~ 2021 (in thousands):

Description	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3

2017
2022

Loans receivable									$	8,991	$	0	$	0	$	8,991

2021

Loans receivable	$	2,439	$	-	$	-	$	2,439	$	9,012	$	0	$	0	$	9,012
Other real estate owned		386		-		-		386		218		0		0		218

Total	$	2,825	$	-	$	-	$	2,825	$	9,230	$	0	$	0	$	9,230

2016

Loans receivable	$	683	$	-	$	-	$	683
Other real estate owned		546		-		-		546

Total	$	1,229	$	-	$	-	$	1,229

~~Loans Receivable~~: Loans in the tables above consist of impaired credits held for investment. In accordance with the loan impairment guidance, impairment was measured based on the fair value of collateral less estimated selling costs for collateral dependent loans. Fair value for impaired loans is based upon appraised values of collateral adjusted for trends observed in the market. A valuation allowance was recorded for the excess of the loan’s recorded investment over the amounts determined by the collateral value method. This valuation allowance is a component of the allowance for loan losses. The ~~Company considers these fair value measurements as level 3.~~

~~Other Real Estate Owned:~~ Other real estate owned in the table above consists of real estate obtained through foreclosure. Other real estate owned is recorded at fair value less estimated selling costs, at the date of transfer, with any impairment amount charged to the allowance for loan losses. Subsequent to the transfer, other real estate owned is carried at the lower of cost or fair value, less estimated selling costs, with any impairment amount recorded as a noninterest expense. The carrying value of other real estate owned 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. Management uses appraised values and adjusts for trends observed in the market and for disposition costs in determining the value of other real estate owned. A valuation allowance was recorded for the excess of the asset’s recorded investment over the amount determined by the fair value, less estimated selling costs. This valuation allowance is a component of the allowance for other real estate owned. The valuation allowance was $287,000 as of September 30, 2017 and $331,000 as of December 31, 2016. The Company considers these fair value measurements as level 3.

~~Table of Contents~~

The significant inputs used in the fair value measurements for Level 3 assets measured at fair value on a nonrecurring basis as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 are as ~~follows:~~follows (in thousands):

2017

Estimated
Fair Value

Valuation
Techniques
Unobservable Inputs
Range
(Average)

Impaired Loans
$ 2,439
Evaluation of collateral
Estimation of value
NM*

Other real estate owned
$ 386
Appraisal
Appraisal adjustment
6% - 8% (7%)

	2022
	Estimated		Valuation		Range
	Fair Value		Techniques	Unobservable Inputs	(Average)

Loans receivable	$	8,991	Evaluation of collateral	Estimation of value	NM*

2016

2021

Estimated

Fair Value

Valuation

Techniques

Unobservable Inputs

Range

(Average)

Estimated

Valuation

Range

Fair Value

Techniques

Unobservable Inputs

(Average)

Impaired Loans

683

Evaluation of collateral

Estimation of value

NM*

Loans receivable

9,012

Evaluation of collateral

Estimation of value

NM*

Other real estate owned

546

Appraisal

Appraisal adjustment

10%

(8%)

218

Appraisal

Appraisal adjustment

(7%)

* ~~Not Meaningful.~~ Evaluations of the underlying assets are completed for each collateral dependent 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 included 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.

GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or nonrecurring basis are discussed above. The methodologies for other financial assets and financial liabilities are discussed below.

~~Fair value of financial instruments:~~

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases in which 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. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases could not be realized in immediate settlement of the instruments. Certain financial instruments with a fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Company.

~~The following disclosures represent financial instruments in~~ ~~which the ending balances at September 30, 2017 and December 31, 2016 are not carried at fair value in their entirety on the consolidated balance sheets.~~

~~Cash and due from banks and interest bearing deposits in financial institutions: The recorded amount of these assets approximates fair value.~~

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The following table includes the carrying amounts and estimated fair values of the Company’s financial assets and liabilities as of March 31, 2022 and December 31, 2021 (in thousands):

		2022				2021
	Fair Value			Estimated				Estimated
	Hierarchy	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value

Financial assets:
Cash and cash equivalents	Level 1	$	148,332	$	148,332	$	89,129	$	89,129
Interest-bearing time deposits	Level 1		16,419		16,419		16,922		16,922
Securities available-for-sale	See previous table		823,897		823,897		831,003		831,003
FHLB and FRB stock	Level 2		3,473		3,473		3,422		3,422
Loans receivable, net	Level 2		1,130,077		1,075,680		1,144,108		1,112,684
Accrued income receivable	Level 1		9,330		9,330		10,124		10,124
Financial liabilities:
Deposits	Level 2	$	1,959,893	$	1,961,384	$	1,878,019	$	1,880,137
Securities sold under agreements to repurchase	Level 1		39,902		39,902		39,851		39,851
FHLB advances	Level 2		0		0		3,000		3,071
Accrued interest payable	Level 1		292		292		353		353

~~Securities available-for-sale~~: Fair value measurement for Level 1 securities is based upon quoted prices. Fair value measurement for Level 2 securities are based upon quoted prices, if available. If quoted prices are not available, the Company obtainsThe methodologies used to determine fair value ~~measurements~~as of March 31, 2022 did not change from ~~an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows,~~ the ~~U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and~~methodologies described in the security’s terms and conditions, among other things. Level 1 securities include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. U.S government mortgage-backed securities, state and political subdivisions, some corporate bonds and other equity securities are reported at fair value utilizing Level 2 inputs.December 31, 2021 Annual Financial Statements.

~~Loans receivable~~: The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates, which reflect the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the historical experience, with repayments for each loan classification modified, as required, by an estimate of the effect of current economic and lending conditions. The effect of nonperforming loans is considered in assessing the credit risk inherent in the fair value estimate.

~~Loans held for sale: The fair value of loans held for sale is based on prevailing market prices.~~

~~Deposit~~s: Fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and NOW accounts, and money market accounts, are equal to the amount payable on demand as of the respective balance sheet date. Fair values of certificates of deposit are based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

S~~ecurities sold under agreements to repurchase: The carrying amounts of securities sold under agreements to repurchase approximate fair value because of the generally short-term nature of the instruments.~~

~~FHLB advances and other borrowings:~~ ~~Fair values of FHLB advances and other borrowings are estimated using discounted cash flow analysis based on interest rates currently being offered with similar terms.~~

~~Accrued income receivable and accrued interest payable: The carrying amounts of accrued income receivable and accrued interest payable approximate fair value.~~

Commitments to extend credit and standby letters of ~~credit:~~credit: The fair values of commitments to extend credit and standby letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and credit worthiness of the counterparties. The carrying value and fair value of the commitments to extend credit and standby letters of credit are not considered significant.

Limitations: Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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~~The estimated fair values of the Company’s financial instruments as described above as of September 30, 2017 and December 31, 2016 are as follows:~~ ~~(in thousands)~~

2017

2016

Fair Value

Estimated

Estimated

Hierarchy

Carrying

Fair

Carrying

Fair

Level

Amount

Value

Amount

Value

Financial assets:

Cash and due from banks
Level 1
$ 23,088 $ 23,088 $ 29,478 $ 29,478
Interest bearing deposits
Level 1
35,486 35,486 31,737 31,737
Securities available-for-sale
See previous table
506,610 506,610 516,080 516,080
Loans receivable, net
Level 2
764,229 753,977 752,182 746,580
Loans held for sale
Level 2
280 280 243 243
Accrued income receivable
Level 1
8,423 8,423 7,769 7,769
Financial liabilities:

Deposits
Level 2
$ 1,114,538 $ 1,115,076 $ 1,109,409 $ 1,110,211
Securities sold under agreements to repurchase
Level 1
39,001 39,001 58,337 58,337
FHLB advances
Level 2
19,000 19,046 14,500 14,681
Other borrowings
Level 2
13,000 13,159 13,000 13,386
Accrued interest payable
Level 1
447 447 408 408

~~The methodologies used to determine fair value as of September 30, 2017 did not change from the methodologies described in the December 31, 2016 Annual Financial Statements.~~

~~Table of Contents~~

6~~. Debt and Equity Securities~~

6.	Debt Securities

The amortized cost of securities ~~available-for-sale~~available-for-sale and their approximate fair values as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 are summarized ~~below:~~below (in thousands):

2017:			Gross		Gross
2022:												Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated		Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value

U.S. government treasuries	$	4,412	$	37	$	-		$	4,449	$	212,757	$	16	$	(11,886	)	$	200,887
U.S. government agencies		112,011		807		(161	)		112,657		116,513		99		(4,444	)		112,168
U.S. government mortgage-backed securities		80,948		1,091		(83	)		81,956		151,333		90		(8,916	)		142,507
State and political subdivisions		241,150		2,684		(396	)		243,438		302,881		296		(13,964	)		289,213
Corporate bonds		60,417		560		(143	)		60,834		81,664		235		(2,777	)		79,122
Equity securities, other		3,257		19		-			3,276
	$	502,195	$	5,198	$	(783	)	$	506,610	$	865,148	$	736	$	(41,987	)	$	823,897

2016:			Gross		Gross
2021:												Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated		Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value

U.S. government treasuries	$	4,396	$	18	$	(46	)	$	4,368	$	192,323	$	239	$	(2,083	)	$	190,479
U.S. government agencies		110,372		540		(703	)		110,209		114,531		2,235		(752	)		116,014
U.S. government mortgage-backed securities		82,279		1,018		(439	)		82,858		149,896		1,375		(1,670	)		149,601
State and political subdivisions		265,204		1,660		(2,416	)		264,448		290,548		4,035		(1,724	)		292,859
Corporate bonds		51,731		147		(694	)		51,184		79,887		2,437		(274	)		82,050
Equity securities, other		3,013		-		-			3,013
	$	516,995	$	3,383	$	(4,298	)	$	516,080	$	827,185	$	10,321	$	(6,503	)	$	831,003

The ~~proceeds, gains~~amortized cost and ~~losses from~~fair value of debt securities available-for-sale as of March 31, 2022, are ~~summarized~~ ~~as follows:~~ shown below by expected maturity. Expected maturity will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties ((in ~~thousands)~~thousands).

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Proceeds from sales of securities available-for-sale
$ 933 $ 5,852 $ 11,757 $ 18,738
Gross realized gains on securities available-for-sale
38 66 501 303
Gross realized losses on securities available-for-sale
- (1 ) (2 ) (7 )
Tax provision applicable to net realized gains on securities available-for-sale
14 29 175 110

	Amortized		Estimated
	Cost		Fair Value

Due in one year or less	$	43,084	$	43,195
Due after one year through five years		459,166		439,613
Due after five years through ten years		340,100		319,708
Due after ten years		22,798		21,381
Total	$	865,148	$	823,897

Securities with a carrying value of $217.3 million and $219.7 million at March 31, 2022 and December 31, 2021, respectively, were pledged on public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

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The proceeds and gains on securities available-for-sale for the three months ended March 31, 2022 and 2021 are summarized below (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Proceeds from sales of securities available-for-sale	$	535	$	0
Gross realized gains on securities available-for-sale		35		0
Gross realized losses on securities available-for-sale		0		0

~~Unrealized~~Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and December 31, 2021 are summarized as ~~of September 30, 2017 and December 31, 2016 are as follows:~~follows (in thousands):

Less than 12 Months

12 Months or More

Total

2017:

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Securities available-for-sale:

U.S. government agencies
$ 28,424 $ (125 ) $ 3,773 $ (36 ) $ 32,197 $ (161 )
U.S. government mortgage-backed securities
10,639 (71 ) 1,997 (12 ) 12,636 (83 )
State and political subdivisions
22,029 (81 ) 21,739 (315 ) 43,768 (396 )
Corporate bonds
5,619 (11 ) 7,310 (132 ) 12,929 (143 )
$ 66,711 $ (288 ) $ 34,819 $ (495 ) $ 101,530 $ (783 )

	Less than 12 Months					12 Months or More					Total					Less than 12 Months					12 Months or More					Total
2016:	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
2022:																Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses

Securities available-for-sale:
U.S. government treasuries	$	2,893	$	(46	)	$	-	$	-		$	2,893	$	(46	)	$	181,570	$	(10,962	)	$	11,487	$	(924	)	$	193,057	$	(11,886	)
U.S. government agencies		48,225		(703	)		-		-			48,225		(703	)		77,732		(3,006	)		15,671		(1,438	)		93,403		(4,444	)
U.S. government mortgage-backed securities		33,753		(439	)		-		-			33,753		(439	)		82,105		(4,063	)		51,997		(4,853	)		134,102		(8,916	)
State and political subdivisions		125,558		(2,226	)		6,512		(190	)		132,070		(2,416	)		218,589		(11,894	)		19,703		(2,070	)		238,292		(13,964	)
Corporate bonds		35,703		(694	)		-		-			35,703		(694	)		43,356		(2,603	)		1,460		(174	)		44,816		(2,777	)
	$	246,132	$	(4,108	)	$	6,512	$	(190	)	$	252,644	$	(4,298	)	$	603,352	$	(32,528	)	$	100,318	$	(9,459	)	$	703,670	$	(41,987	)

	Less than 12 Months					12 Months or More					Total
2021:	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses

Securities available-for-sale:
U.S. government treasuries	$	163,206	$	(2,083	)	$	0	$	0		$	163,206	$	(2,083	)
U.S. government agencies		30,647		(570	)		5,836		(182	)		36,483		(752	)
U.S. government mortgage-backed securities		92,192		(1,580	)		2,524		(90	)		94,716		(1,670	)
State and political subdivisions		115,204		(1,667	)		1,725		(57	)		116,929		(1,724	)
Corporate bonds		16,484		(274	)		0		0			16,484		(274	)
	$	417,733	$	(6,174	)	$	10,085	$	(329	)	$	427,818	$	(6,503	)

Gross unrealized losses on debt securities totaled ~~$783,000~~$42.0 million as of ~~September 30, 2017.~~ March 31, 2022. These unrealized losses are generally due to changes in interest rates or general market conditions. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, state or political subdivision, or corporations. Management then determines whether downgrades by bond rating agencies have occurred, and reviews industry analysts’ reports. The Company’s procedures for evaluating investments in states, municipalities and political subdivisions include but are not limited to reviewing the offering statement and the most current available financial information, comparing yields to yields of bonds of similar credit quality, confirming capacity to repay, assessing operating and financial performance, evaluating the stability of tax revenues, considering debt profiles and local demographics, and for revenue bonds, assessing the source and strength of revenue structures for municipal authorities. These procedures, as applicable, are utilized for all municipal purchases and are utilized in whole or in part for monitoring the portfolio of municipal holdings. The Company does not utilize third party credit rating agencies as a primary component of determining if the municipal issuer has an adequate capacity to meet the financial commitments under the security for the projected life of the investment, and, therefore, does not compare internal assessments to those of the credit rating agencies. Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates. Management concluded that the gross unrealized losses on debt securities were temporary. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values and management’s assessments will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements.

Table of Contents

7.	Loans Receivable and Credit Disclosures

7. ~~Loans Receivable~~ The composition of loans receivable as of March 31, 2022 and ~~Credit Disclosures~~December 31, 2021 is as follows (in thousands):

	2022			2021

Real estate - construction	$	46,140		$	42,638
Real estate - 1 to 4 family residential		256,362			246,745
Real estate - commercial		507,598			515,367
Real estate - agricultural		152,136			153,457
Commercial ¹		71,150			75,482
Agricultural		96,197			111,881
Consumer and other		16,647			15,097
		1,146,230			1,160,667
Less:
Allowance for loan losses		(16,484	)		(16,621	)
Deferred loan (fees) and costs, net		331			62
Loans receivable, net	$	1,130,077		$	1,144,108

¹ Commercial loan portfolio includes $0.3 million and $6.0 million of Paycheck Protection Program ("PPP") loans as of March 31, 2022 and December 31, 2021, respectively.

The Paycheck Protection Program (PPP) was established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in response to the Coronavirus Disease 2019 (COVID-19) pandemic. Funding was extended into 2021. The PPP is administered by the Small Business Administration (SBA). PPP loans are forgivable by the SBA in qualifying circumstances and are 100 percent guaranteed by the SBA.

