10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from  ___________ to ___________

Commission file number:  0-12668

Hills Bancorporation

(State or other jurisdiction of incorporation or organization)	I.R.S. Employer Identification No.
Iowa	42-1208067

131 MAIN STREET, HILLS, Iowa 52235

Telephone number: (319) 679-2291

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

Title of each class Trading Symbol(s) Name of each exchange on which registered

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

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

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

Large accelerated filer	☐	Accelerated Filer	☑
Non-accelerated filer	☐	Small Reporting Company	☐
Emerging Growth Company	☐

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

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes  ☑ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

		SHARES OUTSTANDING
CLASS		October 31, 2021
Common Stock	No par value	9,302,242

HILLS BANCORPORATION

Index to Form 10-Q

Part I

FINANCIAL INFORMATION

		Page
		Number
Item 1.	Financial Statements
	Consolidated balance sheets, September 30, 2021 (unaudited) and December 31, 2020	4
	Consolidated statements of income (unaudited) for three and nine months ended September 30, 2021 and 2020	5
	Consolidated statements of comprehensive income (unaudited) for three and nine months ended September 30, 2021 and 2020	6
	Consolidated statements of stockholders' equity (unaudited) for three and nine months ended September 30, 2021 and 2020	7
	Consolidated statements of cash flows (unaudited) for nine months ended September 30, 2021 and 2020	9
	Notes to consolidated financial statements (condensed)	11
Item 2.	Management Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71
Item 4.	Controls and Procedures	71
	Part II
	OTHER INFORMATION
Item 1.	Legal proceedings	72
Item 1A.	Risk factors	72
Item 2.	Unregistered sales of equity securities and use of proceeds	73
Item 3.	Defaults upon senior securities	74
Item 4.	Mine safety disclosures	74
Item 5.	Other information	74
Item 6.	Exhibits	75
	Signatures	76

Page 3

HILLS BANCORPORATION CONSOLIDATED BALANCE SHEETS (Amounts In Thousands, Except Share Amounts) 

	September 30, 2021		December 31, 2020
ASSETS	(Unaudited)
Cash and cash equivalents	$	869,098	$	574,310
Investment securities available for sale at fair value (amortized cost September 30, 2021 $495,580; December 31, 2020 $396,670)	501,265		408,372
Stock of Federal Home Loan Bank	8,746		8,172
Loans held for sale	10,738		43,947
Loans, net of allowance for credit losses September 30, 2021 $35,590; net of allowance for loan losses December 31, 2020 $37,070	2,619,198		2,674,012
Property and equipment, net	34,740		35,878
Tax credit real estate investment	10,620		7,273
Accrued interest receivable	12,432		12,177
Deferred income taxes, net	8,431		6,088
Goodwill	2,500		2,500
Other assets	8,317		7,882
Total Assets	$	4,086,085	$	3,780,611
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits	$	581,011	$	532,190
Interest-bearing deposits	2,887,248		2,660,378
Total deposits	$	3,468,259	$	3,192,568
Federal Home Loan Bank borrowings	105,000		105,000
Accrued interest payable	1,255		1,733
Allowance for credit losses on off-balance sheet credit exposures	4,580		—
Other liabilities	21,856		17,905
Total Liabilities	$	3,600,950	$	3,317,206
Redeemable Common Stock Held by Employee Stock Ownership Plan (ESOP)	$	48,831	$	47,329
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 20,000,000 shares; issued September 30, 2021 10,329,937 shares; December 31, 2020 10,330,242 shares	$	—	$	—
Paid in capital	61,078		60,233
Retained earnings	468,239		439,831
Accumulated other comprehensive income	4,267		8,782
Treasury stock at cost (September 30, 2021 1,042,426 shares; December 31, 2020 999,247 shares)	(48,449)		(45,441)
Total Stockholders' Equity	$	485,135	$	463,405
Less maximum cash obligation related to ESOP shares	48,831		47,329
Total Stockholders' Equity Less Maximum Cash Obligation Related to ESOP Shares	$	436,304	$	416,076
Total Liabilities & Stockholders' Equity	$	4,086,085	$	3,780,611

See Notes to Consolidated Financial Statements.

Page 4

HILLS BANCORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Amounts In Thousands, Except Per Share Amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest income:
Loans, including fees	$	29,004	$	29,750	$	86,956	$	89,975
Investment securities:
Taxable	940		889		2,629		2,656
Nontaxable	963		933		2,880		2,941
Federal funds sold	289		103		652		801
Total interest income	$	31,196	$	31,675	$	93,117	$	96,373
Interest expense:
Deposits	$	3,414	$	5,077	$	11,416	$	16,854
FHLB borrowings	758		1,388		2,248		4,118
Total interest expense	$	4,172	$	6,465	$	13,664	$	20,972
Net interest income	$	27,024	$	25,210	$	79,453	$	75,401
Provision for credit losses (2021); Provision for loan losses (2020)	82		(157)		(4,561)		4,500
Net interest income after credit loss expense and provision for loan losses	$	26,942	$	25,367	$	84,014	$	70,901
Noninterest income:
Net gain on sale of loans	$	1,512	$	2,303	$	6,243	$	4,859
Trust fees	3,568		2,494		9,645		7,450
Service charges and fees	3,075		2,636		8,729		7,427
Other noninterest income	89		77		647		462
Gain on sale of investment securities	—		—		—		10
	$	8,244	$	7,510	$	25,264	$	20,208
Noninterest expenses:
Salaries and employee benefits	$	10,281	$	10,108	$	31,484	$	29,818
Occupancy	955		1,067		3,135		3,248
Furniture and equipment	1,652		2,028		5,523		5,778
Office supplies and postage	428		425		1,268		1,333
Advertising and business development	496		340		1,480		1,479
Outside services	3,496		2,818		9,781		8,020
FDIC insurance assessment	267		223		777		617
Other noninterest expense	623		1,046		1,668		1,861
	$	18,198	$	18,055	$	55,116	$	52,154
Income before income taxes	$	16,988	$	14,822	$	54,162	$	38,955
Income taxes	3,863		3,392		12,230		8,739
Net income	$	13,125	$	11,430	$	41,932	$	30,216
Earnings per share:
Basic	$	1.41	$	1.22	$	4.50	$	3.22
Diluted	$	1.41	$	1.22	$	4.50	$	3.22

See Notes to Consolidated Financial Statements.

Page 5

HILLS BANCORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (Amounts In Thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	13,125	$	11,430	$	41,932	$	30,216
Other comprehensive (loss) income
Securities:
Net change in unrealized (loss) income on securities available for sale	$	(1,510)	$	(84)	$	(6,017)	$	8,220
Reclassification adjustment for net gains realized in net income	—		—		—		(10)
Income taxes	377		21		1,502		(2,049)
Other comprehensive (loss) income on securities available for sale	$	(1,133)	$	(63)	$	(4,515)	$	6,161
Derivatives used in cash flow hedging relationships:
Net change in unrealized gain (loss) on derivatives	$	—	$	364	$	—	$	(726)
Income taxes	—		(91)		—		181
Other comprehensive income (loss) on cash flow hedges	$	—	$	273	$	—	$	(545)
Other comprehensive (loss) income, net of tax	$	(1,133)	$	210	$	(4,515)	$	5,616
Comprehensive income	$	11,992	$	11,640	$	37,417	$	35,832

See Notes to Consolidated Financial Statements.

Page 6

HILLS BANCORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Amounts In Thousands, Except Share Amounts)

Three Months Ended September 30, 2021 and 2020
	Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Maximum Cash Obligation Related to ESOP Shares		Total
Balance, June 30, 2020	$	60,043	$	419,971	$	6,821	$	(42,787)	$	(45,329)	$	398,719
Issuance of 13,120 shares of common stock	458		—		—		351		—		809
Issuance of 1,861 shares of common stock under the employee stock purchase plan	104		—		—		—		—		104
Unearned restricted stock compensation	(474)		—		—		—		—		(474)
Forfeiture of 3,188 shares of common stock	(166)		—		—		—		—		(166)
Share-based compensation	7		—		—		—		—		7
Change related to ESOP shares	—		—		—		—		(1,566)		(1,566)
Net income	—		11,430		—		—		—		11,430
Purchase of 29,807 shares of common stock	—		—		—		(1,814)		—		(1,814)
Other comprehensive income	—		—		210		—		—		210
Balance, September 30, 2020	$	59,972	$	431,401	$	7,031	$	(44,250)	$	(46,895)	$	407,259
Balance, June 30, 2021	$	60,776	$	455,114	$	5,400	$	(47,187)	$	(48,726)	$	425,377
Issuance of 1,204 shares of common stock	48		—		—		32		—		80
Issuance of 1,725 shares of common stock under the employee stock purchase plan	100		—		—		—		—		100
Unearned restricted stock compensation	273		—		—		—		—		273
Forfeiture of 2,114 shares of common stock	(125)		—		—		—		—		(125)
Share-based compensation	6		—		—		—		—		6
Change related to ESOP shares	—		—		—		—		(105)		(105)
Net income	—		13,125		—		—		—		13,125
Purchase of 19,556 shares of common stock	—		—		—		(1,294)		—		(1,294)
Other comprehensive loss	—		—		(1,133)		—		—		(1,133)
Balance, September 30, 2021	$	61,078	$	468,239	$	4,267	$	(48,449)	$	(48,831)	$	436,304

Page 7

Nine Months Ended September 30, 2021 and 2020
	Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Maximum Cash Obligation Related to ESOP Shares		Total
Balance, December 31, 2019	$	55,943	$	409,509	$	1,415	$	(39,830)	$	(51,826)	$	375,211
Issuance of 105,542 shares of common stock	4,005		—		—		2,810		—		6,815
Issuance of 5,430 shares of common stock under the employee stock purchase plan	304		—		—		—		—		304
Unearned restricted stock compensation	(81)		—		—		—		—		(81)
Forfeiture of 4,211 shares of common stock	(218)		—		—		—		—		(218)
Share-based compensation	19		—		—		—		—		19
Change related to ESOP shares	—		—		—		—		4,931		4,931
Net income	—		30,216		—		—		—		30,216
Cash dividends ($0.89 per share)	—		(8,324)		—		—		—		(8,324)
Purchase of 112,407 shares of common stock	—		—		—		(7,230)		—		(7,230)
Other comprehensive income	—		—		5,616		—		—		5,616
Balance, September 30, 2020	$	59,972	$	431,401	$	7,031	$	(44,250)	$	(46,895)	$	407,259
Balance, December 31, 2020	$	60,233	$	439,831	$	8,782	$	(45,441)	$	(47,329)	$	416,076
Cumulative change in accounting principle (Note 1)	—		(4,751)		—		—		—		(4,751)
Balance, January 1, 2021 (as adjusted for change in accounting principle)	60,233		435,080		8,782		(45,441)		(47,329)		411,325
Issuance of 5,957 shares of common stock	225		—		—		159		—		384
Issuance of 5,564 shares of common stock under the employee stock purchase plan	320		—		—		—		—		320
Unearned restricted stock compensation	603		—		—		—		—		603
Forfeiture of 5,869 shares of common stock	(321)		—		—		—		—		(321)
Share-based compensation	18		—		—		—		—		18
Change related to ESOP shares	—		—		—		—		(1,502)		(1,502)
Net income	—		41,932		—		—		—		41,932
Cash dividends ($0.94 per share)	—		(8,773)		—		—		—		(8,773)
Purchase of 49,136 shares of common stock	—		—		—		(3,167)		—		(3,167)
Other comprehensive loss	—		—		(4,515)		—		—		(4,515)
Balance, September 30, 2021	$	61,078	$	468,239	$	4,267	$	(48,449)	$	(48,831)	$	436,304

 See Notes to Consolidated Financial Statements.

Page 8

HILLS BANCORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts In Thousands)

	Nine Months Ended September 30,
	2021		2020
Cash Flows from Operating Activities
Net income	$	41,932	$	30,216
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation	2,325		2,623
Provision for credit losses (2021) and loan losses (2020)	(4,561)		4,500
Net gain on sale of investment securities available for sale	—		(10)
Forfeiture of common stock	(321)		(218)
Share-based compensation	18		19
Compensation expensed through issuance of common stock	384		971
Provision for deferred income taxes	738		(865)
Net gain on sale of other real estate owned and other repossessed assets	(25)		—
Increase in accrued interest receivable	(255)		(1,289)
Amortization of premium on investment securities, net	872		555
(Increase) decrease in other assets	(683)		1,320
Amortization of operating lease right-of-use assets	298		91
Increase (decrease) in accrued interest payable and other liabilities	5,072		(1,590)
Loans originated for sale	(356,975)		(359,531)
Proceeds on sales of loans	396,427		344,810
Net gain on sales of loans	(6,243)		(4,859)
Net cash and cash equivalents provided by operating activities	$	79,003	$	16,743
Cash Flows from Investing Activities
Proceeds from maturities of investment securities available for sale	$	76,242	$	64,096
Proceeds from sales of investment securities available for sale	—		313
Purchases of investment securities available for sale	(176,023)		(76,694)
Purchases of stock of Federal Home Loan Bank	(574)		(310)
Loans made to customers, net of collections	56,533		(129,294)
Proceeds on sale of other real estate owned and other repossessed assets	70		—
Purchases of property and equipment	(1,187)		(1,025)
Investment in tax credit real estate	(4,183)		—
Net changes from tax credit real estate investment	836		1,120
Net cash and cash equivalents used in investing activities	$	(48,286)	$	(141,794)
Cash Flows from Financing Activities
Net increase in deposits	$	275,691	$	453,187
Net increase in other borrowings	—		43
Issuance of common stock, net of costs	—		5,844
Purchase of treasury stock	(3,167)		(7,230)
Proceeds from the issuance of common stock through the employee stock purchase plan	320		304
Dividends paid	(8,773)		(8,324)
Net cash and cash equivalents provided by financing activities	$	264,071	$	443,824

(Continued)

Page 9

HILLS BANCORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued) (Amounts In Thousands)

	Nine Months Ended September 30,
	2021		2020
Increase in cash and cash equivalents	$	294,788	$	318,773
Cash and cash equivalents:
Beginning of period	574,310		241,965
End of period	$	869,098	$	560,738
Supplemental Disclosures
Cash payments for:
Interest paid to depositors	$	11,894	$	17,130
Interest paid on other obligations	2,248		4,118
Income taxes paid	6,073		7,329
Noncash activities:
Increase/(decrease) in maximum cash obligation related to ESOP shares	$	1,502	$	(4,931)
Transfers to other real estate owned	96		—

See Notes to Consolidated Financial Statements.