Table of Contents

Activity in the allowance for loan losses, on a disaggregated basis, for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016~~2021 is as ~~follows:~~follows (in thousands):

Three Months Ended September 30, 2017

1-4 Family

Construction

Residential

Commercial

Agricultural

Consumer

Real Estate

Real Estate

Real Estate

Real Estate

Commercial

Agricultural

and Other

Total

Balance, June 30, 2017
$ 780 $ 1,713 $ 4,437 $ 907 $ 2,071 $ 1,154 $ 126 $ 11,188
Provision (credit) for loan losses
(74 ) 15 155 36 (80 ) (34 ) 39 57
Recoveries of loans charged-off
- 4 - - 2 - 4 10
Loans charged-off
- - - - (109 ) - (6 ) (115 )
Balance, September 30, 2017
$ 706 $ 1,732 $ 4,592 $ 943 $ 1,884 $ 1,120 $ 163 $ 11,140

	Nine Months Ended September 30, 2017																					Three Months Ended March 31, 2022
				1-4 Family																					1-4 Family
	Construction			Residential		Commercial		Agricultural								Consumer						Construction			Residential			Commercial			Agricultural								Consumer
	Real Estate			Real Estate		Real Estate		Real Estate		Commercial			Agricultural			and Other			Total			Real Estate			Real Estate			Real Estate			Real Estate		Commercial			Agricultural			and Other			Total
Balance, December 31, 2016	$	908		$	1,711	$	3,960	$	861	$	1,728		$	1,216		$	123		$	10,507
Balance, December 31, 2021																						$	675		$	2,752		$	8,406		$	1,584	$	1,170		$	1,836		$	198		$	16,621
Provision (credit) for loan losses		(202	)		12		632		82		735			(96	)		59			1,222			(30	)		150			(92	)		46		(19	)		(230	)		48			(127	)
Recoveries of loans charged-off		-			9		-		-		30			-			8			47			0			1			0			0		1			0			1			3
Loans charged-off		-			-		-		-		(609	)		-			(27	)		(636	)		0			(4	)		0			0		0			0			(9	)		(13	)
Balance, September 30, 2017	$	706		$	1,732	$	4,592	$	943	$	1,884		$	1,120		$	163		$	11,140
Balance, March 31, 2022																						$	645		$	2,899		$	8,314		$	1,630	$	1,152		$	1,606		$	238		$	16,484

Three Months Ended September 30, 2016

1-4 Family

Construction

Residential

Commercial

Agricultural

Consumer

Real Estate

Real Estate

Real Estate

Real Estate

Commercial

Agricultural

and Other

Total

Balance, June 30, 2016
$ 758 $ 1,742 $ 3,890 $ 834 $ 1,439 $ 1,219 $ 253 $ 10,135
Provision (credit) for loan losses
121 32 (89 ) - 169 12 (10 ) 235
Recoveries of loans charged-off
15 1 - - 75 - 2 93
Loans charged-off
- - - - (1 ) - (11 ) (12 )
Balance, September 30, 2016
$ 894 $ 1,775 $ 3,801 $ 834 $ 1,682 $ 1,231 $ 234 $ 10,451

Nine Months Ended September 30, 2016

1-4 Family

Construction

Residential

Commercial

Agricultural

Consumer

Real Estate

Real Estate

Real Estate

Real Estate

Commercial

Agricultural

and Other

Total

Balance, December 31, 2015
$ 999 $ 1,806 $ 3,557 $ 760 $ 1,371 $ 1,256 $ 239 $ 9,988
Provision (credit) for loan losses
(135 ) (34 ) 244 74 308 (25 ) 9 441
Recoveries of loans charged-off
30 3 - - 81 - 7 121
Loans charged-off
- - - - (78 ) - (21 ) (99 )
Balance, September 30, 2016
$ 894 $ 1,775 $ 3,801 $ 834 $ 1,682 $ 1,231 $ 234 $ 10,451

~~Table of Contents~~

	Three Months Ended March 31, 2021
			1-4 Family
	Construction		Residential			Commercial		Agricultural									Consumer
	Real Estate		Real Estate			Real Estate		Real Estate			Commercial			Agricultural			and Other			Total
Balance, December 31, 2020	$	725	$	2,581		$	8,930	$	1,595		$	1,453		$	1,696		$	235		$	17,215
Provision (credit) for loan losses		143		(431	)		118		(97	)		(79	)		(82	)		2			(426	)
Recoveries of loans charged-off		0		263			1		0			1			0			4			269
Loans charged-off		0		(30	)		0		0			(113	)		0			(8	)		(151	)
Balance, March 31, 2021	$	868	$	2,383		$	9,049	$	1,498		$	1,262		$	1,614		$	233		$	16,907

Allowance for loan losses disaggregated on the basis of impairment analysis method as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 is as ~~follows:~~follows (in ~~thousands~~thousands)):

2017			1-4 Family
2022																			1-4 Family
	Construction		Residential		Commercial		Agricultural						Consumer				Construction		Residential		Commercial		Agricultural						Consumer
	Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total		Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total
Individually evaluated for impairment	$	-	$	28	$	-	$	-	$	747	$	-	$	48	$	823	$	0	$	53	$	1,139	$	0	$	42	$	119	$	20	$	1,373
Collectively evaluated for impairment		706		1,704		4,592		943		1,137		1,120		115		10,317		645		2,846		7,175		1,630		1,110		1,487		218		15,111
Balance September 30, 2017	$	706	$	1,732	$	4,592	$	943	$	1,884	$	1,120	$	163	$	11,140
Balance March 31, 2022																	$	645	$	2,899	$	8,314	$	1,630	$	1,152	$	1,606	$	238	$	16,484

2016			1-4 Family
2021																			1-4 Family
	Construction		Residential		Commercial		Agricultural						Consumer				Construction		Residential		Commercial		Agricultural						Consumer
	Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total		Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total
Individually evaluated for impairment	$	-	$	76	$	-	$	-	$	644	$	-	$	-	$	720	$	0	$	40	$	1,139	$	0	$	60	$	132	$	21	$	1,392
Collectively evaluated for impairment		908		1,635		3,960		861		1,084		1,216		123		9,787		675		2,712		7,267		1,584		1,110		1,704		177		15,229
Balance December 31, 2016	$	908	$	1,711	$	3,960	$	861	$	1,728	$	1,216	$	123	$	10,507
Balance December 31, 2021																	$	675	$	2,752	$	8,406	$	1,584	$	1,170	$	1,836	$	198	$	16,621

Table of Contents

Loans receivable disaggregated on the basis of impairment analysis method as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 is as follows (in thousands):

2017			1-4 Family
2022																			1-4 Family
	Construction		Residential		Commercial		Agricultural						Consumer				Construction		Residential		Commercial		Agricultural						Consumer
	Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total		Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total
Individually evaluated for impairment	$	-	$	692	$	703	$	-	$	3,250	$	-	$	85	$	4,730	$	0	$	976	$	9,789	$	542	$	262	$	564	$	24	$	12,157
Collectively evaluated for impairment		44,041		148,148		350,508		79,181		70,916		67,711		10,201		770,706		46,140		255,386		497,809		151,594		70,888		95,633		16,623		1,134,073

Balance September 30, 2017	$	44,041	$	148,840	$	351,211	$	79,181	$	74,166	$	67,711	$	10,286	$	775,436
Balance March 31, 2022																	$	46,140	$	256,362	$	507,598	$	152,136	$	71,150	$	96,197	$	16,647	$	1,146,230

2016			1-4 Family
2021																			1-4 Family
	Construction		Residential		Commercial		Agricultural						Consumer				Construction		Residential		Commercial		Agricultural						Consumer
	Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total		Real Estate		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		and Other		Total
Individually evaluated for impairment	$	-	$	660	$	399	$	-	$	3,942	$	-	$	76	$	5,077	$	0	$	980	$	9,792	$	546	$	330	$	637	$	27	$	12,312
Collectively evaluated for impairment		61,042		148,847		315,303		73,032		70,436		76,994		12,054		757,708		42,638		245,765		505,575		152,911		75,152		111,244		15,070		1,148,355

Balance December 31, 2016	$	61,042	$	149,507	$	315,702	$	73,032	$	74,378	$	76,994	$	12,130	$	762,785
Balance December 31, 2021																	$	42,638	$	246,745	$	515,367	$	153,457	$	75,482	$	111,881	$	15,097	$	1,160,667

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 payment of principal and 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. The Company ~~will apply~~applies its normal loan review procedures to identify loans that should be evaluated for impairment.

1918

Table of Contents

~~The following is a recap of impaired~~Impaired loans,, on a disaggregated basis, as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016:~~ 2021 (in thousands):

	2017						2016						2022							2021
			Unpaid						Unpaid							Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related		Recorded			Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance		Investment			Balance		Allowance		Investment		Balance		Allowance
With no specific reserve recorded:
Real estate - construction	$	-	$	-	$	-	$	-	$	-	$	-	$	0		$	0	$	-	$	0	$	0	$	-
Real estate - 1 to 4 family residential		610		750		-		452		473		-		651			719		-		677		739		-
Real estate - commercial		703		1,369		-		399		1,025		-		121			140		-		124		142		-
Real estate - agricultural		-		-		-		-		-		-		542			617		-		546		1,001		-
Commercial		127		150		-		2,747		2,672		-		220			258		-		233		269		-
Agricultural		-		-		-		-		-		-		255			486		-		322		521		-
Consumer and other		28		30		-		76		81		-		4			6		-		6		8		-
Total loans with no specific reserve:		1,468		2,299		-		3,674		4,251		-		1,793			2,226		-		1,908		2,680		-

With an allowance recorded:
Real estate - construction		-		-		-		-		-		-		0			0		0		0		0		0
Real estate - 1 to 4 family residential		82		104		28		208		360		76		325			341		53		303		314		40
Real estate - commercial		-		-		-		-		-		-		9,668			10,001		1,139		9,668		10,001		1,139
Real estate - agricultural		-		-		-		-		-		-		0			0		0		0		0		0
Commercial		3,123		3,392		747		1,195		1,286		644		42			42		42		97		98		60
Agricultural		-		-		-		-		-		-		309			315		119		315		315		132
Consumer and other		57		60		48		-		-		-		20			22		20		21		23		21
Total loans with specific reserve:		3,262		3,556		823		1,403		1,646		720		10,364	��		10,721		1,373		10,404		10,751		1,392

Total
Real estate - construction		-		-		-		-		-		-		0			0		0		0		0		0
Real estate - 1 to 4 family residential		692		854		28		660		833		76		976			1,060		53		980		1,053		40
Real estate - commercial		703		1,369		-		399		1,025		-		9,789			10,141		1,139		9,792		10,143		1,139
Real estate - agricultural		-		-		-		-		-		-		542			617		0		546		1,001		0
Commercial		3,250		3,542		747		3,942		3,958		644		262			300		42		330		367		60
Agricultural		-		-		-		-		-		-		564			801		119		637		836		132
Consumer and other		85		90		48		76		81		-		24			28		20		27		31		21

	$	4,730	$	5,855	$	823	$	5,077	$	5,897	$	720	$	12,157		$	12,947	$	1,373	$	12,312	$	13,431	$	1,392

2019

Table of Contents

~~The following is a recap of~~ ~~the average~~Average recorded investment and interest income recognized on impaired loans for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016:~~2021 (in thousands):

Three Months Ended September 30,

2017

2016

Average

Interest

Average

Interest

Recorded

Income

Recorded

Income

Investment

Recognized

Investment

Recognized

With no specific reserve recorded:

Real estate - construction
$ - $ - $ - $ -
Real estate - 1 to 4 family residential
631 18 481 -
Real estate - commercial
716 - 450 -
Real estate - agricultural
- - - -
Commercial
139 2 67 -
Agricultural
- - 11 -
Consumer and other
46 - 88 6
Total loans with no specific reserve:
1,532 20 1,097 6

With an allowance recorded:

Real estate - construction
- - - -
Real estate - 1 to 4 family residential
128 - 626 -
Real estate - commercial
- - - -
Real estate - agricultural
- - - -
Commercial
3,263 - 1,003 2
Agricultural
- - - -
Consumer and other
29 - 1 -
Total loans with specific reserve:
3,420 - 1,630 2

Total

Real estate - construction
- - - -
Real estate - 1 to 4 family residential
759 18 1,107 -
Real estate - commercial
716 - 450 -
Real estate - agricultural
- - - -
Commercial
3,402 2 1,070 2
Agricultural
- - 11 -
Consumer and other
75 - 89 6

$ 4,952 $ 20 $ 2,727 $ 8

~~Table of Contents~~

	Nine Months Ended September 30,								Three Months Ended March 31,
	2017				2016				2022				2021
	Average		Interest		Average		Interest		Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income		Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized		Investment		Recognized		Investment		Recognized
With no specific reserve recorded:
Real estate - construction	$	-	$	-	$	-	$	31	$	0	$	0	$	167	$	0
Real estate - 1 to 4 family residential		535		27		438		1		664		3		361		0
Real estate - commercial		648		-		465		22		123		0		192		297
Real estate - agricultural		-		-		-		-		544		0		1,378		25
Commercial		1,457		3		39		-		227		4		546		0
Agricultural		-		-		11		-		289		0		360		13
Consumer and other		60		-		66		6		5		0		6		0
Total loans with no specific reserve:		2,700		30		1,019		60		1,852		7		3,010		335

With an allowance recorded:
Real estate - construction		16		2		-		-		0		0		0		0
Real estate - 1 to 4 family residential		162		-		663		5		314		0		509		0
Real estate - commercial		-		-		26		-		9,668		0		10,016		0
Real estate - agricultural		-		-		-		-		0		0		0		0
Commercial		2,193		-		732		2		70		0		333		0
Agricultural		-		-		-		-		312		0		443		0
Consumer and other		15		1		1		-		21		0		40		0
Total loans with specific reserve:		2,386		3		1,422		7		10,385		0		11,341		0

Total
Real estate - construction		16		2		-		31		0		0		167		0
Real estate - 1 to 4 family residential		697		27		1,101		6		978		3		870		0
Real estate - commercial		648		-		491		22		9,791		0		10,208		297
Real estate - agricultural		-		-		-		-		544		0		1,378		25
Commercial		3,650		3		771		2		297		4		879		0
Agricultural		-		-		11		-		601		0		803		13
Consumer and other		75		1		67		6		26		0		46		0

	$	5,086	$	33	$	2,441	$	67	$	12,237	$	7	$	14,351	$	335

~~The~~ ~~interest foregone on nonaccrual loans for the three months ended September 30, 2017 and 2016 was approximately $88,000 and $46,000, respectively.~~ The interest foregone on nonaccrual loans for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016~~2021 was approximately ~~$289,000~~$143 thousand and ~~$124,000,~~$199 thousand, respectively.

TheNonaccrual loans at March 31, 2022 and December 31, 2021 were $12.2 million and $12.3 million, respectively.

The Company had loans meeting the definition of a troubled debt restructuring (TDR) of ~~$3,098,000~~$11.27 million as of ~~September 30, 2017,~~ March 31, 2022, all of which were included in impaired and nonaccrual loans. The Company had TDRs of ~~$3,672,000~~$11.30 million as of December 31, ~~2016,~~ 2021, all of which were included in impaired and nonaccrual loans.

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T~~he following table sets forth information on the~~The Company’s TDRs, on a disaggregated basis, occurring in the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016:~~ 2021, were as follows (dollarsin ~~thousands)~~thousands):

Three Months Ended September 30,

2017

2016

Pre-Modification

Post-Modification

Pre-Modification

Post-Modification

Outstanding

Outstanding

Outstanding

Outstanding

Number of

Recorded

Recorded

Number of

Recorded

Recorded

Contracts

Investment

Investment

Contracts

Investment

Investment

Real estate - construction
- $ - $ - - $ - $ -
Real estate - 1 to 4 family residential
- - - - - -
Real estate - commercial
- - - - - -
Real estate - agricultural
- - - - - -
Commercial
- - - - - -
Agricultural
- - - - - -
Consumer and other
- - - - - -

- $ - $ - - $ - $ -

	Nine Months Ended September 30,												Three Months Ended March 31,
	2017						2016						2022						2021
			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification				Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded		Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Contracts		Investment		Investment		Contracts		Investment		Investment		Contracts		Investment		Investment		Contracts		Investment		Investment

Real estate - construction		-	$	-	$	-		-	$	-	$	-		0	$	0	$	0		0	$	0	$	0
Real estate - 1 to 4 family residential		-		-		-		-		-		-		0		0		0		2		153		153
Real estate - commercial		-		-		-		-		-		-		0		0		0		0		0		0
Real estate - agricultural		-		-		-		-		-		-		0		0		0		0		0		0
Commercial		2		93		99		3		702		705		0		0		0		1		58		58
Agricultural		-		-		-		-		-		-		0		0		0		0		0		0
Consumer and other		-		-		-		3		70		70		0		0		0		0		0		0

		2	$	93	$	99		6	$	772	$	775		0	$	0	$	0		3	$	211	$	211

During the three ~~and nine~~ months ended ~~September 30, 2017,~~ March 31, 2022, the Company did not grant any concessions to borrowers facing financial difficulties. During the three months ended March 31, 2021, the Company granted concessions to two borrowers, ~~that were experiencing~~with 3 contracts, facing financial difficulties. The loans were restructured for an extended ~~beyond their normal terms and on one loan the interest was capitalized.~~maturity without principal reductions or an amortization period longer than a typical loan.

~~During~~There were 0 TDR loans that were modified during the ~~three~~twelve months ended ~~September 30, 2016, the Company did not grant any concessions to any borrowers facing financial difficulties.~~ ~~During the nine months ended September 30, 2016, the Company granted concessions to two borrowers experiencing financial difficulties with six loans.~~March 31, 2022 that had payment defaults. The ~~three consumer loans were extended beyond normal terms at an interest rate below a market interest rate. The three commercial operating loans were extended beyond normal terms.~~

~~The~~ Company considers TDR loans to have payment default when it is past due 60 days or more.

~~No TDR modified during the twelve months ended~~ ~~September 30, 2017 and 2016 had payment defaults.~~

~~A $530,000 specific reserve was established in the nine months ended September 30, 2017 on two TDR loans.~~ There were ~~$257,000~~no net charge-offs and $262 thousand of net ~~charge-offs~~recoveries related to TDRs for the ~~nine~~three months ended ~~September 30, 2017. There were no charge-offs related to TDRs~~March 31, 2022 and 2021, respectively. No additional specific reserve was provided for the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2022 and 2021.