Page 10

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.Summary of Significant Accounting Policies

Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with instructions for Form 10-Q and Regulation S-X.  These financial statements include all adjustments (consisting of normal recurring accruals) which in the opinion of management are considered necessary for the fair presentation of the financial position and results of operations for the periods shown.  Certain prior year amounts have been reclassified to conform to the current year presentation.  The Company considers that it operates as one business segment, a commercial bank.

Operating results for the nine month period ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Form 10-K Annual Report of Hills Bancorporation and subsidiary (the “Company”) for the year ended December 31, 2020 filed with the Securities Exchange Commission on March 5, 2021.  The consolidated balance sheet as of December 31, 2020, has been derived from the audited consolidated financial statements for that period.

The Company evaluated subsequent events through the filing date of its quarterly report on Form 10-Q with the SEC.

Accounting Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain Significant Estimates:

The allowance for credit losses and loan losses, fair values of securities and other financial instruments, and share-based compensation expense involve certain significant estimates made by management. These estimates are reviewed by management routinely and it is reasonably possible that circumstances that exist at September 30, 2021 may change in the near-term and the effect could be material to the consolidated financial statements. Actual amounts and values as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process.

Revenue Recognition:

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit and investment securities. Interest income on loans and investment securities is recognized on the accrual method in accordance with written contracts.

Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606 are the following: Service charges and fees on deposit accounts represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue which includes interchange income, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when the Company’s performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at

Page 11

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

the time the performance obligations are satisfied. Trust income represents monthly fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, fees for trust services and similar fiduciary activities. Revenue is recognized when our performance obligation is completed each month, which is generally the time that payment is received.

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. As of September 30, 2021, the Company did not have any significant contract balances.

An entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. The Company has not incurred or capitalized any contract acquisition costs as of September 30, 2021.

Tax Credit Real Estate:

Tax credit real estate represents three multi-family rental properties, three assisted living rental properties, a multi-tenant rental property for persons with disabilities, and a multi-family senior living rental property, all of which are affordable housing projects as of September 30, 2021. The Bank has a 99% or greater limited partnership interest in each limited partnership. The investment in each was completed after the projects had been developed by the general partner. The Company evaluates the recoverability of the carrying value on a regular basis. If the recoverability was determined to be in doubt, a valuation allowance would be established by way of a charge to expense. Depreciation expense is provided on a straight-line basis over the estimated useful life of the assets. Expenditures for normal repairs and maintenance are charged to expense as incurred.

In 2016, the Company adopted ASU 2015-02 and the investments in tax credit real estate are recorded for all years presented using the equity method of accounting, with the exception of the investment in the affordable housing project described below. The operations of the properties are not expected to contribute significantly to the Company’s income before income taxes. However, the properties do contribute in the form of income tax credits, which lowers the Company’s effective tax rate. Once established, the credits on each property last for ten years and are passed through from the limited partnerships to the Bank and reduces the consolidated federal tax liability of the Company.

In February 2021, the Company provided construction financing and contributed capital of $4.18 million to Del Ray Ridge LP, as limited partner, which owns and operates an affordable housing property in Iowa City, Iowa. The Company accounts for the investment in this tax credit real estate using the proportional amortization method as provided for under Accounting Standards Codification (ASC) 323-740. The investment qualifies for the proportional amortization method as it meets all of the criteria under ASC 323-740-25-1. Substantially all of the projected benefits are from tax credits and other tax benefits due to the minimum buyout clause included in the partnership agreement.

Adoption of New Financial Accounting Standard Codification 326 (ASC 326 (CECL)):

On January 1, 2021, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the recognition of the allowance for credit losses be estimated using the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet (OBS) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning January 1, 2021 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to

Page 12

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

retained earnings of $4.75 million as of January 1, 2021 for the cumulative effect of adopting ASC 326, which includes deferred taxes of $1.58 million. The transition adjustment includes a $2.75 million increase to the Allowance for Credit Losses and the recording of a $3.58 million Allowance for Credit Losses on OBS Credit Exposures.

The following table illustrates the impact of ASC 326 (amounts in thousands).

	January 1, 2021
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Loans
Allowance for credit losses on loans	$	39,816	$	37,070	$	2,746
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,584	$	—	$	3,584

Available-For-Sale Debt Securities and the Allowance For Credit Losses On Available-For-Sale Debt Securities: Debt securities that we might not hold until maturity are classified as available for sale ("AFS") and are reported at the fair value in the balance sheet. Fair value measurement is based upon quoted market prices in active markets, if available. If quoted prices in active markets are not available, fair value is measured using pricing models or other model-based valuation techniques such as present value of future cash flows, which consider prepayment assumptions and other factors such as credit losses and market liquidity. Unrealized gains and losses are excluded from earnings and reported, net of tax, in other comprehensive income ("OCI"). Purchase premiums and discounts are recognized in interest income using the effective interest method over the life of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For AFS debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes.

Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. For asset-backed securities performance indicators considered related to the underlying assets include default rates, delinquency rates, percentage of nonperforming assets, debt-to-collateral ratios, third-party guarantees, current levels of subordination, vintage, geographic concentration, analyst reports and forecasts, credit ratings and other market data. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis.

If we intend to sell a debt security or more likely than not we will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged against the allowance for credit losses with any incremental impairment reported in earnings.

Accrued interest receivable on AFS debt securities totaled $2.18 million at September 30, 2021 and is excluded from the estimate of credit losses.

Allowance for Credit Losses on Tax Credit Real Estate Investments: On a regular basis, the Company evaluates recoverability of the carrying value of the tax credit real estate investments to determine if an allowance for credit losses is necessary. The allowance for credit losses is measured by a comparison of the carrying amount of the investments to the future undiscounted

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cash flows expected to be generated by the investment properties, including the low-income housing tax credits and any estimated proceeds from eventual disposition. If there is an indication of impairment, the allowance for credit losses would be established with a charge to credit loss expense. There were no indications of impairment based on management's evaluation and therefore no allowance for credit losses was determined necessary as of September 30, 2021.

Loans Held for Sale: Loans held for sale are stated at the lower of aggregate cost or estimated fair value. Loans are sold on a non-recourse basis with servicing released and gains and losses are recognized based on the difference between sales proceeds and the carrying value of the loan. The Company has had very few experiences of repurchasing loans previously sold into the secondary market. A specific reserve was not considered necessary based on the Company’s historical experience with repurchase activity.

Loans Held For Investment: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of deferred loan fees and costs. Accrued interest receivable on loans held for investment totaled $10.13 million at September 30, 2021 and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Nonrefundable loan fees and origination costs are deferred and recognized as a yield adjustment over the life of the related loan.

The policy for charging off loans is consistent throughout all loan categories. A loan is charged off based on criteria that includes but is not limited to: delinquency status, financial condition of the entire customer credit line and underlying collateral coverage, economic or external conditions that might impact full repayment of the loan, legal issues, overdrafts, and the customer’s willingness to work with the Company.

The accrual of interest income on loans is discontinued when, in the opinion of management, there is reasonable doubt as to the

borrower's ability to meet payments of interest or principal when they become due, which is generally when a loan is 90 days or

more past due unless the loan is well secured and in the process of collection. When a loan is placed on nonaccrual status, all previously accrued and unpaid interest is reversed against interest income. Loans are returned to an accrual status when all of the principal and interest amounts contractually due are brought current and repayment of the remaining contractual principal and interest is expected. A loan may also return to accrual status if additional collateral is received from the borrower and, in the opinion of management, the financial position of the borrower indicates that there is no longer any reasonable doubt as to the collection of the amount contractually due. Payment received on nonaccrual loans are applied first to principal. Once principal is recovered, any remaining payments received are applied to interest income.

A loan is accounted for and reported as a troubled debt restructuring ("TDR") when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses to the Company. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of payments, the debt's original contractual maturity or original expected duration.

TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR regardless of the accrual or performance status until the loan is paid off. However, if the TDR loan has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be de-designated as a TDR. Management evaluates loans where there is a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower for purposes of estimating the allowance for credit losses.

Section 4013 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, “Temporary Relief From Troubled Debt Restructurings,” allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. In March 2020, various regulatory agencies, including the FRB and the FDIC, issued an interagency statement, effective immediately, on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The agencies confirmed with the staff of the FASB that short-term

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modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not to be considered TDRs. This includes short-term (e.g., six months) modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. See Note 5 for further discussion.

Allowance for Credit Losses For Loans Held For Investment: Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company's existing loans held for investment portfolio. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability on the balance sheet. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments which consist of agricultural, 1 to 4 family first and junior liens, commercial, and consumer lending. These segments are further disaggregated into loan classes, the level at which credit risk is monitored. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The key components in this estimation process include the following:

•An initial forecast period of one year for all portfolio segments and OBS credit exposures. This period reflects management's expectation of losses based on forward-looking economic scenarios over that time.

•A historical loss forecast period covering the remaining contractual life, adjusted for prepayments, by portfolio segment based on the change in key historical economic variables.

•A reversion period of up to 3 years connecting the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

•We primarily utilize the discounted cash flow (DCF) method to estimate credit losses by portfolio segment. The DCF methods obtain estimated life-time credit losses using the conceptual components described above. The exceptions being for the credit card and overdraft portfolios which utilize a remaining life methodology to estimate credit losses.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.

Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimation of expected credit losses. The following provides the credit quality indicators and risk elements that are most relevant and most carefully considered and monitored for each loan portfolio segment.

Agricultural - Agricultural operating loans include loans made to finance agricultural production and other loans to farmers and farming operations. Agricultural loans also include mortgage loans secured by farmland. Agricultural operating loans, most of which are secured by crops and machinery, are provided to finance capital improvement and farm operations as well as acquisitions of livestock and machinery. The ability of the borrower to repay may be affected by many factors outside of the borrower’s control including adverse weather conditions, loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural operating loans is dependent upon the profitable operation or management of the agricultural entity. Agricultural operating loans generally have a term of one year and may have a fixed or variable rate.

Mortgage loans secured by farmland are made to individuals and businesses within the Company's trade area. The primary source of repayment is the cash flow generated by the collateral underlying the loan. The secondary repayment source would be the liquidation of the collateral. Terms for real estate loans secured by farmland range from one to ten years with an amortization period of 25 years or less. Generally, interest rates are fixed for mortgage loans secured by farmland. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the national real gross domestic product (GDP).

1 to 4 Family First and Junior Liens - The 1 to 4 family first and junior liens portfolio segment is comprised of the single family and home equity loan classes, which are underwritten after evaluating a borrower's capacity to repay, credit, and collateral. Several factors are considered when assessing a borrower's capacity, including the borrower's employment, income,

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current debt, assets, and level of equity in the property. Credit refers to how well a borrower manages their current and prior debts as documented by a credit report that provides credit scores and the borrower's current and past information about their credit history. Collateral refers to the type and use of property, occupancy, and market value. Property appraisals are obtained to assist in evaluating collateral. Loan-to-property value and debt-to-income ratios, loan amount, and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends such as conditions that negatively affect housing prices and demand and levels of unemployment. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the all-transactions house price index for Iowa.

Commercial - The commercial loan portfolio segment is comprised of the commercial real estate mortgage, multifamily residential mortgage, construction/land development and commercial and financial loan classes, whose underwriting standards consider the factors described for single family and home equity loan classes as well as others when assessing the borrower's and associated guarantors or other related party's financial position. These other factors include assessing liquidity, the level and composition of net worth, leverage, considering all other lender amounts and position, an analysis of cash expected to flow through the obligors including the outflow to other lenders, vacancies and prior experience with the borrower. This information is used to assess adequate financial capacity, profitability, and experience. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity, and availability of long-term financing. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate, the all-transactions house price index for Iowa, the Iowa real GDP and the commercial real estate price index (for commercial real estate).