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AnAn aging analysis of the recorded investments in loans, on a disaggregated basis, as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016,~~ 2021, is as ~~follows:~~follows (in thousands):

2017			90 Days								90 Days
2022															90 Days								90 Days
	30-89		or Greater		Total						or Greater		30-89		or Greater		Total						or Greater
	Past Due		Past Due		Past Due		Current		Total		Accruing		Past Due		Past Due		Past Due		Current		Total		Accruing

Real estate - construction	$	205	$	-	$	205	$	43,836	$	44,041	$	-	$	0	$	0	$	0	$	46,140	$	46,140	$	0
Real estate - 1 to 4 family residential		1,065		476		1,541		147,299		148,840		81		989		216		1,205		255,157		256,362		0
Real estate - commercial		312		398		710		350,501		351,211		-		24		0		24		507,574		507,598		0
Real estate - agricultural		377		-		377		78,804		79,181		-		408		0		408		151,728		152,136		0
Commercial		129		429		558		73,608		74,166		-		549		49		598		70,552		71,150		0
Agricultural		207		-		207		67,504		67,711		-		894		0		894		95,303		96,197		0
Consumer and other		43		32		75		10,211		10,286		-		15		0		15		16,632		16,647		0

	$	2,338	$	1,335	$	3,673	$	771,763	$	775,436	$	81	$	2,879	$	265	$	3,144	$	1,143,086	$	1,146,230	$	0

2016			90 Days								90 Days
2021															90 Days								90 Days
	30-89		or Greater		Total						or Greater		30-89		or Greater		Total						or Greater
	Past Due		Past Due		Past Due		Current		Total		Accruing		Past Due		Past Due		Past Due		Current		Total		Accruing

Real estate - construction	$	-	$	-	$	-	$	61,042	$	61,042	$	-	$	0	$	0	$	0	$	42,638	$	42,638	$	0
Real estate - 1 to 4 family residential		1,577		35		1,612		147,895		149,507		19		1,198		482		1,680		245,065		246,745		169
Real estate - commercial		1,420		-		1,420		314,282		315,702		-		24		0		24		515,343		515,367		0
Real estate - agricultural		-		-		-		73,032		73,032		-		30		0		30		153,427		153,457		0
Commercial		84		747		831		73,547		74,378		-		251		15		266		75,216		75,482		0
Agricultural		-		-		-		76,994		76,994		-		172		0		172		111,709		111,881		0
Consumer and other		36		3		39		12,091		12,130		3		49		0		49		15,048		15,097		0

	$	3,117	$	785	$	3,902	$	758,883	$	762,785	$	22	$	1,724	$	497	$	2,221	$	1,158,446	$	1,160,667	$	169

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The credit risk profile by internally assigned grade, on a disaggregated basis, asas of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 is as ~~follows:~~follows (in thousands):

2017	Construction		Commercial		Agricultural
2022													Construction		Commercial		Agricultural
	Real Estate		Real Estate		Real Estate		Commercial		Agricultural		Total		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		Total

Pass	$	41,032	$	329,263	$	57,569	$	59,420	$	42,695	$	529,979	$	45,904	$	388,722	$	125,766	$	61,302	$	80,758	$	702,452
Watch		3,009		17,927		18,984		10,020		23,828		73,768		236		78,615		20,791		7,372		14,293		121,307
Special Mention		-		189		1,234		-		-		1,423		0		830		0		633		0		1,463
Substandard		-		3,129		1,394		1,478		1,188		7,189		0		29,642		5,037		1,581		582		36,842
Substandard-Impaired		-		703		-		3,248		-		3,951		0		9,789		542		262		564		11,157

	$	44,041	$	351,211	$	79,181	$	74,166	$	67,711	$	616,310	$	46,140	$	507,598	$	152,136	$	71,150	$	96,197	$	873,221

2016	Construction		Commercial		Agricultural
2021													Construction		Commercial		Agricultural
	Real Estate		Real Estate		Real Estate		Commercial		Agricultural		Total		Real Estate		Real Estate		Real Estate		Commercial		Agricultural		Total

Pass	$	57,420	$	288,107	$	51,720	$	59,506	$	57,415	$	514,168	$	38,753	$	381,346	$	126,157	$	63,141	$	95,289	$	704,686
Watch		3,245		22,833		15,251		9,512		18,938		69,779		239		99,127		17,853		8,132		7,421		132,772
Special Mention		-		204		4,228		96		75		4,603		0		3,085		3,519		762		7,664		15,030
Substandard		377		4,159		1,833		1,322		566		8,257		3,646		22,017		5,382		3,117		870		35,032
Substandard-Impaired		-		399		-		3,942		-		4,341		0		9,792		546		330		637		11,305

	$	61,042	$	315,702	$	73,032	$	74,378	$	76,994	$	601,148	$	42,638	$	515,367	$	153,457	$	75,482	$	111,881	$	898,825

The credit risk profile based on payment activity, on a disaggregated basis, asas of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 is as ~~follows:~~follows (in thousands):

2017	1-4 Family
2022							1-4 Family
	Residential		Consumer				Residential		Consumer
	Real Estate		and Other		Total		Real Estate		and Other		Total

Performing	$	148,069	$	10,202	$	158,271	$	255,386	$	16,623	$	272,009
Non-performing		771		84		855		976		24		1,000

	$	148,840	$	10,286	$	159,126	$	256,362	$	16,647	$	273,009

2016	1-4 Family
2021							1-4 Family
	Residential		Consumer				Residential		Consumer
	Real Estate		and Other		Total		Real Estate		and Other		Total

Performing	$	148,828	$	12,051	$	160,879	$	245,598	$	15,067	$	260,665
Non-performing		679		79		758		1,147		30		1,177

	$	149,507	$	12,130	$	161,637	$	246,745	$	15,097	$	261,842

8. ~~Goodwill~~

G~~oodwill is not amortized but is evaluated for impairment at least annually. For income tax purposes, goodwill is amortized over fifteen years.~~

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~~9. Intangible assets~~

8.	Intangible assets

The following sets forth the carrying amounts and accumulated amortization of the intangible assets at ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016:~~ 2021 (in thousands):

	2017				2016				2022				2021
	Gross		Accumulated		Gross		Accumulated		Gross		Accumulated		Gross		Accumulated
	Amount		Amortization		Amount		Amortization		Amount		Amortization		Amount		Amortization

Core deposit intangible asset	$	2,518	$	1,793	$	2,518	$	1,563	$	6,411	$	4,169	$	6,411	$	4,043
Customer list		474		65		412		14		535		418		535		398

Total	$	2,992	$	1,858	$	2,930	$	1,577	$	6,946	$	4,587	$	6,946	$	4,441

The weighted average remaining life of the intangible assets is approximately 3 years and 4 years as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016.~~2021.

The following sets forth the activity related to the intangible assets for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016:~~2021 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Beginning intangible asset, net
$ 1,212 $ 1,122 $ 1,353 $ 1,309
Adjustment to intangible asset
12 - 62 -
Amortization
(90 ) (86 ) (281 ) (273 )

Ending intangible asset, net
$ 1,134 $ 1,036 $ 1,134 $ 1,036

	Three Months Ended
	March 31,
	2022			2021

Beginning intangible assets, net	$	2,505		$	3,133
Amortization		(146	)		(160	)

Ending intangible assets, net	$	2,359		$	2,973

E~~stimated~~Estimated remaining amortization expense on ~~core deposit~~ intangible assets for the years ending December 31^stis as ~~follows:~~follows (in thousands):

2017
$ 85
2018
319
2019
196
2020
139
2021
139
2022
133
2023
123

$ 1,134

2022		428
2023		502
2024		337
2025		300
2026		268
2027		240
After		284

Total	$	2,359

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9.	~~10.~~ Pledged Collateral Related to Securities Sold Under Repurchase Agreements

The repurchase agreements mature daily and the following sets forth the pledged collateral at estimated fair value related to securities sold under repurchase agreements ~~and term repurchase agreements~~ as of ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016:~~ 2021 (in thousands):

	2017						2016
	Remaining Contractual Maturity of the Agreements
	Overnight		Greater than		Total		Overnight		Greater than		Total
			90 days						90 days
													2022		2021
Securities sold under agreements to repurchase:
U.S. government treasuries	$	1,485	$	-	$	1,485	$	1,476	$	-	$	1,476	$	4,796	$	4,971
U.S. government agencies		48,363		-		48,363		46,557		-		46,557		39,461		38,045
U.S. government mortgage-backed securities		24,514		-		24,514		30,376		-		30,376		9,311		11,127

Total	$	74,362	$	-	$	74,362	$	78,409	$	-	$	78,409

Term repurchase agreements (Other borrowings):
U.S. government agencies	$	-	$	15,174	$	15,174	$	-	$	15,068	$	15,068
U.S. government mortgage-backed securities		-		-		-		-		354		354

Total	$	-	$	15,174	$	15,174	$	-	$	15,422	$	15,422

Total pledged collateral	$	74,362	$	15,174	$	89,536	$	78,409	$	15,422	$	93,831	$	53,568	$	54,143

In the event the repurchase agreements exceed the estimated fair value of the pledged securities available-for-sale, the Company has unpledged securities available-for-sale that may be pledged on the repurchase agreements.

~~Table of Contents~~

10.

Borrowings

~~11.~~ On June 11, 2021, the Company entered into a promissory note and line of credit agreement with an unaffiliated bank, providing for a five-year four million dollar line of credit facility. The Company had 0 outstanding borrowings on the line of credit as of March 31, 2022 and December 31, 2021.

The Company had $3.0 million of FHLB advances as of December 31, 2021 and NaN as of March 31, 2022.

11.

Income Taxes

The tax effects of temporary differences related to income taxes are included in deferred income taxes. The change in deferred income taxes since December 31, 2021 is due primarily to the increase in the unrealized losses on investment securities.

12.

Commitments, Contingencies and Concentrations of Credit Risk

On April 16, 2021, the Company entered into a $1.7 million commitment with a contractor to build a new branch in West Des Moines, Iowa. The Company has $406 thousand of the commitment remaining at March 31, 2022.

13.

Regulatory Matters

The Company and the Banks are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks 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 Company's and the Banks' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believed the Company and the Banks met all capital adequacy requirements to which they were subject as of March 31, 2022.

Table of Contents

The Company and the Banks’ capital amounts and ratios as of March 31, 2022 and December 31, 2021 are as ~~follows:~~follows (dollars in thousands):

To Be Well

Capitalized Under

For Capital

Prompt Corrective

Actual

Adequacy Purposes *

Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

As of September 30, 2017:

Total capital (to risk- weighted assets):

Consolidated
$ 175,203 17.7 % $ 91,324 9.25 % N/A N/A
Boone Bank & Trust
15,325 16.7 8,486 9.25 $ 9,174 10.0 %
First National Bank
81,177 15.4 48,867 9.25 52,829 10.0
Reliance State Bank
26,957 15.9 15,661 9.25 16,931 10.0
State Bank & Trust
20,217 16.5 11,337 9.25 12,256 10.0
United Bank & Trust
14,903 20.4 6,741 9.25 7,288 10.0

Tier 1 capital (to risk- weighted assets):

Consolidated
$ 163,536 16.6 % $ 71,578 7.25 % N/A N/A
Boone Bank & Trust
14,419 15.7 6,651 7.25 $ 7,339 8.0 %
First National Bank
75,221 14.2 38,301 7.25 42,263 8.0
Reliance State Bank
24,947 14.7 12,275 7.25 13,545 8.0
State Bank & Trust
18,680 15.2 8,886 7.25 9,805 8.0
United Bank & Trust
14,084 19.3 5,284 7.25 5,830 8.0

Tier 1 capital (to average- weighted assets):

Consolidated
$ 163,536 12.1 % $ 53,995 4.00 % N/A N/A
Boone Bank & Trust
14,419 10.5 5,484 4.00 $ 6,855 5.0 %
First National Bank
75,221 10.0 29,942 4.00 37,428 5.0
Reliance State Bank
24,947 12.2 8,147 4.00 10,184 5.0
State Bank & Trust
18,680 11.9 6,297 4.00 7,871 5.0
United Bank & Trust
14,084 12.9 4,372 4.00 5,465 5.0

Common equity tier 1 capital (to risk-weighted assets):

Consolidated
$ 163,536 16.6 % $ 56,769 5.75 % N/A N/A
Boone Bank & Trust
14,419 15.7 5,275 5.75 $ 5,963 6.5 %
First National Bank
75,221 14.2 30,377 5.75 34,339 6.5
Reliance State Bank
24,947 14.7 9,735 5.75 11,005 6.5
State Bank & Trust
18,680 15.2 7,047 5.75 7,967 6.5
United Bank & Trust
14,084 19.3 4,190 5.75 4,737 6.5

* These ratios for September 30, 2017 include a capital conservation buffer of 1.25%, except for the Tier 1 capital to average weighted assets ratios.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio

As of March 31, 2022:
Total capital (to risk-weighted assets):
Consolidated	$	211,219		14.9	%	$	148,534		10.50	%		N/A		N/A
Boone Bank & Trust		15,704		13.5			12,251		10.50			11,668		10.0	%
First National Bank		106,493		14.5			77,007		10.50			73,340		10.0
Iowa State Savings Bank		24,309		15.9			16,043		10.50			15,280		10.0
Reliance State Bank		27,424		15.0			19,235		10.50			18,319		10.0
State Bank & Trust		21,243		14.8			15,114		10.50			14,395		10.0
United Bank & Trust		12,137		15.3			8,328		10.50			7,931		10.0

Tier 1 capital (to risk-weighted assets):
Consolidated	$	194,024		13.7	%	$	120,242		8.50	%		N/A		N/A
Boone Bank & Trust		14,778		12.7			9,917		8.50			9,334		8.0	%
First National Bank		97,319		13.3			62,339		8.50			58,672		8.0
Iowa State Savings Bank		23,048		15.1			12,988		8.50			12,224		8.0
Reliance State Bank		25,131		13.7			15,571		8.50			14,655		8.0
State Bank & Trust		19,590		13.6			12,235		8.50			11,516		8.0
United Bank & Trust		11,144		14.1			6,742		8.50			6,345		8.0

Tier 1 capital (to average-assets):
Consolidated	$	194,024		9.1	%	$	85,639		4.00	%		N/A		N/A
Boone Bank & Trust		14,778		9.0			6,538		4.00			8,172		5.0	%
First National Bank		97,319		8.9			43,893		4.00			54,866		5.0
Iowa State Savings Bank		23,048		9.0			10,219		4.00			12,774		5.0
Reliance State Bank		25,131		8.6			11,642		4.00			14,553		5.0
State Bank & Trust		19,590		8.9			8,812		4.00			11,016		5.0
United Bank & Trust		11,144		8.7			5,137		4.00			6,421		5.0

Common equity tier 1 capital (to risk-weighted assets):
Consolidated	$	194,024		13.7	%	$	99,022		7.00	%		N/A		N/A
Boone Bank & Trust		14,778		12.7			8,167		7.00			7,584		6.5	%
First National Bank		97,319		13.3			51,338		7.00			47,671		6.5
Iowa State Savings Bank		23,048		15.1			10,696		7.00			9,932		6.5
Reliance State Bank		25,131		13.7			12,823		7.00			11,907		6.5
State Bank & Trust		19,590		13.6			10,076		7.00			9,356		6.5
United Bank & Trust		11,144		15.1			5,552		7.00			5,155		6.5

Table of Contents

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio

As of December 31, 2021:
Total capital (to risk-weighted assets):
Consolidated	$	208,480		14.8	%	$	146,881		10.50	%		N/A		N/A
Boone Bank & Trust		15,603		14.2			11,562		10.50			11,012		10.0	%
First National Bank		104,608		14.5			75,832		10.50			72,221		10.0
Iowa State Savings Bank		24,008		15.9			15,895		10.50			15,138		10.0
Reliance State Bank		27,292		13.6			21,136		10.50			20,129		10.0
State Bank & Trust		20,885		15.2			14,416		10.50			13,730		10.0
United Bank & Trust		12,001		15.7			8,039		10.50			7,657		10.0

Tier 1 capital (to risk-weighted assets):
Consolidated	$	191,161		13.7	%	$	118,904		8.50	%		N/A		N/A
Boone Bank & Trust		14,652		13.3			9,360		8.50			8,809		8.0	%
First National Bank		95,573		13.2			61,388		8.50			57,777		8.0
Iowa State Savings Bank		22,747		15.0			12,868		8.50			12,111		8.0
Reliance State Bank		24,774		12.3			17,110		8.50			16,103		8.0
State Bank & Trust		19,231		14.0			11,670		8.50			10,984		8.0
United Bank & Trust		11,042		14.4			6,508		8.50			6,125		8.0

Tier 1 capital (to average-assets):
Consolidated	$	191,161		9.0	%	$	84,585		4.00	%		N/A		N/A
Boone Bank & Trust		14,652		9.0			6,525		4.00			8,157		5.0	%
First National Bank		95,573		8.7			44,333		4.00			55,416		5.0
Iowa State Savings Bank		22,747		9.1			10,102		4.00			12,628		5.0
Reliance State Bank		24,774		8.8			11,396		4.00			14,245		5.0
State Bank & Trust		19,231		9.1			8,469		4.00			10,586		5.0
United Bank & Trust		11,042		8.9			4,955		4.00			6,193		5.0

Common equity tier 1 capital (to risk-weighted assets):
Consolidated	$	191,161		13.7	%	$	97,921		7.00	%		N/A		N/A
Boone Bank & Trust		14,652		13.3			7,708		7.00			7,158		6.5	%
First National Bank		95,573		13.2			50,555		7.00			46,944		6.5
Iowa State Savings Bank		22,747		15.0			10,597		7.00			9,840		6.5
Reliance State Bank		24,774		12.3			14,091		7.00			13,084		6.5
State Bank & Trust		19,231		14.0			9,611		7.00			8,924		6.5
United Bank & Trust		11,042		14.4			5,360		7.00			4,977		6.5

To Be Well

Capitalized Under

For Capital

Prompt Corrective

Actual

Adequacy Purposes

Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

As of December 31, 2016:

Total capital (to risk- weighted assets):

Consolidated
$ 170,358 17.2 % $ 85,241 8.625 % N/A N/A
Boone Bank & Trust
15,044 17.2 7,534 8.625 $ 8,735 10.0 %
First National Bank
78,322 15.3 44,279 8.625 51,338 10.0
Reliance State Bank
26,095 14.1 15,927 8.625 18,466 10.0
State Bank & Trust
20,170 16.4 10,590 8.625 12,278 10.0
United Bank & Trust
14,897 19.2 6,684 8.625 7,749 10.0

Tier 1 capital (to risk- weighted assets):

Consolidated
$ 159,325 16.1 % $ 65,475 6.625 % N/A N/A
Boone Bank & Trust
14,132 16.2 5,787 6.625 $ 6,988 8.0 %
First National Bank
72,750 14.2 34,011 6.625 41,070 8.0
Reliance State Bank
24,139 13.1 12,234 6.625 14,773 8.0
State Bank & Trust
18,633 15.2 8,134 6.625 9,822 8.0
United Bank & Trust
14,078 18.2 5,134 6.625 6,199 8.0

Tier 1 capital (to average- weighted assets):

Consolidated
$ 159,325 12.0 % $ 53,316 4.000 % N/A N/A
Boone Bank & Trust
14,132 10.2 5,529 4.000 $ 6,911 5.0 %
First National Bank
72,750 10.0 29,077 4.000 36,347 5.0
Reliance State Bank
24,139 11.5 8,374 4.000 10,467 5.0
State Bank & Trust
18,633 11.6 6,449 4.000 8,061 5.0
United Bank & Trust
14,078 12.5 4,523 4.000 5,654 5.0

Common equity tier 1 capital (to risk-weighted assets):

Consolidated
$ 159,325 16.1 % $ 50,650 5.125 % N/A N/A
Boone Bank & Trust
14,132 16.2 4,477 5.125 $ 5,678 6.5 %
First National Bank
72,750 14.2 26,311 5.125 33,370 6.5
Reliance State Bank
24,139 13.1 9,464 5.125 12,003 6.5
State Bank & Trust
18,633 15.2 6,292 5.125 7,981 6.5
United Bank & Trust
14,078 18.2 3,972 5.125 5,037 6.5

* These ratios for December 31, 2016 include a capital conservation buffer

Table of ~~0.625%, except for the Tier 1 capital to average weighted assets ratios.~~

Contents

T~~he Federal Reserve Board~~The Company and the ~~FDIC issued final~~Banks are subject to the rules ~~implementing~~of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection ~~Act changes in July 2013.~~Act. The rules ~~revise minimum capital requirements and adjust prompt corrective action thresholds. The final rules revise~~include the ~~regulatory capital elements, add~~implementation of a new common equity Tier I capital ratio, increase the minimum Tier 1 capital ratio requirements and implement a new capital conservation buffer. The rules also permit certain banking organizations to retain, through a one-time election, the existing treatment for accumulated other comprehensive income. The Company and the Banks have made the election to retain the existing treatment for accumulated other comprehensive income. The final rules took effect for the Company and the Banks on January 1, 2015, subject to a transition period for certain parts of the rules.