Consumer Lending - The Bank offers consumer loans to individuals including personal loans and automobile loans. These consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than real estate-related loans. Consumer loans collections are dependent on the borrower's continuing financial stability and are more likely to be affected by adverse personal circumstances. Collateral for these loans generally includes automobiles, boats, recreational vehicles and real estate. However, depending on the overall financial condition of the borrower, some loans are made on an unsecured basis. The collateral securing these loans may depreciate over time, may be difficult to recover and may fluctuate in value based on condition. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the Iowa real GDP.

Determining the Contractual Term: Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Credit Loss Measurement: The allowance level is influenced by loan volumes, loan credit quality indicator migration or delinquency status, historic loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For these loans, we recognize expected credit loss equal to the amount by which the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge- offs and deferred loan fees and costs), except when the loan is collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors.

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(Unaudited)

All appraised values are adjusted for market-related trends based on the Company's experience in sales and other appraisals of similar property types as well as estimated selling costs. Each quarter management reviews all collateral-dependent loans on a loan-by-loan basis to determine whether updated appraisals are necessary based on loan performance, collateral type and guarantor support. At times, the Company measures the fair value of collateral-dependent loans using appraisals with dates prior to one year from the date of review. These appraisals are discounted by applying current, observable market data about similar property types such as sales contracts, estimations of value by individuals familiar with the market, other appraisals, sales or collateral assessments based on current market activity until updated appraisals are obtained. Depending on the length of time since an appraisal was performed, the data provided through reviews and estimated selling costs, collateral values are typically discounted by 0-35%. The use of an appraisal that exceeds twelve months needs approval by the credit underwriting department. Third-party appraisals are obtained from a pre-approved list of independent, third-party, local appraisal firms maintained by the credit underwriting department. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. Generally, appraisals are internally reviewed by the credit underwriting department to ensure the quality of the appraisal and the expertise and independence of the appraiser. Once the expected credit loss amount is determined an allowance is provided for equal to the calculated expected credit loss and included in the allowance for credit losses. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of expected credit loss will be charged off. Factors considered by management in determining if the expected credit loss is permanent or not recoverable include whether management judges the loan to be uncollectible, repayment is deemed to be protracted beyond reasonable time frames, or the loss becomes evident owing to the borrower's lack of assets or, for single family loans, the loan is 90 days or more past due unless both well-secured and in the process of collection.

In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the allowance for credit losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and purpose. This model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for all loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class. The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified or graded loans and the volume of nonaccrual loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans. Additional factors include the existence and effect of any concentrations of credit, and changes in the level of such concentrations and the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. Such factors are used to adjust the historical probabilities of default and severity of loss so that they reflect management expectation of future conditions based on a reasonable and supportable forecast. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the bank reduces, on a straight-line basis over the remaining life of the loans, the adjustments so that model reverts back to the historical rates of default and severity of loss.

Credit card receivables do not have stated maturities. In determining the estimated life of a credit card receivable, management first estimates the future cash flows expected to be received and then applies those expected future cash flows to the credit card balance. Expected credit losses for credit cards are determined through use of the remaining life method. The remaining life method utilizes average annual charge-off rates and remaining life to estimate the allowance for credit losses. This is done by estimating the amount and timing of principal payments expected to be received as payment for the balance outstanding as of the reporting period and applying those principal payments against the balance outstanding as of the reporting period along with the average annual charge-off rate until the expected payments have been fully allocated.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments: The Company maintains a separate allowance for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments, which is disclosed on the balance sheet. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for loan loss methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan type. No credit loss estimate is reported for off-

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(Unaudited)

balance-sheet credit exposures that are unconditionally cancelable by the Company, such as credit card receivables, or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. The allowance for credit losses on OBS credit exposures is adjusted as a provision for credit loss expense. Categories of OBS credit exposures correspond to the loan portfolio segments described previously.

Effect of New Financial Accounting Standards:

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing specific exceptions included in Topic 740, introducing other simplifications and making technical corrections. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The adoption of ASU 2019-12 by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs. The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. For each reporting period, to the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess (that is, the premium) shall be amortized to the next call date, unless the guidance in paragraph 310-20-35-26 is applied to consider estimated prepayments. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which consists of two sections. The first applicable section contains amendments that improve the consistency of the Codification by including all disclosure guidance in

the appropriate disclosure section and provide the option to give certain information either on the face of the financial statements or in the notes to the financial statements. The second section contains Codification improvements that vary in nature. The amendments in this Update do not change GAAP and, therefore, are not expected to result in a significant change in practice. For public business entities, these amendments are effective for annual periods beginning after December 15, 2020. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in this ASU affect entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. An entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option to compensate for goods or services in accordance with the guidance in Topic 718, Compensation-Stock Compensation. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is in the process of evaluating the impact of this ASU on the financial statements.

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Note 2.Earnings Per Share

Basic earnings per share is computed using the weighted average number of actual common shares outstanding during the period.  Diluted earnings per share reflects the potential dilution that would occur from the exercise of common stock options outstanding.  ESOP shares are considered outstanding for this calculation unless unearned.

The computation of basic and diluted earnings per share for the periods presented is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Common shares outstanding at the beginning of the period	9,306,252		9,364,062		9,330,995		9,351,694
Weighted average number of net shares (redeemed) issued	(7,539)		(7,765)		(21,234)		28,137
Weighted average shares outstanding (basic)	9,298,713		9,356,297		9,309,761		9,379,831
Weighted average of potential dilutive shares attributable to stock options granted, computed under the treasury stock method	3,731		3,592		3,605		3,673
Weighted average number of shares (diluted)	9,302,444		9,359,889		9,313,366		9,383,504
Net income (In thousands)	$	13,125	$	11,430	$	41,932	$	30,216
Earnings per share:
Basic	$	1.41	$	1.22	$	4.50	$	3.22
Diluted	$	1.41	$	1.22	$	4.50	$	3.22

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Note 3.Accumulated Other Comprehensive Income

The following table summarizes the balances of each component of accumulated other comprehensive income (AOCI), included in stockholders’ equity, at September 30, 2021 and December 31, 2020:

	September 30, 2021		December 31, 2020
	(amounts in thousands)
Net unrealized gain on available-for-sale securities	$	5,685	$	11,702
Tax effect	(1,418)		(2,920)
Net-of-tax amount	$	4,267	$	8,782

Note 4.Securities

The carrying values of investment securities at September 30, 2021 and December 31, 2020 are summarized in the following table (dollars in thousands):

	September 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Securities available for sale
U.S. Treasury	$	221,414	44.17	%	$	148,646	36.40	%
Other securities (FHLB, FHLMC and FNMA)	34,891		6.96		35,160		8.61
State and political subdivisions	235,207		46.92		224,566		54.99
Mortgage-backed securities and collateralized mortgage obligations	9,753		1.95		—		—
Total securities available for sale	$	501,265	100.00	%	$	408,372	100.00	%

Investment securities have been classified in the consolidated balance sheets according to management’s intent.  Available-for-sale securities consist of debt securities not classified as trading or held to maturity.  Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders' equity.  Municipal bonds are comprised of general obligation bonds and revenue bonds issued by various municipal corporations. As of September 30, 2021 and December 31, 2020, all securities held were rated investment grade based upon external ratings where available and, where not available, based upon management knowledge of the local issuers and their financial situations. There were no trading or held to maturity securities as of September 30, 2021 or December 31, 2020.

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The carrying amount of available-for-sale securities, fair values and allowance for credit losses were as follows as of September 30, 2021 and December 31, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Allowance for Credit Losses		Estimated Fair Value
September 30, 2021
U.S. Treasury	$	219,281	$	3,065	$	(932)	$	—	$	221,414
Other securities (FHLB, FHLMC and FNMA)	35,377		—		(486)		—		34,891
State and political subdivisions	231,120		5,160		(1,073)		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	9,802		—		(49)		—		$	9,753
Total	$	495,580	$	8,225	$	(2,540)	$	—	$	501,265
December 31, 2020:
U.S. Treasury	$	143,467	$	5,179	$	—	$	—	$	148,646
Other securities (FHLB, FHLMC and FNMA)	35,195		35		(70)		—		35,160
State and political subdivisions	218,008		6,674		(116)		—		224,566
Total	$	396,670	$	11,888	$	(186)	$	—	$	408,372

The amortized cost and estimated fair value of available-for-sale securities classified according to their contractual maturities at September 30, 2021, were as follows (in thousands) below. Expected maturities of MBS may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary.

	Amortized Cost		Fair Value
Due in one year or less	$	51,863	$	52,206
Due after one year through five years	270,805		273,962
Due after five years through ten years	118,465		120,965
Due over ten years	44,645		44,379
	$	485,778	$	491,512
Mortgage-backed securities and collateralized mortgage obligations	9,802		9,753
	$	495,580	$	501,265

As of September 30, 2021 investment securities with a carrying value of $10.14 million were pledged to collateralize other borrowings. As of September 30, 2021, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders' equity.

There were no sales of available-for-sale securities for the three months ended September 30, 2021 and 2020. Sales proceeds and gross realized gains and losses on available-for-sale securities were as follows for the nine months ended September 30, 2021 and 2020 (in thousands):

	September 30, 2021		September 30, 2020
Sales proceeds	$	—	$	313
Gross realized gains	—		10
Gross realized losses	—		—

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The following table shows the fair value, gross unrealized losses and the percentage of fair value represented by gross unrealized losses of applicable investment securities owned by the Company, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and December 31, 2020 (in thousands):

	Less than 12 months							12 months or more							Total
September 30, 2021 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	41	$	103,163	$	(932)	0.90	%	—	$	—	$	—	—	%	41	$	103,163	$	(932)	0.90	%
Other securities (FHLB, FHLMC and FNMA)	8	20,059		(265)		1.32		6	14,832		(221)		1.49		14	34,891		(486)		1.39
State and political subdivisions	189	65,805		(1,038)		1.58		10	1,915		(35)		1.83		199	67,720		(1,073)		1.58
Mortgage-backed securities and collateralized mortgage obligations	4	9,753		(49)		0.50		—	—		—		—		4	9,753		(49)		0.50
Total temporarily impaired securities	242	$	198,780	$	(2,284)	1.15	%	16	$	16,747	$	(256)	1.53	%	258	$	215,527	$	(2,540)	1.18	%

	Less than 12 months							12 months or more							Total
December 31, 2020 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	—	$	—	$	—	—	%	—	$	—	$	—	—	%	—	$	—	$	—	—	%
Other securities (FHLB, FHLMC and FNMA)	8	20,019		(70)		0.35		—	—		—		—		8	20,019		(70)		0.35
State and political subdivisions	35	14,168		(110)		0.78		4	370		(6)		1.62		39	14,538		(116)		0.80
Total temporarily impaired securities	43	$	34,187	$	(180)	0.53	%	4	$	370	$	(6)	1.62	%	47	$	34,557	$	(186)	0.54	%

The Company considered the following information in reaching the conclusion that the impairments disclosed in the table above are temporary and not other-than-temporary impairments.  None of the unrealized losses in the above table was due to the deterioration in the credit quality of any of the issues that might result in the non-collection of contractual principal and interest.  The unrealized losses are due to changes in interest rates.  The Company has not recognized any unrealized loss in income because management does not have the intent to sell the securities included in the previous table.  Management has concluded that it is more likely than not that the Company will not be required to sell these securities prior to recovery of the amortized cost basis. The securities are of high credit quality (investment grade credit ratings) and principal and interest payments are made timely with no payments past due as of September 30, 2021. The fair value is expected to recover as the securities approach maturity. The U.S. Treasury and other securities are issued and guaranteed by U.S. government-sponsored entities and agencies. The mortgage-backed securities and collateralized mortgage obligations have implied U.S. government guarantees of the agency securities. The Company evaluates if a credit loss exists by monitoring to ensure it has adequate credit support considering the nature of the investment, number and significance of investments in an unrealized loss position, collectability or delinquency issues, the underlying financial statements of the issuers, credit ratings and subsequent changes thereto, and other available relevant information. Considering the above factors and total unrealized losses being insignificant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

as of September 30, 2021, management has determined that no allowance for credit losses is necessary for the securities portfolio as of September 30, 2021.

Note 5.Loans

Classes of loans are as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Agricultural	$	94,210	$	94,842
Commercial and financial	228,181		286,242
Real estate:
Construction, 1 to 4 family residential	73,167		71,117
Construction, land development and commercial	118,623		111,913
Mortgage, farmland	241,650		247,142
Mortgage, 1 to 4 family first liens	898,333		892,089
Mortgage, 1 to 4 family junior liens	115,308		127,833
Mortgage, multi-family	389,805		374,014
Mortgage, commercial	410,050		417,139
Loans to individuals	32,235		31,325
Obligations of state and political subdivisions	52,299		56,488
	$	2,653,861	$	2,710,144
Net unamortized fees and costs	927		938
	$	2,654,788	$	2,711,082
Less allowance for credit losses (2021) and loan losses (2020)	35,590		37,070
	$	2,619,198	$	2,674,012

As of September 30, 2021 and December 31, 2020, the Company has outstanding balances of $24.55 million and $86.50 million, respectively, of loans issued under the Paycheck Protection Program (PPP) and $0.33 million and $2.12 million, respectively, of deferred PPP loan fees recorded with commercial and financial loans. For the nine months ended September 30, 2021, the Company has recognized $5.48 million of deferred PPP loan fees in interest income and has received total forgiveness payments of $160.48 million from the SBA. For the nine months ended September 30, 2020, there were $1.26 million PPP loan fees recognized and no forgiveness payments received from the SBA.

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Changes in the allowance for credit losses, the allowance for credit losses applicable to individually evaluated loans and the related loan balance of individually evaluated loans for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance	$	2,055	$	4,802	$	2,483	$	4,904	$	10,879	$	9,707	$	1,110	$	35,940
Charge-offs	—		(14)		—		—		(181)		(255)		(138)		(588)
Recoveries	29		431		2		—		140		23		21		646
Credit loss expense	34		(871)		(188)		(241)		26		743		89		(408)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	2,508	$	4,885	$	2,319	$	4,173	$	12,368	$	9,415	$	1,402	$	37,070
Impact of adopting ASC 326	(328)		298		327		763		522		1,396		(232)		2,746
Charge-offs	—		(90)		(3)		(1)		(263)		(265)		(234)		(856)
Recoveries	117		966		93		25		648		240		98		2,187
Credit loss expense	(179)		(1,711)		(439)		(297)		(2,411)		(568)		48		(5,557)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
Ending balance, individually evaluated for credit losses	$	3	$	4	$	128	$	4	$	59	$	5	$	—	$	203
Ending balance, collectively evaluated for credit losses	$	2,115	$	4,344	$	2,169	$	4,659	$	10,805	$	10,213	$	1,082	$	35,387
Loans:
Ending balance	$	94,210	$	228,181	$	191,790	$	241,650	$	1,013,641	$	799,855	$	84,534	$	2,653,861
Ending balance, individually evaluated for credit losses	$	1,426	$	1,394	$	1,028	$	1,583	$	5,566	$	5,758	$	—	$	16,755
Ending balance, collectively evaluated for credit losses	$	92,784	$	226,787	$	190,762	$	240,067	$	1,008,075	$	794,097	$	84,534	$	2,637,106

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Changes in the allowance for loan losses for the three and nine months ended September 30, 2020 were as follows:

	Three Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,547	$	5,777	$	2,433	$	4,089	$	12,282	$	9,173	$	1,319	$	37,620
Charge-offs	(8)		(478)		—		—		(115)		(210)		(63)		(874)
Recoveries	26		165		27		—		201		10		42		471
Provision	30		(119)		(167)		(41)		(210)		320		30		(157)
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
	Nine Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,400	$	4,988	$	2,599	$	3,950	$	10,638	$	7,859	$	1,326	$	33,760
Charge-offs	(43)		(1,253)		(43)		(1)		(576)		(290)		(276)		(2,482)
Recoveries	44		374		81		—		636		33		114		1,282
Provision	194		1,236		(344)		99		1,460		1,691		164		4,500
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
Ending balance, individually evaluated for impairment	$	80	$	477	$	87	$	1	$	86	$	—	$	14	$	745
Ending balance, collectively evaluated for impairment	$	2,515	$	4,868	$	2,206	$	4,047	$	12,072	$	9,293	$	1,314	$	36,315
Loans:
Ending balance	$	96,321	$	335,463	$	184,797	$	243,689	$	1,031,701	$	788,209	$	86,945	$	2,767,125
Ending balance, individually evaluated for impairment	$	1,742	$	5,949	$	7,933	$	2,440	$	6,980	$	3,614	$	14	$	28,672
Ending balance, collectively evaluated for impairment	$	94,579	$	329,514	$	176,864	$	241,249	$	1,024,721	$	784,595	$	86,931	$	2,738,453

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Changes in the allowance for credit losses for off-balance sheet credit exposures for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance	$	494	$	1,529	$	864	$	107	$	791	$	275	$	30	$	4,090
Credit loss expense	15		117		132		61		13		156		(4)		490
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance, prior to adoption of ASC 326	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Impact of adopting ASC 326	385		1,585		736		180		471		212		15		3,584
Credit loss expense	124		61		260		(12)		333		219		11		996
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580

Credit loss expense for off-balance sheet credit exposures is included in credit loss expense on the consolidated statement of income for the three and nine months ended September 30, 2021.

Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company's risk rating methodology assigns risk ratings ranging from 1 to 6, where a higher rating represents higher risk. The Company differentiates its lending portfolios into loans sharing common risk characteristics for which expected credit loss is measured on a pool basis and loans not sharing common risk characteristics for which credit loss is measured individually.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The below are descriptions of the credit quality indicators:

Excellent – Excellent rated loans are prime quality loans covered by highly liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured. Loans are secured with cash, cash equivalents, or collateral with very low loan to values. The borrower would qualify for unsecured debt and guarantors provide excellent secondary support to the relationship. The borrower has a long-term relationship with Hills Bank, maintains high deposit balances and has an established payment history with Hills Bank and an established business in an established industry.

Good – Good rated loans are adequately secured by readily marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information. The relationship is not quite as strong as a borrower that is assigned an excellent rating but still has a very strong liquidity position, low leverage, and track record of strong performance. These loans have a strong collateral position with limited risk to bank capital. The collateral will not materially lose value in a distressed liquidation. Guarantors provide additional secondary support to mitigate possible bank losses. The borrower has a long-term relationship with Hills Bank with an established track record of payments; loans with shorter remaining loan amortization; deposit balances are consistent; loan payments could be made from cash reserves in the interim period; and source of income is coming from a stable industry.

Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate. The borrower's financial performance is consistent, ratios and trends are positive and the primary repayment source can clearly be identified and supported with acceptable financial information. The loan relationship could be vulnerable to changes in economic or industry conditions but have the ability to absorb unexpected issues. The loan collateral coverage is considered acceptable and guarantors can provide financial support but net worth might not be as liquid as a 1 or 2 rated relationship. The borrower has an established relationship with Hills Bank. The relationship is making timely loan payments, any operating line is revolving and deposit balances are positive with limited to no overdrafts. Management and industry is considered stable.

Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence. The relationship liquidity levels are minimal and the borrower’s leverage position is brought into question. The primary repayment source is showing signs of being stressed or is not proven. If the borrower performs as planned, the loan will be repaid. The collateral coverage is still considered acceptable but there might be some concern with the type of real estate securing the debt or highly dependent on chattel assets. Some loans may be better secured than others. Guarantors still provide some support but there is not an abundance of financial strength supporting the guaranty. A monitor credit may be appropriate when the borrower is experiencing rapid growth which is impacting liquidity levels and increasing debt levels. Other attributes to consider would include if the business is a start-up or newly acquired, if the relationship has significant financing relationships with other financial institutions, the quality of financial information being received, management depth of the company, and changes to the business model. The track history with Hills Bank has some deficiencies such as slow payments or some overdrafts.

Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral.  There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position.  A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories. Potential indicators of a special mention would include past due payments, overdrafts, management issues, poor financial performance, industry issues, or the need for additional short-term borrowing. The ability to continue to make payments is in question; there are “red flags” such as past due payments, non-revolving credit lines, overdrafts, and the inability to sell assets. The borrower is experiencing delinquent taxes, legal issues, etc., obtaining financial information has become a challenge, collateral coverage is marginal at best, and the value and condition could be brought into question. Collateral document deficiencies have been noted and if not addressed, could become material. Guarantors provide minimal support for this relationship. The credit may include an action plan or follow up established in the asset quality process. There is a change in the borrower’s communication pattern. Industry issues may be impacting the relationship. Adverse credit scores or history of payment deficiencies could be noted.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized.  These loans have a well-defined weakness or weaknesses.  Full repayment of the loan(s) according to the original terms and conditions is in question or not expected. For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected. There are identified shortfalls in the primary repayment source such as carry over debt, past due payments, and overdrafts. Obtaining quality and timely financial information is a weakness. The loan is under secured with exposure that could impact bank capital. It appears the liquidation of collateral has become the repayment source. The collateral may be difficult to foreclose or have little to no value. Collateral documentation deficiencies have been noted during the review process. Guarantor(s) provide minimal to no support of the relationship. The borrower’s communication with the bank continues to decrease and the borrower is not addressing the situation. There is some concern about the borrower’s ability and willingness to repay the loans. Problems may be the result of external issues such as economic or industry related issues.

The following tables present the credit quality indicators and origination years by type of loan in each category as of September 30, 2021 (amounts in thousands):

	Agricultural
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	424	$	235	$	30	$	17	$	—	$	—	$	5,138	$	5,844
Good	999		1,912		634		75		58		30		4,923		8,631
Satisfactory	6,883		6,649		1,966		2,003		501		141		23,082		41,225
Monitor	5,535		4,762		1,073		630		171		312		17,887		30,370
Special Mention	2,615		442		86		166		7		—		3,303		6,619
Substandard	875		85		210		116		—		—		235		1,521
Total	$	17,331	$	14,085	$	3,999	$	3,007	$	737	$	483	$	54,568	$	94,210

	Commercial and Financial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	6,153	$	1,007	$	5	$	260	$	42	$	—	$	1,231	$	8,698
Good	9,514		9,687		2,381		1,135		382		1,921		19,170		44,190
Satisfactory	42,268		24,288		8,225		3,956		2,686		1,255		35,106		117,784
Monitor	20,191		11,791		3,938		1,438		450		520		11,371		49,699
Special Mention	1,332		582		529		124		3		6		266		2,842
Substandard	3,156		1,019		294		68		131		—		300		4,968
Total	$	82,614	$	48,374	$	15,372	$	6,981	$	3,694	$	3,702	$	67,444	$	228,181

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

	Real Estate: Construction, 1 to 4 Family Residential
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Good	212		487		—		—		—		—		13,796		14,495
Satisfactory	4,403		1,882		—		—		—		—		42,675		48,960
Monitor	956		1,668		—		—		—		—		6,394		9,018
Special Mention	—		—		—		—		—		—		583		583
Substandard	111		—		—		—		—		—		—		111
Total	$	5,682	$	4,037	$	—	$	—	$	—	$	—	$	63,448	$	73,167

	Real Estate: Construction, Land Development and Commercial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	5,079	$	—	$	—	$	—	$	147	$	8	$	—	$	5,234
Good	1,925		2,235		—		—		154		247		9,774		14,335
Satisfactory	20,602		7,731		2,529		276		1,023		122		32,038		64,321
Monitor	6,465		1,429		7		39		262		—		18,354		26,556
Special Mention	86		—		—		—		—		—		—		86
Substandard	7,000		548		196		—		—		—		347		8,091
Total	$	41,157	$	11,943	$	2,732	$	315	$	1,586	$	377	$	60,513	$	118,623

	Real Estate: Mortgage, Farmland
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	3,591	$	124	$	60	$	102	$	58	$	139	$	4,074
Good	7,918		16,961		2,733		3,144		6,489		5,556		3,915		46,716
Satisfactory	38,291		42,353		12,483		9,244		9,152		12,934		9,822		134,279
Monitor	5,351		17,330		5,791		4,138		1,324		7,079		5,796		46,809
Special Mention	4,232		694		—		—		1,168		206		—		6,300
Substandard	2,477		450		294		48		—		203		—		3,472
Total	$	58,269	$	81,379	$	21,425	$	16,634	$	18,235	$	26,036	$	19,672	$	241,650

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

	Real Estate: Mortgage, 1 to 4 Family First Liens
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	465	$	1,358	$	434	$	22	$	153	$	306	$	—	$	2,738
Good	7,476		12,322		3,272		3,301		3,851		11,023		4,164		45,409
Satisfactory	187,076		190,199		75,462		72,729		64,914		115,599		8,590		714,569
Monitor	20,445		48,859		6,675		7,530		9,409		15,824		2,975		111,717
Special Mention	1,249		3,118		1,212		1,090		753		2,078		—		9,500
Substandard	1,709		1,827		1,534		1,610		802		6,918		—		14,400
Total	$	218,420	$	257,683	$	88,589	$	86,282	$	79,882	$	151,748	$	15,729	$	898,333

	Real Estate: Mortgage, 1 to 4 Family Junior Liens
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	14	$	—	$	—	$	—	$	—	$	463	$	477
Good	33		637		291		—		109		496		1,437		3,003
Satisfactory	10,451		10,780		6,266		8,046		5,893		6,676		55,630		103,742
Monitor	239		1,232		197		440		113		322		2,735		5,278
Special Mention	118		522		96		74		140		126		156		1,232
Substandard	100		354		104		418		102		200		298		1,576
Total	$	10,941	$	13,539	$	6,954	$	8,978	$	6,357	$	7,820	$	60,719	$	115,308

	Real Estate: Mortgage, Multi-Family
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	2,562	$	4,570	$	—	$	—	$	—	$	717	$	—	$	7,849
Good	5,682		42,254		1,817		165		2,836		9,333		—		62,087
Satisfactory	57,636		96,776		21,265		1,627		1,628		15,880		14,490		209,302
Monitor	38,871		41,629		178		1,175		1,600		1,461		6,312		91,226
Special Mention	644		—		826		—		—		—		—		1,470
Substandard	12,250		—		—		—		—		5,621		—		17,871
Total	$	117,645	$	185,229	$	24,086	$	2,967	$	6,064	$	33,012	$	20,802	$	389,805

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(Unaudited)