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~~Beginning in 2016, an additional~~2.5 percent capital conservation buffer wasthat is added to the minimum requirements for capital adequacy purposes ~~subject~~for all capital ratios except tier 1 capital to ~~a three year phase-in period. The capital conservation buffer will be fully phased-in on January 1, 2019 at 2.5 percent.~~average assets. A banking organization with a capital conservation buffer of less than ~~2.5 percent (or~~ the required ~~phase-in~~ amount ~~in years prior to 2019)~~ will be subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers. At March 31, 2022, the ~~present time, the~~capital ratios for the Company and the Banks ~~are~~were sufficient to meet the ~~fully phased-in~~ conservation buffer.

1~~2. Subsequent Events~~

14.

Subsequent Events

Management evaluated subsequent events through the date the financial statements were issued. There were no significant events or transactions occurring after ~~September 30, 2017,~~ March 31, 2022, but prior to ~~November 8, 2017,~~ May 6, 2022, that provided additional evidence about conditions that existed at ~~September 30, 2017.~~ March 31, 2022. There were no other significant events or transactions that provided evidence about conditions that did not exist at ~~September 30, 2017.~~March 31, 2022.

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

Overview

Ames National Corporation ~~(the~~(the “Company”) is a bank holding company established in 1975 that owns and operates ~~five~~six bank subsidiaries in central Iowa (the “Banks”). The following discussion is provided for the consolidated operations of the Company and its Banks, First National Bank, Ames, Iowa (First National), State Bank & Trust Co. (State Bank), Boone Bank & Trust Co. (Boone Bank), Reliance State Bank (Reliance Bank), ~~and~~ United Bank & Trust NA (United Bank) and Iowa State Savings Bank (Iowa State Bank). The purpose of this discussion is to focus on significant factors affecting the Company's financial condition and results of operations.

The Company does not engage in any material business activities apart from its ownership of the Banks. Products and services offered by the Banks are for commercial and consumer purposes including loans, deposits and wealth management services. ~~The Banks also offer~~Wealth management services includes financial planning and managing trust, agencies, estates and investment ~~services through a third-party broker-dealer.~~brokerage accounts. The Company employs ~~fourteen~~sixteen individuals to assist with financial reporting, human resources, audit, compliance, marketing, technology systems, training, real estate valuation services and the coordination of management activities, in addition to ~~205~~250 full-time equivalent individuals employed by the Banks.

The ~~Company~~’sCompany’s primary competitive strategy is to utilize seasoned and competent Bank management and local decision making authority to provide customers with faster response times and more flexibility in the products and services offered. This strategy is viewed as providing an opportunity to increase revenues through creating a competitive advantage over other financial institutions. The Company also strives to remain operationally efficient to provide better profitability while enabling the Company to offer more competitive loan and deposit rates.

The principal sources of Company revenues and cash flow are: (i) interest and fees earned on loans made by the Company and Banks; (ii) interest on fixed income investments held by the Banks; (iii) fees on wealth management services provided by those Banks exercising trust powers; (iv) service fees on deposit accounts maintained at the ~~Banks~~Banks; (v) gain on sale of loans; and ~~(v) Merchant~~(vi) merchant and card fees. The Company’s principal expenses are: (i) interest expense on deposit accounts and other borrowings; (ii) provision for loan losses; (iii) salaries and employee benefits; (iv) data processing costs associated with maintaining the Banks’ loan and deposit functions; (v) occupancy expenses for maintaining the Bank’s facilities; and (vi) professional fees. The largest component contributing to the Company’s net income is net interest income, which is the difference between interest earned on earning assets (primarily loans and investments) and interest paid on ~~interest bearing~~interest-bearing liabilities (primarily deposits and other borrowings). One of management’s principal functions is to manage the spread between interest earned on earning assets and interest paid on interest bearing liabilities in an effort to maximize net interest income while maintaining an appropriate level of interest rate risk.

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~~The Company had net~~ ~~income of $3,928,000, or $0.42 per share, for the three months ended September 30, 2017, compared to net income of $3,804,000, or $0.41 per share, for the three months ended September 30, 2016.~~

~~The~~ ~~increase in quarterly earnings can be primarily attributed to an increase in loan interest income and a lower provision for loan losses, offset in part by increases in interest expense.~~

Net loan charge-offs (recoveries) totaled $105,000 and $(81,000) for the three months ended September 30, 2017 and 2016, respectively. The provision for loan losses totaled $57,000 and $235,000 for the three months ended September 30, 2017 and 2016, respectively.

The Company had net income of $~~11,011,000,~~$5.1 million, or ~~$1.18~~$0.57 per share, for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, compared to net income of ~~$11,710,000,~~$6.0 million, or ~~$1.26~~$0.66 per share, for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2021. The decrease in ~~nine month~~ earnings ~~can be~~is primarily ~~attributed to a higher provision for loan losses and increases in~~the result of lower interest ~~expense,~~income on loans, offset in part by an increase in ~~loan~~ interest ~~income.~~income on taxable securities and a decrease in interest expense on time deposits.

Net loan charge-offs ~~(recoveries)~~ totaled ~~$589,000 and $(22,000)~~$10 thousand for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively. The provision~~March 31, 2022 compared to net loan recoveries of $118 thousand for the three months ended March 31, 2021. A credit for loan losses ~~totaled $1,222,000 and $441,000~~of $127 thousand was recognized for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2022 as compared to a $426 thousand credit for loan losses for the three months ended March 31, 2021.

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The following management discussion and analysis will provide a review of important items relating to:

●	Challenges

●	~~Challenges~~Key Performance Indicators and Industry Results

●	~~Key Performance Indicators and Industry Results~~Critical Accounting Policies

●	~~Critical Accounting Policies~~Non-GAAP Financial Measures

●	Income Statement Review

●	~~Income Statement~~Balance Sheet Review

●	~~Balance Sheet Review~~

●	Asset Quality Review and Credit Risk Management

●	Liquidity and Capital Resources

●	~~Liquidity and Capital Resources~~

●	Forward-Looking Statements and Business Risks

Challenges

Management has identified certain events or circumstances that may negatively impact the ~~Company~~’sCompany’s financial condition and results of operations in the future and is attempting to position the Company to best respond to those challenges. These challenges are addressed in the Company’s most recent Annual Report on Form 10-K filed on March ~~13, 2017.~~11, 2022.

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KeyKey Performance Indicators and Industry Results

Certain key performance indicators for the Company and the industry are presented in the following chart. The industry figures are compiled by the Federal Deposit Insurance Corporation (the “FDIC”) and are derived from ~~5,787 commercial~~4,391 community banks and savings institutions insured by the FDIC. Management reviews these indicators on a quarterly basis for purposes of comparing the Company’s performance from quarter-to-quarter against the industry as a whole.

Selected Indicators for the Company and the Industry

																									3 Months
	3 Months			9 Months																					Ended			Years Ended December 31,
	Ended			Ended			3 Months Ended						Years Ended December 31,												March, 31,
	September 30, 2017						June 30, 2017						2016						2015						2022			2021						2020
	Company						Company			Industry*			Company			Industry			Company			Industry			Company			Company			Industry*			Company			Industry*

Return on assets		1.15	%		1.07	%		1.01	%		1.14	%		1.18	%		1.04	%		1.13	%		1.04	%		0.96	%		1.15	%		1.25	%		1.01	%		1.09	%

Return on equity		9.08	%		8.64	%		8.17	%		10.11	%		9.38	%		9.32	%		9.44	%		9.31	%		10.28	%		11.43	%		11.61	%		9.48	%		9.72	%

Net interest margin		3.29	%		3.25	%		3.25	%		3.22	%		3.36	%		3.13	%		3.33	%		3.07	%		2.55	%		2.83	%		3.27	%		3.13	%		3.39	%

Efficiency ratio		52.42	%		53.16	%		52.93	%		56.32	%		51.95	%		58.28	%		53.59	%		59.91	%		59.72	%		55.04	%		61.42	%		55.83	%		62.34	%

Capital ratio		12.70	%		12.41	%		12.37	%		9.69	%		12.60	%		9.48	%		12.00	%		9.59	%		9.33	%		10.04	%		10.16	%		10.66	%		10.32	%

*Latest available data

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Key performances indicators include:

●	Return on Assets

This ratio is calculated by dividing net income by average assets. It is used to measure how effectively the assets of the Company are being utilized in generating income. The Company's annualized return on a~~verage~~average assets was ~~1.15%~~0.96% and 1.19% for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016.~~2021, respectively. This ratio decrease was primarily the result of lower net income.

●	Return on Equity

This ratio is calculated by dividing net income by average equity. It is used to measure the net income or return the Company generated for the shareholders’ equity investment in the Company. The Company's return on average equity was at ~~9.08%~~10.28% and ~~8.91%~~11.52% for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively. ~~The increase~~This ratio decrease was primarily the result of a lower net income and offset in ~~this ratio~~part by a decrease in ~~2017 from the previous period is primarily due to an increase in net income.~~stockholders’ equity.

●	Net Interest Margin

The net interest margin for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 was ~~3.29%~~2.55% and ~~3.38%~~2.86%, respectively. The ratio is calculated by dividing tax equivalent net interest income by average earning assets. Earning assets are primarily made up of loans and investments that earn interest. This ratio is used to measure how well the Company is able to maintain interest rates on earning assets above those of interest-bearing liabilities, which is the interest expense paid on deposits and other borrowings. ~~The decrease in this ratio in 2017 is primarily the result of an increase in the interest rates on deposits.~~

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●	Efficiency Ratio

This ratio is calculated by dividing noninterest expense by the sum of net interest income and noninterest income. The ratio is a measure of the Company’s ability to manage noninterest expenses. The Company’s efficiency ratio was ~~52.42%~~59.72% and ~~50.71%~~55.70% for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively. The efficiency ratio ~~remained consistent with prior periods.~~has increased compared to the same quarter last year primarily due to a reduction in net interest income and an increase in noninterest expense.

●	Capital Ratio

The average capital ratio is calculated by dividing average total equity capital by average total assets. It measures the level of average assets that are funded by shareholders’ equity. Given an equal level of risk in the financial condition of two companies, the higher the capital ratio, generally the more financially sound the company. The Company’s capital ratio of ~~12.70%~~9.33% as of ~~September 30, 2017~~March 31, 2022 is ~~significantly higher~~lower than the industry average of ~~9.69%~~10.16% as of ~~June 30, 2017.~~December 31, 2021 primarily due an increase in unrealized losses on investment securities.

~~Industry Results~~

~~The FDIC Quarterly Banking Profile reported the following results for the~~ ~~second quarter of 2017:~~

~~Higher Net Interest Income Lifts Industry Earnings~~

~~Higher net interest income and restrained growth in operating expenses helped lift banking industry profi~~ts in second quarter 2017. The 5,787 commercial banks and savings institutions insured by the FDIC reported net income of $48.3 billion for the quarter, an increase of $4.7 billion (10.7%) compared with the second quarter of 2016. Almost two out of every three banks, 63.4% reported year-over-year earnings improvement, while only 4.1% were unprofitable, down from 4.6% a year earlier. The average return on assets (ROA) rose to 1.14% from 1.06% the year before. This is the highest quarterly ROA for the industry since second quarter 2007.

~~Net Interest Margins Improve~~

~~Net operating revenue~~—the sum of net interest income and total noninterest income—rose to $190.5 billion in the second quarter, an $11 billion (6.1%) increase from second quarter 2016. Most of the improvement consisted of higher net interest income, which was $10.3 billion (9.1%) higher than a year earlier. The increase in net interest income helped lift the industry’s net interest margin (NIM) to 3.22%, from 3.08% in second quarter 2016. This is the highest quarterly NIM since fourth quarter 2013. While 57.7% of all banks reported higher NIMs, the improvement was greatest at larger institutions. More of their assets reprice or mature in the short term, and they are better-positioned to benefit from rising short-term interest rates. Noninterest income totaled $66.8 billion, up $654 million (1%) from a year earlier. Income from asset servicing was $1 billion (93.9%) higher, while gains on asset sales were $1.6 billion (31.7%) lower. Trading income fell $313 million (4.5%).

~~Noninterest Expense Growth Is Moderate~~

~~Banks set aside $12 billion in loan-loss provisions during the second quarter, up $273 million (2.3~~%) from the previous year. Slightly more than one-third of all banks—36.5%—increased their loss provisions versus second quarter 2016, while 32.2% reported lower provisions. Noninterest expenses totaled $108.6 billion, an increase of $3.5 billion (3.3%). Expenses for salaries and employee benefits were $2.1 billion (4.3%) higher than a year earlier, as the total number of employees rose by 48,019 (2.3%).

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~~Noncurrent Loan Balances Decline Further~~

~~The amount of loans and leases that were noncurrent~~—90 days or more past due or in nonaccrual status—fell for the 28th time in the last 29 quarters, declining by $8.4 billion (6.7%) in the three months ended June 30. Noncurrent balances declined in all major loan categories during the quarter. Noncurrent residential mortgage loans fell by $4.8 billion (7.9%), while noncurrent C&I loans declined by $2.2 billion (9.5%). The average noncurrent loan rate fell from 1.34% to 1.23% during the quarter, the lowest since third quarter 2007.

~~Banks Shift Their Reserve Allocations~~

~~Total loan-loss reserves posted a modest ($197~~ million, 0.2%) decline during the second quarter. The industry’s coverage ratio of reserves to noncurrent loans and leases rose from 97.5% to 104.3%, the highest level since third quarter 2007. Banks with assets greater than $1 billion, which account for 90% of the industry’s loss reserves, increased their reserves for credit card losses by $1.4 billion (4.3%), while reducing their reserves for commercial loan losses by $1.1 billion (3.3%) and their reserves for residential real estate loan losses by $922 million (5.5%).

~~Retained Earnings Drive Capital Growth~~

~~Equity capital increased by $38.7 billion (2~~%) during the quarter. Retained earnings contributed $20 billion to the growth in capital, $322 million (1.6%) less than in second quarter 2016. Banks declared $28.3 billion in dividends in the quarter, up $5 billion (21.4%) from the year-earlier quarter. Lower long-term interest rates contributed to an $8 billion improvement in accumulated other comprehensive income, which was reflected in the equity capital increase. At the end of the quarter, 99.4% of all FDIC-insured institutions, representing 99.96% of total industry assets, met or exceeded the requirements for well-capitalized banks, as defined for Prompt Corrective Action purposes.

~~Banks Reduce~~ ~~Their Federal Reserve Bank Balances~~

~~Industry assets surpassed $17 trillion for the first time at the end of the second quarter, rising by $100.8 billion (0.6~~%) during the three months ended June 30. Banks reduced their balances at Federal Reserve banks by $102.4 billion (8%). They also reduced their investment securities by $15 billion (0.4%), as U.S. Treasury securities fell by $49.9 billion (9.7%), and mortgage-backed securities rose by $38 billion (1.9%). Securities held in available-for-sale accounts declined by $59 billion (9.7%), while securities in held-to-maturity accounts increased by $44 billion (4.7%). Assets in trading accounts increased by $18.7 billion (3.2%) during the quarter. The percentage of industry assets maturing or repricing in more than three years remained unchanged from the first quarter, at 35.4%. The all-time high level for this percentage—35.5%—occurred at the end of fourth quarter 2016.