	Real Estate: Mortgage, Commercial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	99	$	17,194	$	—	$	—	$	3,436	$	365	$	—	$	21,094
Good	11,312		48,976		3,462		4,337		5,379		7,364		10,031		90,861
Satisfactory	49,134		51,957		16,814		13,058		18,510		25,967		15,679		191,119
Monitor	10,640		57,522		6,064		1,737		2,542		3,487		3,658		85,650
Special Mention	168		7,689		303		843		2,000		6,431		—		17,434
Substandard	1,362		2,213		—		212		—		105		—		3,892
Total	$	72,715	$	185,551	$	26,643	$	20,187	$	31,867	$	43,719	$	29,368	$	410,050

	Loans to Individuals
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Good	—		—		72		23		7		—		2		104
Satisfactory	10,340		6,988		2,737		1,223		195		9,813		56		31,352
Monitor	292		201		40		54		4		—		3		594
Special Mention	44		65		25		5		—		—		2		141
Substandard	5		14		15		1		3		3		3		44
Total	$	10,681	$	7,268	$	2,889	$	1,306	$	209	$	9,816	$	66	$	32,235

	Obligations of State and Political Subdivisions
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	6,259	$	—	$	6,259
Good	—		3,216		—		—		—		9,225		—		12,441
Satisfactory	660		2,143		1,778		711		11,477		3,881		9,534		30,184
Monitor	—		836		208		249		179		1,800		—		3,272
Special Mention	—		—		—		—		—		143		—		143
Substandard	—		—		—		—		—		—		—		—
Total	$	660	$	6,195	$	1,986	$	960	$	11,656	$	21,308	$	9,534	$	52,299

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(Unaudited)

The following table presents the credit quality indicators by type of loans in each category as of December 31, 2020 (amounts in thousands):

	Agricultural		Commercial and Financial		Real Estate: Construction, 1 to 4 family residential		Real Estate: Construction, land development and commercial
December 31, 2020
Grade:
Excellent	$	3,761	$	9,024	$	—	$	227
Good	12,369		62,310		13,675		15,187
Satisfactory	42,015		144,999		41,616		64,301
Monitor	29,381		56,439		13,654		23,368
Special Mention	5,143		8,258		1,857		7,137
Substandard	2,173		5,212		315		1,693
Total	$	94,842	$	286,242	$	71,117	$	111,913

	Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family first liens		Real Estate: Mortgage, 1 to 4 family junior liens		Real Estate: Mortgage, multi- family
December 31, 2020
Grade:
Excellent	$	5,706	$	2,303	$	204	$	14,650
Good	41,878		47,233		3,707		57,281
Satisfactory	129,210		701,273		115,731		197,493
Monitor	61,298		114,207		5,153		70,885
Special Mention	6,074		12,890		1,307		15,374
Substandard	2,976		14,183		1,731		18,331
Total	$	247,142	$	892,089	$	127,833	$	374,014

	Real Estate: Mortgage, commercial		Loans to individuals		Obligations of state and political subdivisions		Total
December 31, 2020
Grade:
Excellent	$	26,940	$	1	$	6,752	$	69,568
Good	92,699		145		13,094		359,578
Satisfactory	196,310		30,487		26,571		1,690,006
Monitor	77,125		479		9,924		461,913
Special Mention	19,731		127		147		78,045
Substandard	4,334		86		—		51,034
Total	$	417,139	$	31,325	$	56,488	$	2,710,144

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(Unaudited)

Past due loans as of September 30, 2021 and December 31, 2020 were as follows:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Accruing Loans Past Due 90 Days or More
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	377	$	—	$	249	$	626	$	93,584	$	94,210	$	152
Commercial and financial	1,062		2,370		41		3,473		224,708		228,181		—
Real estate:
Construction, 1 to 4 family residential	2,085		124		422		2,631		70,536		73,167		423
Construction, land development and commercial	7,024		7,000		96		14,120		104,503		118,623		—
Mortgage, farmland	—		167		204		371		241,279		241,650		204
Mortgage, 1 to 4 family first liens	948		1,481		2,522		4,951		893,382		898,333		264
Mortgage, 1 to 4 family junior liens	60		24		106		190		115,118		115,308		—
Mortgage, multi-family	3,905		—		—		3,905		385,900		389,805		—
Mortgage, commercial	—		829		—		829		409,221		410,050		—
Loans to individuals	205		10		5		220		32,015		32,235		—
Obligations of state and political subdivisions	—		—		—		—		52,299		52,299		—
	$	15,666	$	12,005	$	3,645	$	31,316	$	2,622,545	$	2,653,861	$	1,043
December 31, 2020
Agricultural	$	438	$	—	$	629	$	1,067	$	93,775	$	94,842	$	111
Commercial and financial	867		195		140		1,202		285,040		286,242		20
Real estate:
Construction, 1 to 4 family residential	190		—		536		726		70,391		71,117		536
Construction, land development and commercial	—		—		—		—		111,913		111,913		—
Mortgage, farmland	279		28		—		307		246,835		247,142		—
Mortgage, 1 to 4 family first liens	4,969		1,342		2,486		8,797		883,292		892,089		342
Mortgage, 1 to 4 family junior liens	436		21		155		612		127,221		127,833		47
Mortgage, multi-family	—		—		—		—		374,014		374,014		—
Mortgage, commercial	783		—		461		1,244		415,895		417,139		—
Loans to individuals	218		59		4		281		31,044		31,325		—
Obligations of state and political subdivisions	—		—		—		—		56,488		56,488		—
	$	8,180	$	1,645	$	4,411	$	14,236	$	2,695,908	$	2,710,144	$	1,056

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(Unaudited)

The Company does not have a material amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms.

Certain nonaccrual and TDR loan information by loan type at September 30, 2021 and December 31, 2020, was as follows:

	September 30, 2021								December 31, 2020
	Non-accrual loans (1)		Interest income recognized on non-accrual		Accruing loans past due 90 days or more		TDR loans		Non- accrual loans (1)		Accruing loans past due 90 days or more		TDR loans
	(Amounts In Thousands)								(Amounts In Thousands)
Agricultural	$	708	—		$	152	$	377	$	1,252	$	111	$	85
Commercial and financial	112		—		—		1,139		479		20		1,263
Real estate:
Construction, 1 to 4 family residential	111		—		423		—		315		536		—
Construction, land development and commercial	293		—		—		203		204		—		211
Mortgage, farmland	353		—		204		1,206		446		—		1,616
Mortgage, 1 to 4 family first liens	3,900		—		264		1,348		4,331		342		1,751
Mortgage, 1 to 4 family junior liens	184		—		—		20		193		47		20
Mortgage, multi-family	—		—		—		1,470		79		—		1,695
Mortgage, commercial	2,057		—		—		2,231		1,550		—		3,610
	$	7,718	$	—	$	1,043	$	7,994	$	8,849	$	1,056	$	10,251

(1)There were $2.76 million and $2.97 million of TDR loans included within nonaccrual loans as of September 30, 2021 and December 31, 2020, respectively.

Loans 90 days or more past due that are still accruing interest decreased $0.01 million from December 31, 2020 to September 30, 2021. As of September 30, 2021 there were six accruing loans past due 90 days or more with an average loan balance of $0.17 million. There were 12 accruing loans past due 90 days or more as of December 31, 2020 with an average loan balance of $0.09 million. The accruing loans past due 90 days or more balances are believed to be adequately collateralized and the Company expects to collect all principal and interest as contractually due under these loans.

The Company may modify the terms of a loan to maximize the collection of amounts due.  Such a modification is considered a troubled debt restructuring (“TDR”).  In most cases, the modification is either a reduction in interest rate, conversion to interest only payments or an extension of the maturity date.  The borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered.  TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles.

Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. In March 2020, various regulatory agencies, including the FRB and the FDIC, issued an interagency statement, effective immediately, on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not to be considered TDRs. This includes short-term (e.g., six months) modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of September 30, 2021, the total amount of the eligible loans in deferral (deferral of principal and/or interest) that met the requirements set forth under the CARES Act and therefore were not considered TDRs was 16

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(Unaudited)

loans, totaling $9.5 million. As of December 31, 2020, there were 13 loans, totaling $9.4 million that met the requirements and were not considered TDRs.

Throughout 2020, COVID-19 related payment deferrals provided for customers totaled approximately 14.82% of total loans. As of September 30, 2021 and December 31, 2020, COVID-19 related payment deferrals were approximately 0.13% and 1.20% of total loans, respectively.

Below is a summary of information for TDR loans as of September 30, 2021 and December 31, 2020:

	September 30, 2021					December 31, 2020
	Number of contracts	Recorded investment		Commitments outstanding		Number of contracts	Recorded investment		Commitments outstanding
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	4	$	974	$	160	6	$	1,028	$	—
Commercial and financial	14	1,211		—		17	1,743		35
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	1	203		—		1	211		4
Mortgage, farmland	5	1,512		—		6	2,009		—
Mortgage, 1 to 4 family first liens	11	1,351		—		17	1,898		—
Mortgage, 1 to 4 family junior liens	1	20		—		1	20		—
Mortgage, multi-family	2	1,470		—		2	1,695		—
Mortgage, commercial	11	4,010		—		13	4,621		—
Loans to individuals	—	—		—		—	—		—
	49	$	10,751	$	160	63	$	13,225	$	39

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(Unaudited)

The following is a summary of TDR loans that were modified during the three and nine months ended September 30, 2021:

	Three Months Ended September 30, 2021					Nine Months Ended September 30, 2021
	Number of contracts	Pre-modification recorded investment		Post-modification recorded investment		Number of contracts	Pre-modification recorded investment		Post-modification recorded investment
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	—	$	—	$	—	1	$	178	$	178
Commercial and financial	—	—		—		—	—		—
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	—	—		—		—	—		—
Mortgage, farmland	—	—		—		1	319		319
Mortgage, 1 to 4 family first lien	—	—		—		—	—		—
Mortgage, 1 to 4 family junior liens	—	—		—		—	—		—
Mortgage, multi-family	—	—		—		—	—		—
Mortgage, commercial	—	—		—		1	232		232
	—	$	—	$	—	3	$	729	$	729

The Company has allocated $0.02 million of allowance for TDR loans and the Company had commitments to lend $0.16 million in additional borrowings to restructured loan customers as of September 30, 2021.  The Company had commitments to lend $0.04 million in additional borrowings to restructured loan customers as of December 31, 2020.  These commitments were in the normal course of business.  The additional borrowings were not used to facilitate payments on these loans. The modifications of the terms of loans performed during the nine months ended September 30, 2021 included extensions of the maturity date.

There were no TDR loans that were in payment default (defined as past due 90 days or more) during the period ended September 30, 2021 and the year ended December 31, 2020.

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(Unaudited)

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:

	Primary Type of Collateral
	Real Estate		Accounts Receivable		Equipment		Other		Total		ACL Allocation
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	1,372	$	—	$	54	$	—	$	1,426	$	3
Commercial and financial	1,239		—		155		—		1,394		4
Real estate:
Construction, 1 to 4 family residential	533		—		—		—		533		115
Construction, land development and commercial	495		—		—		—		495		13
Mortgage, farmland	1,583		—		—		—		1,583		4
Mortgage, 1 to 4 family first liens	5,362		—		—		—		5,362		47
Mortgage, 1 to 4 family junior liens	204		—		—		—		204		12
Mortgage, multi-family	1,470		—		—		—		1,470		—
Mortgage, commercial	4,288		—		—		—		4,288		5
Loans to individuals	—		—		—		—		—		—
Obligations of state and political subdivisions	—		—		—		—		—		—
	$	16,546	$	—	$	209	$	—	$	16,755	$	203

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(Unaudited)

Pre-ASC 326 (CECL) adoption impaired loans information as of December 31, 2020 is as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:	(Amounts In Thousands)
Agricultural	$	1,337	$	1,928	$	—
Commercial and financial	1,520		2,907		—
Real estate:
Construction, 1 to 4 family residential	315		337		—
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	6,253		8,013		—
Mortgage, 1 to 4 family junior liens	108		350		—
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,124		4,960		—
Loans to individuals	—		47		—
	$	17,906	$	23,459	$	—
With an allowance recorded:
Agricultural	$	206	$	206	$	86
Commercial and financial	671		724		411
Real estate:
Construction, 1 to 4 family residential	536		536		7
Construction, land development and commercial	—		—		—
Mortgage, farmland	—		—		—
Mortgage, 1 to 4 family first liens	924		975		56
Mortgage, 1 to 4 family junior liens	132		158		37
Mortgage, multi-family	—		—		—
Mortgage, commercial	303		304		14
Loans to individuals	51		51		51
	$	2,823	$	2,954	$	662
Total:
Agricultural	$	1,543	$	2,134	$	86
Commercial and financial	2,191		3,631		411
Real estate:
Construction, 1 to 4 family residential	851		873		7
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	7,177		8,988		56
Mortgage, 1 to 4 family junior liens	240		508		37
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,427		5,264		14
Loans to individuals	51		98		51
	$	20,729	$	26,413	$	662

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(Unaudited)

Post-ASC 326 CECL Adoption:

The changes in the ACL in 2021 compared to December 31, 2020 is the result of the following factors: $2.75 million increase upon adoption of ASC 326 (CECL) on January 1, 2021; changes after adoption for the nine months ended September 30, 2021 include improvements in the economic factor forecasts, primarily Iowa unemployment, used in the ACL calculation which resulted in a decrease of $1.14 million; decrease in loan volume which resulted in a decrease of $0.75 million; changes in prepayment and curtailment rates resulting in a decrease of $1.03 million; decreases in historical loss rates along with net recoveries in the first half of 2021 resulting in a decrease of $1.59 million; decreases in the individually analyzed loans reserve of $0.42 million; and increases in qualitative factors determined necessary by management which resulted in an increase of $0.71 million.

The extent to which collateral secures collateral-dependent loans is provided in the previous individually analyzed loans table and changes in the extent to which collateral secures its collateral-dependent loans are described below. Collateral-dependent loans decreased $3.97 million from December 31, 2020 to September 30, 2021.  Collateral-dependent loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more and TDR loans. Collateral-dependent loans also include loans that, based on management’s evaluation of current information and events, the Company expects to be unable to collect in full according to the contractual terms of the original loan agreement.  Collateral-dependent loans were 0.63% of loans held for investment as of September 30, 2021 and 0.76% as of December 31, 2020.  The decrease in collateral-dependent loans is due to a decrease of $0.52 million in loans with a specific reserve, a decrease in nonaccrual loans of $1.13 million, a decrease in 90 days or more accruing loans of $0.01 million and a decrease in TDR loans of $2.26 million from December 31, 2020 to September 30, 2021. There were no significant changes noted in the extent to which collateral secures collateral-dependent loans.

The Company regularly reviews a substantial portion of the loans in the portfolio and assesses whether the loans share common risk characteristics for which expected credit loss is measured on a pool basis or if the loans do not share common risk characteristics and therefore expected credit loss is measured on an individual loan basis.  If the loans are assessed for credit losses on an individual basis, the Company determines if a specific allowance is appropriate.  In addition, the Company's management also reviews and, where determined necessary, provides allowances for particular loans based upon (1) reviews of specific borrowers and (2) management’s assessment of areas that management considers are of higher credit risk, including loans that have been restructured or where a TDR is reasonably possible.  Loans that are determined not to be collateral-dependent and for which there are no specific allowances are classified into one or more risk categories and expected credit loss is measured on a pool basis. See Note 1 Adoption of New Financial Accounting Standard for further discussion of the allowance for credit losses for loans held for investment.

Specific allowances for credit losses on loans assessed individually are established if the loan balances exceed the net present value of the relevant future cash flows or the fair value of the relevant collateral based on updated appraisals and/or updated collateral analysis for the properties if the loan is collateral dependent.  The Company may recognize a charge off or record a specific allowance related to an individually analyzed loan if there is a collateral shortfall or it is unlikely the borrower can make all principal and interest payments as contractually due.

For loans that are collateral-dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral.  In general, this is the amount that the carrying value of the loan exceeds the related appraised value less estimated costs to sell the collateral.  Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the credit loss is being measured.  The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variables affecting its value may have changed since the appraisal was performed. The charge off or loss adjustment supported by an appraisal is considered the minimum charge off.  Any adjustments made to the appraised value are to provide an additional charge off or specific reserve based on the applicable facts and circumstances.  In instances where there is an estimated decline in value, a specific reserve may be provided or a charge off taken pending confirmation of the amount of the loss from an updated appraisal.  Upon receipt of the new appraisals, an additional specific reserve may be provided or charge off taken based on the appraised value of the collateral.  On average, appraisals are obtained within one month of order.

Note 6.Leases

The Bank leases branch offices, parking facilities and certain equipment under operating leases. The leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years, and some of which

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(Unaudited)

include options to terminate the leases within 1 year. As the options are reasonably certain to be exercised, they are recognized as part of the right-of-use assets and lease liabilities.

For the nine months ended September 30, 2021 and 2020, total operating lease expense was $0.44 million and $0.42 million respectively, and is included in occupancy expenses in the consolidated statements of income. Included in this for the nine months ended September 30, 2021 and 2020 were $0.37 million and $0.35 million, respectively, of operating lease costs, $0.03 million and $0.03 million, respectively, of short term lease costs, and $0.04 million and $0.04 million, respectively, of variable lease costs.

For the nine months ended September 30, 2021 and 2020, cash paid for amounts included in the measurement of operating lease liabilities was $0.38 million and $0.35 million, respectively.

As of September 30, 2021 and December 31, 2020, operating lease right-of-use assets included in other assets was $2.57 million and $2.86 million respectively. Operating lease liabilities were $2.63 million and $2.91 million as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, the weighted average remaining lease term for operating leases was 10.01 years and 10.27 years, respectively, and the weighted average discount rate for operating leases was 3.48% and 3.45%, respectively. Discount rates used were determined from FHLB borrowing rates for comparable terms.

As of September 30, 2021, maturities of lease liabilities were as follows:

Year ending December 31:	(Amounts In Thousands)
2021 (excluding the nine months ended September 30, 2021)	$	117
2022	464
2023	317
2024	250
2025	254
Thereafter	1,755
Total lease payments	3,157
Less imputed interest	(529)
Total operating lease liabilities	$	2,628

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(Unaudited)

Note 7.Fair Value Measurements

The carrying value and estimated fair values of the Company's financial instruments as of September 30, 2021 are as follows:

	September 30, 2021
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	869,098	$	869,098	$	869,098	$	—	$	—
Investment securities	510,011		510,011		221,414		288,597		—
Loans held for sale	10,738		10,738		—		10,738		—
Loans
Agricultural	92,092		92,185		—		—		92,185
Commercial and financial	223,833		223,726		—		—		223,726
Real estate:
Construction, 1 to 4 family residential	72,405		72,481		—		—		72,481
Construction, land development and commercial	117,088		116,577		—		—		116,577
Mortgage, farmland	236,987		236,664		—		—		236,664
Mortgage, 1 to 4 family first liens	891,338		889,507		—		—		889,507
Mortgage, 1 to 4 family junior liens	112,366		112,320		—		—		112,320
Mortgage, multi-family	386,092		384,065		—		—		384,065
Mortgage, commercial	403,545		403,004		—		—		403,004
Loans to individuals	31,602		31,710		—		—		31,710
Obligations of state and political subdivisions	51,850		52,119		—		—		52,119
Accrued interest receivable	12,432		12,432		—		12,432		—
Total financial instrument assets	$	4,021,477	$	4,016,637	$	1,090,512	$	311,767	$	2,614,358
Financial instrument liabilities
Deposits
Noninterest-bearing deposits	$	581,011	$	581,011	$	—	$	581,011	$	—
Interest-bearing deposits	2,887,248		2,895,755		—		2,895,755		—
Other borrowings	—		—		—		—		—
Federal Home Loan Bank borrowings	105,000		113,880		—		113,880		—
Accrued interest payable	1,255		1,255		—		1,255		—
Total financial instrument liabilities	$	3,574,514	$	3,591,901	$	—	$	3,591,901	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	616,208	$	—	$	—	$	—	$	—
Letters of credit	7,523		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	623,731	$	—	$	—	$	—	$	—

(1)Considered Level 1 under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The carrying value and estimated fair values of the Company's financial instruments as of December 31, 2020 are as follows:

	December 31, 2020
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	574,310	$	574,310	$	574,310	$	—	$	—
Investment securities	416,544		416,544		148,646		267,898		—
Loans held for sale	43,947		43,947		—		43,947		—
Loans
Agricultural	92,334		92,922		—		—		92,922
Commercial and financial	281,357		282,015		—		—		282,015
Real estate:
Construction, 1 to 4 family residential	70,210		70,432		—		—		70,432
Construction, land development and commercial	110,501		110,039		—		—		110,039
Mortgage, farmland	242,969		242,978		—		—		242,978
Mortgage, 1 to 4 family first liens	882,156		890,409		—		—		890,409
Mortgage, 1 to 4 family junior liens	126,336		124,945		—		—		124,945
Mortgage, multi-family	369,552		370,538		—		—		370,538
Mortgage, commercial	412,186		413,409		—		—		413,409
Loans to individuals	30,573		31,164		—		—		31,164
Obligations of state and political subdivisions	55,838		59,300		—		—		59,300
Accrued interest receivable	12,177		12,177		—		12,177		—
Total financial instrument assets	$	3,720,990	$	3,735,129	$	722,956	$	324,022	$	2,688,151
Financial instrument liabilities:
Deposits
Noninterest-bearing deposits	$	532,190	$	532,190	$	—	$	532,190	$	—
Interest-bearing deposits	2,660,378		2,673,815		—		2,673,815		—
Federal Home Loan Bank borrowings	105,000		115,259		—		115,259		—
Accrued interest payable	1,733		1,733		—		1,733		—
Total financial instrument liabilities	$	3,299,301	$	3,322,997	$	—	$	3,322,997	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	483,602	$	—	$	—	$	—	$	—
Letters of credit	8,056		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	491,658	$	—	$	—	$	—	$	—

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Fair value of financial instruments:  FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) provides a single definition for fair value, a framework for measuring fair value and expanded disclosures concerning fair value.  Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company determines the fair market value of its financial instruments based on the fair value hierarchy established in ASC 820.  There are three levels of inputs that may be used to measure fair value as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than quoted prices included within Level 1.  Observable inputs include the quoted prices for similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability.

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

It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.  The Company is required to use observable inputs, to the extent available, in the fair value estimation process unless that data results from forced liquidations or distressed sales. 

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

ASSETS

Investment securities available for sale:  Investment securities available for sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If a quoted price is not available, the fair value is obtained from benchmarking the security against similar securities. U.S. Treasury securities are considered Level 1 with the remaining securities considered Level 2.

The pricing for investment securities is obtained from an independent source.  There are no Level 3 investment securities owned by the Company.  The Company obtains an understanding of the independent source’s valuation methodologies used to determine fair value by level of security. The Company validates assigned fair values on a sample basis using an additional third-party provider pricing service to determine if the fair value measurement is reasonable. Due to the nature of our investment portfolio, we do not expect significant and unusual fluctuations as fair value changes primarily relate to interest rate changes.   No unusual fluctuations were identified during the nine months ended September 30, 2021. If a fluctuation requiring investigation was identified, the Company would research the change with the independent source or other available information.

Loans held for sale and Loans:  ASU 2016-01, Financial Instruments -Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Methodologies utilized for this financial statement period are as follows:

•Income Approach: Fair value is determined based on a discounted cash flow analysis. The discounted cash flow analysis was based on the contractual maturity of the loan and market indications of rates, prepayment speeds, defaults and credit risk.

•Asset Approach: Fair value is determined based on the estimated values of the underlying collateral or individual analysis of receipts. This provides a better indication of value than the contractual income streams as these loans are not performing or exhibit strong signs indicative of non-performance.

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HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Fair value has been estimated in accordance with ASC 820, Fair Value Measurements and Disclosures, and is intended to represent the price that would be received in an orderly transaction between market participants as of the measurement date. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, at least one significant assumption not observable in the market was utilized. These unobservable assumptions reflect estimates that market participants would use in pricing the asset or liability. Inputs to these valuation techniques are subjective in nature, involve uncertainties and require significant judgment and therefore cannot be determined with precision. Accordingly, the fair value estimates presented are not necessarily indicative of the amounts to be realized in a current market exchange. Loans are classified as Level 3.

Loans held for sale are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the short time between origination of the loan and its sale on the secondary market (Level 2). The market is active for these loans and as a result prices for similar assets are available.

Individually analyzed loans under ASC 326 CECL: See Note 1 for further discussion of individually analyzed loans under CECL.

Impaired loans pre-ASC 326: A loan is considered to be impaired when it is probable that all of the principal and interest due may not be collected according to its contractual terms. Generally, when a loan is considered impaired, the amount of reserve required under ASC 310, Receivables, is measured based on the fair value of the underlying collateral. The Company makes such measurements on all material loans deemed impaired using the fair value of the collateral for collateral dependent loans or based on the present value of the estimated future cash flows of interest and principal discounted at the loans effective interest rate or the fair value of the loan if determinable. The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors. All appraised values are adjusted for market-related trends based on the Company's experience in sales and other appraisals of similar property types as well as estimated selling costs. Each quarter management reviews all collateral dependent impaired loans on a loan-by-loan basis to determine whether updated appraisals are necessary based on loan performance, collateral type and guarantor support. At times, the Company measures the fair value of collateral dependent impaired loans using appraisals with dates prior to one year from the date of review. These appraisals are discounted by applying current, observable market data about similar property types such as sales contracts, estimations of value by individuals familiar with the market, other appraisals, sales or collateral assessments based on current market activity until updated appraisals are obtained. Depending on the length of time since an appraisal was performed, the data provided through reviews and estimated selling costs, collateral values are typically discounted by 0-35%. These loans are considered Level 3 as the instruments used to determine fair market value require significant management judgment and estimation.

Foreclosed assets:  The Company does not record foreclosed assets at fair value on a recurring basis.  Foreclosed assets consist mainly of other real estate owned but may include other types of assets repossessed by the Company.  Foreclosed assets are adjusted to the lower of carrying value or fair value less the cost of disposal.   Fair value is generally based upon independent market prices or appraised values of the collateral, and may include a marketability discount as deemed necessary by management based on its experience with similar types of real estate.  The value of foreclosed assets is evaluated periodically as a nonrecurring fair value adjustment.  Foreclosed assets are classified as Level 3.