~~The Annual Loan Growth Rate Slows for a Third Consecutive Quarter~~

~~Total loans and lease~~s increased by $161.2 billion (1.7%) during the second quarter. All major loan categories posted increases, led by residential mortgage loans (up $35.1 billion, 1.8%), credit card balances (up $23.6 billion, 3.1%), and C&I loans (up $22.1 billion, 1.1%). Unused loan commitments increased by $25.9 billion (0.4%). For the 12 months ended June 30, total loans and leases increased by $337.6 billion (3.7%), while unused loan commitments rose by $274.8 billion (3.9%). The 12-month growth rate for total loans and leases has slowed in each of the last three quarters. A year ago, the 12-month loan growth rate was 6.7%. The 12-month growth rate in unused loan commitments has slowed for six consecutive quarters. In 2015, unused commitments increased 6.6%.

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~~The~~ ~~Number of Banking Employees Rises 2.3% Over the Past Year~~

~~The number of FDIC-insured commercial banks and savings institutions reporting financial results fell to 5,787 in the second quarter, from 5,856 in the first quarter. During the second quarter,~~ three insured institutions failed, while 62 institutions were absorbed by mergers. No new reporters were added during the quarter. The number of institutions on the FDIC’s Problem Bank List declined for a 25th consecutive quarter, from 112 to 105. This is the smallest number of problem banks since March 31, 2008, and is almost 90% below the peak of 888 at the end of March 2011. The number of full-time equivalent employees rose by 11,663 (0.6%) to 2,093,278 during the quarter, which was 48,019 higher than second quarter 2016 (2.3%). This is still 5.9% below the peak of 2,223,383 employees in first quarter 2007.

Critical Accounting Policies

The discussion contained in this Item 2 and other disclosures included within this report are based,, in part, on the Company’s audited December 31, ~~2016~~2021 consolidated financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The financial information contained in these statements is, for the most part, based on the financial effects of transactions and events that have already occurred. However, the preparation of these statements requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

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The ~~Company~~’sCompany’s significant accounting policies are described in the “Notes to Consolidated Financial Statements” accompanying the Company’s audited financial statements. Based on its consideration of accounting policies that involve the most complex and subjective estimates and judgments, management has identified the allowance for loan losses, the assessment of other-than-temporary impairment for investment securities and the assessment of goodwill impairment to be the Company’s most critical accounting policies.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses that is treated as an expense and charged against earnings. Loans are charged against the allowance for loan losses when management believes that collectability of the principal is unlikely. The Company has policies and procedures for evaluating the overall credit quality of its loan portfolio, including timely identification of potential problem loans. On a quarterly basis, management reviews the appropriate level for the allowance for loan losses, incorporating a variety of risk considerations, both quantitative and qualitative. Quantitative factors include the ~~Company~~’sCompany’s historical loss experience, delinquency and charge-off trends, collateral values, known information about individual loans and other factors. Qualitative factors include various considerations regarding the general economic environment in the Company’s market area. To the extent actual results differ from forecasts and management’s judgment, the allowance for loan losses may be greater or lesser than future charge-offs. Due to potential changes in conditions, including the economic disruption and uncertainties resulting from the continuation of the COVID-19 pandemic, it is at least reasonably possible that changes in estimates will occur in the near term and that such changes could be material to the amounts reported in the Company’s financial statements.

For further discussion concerning the allowance for loan losses and the process of establishing specific reserves, see the section of thethe Annual Report on Form 10-K entitled “Asset Quality Review and Credit Risk Management” and “Analysis of the Allowance for Loan Losses”.

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Fair Value and Other-Than-Temporary Impairment of Investment Securities

The ~~Company~~’sCompany’s securities available-for-sale portfolio is carried at fair value with “fair value” being defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact.

Declines in the fair value of available-for-sale securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the intent to sell the investment securities and the more likely than not requirement that the Company will be required to sell the investment securities prior to recovery (2) the length of time and the extent to which the fair value has been less than cost and (3) the financial condition and near-term prospects of the issuer. Due to potential changes in conditions, including the economic disruption and uncertainties resulting from the continuation of the COVID-19 pandemic, it is at least reasonably possible that changes in ~~management~~’smanagement’s assessment of other-than-temporary impairment will occur in the near term and that such changes could be material to the amounts reported in the Company’s financial statements.

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Goodwill

Goodwill arose in connection with twofour acquisitions consummated in previous periods. Goodwill is tested annually for impairment or more often if conditions indicate a possible impairment. For the purposes of goodwill impairment testing, determination of the fair value of a reporting unit involves the use of significant estimates and assumptions. Impairment would arise if the fair value of a reporting unit is less than its carrying value. At ~~September 30, 2017,~~March 31, 2022, Company’s management has completed the goodwill impairment assessment and determined goodwill was not impaired. Actual future test results may differ from the present evaluation of impairment due to changes in the conditions used in the current evaluation. The effects of the continuation of the COVID-19 pandemic may negatively impact our net income, fair value and correspondingly goodwill. An impairment of goodwill would decrease the Company’s earnings during the period in which the impairment is recorded.

Non-GAAP Financial Measures

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis. Management believes these non-GAAP financial measures are widely used in the financial institutions industry and provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on an FTE basis to GAAP (dollars in thousands).

	Three Months Ended March 31,
	2022			2021
Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP:
Net interest income (GAAP)	$	13,152		$	13,664
Tax-equivalent adjustment ⁽¹⁾		180			225
Net interest income on an FTE basis (non-GAAP)		13,332			13,889
Average interest-earning assets	$	2,090,628		$	1,941,859
Net interest margin on an FTE basis (non-GAAP)		2.55	%		2.86	%

(1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 21 percent, adjusted to reflect the effect of the tax-exempt interest income associated with owning tax-exempt securities and loans.

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Income Statement Review for the Three Months ended ~~September~~ 30~~, 20~~17March 31, 2022 and ~~201~~62021

The following highlights a comparative discussion of the major components of net income and their impact for the three ~~month~~smonths ended ~~September 30, 2017~~March 31, 2022 and ~~2016:~~2021:

AVERAGE BALANCES AND INTEREST RATES

The following two tables are used to calculate the ~~Company~~’sCompany’s non-GAAP net interest ~~margin.~~margin on an FTE basis. The first table includes the Company’s average assets and the related income to determine the average yield on earning assets. The second table includes the average liabilities and related expense to determine the average rate paid on ~~interest bearing~~interest-bearing liabilities. The net interest margin is equal to ~~the~~ interest income less ~~the~~ interest expense divided by average earning assets. Refer to the net interest income discussion following the tables for additional detail.

AVERAGE BALANCE SHEETS AND INTEREST RATES	AVERAGE BALANCE SHEETS AND INTEREST RATES															AVERAGE BALANCE SHEETS AND INTEREST RATES

		Three Months Ended September 30,															Three Months Ended March 31,

		2017							2016								2022							2021

		Average		Revenue/		Yield/			Average		Revenue/		Yield/				Average		Revenue/		Yield/			Average		Revenue/		Yield/
		balance		expense		rate			balance		expense		rate				balance		expense		rate			balance		expense		rate
ASSETS
(dollars in thousands)
Interest-earning assets
Loans 1
Loans⁽¹⁾
Commercial		$	77,788	$	920		4.73	%	$	88,265	$	1,014		4.59	%		$	70,847	$	876		4.95	%	$	122,006	$	1,712		5.61	%
Agricultural			67,951		922		5.43	%		73,879		900		4.87	%			95,526		925		3.87	%		92,362		989		4.28	%
Real estate			623,214		6,756		4.34	%		555,002		6,131		4.42	%			957,869		8,683		3.63	%		908,212		9,112		4.01	%
Consumer and other			10,514		132		5.03	%		21,513		191		3.56	%			16,136		160		3.97	%		14,172		171		4.83	%

Total loans (including fees)			779,467		8,730		4.48	%		738,659		8,236		4.46	%			1,140,378		10,644		3.73	%		1,136,752		11,984		4.22	%

Investment securities
Taxable			275,498		1,558		2.26	%		259,212		1,425		2.20	%			699,709		2,588		1.48	%		453,939		1,989		1.75	%
Tax-exempt 2			230,249		1,862		3.23	%		249,400		2,045		3.28	%
Tax-exempt ⁽²⁾																		140,569		854		2.43	%		162,496		1,069		2.63	%
Total investment securities			505,747		3,420		2.70	%		508,612		3,470		2.73	%			840,278		3,442		1.64	%		616,435		3,058		1.98	%

Interest bearing deposits with banks and federal funds sold			27,183		115		1.69	%		25,533		87		1.36	%
Interest-bearing deposits with banks and federal funds sold																		109,972		166		0.60	%		188,672		178		0.38	%

Total interest-earning assets			1,312,397	$	12,265		3.74	%		1,272,804	$	11,793		3.71	%			2,090,628	$	14,252		2.73	%		1,941,859	$	15,220		3.14	%

Noninterest-earning assets			49,366							55,732								54,353							81,154

TOTAL ASSETS		$	1,361,763						$	1,328,536							$	2,144,981						$	2,023,013

~~1 Average loan balance includes nonaccrual loans, if any. Interest income collected on nonaccrual loans has been included.~~

~~2 Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 35%~~
(1) Average loan balances include nonaccrual loans, if any. Interest income collected on nonaccrual loans has been included.
(2) Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 21%.

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AVERAGE BALANCE SHEETS AND INTEREST RATES	AVERAGE BALANCE SHEETS AND INTEREST RATES																	AVERAGE BALANCE SHEETS AND INTEREST RATES

		Three Months Ended September 30,																	Three Months Ended March 31,

		2017								2016									2022								2021

		Average		Revenue/			Yield/			Average		Revenue/			Yield/				Average		Revenue/			Yield/			Average		Revenue/			Yield/
		balance		expense			rate			balance		expense			rate				balance		expense			rate			balance		expense			rate
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in thousands)
Interest-bearing liabilities
Deposits
NOW, savings accounts and money markets		$	712,550	$	685			0.38	%	$	658,522	$	325			0.20	%
Time deposits > $100,000			83,793		240			1.15	%		84,034		196			0.93	%
Time deposits < $100,000			113,112		244			0.86	%		123,648		233			0.75	%
Interest-bearing checking, savings accounts and money markets																			$	1,286,431	$	490			0.15	%	$	1,156,088	$	479			0.17	%
Time deposits																				213,427		398			0.75	%		252,035		815			1.29	%
Total deposits			909,455		1,169			0.51	%		866,204		754			0.35	%			1,499,858		888			0.24	%		1,408,123		1,294			0.37	%
Other borrowed funds			71,266		292			1.64	%		94,504		274			1.16	%			39,495		32			0.32	%		40,692		37			0.36	%

Total Interest-bearing liabilities			980,721		1,461			0.60	%		960,708		1,028			0.43	%
Total interest-bearing liabilities																				1,539,353		920			0.24	%		1,448,815		1,331			0.37	%

Noninterest-bearing liabilities
Demand deposits			200,934								188,419
Noninterest-bearing checking																				396,894								354,595
Other liabilities			7,132								8,710									8,563								10,571

Stockholders' equity			172,976								170,699									200,171								209,032

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,361,763							$	1,328,536								$	2,144,981							$	2,023,013


Net interest income				$	10,804			3.29	%			$	10,765			3.38	%
Net interest income (FTE)⁽³⁾																					$	13,332			2.55	%			$	13,889			2.86	%

Spread Analysis
Spread Analysis (FTE)
Interest income/average assets		$	12,265		3.60	%				$	11,793		3.55	%					$	14,252		2.66	%				$	15,220		3.01	%
Interest expense/average assets		$	1,461		0.43	%				$	1,028		0.31	%					$	920		0.17	%				$	1,331		0.26	%
Net interest income/average assets		$	10,804		3.17	%				$	10,765		3.24	%					$	13,332		2.49	%				$	13,889		2.75	%

(3) Net interest income (FTE) is a non-GAAP financial measure. For further information, refer to the Non-GAAP Financial Measures section of this report.

Net Interest Income

For the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, the Company's net interest margin adjusted for tax exempt income was ~~3.29%~~2.55% and ~~3.38%~~2.86%, respectively. Net interest income, prior to the adjustment for tax-exempt income, for the three months ended ~~September 30, 2017~~March 31, 2022 totaled ~~$10,152,000~~$13.2 million compared to ~~$10,050,000~~$13.7 million for the three months ended ~~September 30, 2016.~~March 31, 2021.

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For the three months ended ~~September 30, 2017,~~March 31, 2022, interest income ~~increased $535,000,~~declined $923 thousand, or 5%6%, when compared to the same period in ~~2016.~~2021. The decrease is primarily due to a reduction in interest rates, less income recognized from PPP fees and the recognition of nonaccrual interest income offset in part by an increase in taxable security interest income. Fees recognized from ~~2016~~PPP loans during the first quarter of 2022 were $200 thousand as compared to $840 thousand of fees during the first quarter of 2021. Nonaccrual interest income recognized in the first quarter of 2022 was ~~primarily attributable~~$7 thousand compared to $335 thousand recognized during the first quarter of 2021. Taxable securities interest income was $599 thousand higher ~~average balance~~than the first quarter of ~~loans. The higher average balances of loans were~~2021 due primarily to ~~favorable economic conditions in our market areas.~~increased balances.

Interest expense ~~increased $433,000,~~declined $411 thousand, or ~~42%~~31%, for the three months ended ~~September 30, 2017~~March 31, 2022 when compared to the same period in ~~2016.~~2021. The ~~higher~~lower interest expense for the period is primarily ~~attributable to higher rates on core deposits~~ due to ~~competitive pressures.~~interest rate declines and a decrease in time deposit balances.

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Provision (Credit) for Loan Losses

~~The Company’s provision~~A credit for loan losses of ($127) thousand was ~~$57,000 and $235,000~~recognized for the three months ended ~~September 30, 2017 and 2016, respectively. The decrease in the provision~~March 31, 2022 as compared to a credit for loan losses ~~was due primarily to an increase in specific reserves for one loan in 2016. Net loan charge-offs (recoveries) were $105,000 and $(81,000)~~of ($426) thousand for the three months ended ~~September 30, 2017 and 2016, respectively. The increase net~~March 31, 2021. Net loan charge-offs related primarily to one commercial operating customer relationship. While the current provision for loan losses are not related to agricultural loans, Company management is seeing weakness in the Iowa agricultural economy as a result of the current low grain prices; however, initial crop yield reports have been favorable in the Company’s market area as of the end of the quarter.

~~Noninterest~~ ~~Income and Expense~~

N~~oninterest income decreased $144,000~~totaled $10 thousand for the three months ended ~~September 30, 2017~~March 31, 2022 compared to ~~the same period in 2016. The decrease in noninterest income is primarily due to a slowdown in the refinance~~net loan recoveries of home loans held for sale resulting in lower gains on the sale of loans, offset in part by a 9% increase in wealth management income. The increase in wealth management income is primarily due to an revenue increases associated with an acquisition and higher revenues related to increases in assets under management, offset in part by lower one time estate fees. Exclusive of realized securities gains, noninterest income was 6% lower in the third quarter of 2017 compared to the same period in 2016.

~~Noninterest expense increased $184,000 or 3%~~$118 thousand for the three months ended ~~September 30, 2017 compared to~~March 31, 2021. The credit for loan losses in the same period in 2016 primarily as a result of lower other real estate owned income and higher occupancy costs. The decrease in other real estate income was due to the continuing lower levels of other real estate owned. The higher occupancy costs were primarily related to an increase in property tax expense. The efficiency ratio was 52.42% for the thirdfirst quarter of ~~2017 as compared to 50.71% in 2016.~~

~~Income Taxes~~

~~The provision for income taxes~~ ~~expense for the three months ended September 30, 2017 and 2016~~2022 was ~~$1,730,000 and $1,903,000, respectively, representing an effective tax rate of 31% and 33%, respectively. The lower effective tax rate than the expected tax rate of 35% for both periods is~~ primarily due to ~~tax-exempt interest income.~~a decline in loans outstanding from December 31, 2021. The ~~initial recording of a valuation allowance on a deferred tax asset resulted in a higher effective tax rate in 2016.~~

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~~Income Statement Review~~ ~~for the~~ ~~Nine~~ ~~Months ended~~ ~~September~~ 30~~, 2017 and 2016~~

~~The following highlights a comparative discussion of the major components of net income and their impact for the~~ ~~nine months ended September 30, 2017 and 2016:~~

~~AVERAGE BALANCES AND INTEREST RATES~~

~~The following two tables are used to calculate the Company~~’s net interest margin. The first table includes the Company’s average assets and the related income to determine the average yield on earning assets. The second table includes the average liabilities and related expense to determine the average rate paid on interest bearing liabilities. The net interest margin is equal to the interest income less the interest expense divided by average earning assets.