Off-balance sheet instruments:  Fair values for outstanding letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.  The fair value of the outstanding letters of credit is not significant. Unfunded loan commitments are not valued since the loans are generally priced at market at the time of funding (Level 2).

Page 44

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The table below represents the balances of assets and liabilities measured at fair value on a recurring basis:

	September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	221,414	$	—	$	—	$	221,414
State and political subdivisions	—		235,207		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	—		9,753		—		9,753
Other securities (FHLB, FHLMC and FNMA)	—		34,891		—		34,891
Total	$	221,414	$	279,851	$	—	$	501,265

	December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	148,646	$	—	$	—	$	148,646
State and political subdivisions	—		224,566		—		224,566
Other securities (FHLB, FHLMC and FNMA)	—		35,160		—		35,160
Total	$	148,646	$	259,726	$	—	$	408,372

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

There were no transfers between Levels 1, 2 or 3 during the nine months ended September 30, 2021 and the year ended December 31, 2020.

Page 45

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

The Company is required to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP.  These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.  The valuation methodologies used to measure these fair value adjustments are described above.    The following tables present the Company’s assets that are measured at fair value on a nonrecurring basis.

	September 30, 2021								Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	886	$	886	$	—	$	—
Commercial and financial	—		—		1,188		1,188		—		—
Real Estate:											—
Construction, 1 to 4 family residential	—		—		386		386		—		—
Construction, land development and commercial	—		—		96		96		—		—
Mortgage, farmland	—		—		1,217		1,217		—		—
Mortgage, 1 to 4 family first liens	—		—		5,084		5,084		114		147
Mortgage, 1 to 4 family junior liens	—		—		193		193		9		9
Mortgage, multi-family	—		—		1,470		1,470		—		—
Mortgage, commercial	—		—		4,222		4,222		255		255
Loans to individuals	—		—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—		—
Total	$	—	$	—	$	14,742	$	14,742	$	378	$	411

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

Page 46

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis (continued)

	December 31, 2020								Year Ended December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	1,081	$	1,081	$	—
Commercial and financial	—		—		1,692		1,692		385
Real Estate:
Construction, 1 to 4 family residential	—		—		414		414		—
Construction, land development and commercial	—		—		315		315		—
Mortgage, farmland	—		—		1,718		1,718		—
Mortgage, 1 to 4 family first liens	—		—		5,906		5,906		252
Mortgage, 1 to 4 family junior liens	—		—		176		176		19
Mortgage, multi-family	—		—		1,773		1,773		—
Mortgage, commercial	—		—		5,082		5,082		250
Loans to individuals	—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—
Total	$	—	$	—	$	18,157	$	18,157	$	906

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

Page 47

Note 8.Stock Repurchase Program

On July 26, 2005, the Company’s Board of Directors authorized a program to repurchase up to a total of 1,500,000 shares of the Company’s common stock (the “2005 Stock Repurchase Program”).  The Company’s Board of Directors has authorized the 2005 Stock Repurchase Program through December 31, 2022.  The Company expects the purchases pursuant to the 2005 Stock Repurchase Program to be made from time to time in private transactions at a price equal to the most recent quarterly independent appraisal of the shares of the Company’s common stock and with the Board reviewing the overall results of the 2005 Stock Repurchase Program on a quarterly basis.  All purchases made pursuant to the 2005 Stock Repurchase Program since its inception have been made on that basis.  The amount and timing of stock repurchases will be based on various factors, such as the Board’s assessment of the Company’s capital structure and liquidity, the amount of interest shown by shareholders in selling shares of stock to the Company at their appraised value, and applicable regulatory, legal and accounting factors.  The Company has purchased 1,398,761 shares of its common stock in privately negotiated transactions from August 1, 2005 through September 30, 2021.  Of these 1,398,761 shares, 19,556 shares were purchased during the quarter ended September 30, 2021, at an average price per share of $66.15.

Page 48

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note 9. Commitments and Contingencies

Concentrations of credit risk:  The Bank’s loans, commitments to extend credit, unused lines of credit and outstanding letters of credit have been granted to customers within the Bank's market area.  Investments in securities issued by state and political subdivisions within the state of Iowa totaled approximately $86.49 million.  The concentrations of credit by type of loan are set forth in Note 5 to the Consolidated Financial Statements.  Outstanding letters of credit were granted primarily to commercial borrowers.  Although the Bank has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon the economic conditions in Johnson, Linn and Washington Counties, Iowa.

Contingencies:  In the normal course of business, the Company and its subsidiaries are subject to pending and threatened legal actions, some of which seek substantial relief or damages.  While the ultimate outcome of such legal proceedings cannot be predicted with certainty, after reviewing pending and threatened litigation with counsel, management believes at this time that the outcome of such litigation will not have a material adverse effect on the Company’s business, financial conditions, or results of operations.

The outbreak of Coronavirus Disease 2019 (“COVID-19”) continues to adversely impact a broad range of industries in which the Company’s customers operate and impair their ability to fulfill their financial obligations to the Company. The World Health Organization declared COVID-19 to be a global pandemic indicating that almost all public commerce and related business activities must be, to varying degrees, curtailed with the goal of decreasing the rate of new infections.

The spread of the outbreak has caused significant disruptions in the U.S. economy and is highly likely to disrupt banking and other financial activity in the areas in which the Company operates and could also potentially create widespread business continuity issues for the Company. The Company’s business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. If the global response to contain COVID-19 escalates or is unsuccessful, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows. See Note 5 for further discussion regarding the financial impact of COVID-19.

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

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, credit card participations and standby letters of credit is represented by the contractual amount of those instruments.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  A summary of the Bank’s commitments at September 30, 2021 and December 31, 2020 is as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Firm loan commitments and unused portion of lines of credit:
Home equity loans	$	79,686	$	69,974
Credit cards	64,910		60,535
Commercial, real estate and home construction	173,754		118,186
Commercial lines and real estate purchase loans	297,858		234,907
Outstanding letters of credit	7,523		8,056

Note 10.Income Taxes

Federal income tax expense for the nine months ended September 30, 2021 and 2020 was computed using the consolidated effective federal tax rate.  The Company also recognized income tax expense pertaining to state franchise taxes payable individually by the subsidiary bank.  The Company files a consolidated tax return for federal purposes and separate tax returns for State of Iowa purposes.  The tax years ended December 31, 2020, 2019, and 2018 remain subject to examination by the

Page 49

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Internal Revenue Service.  For state tax purposes, the tax years ended December 31, 2020, 2019, and 2018 remain open for examination.  There were no material unrecognized tax benefits at September 30, 2021  and December 31, 2020 and therefore no interest or penalties on unrecognized tax benefits has been recorded.  As of September 30, 2021, the Company does not anticipate any significant increase in unrecognized tax benefits during the twelve-month period ending September 30, 2022. Income taxes as a percentage of income before taxes were 22.58% for the nine months ended September 30, 2021 and 22.43% for the same period in 2020. 

Note 11.Derivative Financial Instruments

In the normal course of business, the Bank may use derivative financial instruments to manage its interest rate risk.  These instruments carry varying degrees of credit, interest rate and market or liquidity risks.  Derivative instruments are recognized as either assets or liabilities in the accompanying financial statement and are measured at fair value.  The Bank’s objectives are to add stability to its net interest margin and to manage its exposure to movements in interest rates.  The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amount to be exchanged between the counterparties.  The Bank is exposed to credit risk in the event of nonperformance by counterparties to financial instruments.  The Bank minimizes this risk by entering into derivative contracts with large, stable financial institutions.  The Bank has not experienced any losses from nonperformance by counterparties.  The Bank monitors counterparty risk in accordance with the provisions of ASC 815.  In addition, the Bank’s interest rate-related derivative instruments contain language outlining collateral pledging requirements for each counterparty.  Collateral must be posted when the market value exceeds certain threshold limits which are determined by credit ratings of each counterparty.  The Bank terminated one interest rate swap in December 2020 and the other matured in November 2020, therefore the Bank was not required to pledge collateral as of September 30, 2021 and December 31, 2020.

Cash Flow Hedges:

The Bank executed two forward-starting interest rate swap transactions on November 7, 2013.  One of the interest rate swap transactions had an effective date of November 9, 2015, and an expiration date of November 9, 2020, effectively converting $25.00 million of variable rate debt to fixed rate debt.  The other interest rate swap transaction had an effective date of November 7, 2016 and an expiration date of November 7, 2023, effectively converting $25.00 million of variable rate debt to fixed rate debt.  For accounting purposes, these swap transactions were designated as a cash flow hedge of the changes in cash flows attributable to changes in three-month LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on an amount of the Bank’s debt principal equal to the then-outstanding swap notional amount.  At inception, the Bank asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps. The Bank terminated the remaining interest rate swap in December 2020 and in connection with the termination paid $2.684 million to the counterparty. The losses realized on the interest rate swap were reclassified into the income statement from other comprehensive income. In connection with the termination of the swap, the related FHLB borrowings were paid off. There were no remaining derivative instruments designated as cash flow hedges as of September 30, 2021 and December 31, 2020.

There were no gains or losses recognized on the Bank's derivative instruments designated as cash flow hedges for the nine months ended September 30, 2021. The table below identifies the gains and losses recognized on the Bank’s derivative instruments designated as cash flow hedges for the nine months ended September 30, 2020:

Page 50

HILLS BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
	(Amounts in Thousands)
September 30, 2020
Interest rate swap	$	81	Interest Expense	$	—	Other Income	$	—
Interest rate swap	(626)		Interest Expense	—		Other Income	—

Page 51

HILLS BANCORPORATION

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

The following is management’s discussion and analysis of the financial condition of Hills Bancorporation (“Hills Bancorporation” or “the Company”) and its banking subsidiary Hills Bank and Trust Company (“the Bank”) for the dates and periods indicated.  The discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying footnotes.

Special Note Regarding Forward Looking Statements

This report contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of such term in the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Actual results may differ materially from those included in the forward-looking statements.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, the following:

•The strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the Company’s assets.

•The effects of recent financial market disruptions and/or an economic recession, and monetary and other governmental actions designed to address such disruptions, including in response to the COVID-19 pandemic.

•The financial strength of the counterparties with which the Company or the Company’s customers do business and as to which the Company has investment or financial exposure.

•The credit quality and credit agency ratings of the securities in the Company’s investment securities portfolio, a deterioration or downgrade of which could lead to recognition of an allowance for credit losses or other-than-temporary impairment of the affected securities and the recognition of an impairment loss.

•The effects of, and changes in, laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters as well as any laws otherwise affecting the Company, including, but not limited to, potential changes in U.S. tax laws and regulations.

•The effects of changes in interest rates (including the effects of changes in the rate of prepayments of the Company’s assets) and the policies of the Board of Governors of the Federal Reserve System.

•The ability of the Company to compete with other financial institutions as effectively as the Company currently intends due to increases in competitive pressures in the financial services sector.

•The ability of the Company to obtain new customers and to retain existing customers.

•The timely development and acceptance of products and services, including products and services offered through alternative electronic delivery channels.

•Technological changes implemented by the Company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the Company and its customers.

•The ability of the Company to develop and maintain secure and reliable technology systems.

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•The ability of the Company to retain key executives and employees and the difficulty that the Company may experience in replacing key executives and employees in an effective manner.

•Consumer spending and saving habits which may change in a manner that affects the Company’s business adversely.

•The economic impact of natural disasters, diseases and/or pandemics, including any extended impact from the COVID-19 pandemic, and terrorist attacks and military actions.

•Business combinations and the integration of acquired businesses and assets which may be more difficult or expensive than expected.

•The costs, effects and outcomes of existing or future litigation.

•Changes in accounting policies and practices that may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

•The ability of the Company to manage the risks associated with the foregoing as well as anticipated.

These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

COVID-19: Update on Company Action and Ongoing Risks

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic caused significant economic dislocation in the United States as many state and local governments ordered non-essential businesses to close and residents to shelter in place at home, which resulted in an unprecedented slow-down in economic activity and a related increase in unemployment throughout most of 2020 and into 2021.

Government response to the COVID-19 pandemic was sweeping, including passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act which was signed into law on March 27, 2020. Congress, the Federal Reserve Bank and the other U.S. state and federal financial regulatory agencies have taken actions to mitigate disruptions to economic activity and financial stability resulting from the COVID-19 pandemic. In addition, the federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and passed measures to provide relief from reporting loan classifications due to modifications related to the COVID-19 outbreak.

The broader U.S. and global economies slowly began reopening during the first half of 2021 as vaccines against COVID-19 became widely available. However, labor and supply disruptions resulting from the global pandemic continue, and the emergence of a new and more infectious variant of COVID-19 is creating ongoing health and safety concerns that may lead to further disruptions in local, national and global economies.

While significant progress has been made to combat the outbreak of COVID-19, and while it appears that the epidemiological and macroeconomic conditions are trending in a positive direction as of September 30, 2021, if there is a resurgence in the virus, the Company could experience further adverse effects on its business, financial condition, results of operations and cash flows.