AVERAGE BALANCE SHEETS AND INTEREST RATES

Nine Months Ended September 30,

2017

2016

Average

Revenue/

Yield/

Average

Revenue/

Yield/

balance

expense

rate

balance

expense

rate

ASSETS

(dollars in thousands)

Interest-earning assets

Loans 1

Commercial
$ 77,471 $ 2,613 4.50 % $ 94,121 $ 3,192 4.52 %
Agricultural
69,093 2,703 5.22 % 75,211 2,754 4.88 %
Real estate
612,845 19,620 4.27 % 528,179 17,595 4.44 %
Consumer and other
11,121 411 4.92 % 21,897 584 3.56 %

Total loans (including fees)
770,530 25,347 4.39 % 719,408 24,125 4.47 %

Investment securities

Taxable
271,913 4,637 2.27 % 262,604 4,393 2.23 %
Tax-exempt 2
241,160 5,875 3.25 % 253,688 6,335 3.33 %
Total investment securities
513,073 10,512 2.73 % 516,292 10,728 2.77 %

Interest bearing deposits with banks and federal funds sold
36,633 365 1.33 % 34,930 297 1.13 %

Total interest-earning assets
1,320,236 $ 36,224 3.66 % 1,270,630 $ 35,150 3.69 %

Noninterest-earning assets
49,268 54,989

TOTAL ASSETS
$ 1,369,504 $ 1,325,619

~~1 Average loan balance includes nonaccrual loans, if any. Interest income collected on nonaccrual loans has been included.~~

~~2 Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 35%.~~

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AVERAGE BALANCE SHEETS AND INTEREST RATES

Nine Months Ended September 30,

2017

2016

Average

Revenue/

Yield/

Average

Revenue/

Yield/

balance

expense

rate

balance

expense

rate

LIABILITIES AND STOCKHOLDERS' EQUITY

(dollars in thousands)

Interest-bearing liabilities

Deposits

NOW, savings accounts and money markets
$ 717,946 $ 1,819 0.34 % $ 663,891 $ 965 0.19 %
Time deposits > $100,000
82,956 671 1.08 % 86,632 590 0.91 %
Time deposits < $100,000
115,646 714 0.82 % 125,745 704 0.75 %
Total deposits
916,548 3,204 0.47 % 876,268 2,259 0.34 %
Other borrowed funds
75,662 863 1.52 % 84,261 796 1.26 %

Total Interest-bearing liabilities
992,210 4,067 0.55 % 960,529 3,055 0.42 %

Noninterest-bearing liabilities

Demand deposits
200,020 190,176
Other liabilities
7,319 7,606

Stockholders' equity
169,955 167,308

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 1,369,504 $ 1,325,619

Net interest income
$ 32,157 3.25 % $ 32,095 3.37 %

Spread Analysis

Interest income/average assets
$ 36,224 3.53 % $ 35,150 3.54 %
Interest expense/average assets
$ 4,067 0.40 % $ 3,055 0.31 %
Net interest income/average assets
$ 32,157 3.13 % $ 32,095 3.23 %

~~Net Interest Income~~

~~For the~~ nine months ended September 30, 2017 and 2016, the Company's net interest margin adjusted for tax exempt income was 3.25% and 3.37%, respectively. Net interest income, prior to the adjustment for tax-exempt income, for the nine months ended September 30, 2017 totaled $30,100,000 compared to $29,877,000 for the nine months ended September 30, 2016.

~~For the~~ nine months ended September 30, 2017, interest income increased $1,235,000, or 4%, when compared to the same period in 2016. The increase from 2016 was primarily attributable to higher average balance of loans, offset in part by lower yields on loans. The higher average balances of loans were due primarily to favorable economic conditions in our market areas. The lower yields on loans were due primarily to competitive pressures.

~~Table of Contents~~

~~Interest~~ expense increased $1,012,000, or 33%, for the nine months ended September 30, 2017 when compared to the same period in 2016. The higher interest expense for the period is primarily attributable to higher rates on core deposits due to competitive pressures.

~~Provision for Loan Losses~~

~~The Company’s provision~~credit for loan losses ~~was $1,222,000 and $441,000 for the nine months ended September 30, 2017 and 2016, respectively. The increase~~ in the ~~provision for~~first quarter of 2021 was primarily due to loan ~~losses was due primarily to the increase~~recoveries, a reduction in ~~the~~a specific reserve ~~for one commercial credit~~ and ~~growth in the~~lower loan portfolio. Net loan charge-offs (recoveries) were $589,000 and $(22,000) for the nine months ended September 30, 2017 and 2016, respectively. The increase in the net loan charge-offs were related primarily to commercial operating loans with construction contractors. While the current provision for loan losses are not related to agricultural loans, Company management is seeing weakness in the Iowa agricultural economy as a result of the current low grain prices; however, initial crop yield reports have been favorable in the Company’s market area as of the end of the quarter.balances from December 31, 2020.

Noninterest Income and Expense

Noninterest income ~~decreased $63,000~~ for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 totaled $2.6 million as compared to $2.5 million for the ~~same period in 2016.~~three months ended March 31, 2021, an increase of 2%. The ~~decrease~~increase in noninterest income was primarily due to an increase in wealth management income, offset in part by lower gains on sale of residential loans held for sale as refinancing volume has slowed. The increase in wealth management income was primarily related to growth in the assets under management and new account relationships.

Noninterest expense for the three months ended March 31, 2022 totaled $9.4 million compared to $9.0 million recorded for the three months ended March 31, 2021, an increase of 4%. The increase is primarily due to ~~decreases in gain on sale of loans and service fees, offset in part by~~ an increase in ~~security gains~~salaries and other noninterest income. The decrease in the gain on the sale of loans is primarily due to a slowdown in the refinance of home loans held for sale resulting in lower revenue. The increase in other noninterest income is primarily due to the collection of $73,000 on a court judgement previously deemed uncollectible by First Bank prior to the Company’s acquisition in 2014. Exclusive of realized securities gains, noninterest income was 5% lower for the nine months ended September 30, 2017 compared to the same period in 2016.

~~Noninterest expense~~ ~~increased $504,000 or 3% for the nine months ended September 30, 2017 compared to the same period in 2016 primarily as a result of normal salary~~employee benefits, professional fees and ~~benefit increases and higher data processing costs. Data processing increases were due to increasing technology~~business development costs. The efficiency ratio was ~~53.16%~~59.7% for the ~~nine months ended September 30, 2017~~first quarter of 2022 as compared to ~~51.99%~~55.7% in ~~same period in 2016.~~the first quarter of 2021.

Income Taxes

~~The provision for income taxes~~Income tax expense for the ~~nine~~three months ended ~~September 30, 2017 and 2016 was $4,662,000 and $5,087,000, respectively, representing an~~March 31, 2022 totaled $1.3 million compared to $1.6 million recorded for the three months ended March 31, 2021. The effective tax rate ~~of 30%~~was 20.3% and ~~30%,~~20.6% for the three months ended March 31, 2022 and 2021, respectively. The lower ~~effective~~than expected tax rate ~~than the expected income tax rate of 35% for both periods is~~in 2022 and 2021 was due primarily ~~due~~ to tax-exempt interest ~~income.~~income and New Markets Tax Credits.

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Balance Sheet Review

As of ~~September 30, 2017,~~March 31, 2022, total assets were ~~$1,364,940,000,~~$2.18 billion, a ~~$1,513,000 decrease~~$47.7 million increase compared to December 31, ~~2016. The decrease~~2021. This increase in assets is primarily reflected in interest-bearing deposits and federal funds sold and was ~~due primarily to a decrease~~funded by growth in ~~cash and due from banks and securities available for sale, offset by an increase in loans.~~our deposits.

Investment Portfolio

The ~~investment~~investment portfolio totaled ~~$506,610,000~~$823.9 million as of ~~September 30, 2017,~~March 31, 2022, a decrease of ~~$9,469,000~~$7.1 million from the December 31, ~~2016~~2021 balance of ~~$516,080,000.~~$831.0 million. The decrease in ~~the investment portfolio was~~securities available-for-sale is primarily due to ~~sales, calls and maturities~~a decline in fair value as interest rates rose during the first quarter of ~~state and political subdivision bonds.~~

~~Table~~2022, offset in part by purchases of ~~Contents~~

investments.

On a quarterly basis, the investment portfolio is reviewed for other-than-temporary impairment. As of ~~September 30, 2017,~~March 31, 2022, gross unrealized losses of ~~$783,000,~~$42.0 million, are considered to be temporary in nature due to the interest rate environment ~~of 2017~~ and other general economic factors. Certain bonds in the investment portfolio may become other-than-temporarily impaired and could negatively affect the Company’s net income. As a result of the Company’s favorable liquidity position, the Company does not have the intent to sell securities with an unrealized loss at the present time. In addition, management believes it is more likely than not that the Company will hold these securities until recovery of their fair value to cost basis and ~~avoid considering present unrealized loss positions~~expects full principal and interest to be ~~other-than-temporary.~~collected. Therefore, the Company does not consider these investments to have other-than-temporary impairment as of March 31, 2022.

At ~~September 30, 2017,~~March 31, 2022, the Company’s investment securities portfolio included securities issued by ~~266~~280 government municipalities and agencies located within 2428 states with a fair value of ~~$243.4~~$289.2 million. At December 31, ~~2016,~~2021, the Company’s investment securities portfolio included securities issued by ~~286~~298 government municipalities and agencies located within 2528 states with a fair value of ~~$264.4~~$292.9 million. No one municipality or agency represents a concentration within this segment of the investment portfolio. ~~The~~Storm Lake, Iowa, general obligation bonds with a fair value of $7.0 million (approximately 2.4% of the fair value of the government municipalities and agencies) represent the largest exposure to any one municipality or agency for the Company as of ~~September 30, 2017 was $4.4 million (approximately 2.0%~~March 31, 2022; the bonds are repayable from the levy of continuing annual tax on all the taxable property within the territory of the ~~fair value~~city of ~~the governmental municipalities and agencies) represented by the Dubuque, Iowa Community School District to be repaid by sales tax revenues and property taxes.~~Storm Lake.

The ~~Company~~’sCompany’s procedures for evaluating investments in states, municipalities and political subdivisions include but are not limited to reviewing the offering statement and the most current available financial information, comparing yields to yields of bonds of similar credit quality, confirming capacity to repay, assessing operating and financial performance, evaluating the stability of tax revenues, considering debt profiles and local demographics, and for revenue bonds, assessing the source and strength of revenue structures for municipal authorities. These procedures, as applicable, are utilized for all municipal purchases and are utilized in whole or in part for monitoring the portfolio of municipal holdings. The Company does not utilize third party credit rating agencies as a primary component of determining if the municipal issuer has an adequate capacity to meet the financial commitments under the security for the projected life of the investment, and, therefore, does not compare internal assessments to those of the credit rating agencies. Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates.

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The following table summarizes the total general obligation and revenue bonds in the ~~Company~~’sCompany’s investment securities portfolios as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 identifying the state in which the issuing government municipality or agency ~~operates.~~operates (~~Dollars~~ in thousands):

	2017				2016				2022				2021
			Estimated				Estimated				Estimated				Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value

Obligations of states and political subdivisions:
General Obligation bonds:
Iowa	$	60,493	$	60,732	$	75,142	$	74,408	$	71,716	$	69,206	$	72,128	$	72,830
Texas		12,188		12,359		11,091		11,065		28,923		27,323		24,742		24,953
Pennsylvania		8,720		8,795		8,728		8,654
Nebraska										19,543		18,076		19,546		19,486
Washington		6,640		6,609		7,221		6,957		10,988		10,566		11,013		11,241
Other (2017: 16 states; 2016: 17 states)		24,150		24,601		28,064		28,258
Other (2022: 16 states; 2021: 16 states)										41,008		38,918		41,371		41,617

Total general obligation bonds	$	112,191	$	113,096	$	130,246	$	129,342	$	172,178	$	164,089	$	168,800	$	170,127

Revenue bonds:
Iowa	$	118,886	$	120,175	$	126,750	$	126,964	$	66,468	$	64,638	$	61,718	$	62,181
Other (2017: 9 states; 2016: 10 states)		10,073		10,167		8,208		8,142
Texas										13,108		12,363		11,898		12,090
Nebraska										10,067		9,321		9,727		9,636
Other (2022: 21 states; 2021: 21 states)										41,060		38,802		38,405		38,825

Total revenue bonds	$	128,959	$	130,342	$	134,958	$	135,106	$	130,703	$	125,124	$	121,748	$	122,732

Total obligations of states and political subdivisions	$	241,150	$	243,438	$	265,204	$	264,448	$	302,881	$	289,213	$	290,548	$	292,859

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, the revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as community school facilities, college and university dormitory facilities, water utilities and electrical utilities. The revenue bonds are to be paid from ~~primarily 5~~6 primary revenue sources. The revenue sources that represent 5% or more, individually, as a percent of the total revenue bonds are summarized in the following ~~table.~~table (in ththousands)~~ousands)~~:

	2017				2016				2022				2021
			Estimated				Estimated				Estimated				Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value

Revenue bonds by revenue source
Sales tax	$	72,894	$	73,917	$	77,586	$	78,085	$	32,652	$	31,476	$	31,632	$	31,896
Water		14,139		14,218		11,283		11,296		22,579		21,543		22,611		22,924
College and universities, primarily dormitory revenues		10,457		10,538		14,105		13,907		17,128		16,268		17,169		17,353
Sewer										14,239		13,431		14,248		14,327
Leases		9,062		9,098		9,106		8,960		10,265		9,972		8,788		8,894
Electric		8,428		8,545		8,446		8,459
Electric power & light revenues										7,498		7,191		7,508		7,646
Other		13,979		14,026		14,432		14,399		26,342		25,243		19,792		19,692

Total revenue bonds by revenue source	$	128,959	$	130,342	$	134,958	$	135,106	$	130,703	$	125,124	$	121,748	$	122,732

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Loan Portfolio

The l~~oan~~loan portfolio, net of the allowance for loan losses, totaled ~~$764,229,000, $768,208,000~~$1.13 billion and ~~$752,182,000~~$1.14 billion as of ~~September 30, 2017, June 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. The decrease was primarily due to a reduction in agriculture and commercial real estate loans, offset in part by an increase in the 1-4 family residential loan ~~portfolio since December 31, 2016 is primarily due to steady loan demand, in the Ames and Des Moines markets. Loan demand has softened in the third quarter of 2017.~~portfolio.

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Deposits

Deposits totaled $~~1,114,538,000, $1,126,771,000~~$1.96 billion and ~~$1,109,409,000~~$1.88 billion as of ~~September 30, 2017, June 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. The ~~increase~~change in deposits since December 31, ~~2016~~2021 was ~~primarily~~ due to increases ~~in public funds NOW account balances. The decrease in~~across all types except time deposits ~~since June 30, 2017 was primarily~~which continue to decline due to ~~decreases~~the current rate environment. Balances fluctuate as customers’ liquidity needs vary at any given time. Deposit levels may be impacted in ~~retail NOW and public funds money market account balances.~~

S~~ecurities Sold Under Agreements to Repurchase~~

Securities sold under agreements to repurchase totaled $39,001,000 as of September 30, 2017, a decrease of $19,336,000, or 33%, from the December 31, 2016 balance of $58,337,000. The decrease in primarily due to withdrawals from three commercial accounts.future periods by changing economic conditions.

Off-Balance Sheet Arrangements

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. No material changes in the Company’s off-balance sheet arrangements have occurred since December 31, ~~2016.~~2021.

Asset Quality Review and Credit Risk Management

The ~~Company~~’sCompany’s credit risk is historically centered in the loan portfolio, which on ~~September 30, 2017~~March 31, 2022 totaled ~~$764,229,000~~$1.13 billion compared to ~~$752,182,000~~$1.14 billion as of December 31, ~~2016.~~2021. Net loans comprise ~~56%~~52% of total assets as of ~~September 30, 2017.~~March 31, 2022. The ~~object~~objective in managing loan portfolio risk is to reduce the risk of loss resulting from a customer’s failure to perform according to the terms of ~~a transaction~~an agreement and to quantify and manage credit risk on a portfolio basis. The Company’s level of problem loans (consisting of nonaccrual loans and loans past due 90 days or more) as a percentage of total loans was ~~0.62%~~1.09% at ~~September 30, 2017,~~March 31, 2022, as compared to ~~0.67%~~1.11% at December 31, ~~2016 and 0.40% at September 30, 2016.~~2021. The Company’s level of problem loans as a percentage of total loans at ~~September 30, 2017~~March 31, 2022 of ~~0.62%~~1.09% is ~~lower than~~higher as compared to the ~~Company’s~~Iowa State Average peer group ~~(339 bank holding companies with assets~~ of ~~$1 billion to $3 billion) of 0.72%~~FDIC insured institutions as of ~~June 30, 2017.~~December 31, 2021, of 0.45%, most recent available.

I~~mpaired~~Impaired loans ~~net of specific reserves,~~ totaled ~~$3,907,000~~$12.2 million as of ~~September 30, 2017~~March 31, 2022 and have decreased ~~$450,000~~$682 thousand as compared to the impaired loans of ~~$4,357,000~~$12.8 million as of December 31, ~~2016.~~2021. The decrease is primarily due to payments on nonaccrual loans.

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 payment of principal and 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. The Company applies its normal loan review procedures to identify loans that should be evaluated for impairment.

The Company had TDRs of $~~3,098,000~~$11.27 million as of ~~September 30, 2017,~~March 31, 2022 and $11.30 million as of December 31, 2021, all of which were included in impaired and nonaccrual loans. ~~The Company had TDRs of $3,672,000 as of December 31, 2016, all of which were included in impaired and nonaccrual loans.~~

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~~TDR~~s

TDRs are monitored and reported on a quarterly basis. Certain TDRs are on nonaccrual status at the time of restructuring. These borrowings are typically returned to accrual status after the following: sustained repayment performance in accordance with the restructuring agreement for a reasonable period of at least ~~six~~nine months; and, management is reasonably assured of future performance. If the TDR meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will return to performing status.

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For TDRs that were on nonaccrual status before the modification, a specific reserve may already be recorded. In periods subsequent to modification, the Company will continue to evaluate all TDRs for possible impairment and, as necessary, recognize impairment through the allowance. ~~A $530,000~~No additional specific reserve was ~~established in~~provided for the ~~nine~~three months ended ~~September 30, 2017 on a TDR loan.~~March 31, 2022 and 2021. The Company had ~~$257,000~~no charge-offs and $262 thousand of ~~net charge-offs related to~~recoveries for TDRs for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~none for the same period~~2021, respectively. The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in ~~2016.~~troubled debt restructurings or whose loans are on nonaccrual.

Loans past due 90 days or more that are still accruing interest are reviewed no less frequently than quarterly to determine if there iscontinues to be a strong reason that the credit should not be placed on ~~non-accrual.~~nonaccrual. As of ~~September 30, 2017, non-accrual~~March 31, 2022, nonaccrual loans totaled ~~$4,726,000~~$12.5 million and there ~~was one loan in the amount of $81,000~~were no loans past due 90 days and still accruing. This compares to ~~non-accrual~~nonaccrual loans of ~~$5,077,000~~$12.7 million and loans past due 90 days and still accruing totaled ~~$22,000~~$169 thousand as of December 31, ~~2016. Other~~2021. The decrease in nonaccrual loans is due primarily to payments received during the quarter. There was no real estate owned ~~totaled $385,000~~and $218 thousand as of ~~September 30, 2017~~March 31, 2022 and ~~$546,000 as of~~ December 31, ~~2016.~~2021, respectively.

The agricultural real estate and agricultural operating loan portfolio classifications remain ~~in a weakened position.~~elevated. The watch and special mention loans in these categories totaled ~~$44,046,000~~$35.1 million as of ~~September 30, 2017~~March 31, 2022 as compared to ~~$38,492,000~~$36.5 million as of December 31, ~~2016.~~2021. The substandard and impaired loans in these categories totaled ~~$2,582,000~~$6.7 million and $7.4 million as of ~~September 30, 2017~~March 31, 2022 and December 31, 2021, respectively.

The watch and special mention loans classified as commercial real estate totaled $79.4 million as of March 31, 2022 as compared to ~~$2,399,000~~$102.2 million as of December 31, ~~2016.~~2021. The ~~increase in these categories is primarily due to the impact on agricultural~~substandard and impaired commercial real estate loans totaled $39.4 million and $31.8 million as of ~~low grain prices, mitigated by indications of favorable yields in 2017.~~March 31, 2022 and December 31, 2021, respectively.

The allowance for loan losses as a percentage of outstanding loans as of ~~September 30, 2017~~March 31, 2022 was 1.44%, as compared to ~~1.38%~~1.43% at December 31, ~~2016.~~2021. The allowance for loan losses totaled ~~$11,140,000~~$16.5 million and ~~$10,507,000~~$16.6 million as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. ~~Net charge-offs (recoveries) of~~PPP loans ~~totaled $589,000~~are government guaranteed and ~~$(22,000)~~the impact on the allowance for ~~the nine months ended September 30, 2017 and 2016, respectively.~~loan loss was not significant.

The allowance for loan losses is ~~management~~’smanagement’s best estimate of probable losses inherent in the loan portfolio as of the balance sheet date. Factors considered in establishing an appropriate allowance include: an assessment of the financial condition of the borrower, a realistic determination of value and adequacy of underlying collateral, the condition of the local economy and the condition of the specific industry of the borrower, an analysis of the levels and trends of loan categories and a review of delinquent and classified loans. The decrease in the allowance for loan losses is mainly due to a decline in loans outstanding from December 31, 2021. Additional increases in the allowance for loan losses are possible if the effects of the COVID-19 pandemic or high inflation levels negatively impact our loan portfolio. These increases may be due to increased charge-offs or an increase in the qualitative factors. The qualitative factors are considered as a part of our allowance for loan loss calculation and may deteriorate if economic conditions worsen.

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Liquidity and Capital Resources

Liquidity management is the process by which the Company, through its ~~Banks~~’Banks’ Asset and Liability Committees (ALCO), ensures that adequate liquid funds are available to meet its financial commitments on a timely basis, at a reasonable cost and within acceptable risk tolerances. These commitments include funding credit obligations to borrowers, funding of mortgage originations pending delivery to the secondary market, withdrawals by depositors, maintaining adequate collateral for pledging for public funds, trust deposits and borrowings, paying dividends to shareholders, payment of operating expenses, funding capital expenditures and maintaining deposit reserve requirements.

Liquidity is derived primarily from core deposit growth and retention; principal and interest payments on loans; principal and interest payments, sale, maturity and prepayment of securities available-for-sale; net cash provided from operations; and access to other funding sources. Other funding sources include federal funds purchased lines, FHLB advances and other capital market sources.

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As of ~~September 30, 2017,~~March 31, 2022, the level of liquidity and capital resources of the Company remain at a satisfactory level. Management believes that the Company's liquidity sources will be sufficient to support its existing operations for the foreseeable future.

The liquidity and capital resources d~~iscussion~~discussion will cover the following topics:

●	~~Review~~ ~~of the Company’s Current Liquidity Sources~~

●	Review of ~~Statements of Cash Flows~~the Company’s Current Liquidity Sources

●	~~Company Only Cash Flows~~

●	~~Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in~~ ~~Liquidity and Cash Flows Needs~~

●	~~Capital Resources~~

~~Review of the Company’s Current Liquidity Sources~~

~~Liquid assets of cash~~ and due from banks and interest-bearing deposits in financial institutions as of September 30, 2017 and December 31, 2016 totaled $58,574,000 and $61,215,000, respectively, and provide an adequate level of liquidity given current economic conditions.

~~Other sources of~~ liquidity available to the Banks as of September 30, 2017 include outstanding lines of credit with the FHLB of Des Moines, Iowa of $183,824,000, with $19,000,000 of outstanding FHLB advances. Federal funds borrowing capacity at correspondent banks was $108,571,000, with no outstanding federal fund purchase balances as of September 30, 2017. The Company had securities sold under agreements to repurchase totaling $39,001,000 and term repurchase agreements of $13,000,000 as of September 30, 2017.

~~Total investments as of~~ September 30, 2017 were $506,610,000 compared to $516,080,000 as of December 31, 2016. These investments provide the Company with a significant amount of liquidity since all of the investments are classified as available-for-sale as of September 30, 2017.

The investment portfolio serves an important role in the overall context of balance sheet management in terms of balancing capital utilization and liquidity. The decision to purchase or sell securities is based upon the current assessment of economic and financial conditions, including the interest rate environment, liquidity and credit considerations. The portfolio~~’s scheduled maturities and payments represent a significant source of liquidity.~~

Review of Statements of Cash Flows

●

~~Net c~~ash provided by operating activities for the nine months ended September 30, 2017 totaled $13,553,000 compared to $14,585,000 for the nine months ended September 30, 2016. The decrease in cash provided by operating activities was primarily due to lower net income.

~~Net~~ cash used in investing activities for the nine months ended September 30, 2017 was $4,184,000 compared to $14,181,000 for the nine months ended September 30, 2016. The decrease of $9,997,000 in cash used in investing activities was primarily due to a net decrease in the change in the loan portfolio of $26,204,000, offset in part by lower levels of proceeds from the sale of securities of $6,981,000 and a net increase in the change in the interest bearing deposits.

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~~Net cash~~ used in financing activities for the nine months ended September 30, 2017 totaled $15,759,000 compared to $3,105,000 for the nine months ended September 30, 2016. The change of $12,654,000 in net cash used in financing activities was primarily due to a decrease in securities sold under agreements to repurchase in 2017 of $19,336,000 as compared to a decrease of $4,432,000 in 2016 and a decrease in proceeds from short-term FHLB borrowings of $15,500,000, offset in part by an increase in deposits in 2017 of $5,129,000 as compared to a decrease of $12,358,000 in 2016. As of September 30, 2017, the Company did not have any external debt financing, off-balance sheet financing arrangements, or derivative instruments linked to its stock.

Company Only Cash Flows

●

~~The Company~~’s liquidity on an unconsolidated basis is heavily dependent upon dividends paid to the Company by the Banks. The Banks provide adequate liquidity to pay the Company’s expenses and stockholder dividends. Dividends paid by the Banks to the Company amounted to $7,655,000 and $6,825,000 for the nine months ended September 30, 2017 and 2016, respectively. Various federal and state statutory provisions limit the amounts of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval. Federal Reserve policy further limits the circumstances under which bank holding companies may declare dividends. For example, a bank holding company should not continue its existing rate of cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. In addition, the Federal Reserve and the FDIC have issued policy statements, which provide that insured banks and bank holding companies should generally pay dividends only out of current operating earnings. Federal and state banking regulators may also restrict the payment of dividends by order. The quarterly dividend declared by the Company increased to $0.22 per share in 2017 from $0.21 per share in 2016.

~~The Company, on an unconsolidated basis, has interest bearing deposits totaling $13,287,000 as of September 30, 2017 that are presently available to provide additional liquidity to the Banks.~~

Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flows Needs

●

No other material capital expenditures or material changes in the capital resource mix are anticipated at this time. The primary cash flow uncertainty would be a sudden decline in deposits causing the Banks to liquidate securities. Historically, the Banks have maintained an adequate level of short-term marketable investments to fund the temporary declines in deposit balances. There are no known trends in liquidity and cash flow needs as of September 30, 2017 that are of concern to management.

Capital Resources

~~The Company~~’s total stockholders’ equity as of September 30, 2017 totaled $173,329,000 and was $8,224,000 higher than the $165,105,000 recorded as of December 31, 2016. The increase in stockholders’ equity was primarily due to net income and an increase in accumulated other comprehensive income, reduced by dividends declared. The increase in other comprehensive income is created by lower market interest rates on the longer end of the interest yield curve compared to December 31, 2016, which resulted in higher fair values in the securities available-for-sale portfolio. At September 30, 2017 and December 31, 2016, stockholders’ equity as a percentage of total assets was 12.70% and 12.08%, respectively. The capital levels of the Company exceed applicable regulatory guidelines as of September 30, 2017.

Review of the Company’s Current Liquidity Sources

Liquid assets of cash on hand, balances due from other banks and interest-bearing deposits in financial institutions as of March 31, 2022 and December 31, 2021 totaled $148.3 million and $89.1 million, respectively, and management believes these sources provide an adequate level of liquidity given current economic conditions.

Other sources of liquidity available to the Banks as of March 31, 2022 include outstanding lines of credit with the FHLB of Des Moines, Iowa of $301.0 million, with no outstanding FHLB advances. The Company also has a $4 million line of credit with an unaffiliated bank, with no outstanding borrowings as of March 31, 2022. Federal funds borrowing capacity at correspondent banks was $102.2 million, with no outstanding federal fund purchase balances as of March 31, 2022. The Company had securities sold under agreements to repurchase totaling $39.9 million as of March 31, 2022.

Total investments as of March 31, 2022 were $823.9 million compared to $831.0 million as of December 31, 2021. These investments provide the Company with a significant amount of liquidity since all of the investments are classified as available-for-sale as of March 31, 2022.

The investment portfolio serves an important role in the overall context of balance sheet management in terms of balancing capital utilization and liquidity. The decision to purchase or sell securities is based upon the current assessment of economic and financial conditions, including the interest rate environment, liquidity and credit considerations. The portfolio’s scheduled maturities and payments represent a significant source of liquidity.

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Review of the Consolidated Statements of Cash Flows

Net cash provided by operating activities for the three months ended March 31, 2022 totaled $7.0 million compared to $9.4 million for the three months ended March 31, 2021. The decrease of $2.4 million in cash provided by operating activities was primarily due to lower net income and fewer net proceeds from loans held for sale.

Net cash used in investing activities for the three months ended March 31, 2022 was $24.3 million compared to $77.9 million for the three months ended March 31, 2021. The decrease of $53.6 million in cash used in investing activities was primarily due to fewer purchases of investments.

Net cash provided by financing activities for the three months ended March 31, 2022 totaled $76.6 million compared to $128.2 million for the three months ended March 31, 2021. The decrease in cash provided by financing activities of $51.6 million was primarily due to a lower increase in deposits between periods. As of March 31, 2022, the Company did not have any external debt financing, off-balance sheet financing arrangements, or derivative instruments linked to its stock.

Review of Company Only Cash Flows

The Company’s liquidity on an unconsolidated basis is heavily dependent upon dividends paid to the Company by the Banks. The Banks provide adequate liquidity to pay the Company’s expenses and stockholder dividends. Dividends paid by the Banks to the Company amounted to $2.5 million and $2.4 million for the three months ended March 31, 2022 and 2021, respectively. Various federal and state statutory provisions limit the amounts of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval. Federal Reserve policy further limits the circumstances under which bank holding companies may declare dividends. For example, a bank holding company should not continue its existing rate of cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. In addition, the Federal Reserve and the FDIC have issued policy statements, which provide that insured banks and bank holding companies should generally pay dividends only out of current operating earnings. Federal and state banking regulators may also restrict the payment of dividends by order.

The Company, on an unconsolidated basis, has interest-bearing deposits totaling $1.3 million as of March 31, 2022.

Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flows Needs

On April 16, 2021, the Company entered into a commitment with a contractor to build a new branch in West Des Moines, Iowa for $1.7 million. The Company has $406 thousand of the commitment remaining at March 31, 2022. No other material capital expenditures or material changes in the capital resource mix are anticipated at this time. The primary cash flow uncertainty would be a sudden decline in deposits causing the Banks to liquidate securities. Historically, the Banks have maintained an adequate level of short-term marketable investments to fund the temporary declines in deposit balances. There are no known trends in liquidity and cash flow needs as of March 31, 2022 that are of concern to management.

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Capital Resources

The Company’s total stockholders’ equity as of March 31, 2022 totaled $176.7 million and was $31.1 million less than the $207.8 million recorded as of December 31, 2021. The decrease in stockholders’ equity was primarily the result of an increase in unrealized losses on the investment portfolio, offset in part by the retention of net income in excess of dividends. At March 31, 2022 and December 31, 2021, stockholders’ equity as a percentage of total assets was 8.1% and 9.7%, respectively. The capital levels of the Company exceed applicable regulatory guidelines as of March 31, 2022.

Forward-Looking Statements and Business Risks

The Private Securities Litigation Reform Act of 1995 provides the Company with the opportunity to make cautionary statements regarding forward-looking statements contained in this Quarterly Report, including forward-looking statements concerning the Company’s future financial performance and asset quality. Any forward-looking statement contained in this Quarterly Report is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, asset quality, plans and objectives may vary materially from those expressed in the forward-looking statements. The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following: the substantial negative impact of the COVID-19 pandemic on national, regional and local economies in general and on our customers in particular; competitive products and pricing available in the marketplace; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses resulting from the COVID-19 pandemic or as dictated by new market conditions or regulatory requirements; fiscal and monetary policies of the U.S. government; changes in governmental regulations affecting financial institutions (including regulatory fees and capital requirements); changes in prevailing interest rates; credit risk management and asset/liability management; the financial and securities markets; the availability of and cost associated with sources of liquidity; and other risks and uncertainties inherent in the Company’s business, including those discussed under the heading “Risk Factors” in the Company’s annual report on Form 10-K. Management intends to identify forward-looking statements when using words such as “believe”, “expect”, “intend”, “anticipate”, “estimate”, “should”, “forecasting” or similar expressions. Undue reliance should not be placed on these forward-looking statements. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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~~Forward-Looking Statements and Business Risks~~

~~The Private Securities Litigation Reform Act of 1995 provides the Company with the opportunity to make cautionary statements regarding forward-looking statements contained in this~~ Quarterly Report, including forward-looking statements concerning the Company’s future financial performance and asset quality. Any forward-looking statement contained in this Quarterly Report is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, asset quality, plans and objectives may vary materially from those expressed in the forward-looking statements. The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following: economic conditions, particularly in the concentrated geographic area in which the Company and its affiliate banks operate; competitive products and pricing available in the marketplace; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions or regulatory requirements; fiscal and monetary policies of the U.S. government; changes in governmental regulations affecting financial institutions (including regulatory fees and capital requirements); changes in prevailing interest rates; credit risk management and asset/liability management; the financial and securities markets; the availability of and cost associated with sources of liquidity; and other risks and uncertainties inherent in the Company’s business, including those discussed under the headings “Risk Factors” and “Forward-Looking Statements and Business Risks” in the Company’s Annual Report. Management intends to identify forward-looking statements when using words such as “believe”, “expect”, “intend”, “anticipate”, “estimate”, “should” or similar expressions. Undue reliance should not be placed on these forward-looking statements. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

~~The Company's market risk is comprised primarily of interest rate risk arising from its core banking~~ activities of lending and deposit taking. Interest rate risk results from the changes in market interest rates which may adversely affect the Company's net interest income. Management continually develops and applies strategies to mitigate this risk. Management does not believe that the Company's primary market risk exposure and how it has been managed year-to-date in 2017 changed significantly when compared to 2016.

The Company's market risk is comprised primarily of interest rate risk arising from its core banking activities of lending and deposit taking. Interest rate risk results from the changes in market interest rates which may adversely affect the Company's net interest income. Management continually develops and applies strategies to mitigate this risk. Management does not believe that the Company's primary market risk exposure and how it has been managed year-to-date in 2022 changed significantly when compared to 2021. Uncertainty due to the federal governmental actions stemming from reactions to the COVID-19 pandemic, may cause market interest rates to deviate from historical norms.

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Item 4.

Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no change in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

~~As of the end of the period covered by this report, a~~n evaluation was performed under the supervision and with the participation of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

~~There was no change in the Company's internal control over financial~~ ~~reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.~~

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PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

Not applicable

~~Not applicable~~

~~Item 1.A~~.Item 1.A.

Risk Factors

~~None.~~

Management does not believe there have been any material changes in the risk factors that were disclosed in the Company's Form 10-K filed with the SEC on March 11, 2022.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

In November, 2016, the Company approved a Stock Repurchase Plan which provided for the repurchase of up to 100,000 shares of the Company’s common stock. As of September 30, 2017, there were 100,000 shares remaining to be purchased under the plan.

In November, 2021, the Company approved a Stock Repurchase Plan which provided for the repurchase of up to 100,000 shares of the Company’s common stock. As of March 31, 2022, there were 100,000 shares remaining to be purchased under the plan.

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchases” (as defined in rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended March 31, 2022.

Total

Number

Maximum

of Shares

Number of

Purchased as

Shares that

Total

Part of

May Yet Be

Number

Average

Publicly

Purchased

of Shares

Price Paid

Announced

Under

Period

Purchased

Per Share

Plans

The ~~following table provides information with respect~~Plan

January 1, 2022 to ~~purchase made by or on behalf of the Company or any “affiliated purchases” (as defined in rule 10b-18(a)(3) under the Securities Exchange Act~~ ~~of 1934), of the Company’s common stock during the three months ended September 30, 2017.~~January 31, 2022

100,000

February 1, 2022 to February 28, 2022

					~~Total~~
					~~Number~~		~~Maximum~~
					~~of Shares~~		~~Number of~~
					~~Purchased as~~		~~Shares that~~
	~~Total~~				~~Part of~~		~~May Yet Be~~
	~~Number~~		~~Average~~		~~Publicly~~		~~Purchased~~
	~~of Shares~~		~~Price Paid~~		~~Announced~~		~~Under~~
~~Period~~	~~Purchased~~		~~Per Share~~		~~Plans~~		~~The Plan~~

~~July 1, 2017 to July 31, 2017~~		-	$	-		-		~~100,000~~

~~August 1, 2017 to August 31, 2017~~		-	$	-		-		~~100,000~~

~~September 1, 2017 to September 30, 2017~~		-	$	-		-		100,000

March 1, 2022 to March 31, 2022		-	$	-		-		100,000

Total		-				-

Item 3.

Defaults Upon Senior Securities

Not applicable

~~Not applicable~~

Item 4.

Mine Safety Disclosures

Not applicable

~~Table of Contents~~

Item 5.

Other information

Not applicable

Table of Contents

Item 6.

Exhibits

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2	Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.

~~31.1~~

~~Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.~~
101.INS
Inline XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document ⁽¹⁾
~~31.2~~
~~Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.~~
101.SCH
Inline XBRL Taxonomy Extension Schema Document ⁽¹⁾
~~32.1~~
~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.~~
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document ⁽¹⁾
~~32.2~~
~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.~~
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document ⁽¹⁾
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document ⁽¹⁾
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document ⁽¹⁾

104	Cover page Interactive Data File (formatted as Inline XBRL and combined in Exhibit 101.1)

~~101.INS~~

~~XBRL Instance Document (1)~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document (1)~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document (1)~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document (1)~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document (1)~~

1~~01.DEF~~

~~XBRL Taxonomy Extension Definition Linkbase Document (1)~~

~~(1)~~

⁽¹⁾ These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

Table of Contents

SIGNATURES

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

	AMES NATIONAL CORPORATION

~~DATE:~~ ~~November 8, 2017~~	~~By:~~	~~/s/ Thomas H. Pohlman~~

	~~Thomas H. Pohlman, Chief Executive Officer and President~~


	~~By:~~	~~/s/ John P. Nelson~~

	~~John P. Nelson, Chief Financial Officer and Executive Vice President~~

DATE: May 6, 2022	By: /s/ John P. Nelson

	John P. Nelson, Chief Executive Officer and President

	By: /s/ John L. Pierschbacher

	John L. Pierschbacher, Chief Financial Officer

~~Table of Contents~~

~~EXHIBIT INDEX~~

~~The following exhibits are filed herewith:~~

~~Exhibit No.~~

~~Description~~

~~-----------~~

~~-------------------------------------------------------------------------------------------~~

~~31.1~~

~~Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002~~

~~31.2~~

~~Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002~~

~~32.1~~

~~Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350~~

~~32.2~~

~~Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350~~

~~101.INS~~

~~XBRL Instance Document (1)~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document (1)~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document (1)~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document (1)~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document (1)~~

~~101.DEF~~

~~XBRL Taxonomy Extension Definition Linkbase Document (1)~~

~~(1)~~ These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

~~IOWA~~ Iowa	42-1039071
(State ~~or Other Jurisdiction~~ of Incorporation)	(I. R. S. Employer
~~Incorporation or Organization)~~	Identification Number)

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	ATLO	NASDAQ

~~COMMON STOCK, $2.00 PAR VALUE~~	9,310,~~913~~
~~(Class)~~	~~(Shares Outstanding at October 27, 2017)~~

		Page

~~Part~~PART I.	~~Financial Information~~FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	3

	Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021	3

	Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	4

	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	5

	Consolidated Statements of ~~Stockholders~~’Stockholders’ Equity for the ~~nine~~ three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	6

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30 29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49 43

Item 4.	Controls and Procedures	4944

~~Part~~PART II.	~~Other Information~~ OTHER INFORMATION

Item 1.	Legal Proceedings	50 44

Item 1.A.	Risk Factors	50 44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50 45

Item 3.	Defaults Upon Senior Securities	50 45

Item 4.	Mine Safety Disclosures	50 45

Item 5.	Other Information	51 45

Item 6.	Exhibits	51 46

	Signatures	52 47

						March 31,			December 31,
						2022			2021
	September 30,		December 31,			(unaudited)			(audited)
ASSETS	2017		2016

Cash and due from banks	$	23,087,890	$	29,478,068		$	28,681		$	19,590
Interest bearing deposits in financial institutions		35,486,284		31,737,259
Interest-bearing deposits in financial institutions and federal funds sold							119,651			69,539
Total cash and cash equivalents							148,332			89,129
Interest-bearing time deposits							16,419			16,922
Securities available-for-sale		506,610,435		516,079,506			823,897			831,003
Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock, at cost							3,473			3,422
Loans receivable, net		764,228,850		752,181,730			1,130,077			1,144,108
Loans held for sale		279,800		242,618
Bank premises and equipment, net		15,595,418		16,049,379			17,733			17,512
Accrued income receivable		8,423,038		7,768,689			9,330			10,124
Other real estate owned		385,509		545,757
Deferred income taxes		1,817,543		3,485,689
Bank-owned life insurance							3,002			2,985
Deferred income taxes, net							13,112			1,922
Intangible assets, net		1,133,736		1,352,812			2,359			2,505
Goodwill		6,732,216		6,732,216			12,424			12,424
Other assets		1,159,533		799,306			4,560			4,985

Total assets	$	1,364,940,252	$	1,366,453,029		$	2,184,718		$	2,137,041

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits
Demand, noninterest bearing	$	202,368,921	$	212,074,792
NOW accounts		337,062,117		310,427,812
Noninterest-bearing checking						$	413,114		$	411,585
Interest-bearing checking							630,016			575,997
Savings and money market		380,454,650		381,852,433			705,560			674,975
Time, $250,000 and over		36,776,010		39,031,663
Time, $250 and over							41,460			40,793
Other time		157,876,361		166,022,165			169,743			174,669
Total deposits		1,114,538,059		1,109,408,865			1,959,893			1,878,019

Securities sold under agreements to repurchase		39,001,050		58,337,367			39,902			39,851
Federal Home Loan Bank (FHLB) advances		19,000,000		14,500,000
Other borrowings		13,000,000		13,000,000
FHLB advances							0			3,000
Dividends payable		2,048,401		1,955,292			2,455			2,364
Accrued expenses and other liabilities		4,023,858		4,146,262			5,803			6,029
Total liabilities		1,191,611,368		1,201,347,786			2,008,053			1,929,263

STOCKHOLDERS' EQUITY
Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 9,310,913 shares as of September 30, 2017 and December 31, 2016		18,621,826		18,621,826
Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 9,092,167 shares as of March 31, 2022 and December 31, 2021							18,184			18,184
Additional paid-in capital		20,878,728		20,878,728			16,353			16,353
Retained earnings		131,047,038		126,181,376			173,067			170,377
Accumulated other comprehensive income (loss) - net unrealized gain (loss) on securities available-for-sale		2,781,292		(576,687	)
Accumulated other comprehensive income (loss)							(30,939	)		2,864
Total stockholders' equity		173,328,884		165,105,243			176,665			207,778

Total liabilities and stockholders' equity	$	1,364,940,252	$	1,366,453,029		$	2,184,718		$	2,137,041

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2022			2021

Interest income:
Interest and dividend income:
Loans, including fees	$	8,729,702		$	8,236,401		$	25,345,116		$	24,124,973		$	10,644		$	11,984
Securities:
Taxable		1,557,872			1,425,366			4,637,498			4,392,602			2,588			1,989
Tax-exempt		1,210,510			1,329,071			3,819,380			4,117,893			674			844
Interest bearing deposits and federal funds sold		114,820			86,869			365,346			296,925
Other interest and dividend income														166			178
Total interest income		11,612,904			11,077,707			34,167,340			32,932,393			14,072			14,995

Interest expense:
Deposits		1,169,296			753,642			3,204,115			2,259,140			888			1,294
Other borrowed funds		292,054			274,297			862,798			796,006			32			37
Total interest expense		1,461,350			1,027,939			4,066,913			3,055,146			920			1,331

Net interest income		10,151,554			10,049,768			30,100,427			29,877,247			13,152			13,664

Provision for loan losses		57,277			234,703			1,221,620			440,787
Provision (credit) for loan losses														(127	)		(426	)

Net interest income after provision for loan losses		10,094,277			9,815,065			28,878,807			29,436,460
Net interest income after provision (credit) for loan losses														13,279			14,090

Noninterest income:
Wealth management income		747,634			684,908			2,180,941			2,210,229			1,280			932
Service fees		401,237			426,711			1,126,122			1,228,416			338			333
Securities gains, net		37,881			64,917			498,560			296,110			35			0
Gain on sale of loans held for sale		179,553			339,501			544,095			773,512			180			504
Merchant and card fees		348,847			350,488			1,017,362			1,051,378			442			464
Other noninterest income		144,953			137,153			598,791			469,138			278			273
Total noninterest income		1,860,105			2,003,678			5,965,871			6,028,783			2,553			2,506

Noninterest expense:
Salaries and employee benefits		4,026,932			3,977,495			12,058,903			11,883,696			5,611			5,507
Data processing		807,419			824,429			2,481,331			2,366,293			1,432			1,372
Occupancy expenses, net		527,071			449,775			1,546,657			1,461,201			717			728
FDIC insurance assessments		111,987			109,289			326,958			434,808			147			139
Professional fees		307,484			296,720			919,157			889,721			474			396
Business development		262,408			239,917			722,869			696,033			336			237
Other real estate owned (income), net		(3,200	)		(91,173	)		(2,396	)		(87,564	)
Intangible asset amortization		89,861			86,492			280,837			273,206			146			160
New market tax credit projects amortization														189			160
Other operating expenses, net		166,026			219,283			837,810			750,244			327			307
Total noninterest expense		6,295,988			6,112,227			19,172,126			18,667,638			9,379			9,006

Income before income taxes		5,658,394			5,706,516			15,672,552			16,797,605			6,453			7,590

Provision for income taxes		1,729,987			1,902,636			4,661,687			5,087,253			1,308			1,567

Net income	$	3,928,407		$	3,803,880		$	11,010,865		$	11,710,352		$	5,145		$	6,023

Basic and diluted earnings per share	$	0.42		$	0.41		$	1.18		$	1.26		$	0.57		$	0.66

Dividends declared per share	$	0.22		$	0.21		$	0.66		$	0.63		$	0.27		$	0.25

	Common Stock				Additional Paid-		Retained			Accumulated Other Comprehensive Income (Loss),			Total Stockholders'
	Shares		Amount		in Capital		Earnings			Net of Taxes			Equity

Balance, December 31, 2020		9,122,747	$	18,245	$	17,002	$	158,217		$	16,023		$	209,487
Net income		-		0		0		6,023			0			6,023
Other comprehensive (loss)		-		0		0		0			(8,876	)		(8,876	)
Cash dividends declared, $0.25 per share		-		0		0		(2,281	)		0			(2,281	)
Balance, March 31, 2021		9,122,747	$	18,245	$	17,002	$	161,959		$	7,147		$	204,353


Balance, December 31, 2021		9,092,167	$	18,184	$	16,353	$	170,377		$	2,864		$	207,778
Net income		-		0		0		5,145			0			5,145
Other comprehensive (loss)		-		0		0		0			(33,803	)		(33,803	)
Cash dividends declared, $0.27 per share		-		0		0		(2,455	)		0			(2,455	)
Balance, March 31, 2022		9,092,167	$	18,184	$	16,353	$	173,067		$	(30,939	)	$	176,665

	2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,010,865		$	11,710,352
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,221,620			440,787
Provision for off-balance sheet commitments		4,000			12,000
Amortization, net		2,129,648			2,327,654
Amortization of intangible asset		280,837			273,206
Depreciation		861,700			885,202
Deferred income taxes		(303,999	)		176,658
Securities gains, net		(498,560	)		(296,110	)
(Gain) on sales of loans held for sale		(544,095	)		(773,511	)
Proceeds from loans held for sale		22,668,307			34,782,288
Originations of loans held for sale		(22,161,394	)		(34,657,822	)
Loss on sale of premises and equipment, net		56,168			2,769
Impairment of other real estate owned		-			28,039
(Gain) on sale of other real estate owned, net		(14,648	)		(131,127	)
Change in assets and liabilities:
(Increase) in accrued income receivable		(654,349	)		(805,127	)
(Increase) decrease in other assets		(377,095	)		286,238
Increase (decrease) in accrued expenses and other liabilities		(126,404	)		323,605
Net cash provided by operating activities		13,552,601			14,585,101

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available-for-sale		(51,271,943	)		(49,668,267	)
Proceeds from sale of securities available-for-sale		11,756,963			18,738,154
Proceeds from maturities and calls of securities available-for-sale		52,588,102			54,611,331
Net (increase) decrease in interest bearing deposits in financial institutions		(3,749,025	)		994,573
Net (increase) in loans		(13,190,423	)		(39,394,414	)
Net proceeds from the sale of other real estate owned		191,564			755,906
Purchase of bank premises and equipment, net		(447,039	)		(218,081	)
Other		(61,761	)		-
Net cash (used in) investing activities		(4,183,562	)		(14,180,798	)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits		5,129,194			(12,358,477	)
(Decrease) in securities sold under agreements to repurchase		(19,336,317	)		(4,431,520	)
Payments on FHLB borrowings and other borrowings		(1,000,000	)		(1,542,203	)
Proceeds from short-term FHLB borrowings, net		5,500,000			21,000,000
Dividends paid		(6,052,094	)		(5,772,766	)
Net cash (used in) financing activities		(15,759,217	)		(3,104,966	)

Net (decrease) in cash and due from banks		(6,390,178	)		(2,700,663	)

CASH AND DUE FROM BANKS
Beginning		29,478,068			24,005,801
Ending	$	23,087,890		$	21,305,138

	2017		2016

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	4,027,782	$	3,145,519
Income taxes		5,050,220		4,223,653

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
Transfer of loans receivable to other real estate owned	$	16,668	$	56,587

	2017
	Estimated Fair Value		Valuation Techniques	Unobservable Inputs	Range (Average)

Impaired Loans	$	2,439	Evaluation of collateral	Estimation of value	NM*

Other real estate owned	$	386	Appraisal	Appraisal adjustment	6%	-	8%	(7%)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017		2016			2017			2016
Proceeds from sales of securities available-for-sale	$	933	$	5,852		$	11,757		$	18,738
Gross realized gains on securities available-for-sale		38		66			501			303
Gross realized losses on securities available-for-sale		-		(1	)		(2	)		(7	)
Tax provision applicable to net realized gains on securities available-for-sale		14		29			175			110

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes *					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio

As of September 30, 2017:
Total capital (to risk- weighted assets):
Consolidated	$	175,203		17.7	%	$	91,324		9.25	%		N/A		N/A
Boone Bank & Trust		15,325		16.7			8,486		9.25		$	9,174		10.0	%
First National Bank		81,177		15.4			48,867		9.25			52,829		10.0
Reliance State Bank		26,957		15.9			15,661		9.25			16,931		10.0
State Bank & Trust		20,217		16.5			11,337		9.25			12,256		10.0
United Bank & Trust		14,903		20.4			6,741		9.25			7,288		10.0

Tier 1 capital (to risk- weighted assets):
Consolidated	$	163,536		16.6	%	$	71,578		7.25	%		N/A		N/A
Boone Bank & Trust		14,419		15.7			6,651		7.25		$	7,339		8.0	%
First National Bank		75,221		14.2			38,301		7.25			42,263		8.0
Reliance State Bank		24,947		14.7			12,275		7.25			13,545		8.0
State Bank & Trust		18,680		15.2			8,886		7.25			9,805		8.0
United Bank & Trust		14,084		19.3			5,284		7.25			5,830		8.0

Tier 1 capital (to average- weighted assets):
Consolidated	$	163,536		12.1	%	$	53,995		4.00	%		N/A		N/A
Boone Bank & Trust		14,419		10.5			5,484		4.00		$	6,855		5.0	%
First National Bank		75,221		10.0			29,942		4.00			37,428		5.0
Reliance State Bank		24,947		12.2			8,147		4.00			10,184		5.0
State Bank & Trust		18,680		11.9			6,297		4.00			7,871		5.0
United Bank & Trust		14,084		12.9			4,372		4.00			5,465		5.0

Common equity tier 1 capital (to risk-weighted assets):
Consolidated	$	163,536		16.6	%	$	56,769		5.75	%		N/A		N/A
Boone Bank & Trust		14,419		15.7			5,275		5.75		$	5,963		6.5	%
First National Bank		75,221		14.2			30,377		5.75			34,339		6.5
Reliance State Bank		24,947		14.7			9,735		5.75			11,005		6.5
State Bank & Trust		18,680		15.2			7,047		5.75			7,967		6.5
United Bank & Trust		14,084		19.3			4,190		5.75			4,737		6.5