Lending Assistance

The Bank continues to work with customers to determine how best to serve them, including providing short-term modifications for customers primarily through deferrals of principal only payments for three to six months. Throughout 2020, COVID-19 related payment deferrals provided for customers totaled approximately 14.82% of total loans. As of September 30, 2021 and December 31, 2020, COVID-19 related payment deferrals were approximately 0.13% and 1.20% of total loans, respectively.

The Bank continues to assist customers through this difficult time in the best manner possible by providing $127.10 million of Paycheck Protection Program (PPP) loans through December 31, 2020. With the passage of the Coronavirus Response and

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Relief Supplemental Appropriations Act 2021 in late December 2020, the Bank provided additional PPP loans in 2021 totaling $58.34 million through September 30, 2021 to further assist our customers. The PPP loans have a two or five year term and earn interest at 1%. Loans funded through the PPP program are fully guaranteed by the U.S. government if certain criteria are met. The Bank believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. As of September 30, 2021, the Bank has outstanding PPP loan balances of $24.55 million and has received total forgiveness payments of $160.48 million from the SBA.

Financial Exposures

The COVID-19 pandemic continues to represent an unprecedented challenge to the global economy in general and the financial services sector in particular. However, given the emergence of a new and more infectious variant of COVID-19 along with the hesitancy of a significant portion of the U.S. population to become vaccinated, there is still significant uncertainty regarding the overall length of the pandemic and the aggregate impact that it will have on global and regional economies, including uncertainties regarding the potential positive effects of governmental actions taken in response to the pandemic. Our credit administration continues to closely monitor and analyze the higher risk segments within the loan portfolio, tracking loan payment deferrals, customer liquidity and providing timely reports to senior management and the board of directors. Based on the Company’s capital levels, prudent underwriting policies, loan concentration diversification and our geographic footprint, we currently expect to be able to manage the economic risks and uncertainties associated with the pandemic and remain adequately capitalized. However, the Company may be required to make additional loan loss provisions as warranted by the fluid COVID-19 situation.

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Critical Accounting Policies

On January 1, 2021, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the allowance for credit losses use the current expected credit loss (CECL) methodology. The following is a discussion of the methodologies used by the Company both pre- and post-adoption of ASC 326.

Post-ASC 326 CECL Adoption: The preparation of financial statements in accordance with the accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make a number of judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expense in the financial statements. Various elements of our accounting policies, by their nature, involve the application of highly sensitive and judgmental estimates and assumptions. Some of these policies and estimates relate to matters that are highly complex and contain substantial inherent uncertainties. Management has made significant estimates in several areas, including the allowance for credit losses (see Note 5 - Loans and Note 4 - Securities) and the fair value of debt securities (see Note 4 - Securities).

We have identified the following accounting policies and estimates that, due to the inherent judgments and assumptions and the potential sensitivity of the financial statements to those judgments and assumptions, are critical to an understanding of our financial statements. We believe that the judgments, estimates and assumptions used in the preparation of the Company's financial statements are appropriate. For a further description of our accounting policies, see Note 1 - Summary of Significant Accounting Policies in the financial statements included in this Form 10-Q.

The allowance for credit losses for loans represents management's estimate of all expected credit losses over the expected contractual life of our existing loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods.

We employ a disciplined process and methodology to establish our allowance for credit losses that has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

Based upon this methodology, management establishes an asset-specific allowance for loans that do not share risk characteristics with other loans based on the amount of expected credit losses calculated on those loans and charges off amounts determined to be uncollectible. Factors we consider in measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due.

When a loan does not share risk characteristics with other loans, we measure expected credit loss as the difference between the amortized cost basis in the loan and the present value of expected future cash flows discounted at the loan's effective interest rate except that, for collateral- dependent loans, credit loss is measured as the difference between the amortized cost basis in the loan and the fair value of the underlying collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. In accordance with our appraisal policy, the fair value of collateral-dependent loans is based upon independent third-party appraisals or on collateral valuations prepared by in-house evaluations. Once a third-party appraisal is greater than one year old, or if its determined that market conditions, changes to the property, changes in intended use of the property or other factors indicate that an appraisal is no longer reliable, we perform an internal collateral valuation to assess whether a change in collateral value requires an additional adjustment to carrying value. When we receive an updated appraisal or collateral valuation, management reassesses the need for adjustments to the loan's expected credit loss measurements and, where appropriate, records an adjustment. If the calculated expected credit loss is determined to be permanent, fixed or nonrecoverable, the credit loss portion of the loan will be charged off against the allowance for credit losses. Loans designated having significantly increased credit risk are generally placed on nonaccrual and remain in that status until all principal and interest payments are current and the prospects for future payments in accordance with the loan agreement are reasonably assured, at which point the loan is returned to accrual status.

In estimating the component of the allowance for credit losses for loans that share common risk characteristics, loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk

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characteristics or areas of risk concentration. Credit loss assumptions are estimated using a model that categorizes loan pools based on loan type and purpose. This model calculates an expected life-of-loan loss percentage for each loan category by considering the probability of default using historical life-of-loan analysis periods for agricultural, 1 to 4 family first and junior liens, commercial and consumer segments, and the severity of loss, based on the aggregate net lifetime losses incurred per loan class.

The component of the allowance for credit losses for loans that share common risk characteristics also considers factors for each loan class to adjust for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to:

•Lending policies and procedures;

•International, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets;

•The nature of the loan portfolio, including the terms of the loans;

•The experience, ability and depth of the lending management and other relevant staff;

•The volume and severity of past due and adversely classified or graded loans and the volume of nonaccrual loans;

•The quality of our loan review and process;

•The value of underlying collateral for collateral-dependent loans;

•The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

•The effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Such factors are used to adjust the historical probabilities of default and severity of loss so that they reflect management expectation of future conditions based on a reasonable and supportable forecast. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the bank reduces, on a straight-line basis over the remaining life of the loans, the adjustments so that model reverts back to the historical rates of default and severity of loss.

The expense for credit loss recorded through earnings is the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio. The amount of expense and the corresponding level of allowance for credit losses for loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors.

The allowance for credit losses for loans, as reported in our consolidated balance sheet, is adjusted by an expense for credit losses, which is recognized in earnings, and reduced by the charge-off of loan amounts, net of recoveries. For further information on the allowance for credit losses for loans, see Note 1 - Summary of Significant Accounting Policies and Note 5 - Loans in the notes to the financial statements of this Form 10-Q.

Pre-ASC 326 CECL Adoption: The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The financial information contained within these financial statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. Based on its consideration of accounting policies that involve the most complex and subjective decisions and assessments, management has identified its most critical accounting policies to be those which are related to the allowance for loan losses. The Company's allowance for loan losses methodology incorporates a variety of risk considerations, both quantitative and qualitative in establishing an allowance for loan losses that management believes is appropriate at each reporting date. Quantitative factors include the Company's historical loss experience, delinquency and charge-off trends, collateral values, changes in impaired loans, and other factors. Quantitative factors also incorporate known information about individual loans, including borrowers' sensitivity to interest rate movements. Qualitative factors include the general economic environment in the Company's markets, including economic conditions throughout the Midwest and the state of certain industries.  Determinations relating to the possible level of future loan losses are based in part on subjective judgments by management.  Future loan losses in excess of current estimates, could materially adversely affect our results of operations or financial position.  Size and complexity of individual credits in relation to loan structure, existing loan policies and pace of portfolio growth are other qualitative factors that are considered in the methodology. As the Company adds new products and increases the complexity of its loan portfolio, it will enhance its methodology accordingly. This discussion of the Company’s critical accounting policies should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes presented elsewhere herein, as well as other relevant portions of Management’s Discussion and Analysis of Financial Condition and Results of Operations. 

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Overview

This overview highlights selected information and may not contain all of the information that is important to you in understanding our performance during the period.  For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates, you should carefully read this entire report.

The Company is a holding company engaged in the business of commercial banking.  The Company’s subsidiary is Hills Bank and Trust Company, Hills, Iowa (the “Bank”), which is wholly-owned.  The Bank was formed in Hills, Iowa in 1904.  The Bank is a full-service commercial bank extending its services to individuals, businesses, governmental units and institutional customers primarily in the communities of Hills, Iowa City, Coralville, North Liberty, Lisbon, Mount Vernon, Kalona, Wellman, Cedar Rapids, Marion, and Washington, Iowa.  At September 30, 2021, the Bank has nineteen full-service locations.

Net income for the nine month period ended September 30, 2021 was $41.93 million compared to $30.22 million for the same nine months of 2020, an increase of 38.77%.  The $11.72 million increase in net income was caused by a number of factors.  The principal factors in the increase in net income for the first nine months of 2021 are a reversal in the credit loss reserves of $4.56 million, primarily due to improvements in economic factor forecasts, historical loss rates and net recoveries year-to-date; an increase in noninterest income of $5.06 million; and an increase in net interest income of $4.05 million.

The Company achieved a return on average assets of 1.32% and a return on average equity of 12.14% for the twelve months ended September 30, 2021, compared to the twelve months ended September 30, 2020, which were 1.22% and 11.00%, respectively. The return on average assets and return on average equity for the nine months ended September 30, 2021 were 1.43% and 13.32%, respectively, compared to the nine months ended September 30, 2020, which were 1.16% and 10.33%, respectively.  Dividends of $0.94 per share were paid in January 2021 to 2,701 shareholders.  The dividend paid in January 2020 was $0.89 per share.

The Company’s net interest income is the largest component of revenue and it is primarily a function of the average earning assets and the net interest margin percentage.  The Company achieved a net interest margin on a tax-equivalent basis of 2.83% for the nine months ended September 30, 2021 compared to 3.05% for the same nine months of 2020.  Average earning assets were $3.823 billion year to date in 2021 and $3.362 billion in 2020.

Highlights noted on the balance sheet as of September 30, 2021 for the Company included the following:

•Total assets were $4.086 billion, an increase of $305.47 million since December 31, 2020.

•Cash and cash equivalents were $869.10 million, an increase of $294.79 million since December 31, 2020. A portion of the increase can be attributed to increased savings with the current negative economic environment due to the pandemic and equity investors fleeing volatile capital markets in an effort to preserve principal. Also, cash and cash equivalents included approximately $100 million of temporary public funds.

•Net loans were $2.630 billion, a decrease of $88.02 million since December 31, 2020. The decrease is primarily attributable to the Bank receiving $120.07 million of PPP loan forgiveness payments from the SBA for the nine months ended September 30, 2021. Loans held for sale decreased $33.21 million since December 31, 2020.

•Tax credit real estate increased by $3.35 million for the nine months ended September 30, 2021, primarily attributable to a $4.18 million investment in a multi-family affordable housing rental property.

•Deposits increased $275.69 million since December 31, 2020. A portion of the increase can be attributed to increased savings with the current negative economic environment due to the pandemic. Also, deposit growth included approximately $100 million in temporary public funds.

•Liabilities as of September 30, 2021 include $4.58 million of allowance for credit losses on off-balance sheet credit exposures under CECL compared to zero under the incurred loss model as of December 31, 2020.

Reference is made to Note 7 for a discussion of fair value measurements which relate to methods used by the Company in recording assets and liabilities on its financial statements.

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Financial Condition

The COVID-19 pandemic has created significant uncertainty regarding projecting loan demand throughout 2021.

The following table sets forth the composition of the loan portfolio as of September 30, 2021 and December 31, 2020:

	September 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
	(Amounts In Thousands)				(Amounts In Thousands)
Agricultural	$	94,210	3.55	%	$	94,842	3.50	%
Commercial and financial	228,181		8.60		286,242		10.56
Real estate:
Construction, 1 to 4 family residential	73,167		2.76		71,117		2.62
Construction, land development and commercial	118,623		4.47		111,913		4.13
Mortgage, farmland	241,650		9.11		247,142		9.12
Mortgage, 1 to 4 family first liens	898,333		33.85		892,089		32.92
Mortgage, 1 to 4 family junior liens	115,308		4.34		127,833		4.72
Mortgage, multi-family	389,805		14.69		374,014		13.80
Mortgage, commercial	410,050		15.45		417,139		15.39
Loans to individuals	32,235		1.21		31,325		1.16
Obligations of state and political subdivisions	52,299		1.97		56,488		2.08
	$	2,653,861	100.00	%	$	2,710,144	100.00	%
Net unamortized fees and costs	927				938
	$	2,654,788			$	2,711,082
Less allowance for credit losses (2021) and loan losses (2020)	35,590				37,070
	$	2,619,198			$	2,674,012

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The Bank has an established formal loan origination policy.  In general, the loan origination policy attempts to reduce the risk of credit loss to the Bank by requiring, among other things, maintenance of minimum loan to value ratios, evidence of appropriate levels of insurance carried by borrowers and documentation of appropriate types and amounts of collateral and sources of expected payment.  The collateral relied upon in the loan origination policy is generally the property being financed by the Bank.  The source of expected payment is generally the income produced from the property being financed.  Personal guarantees are required of individuals owning or controlling at least 20% of the ownership of an entity.  Limited or proportional guarantees may be accepted in circumstances if approved by the Company’s Board of Directors.  Financial information provided by the borrower is verified as considered necessary by reference to tax returns, or audited, reviewed or compiled financial statements.  The Bank does not originate subprime loans.  In order to modify, restructure or otherwise change the terms of a loan, the Bank’s policy is to evaluate each borrower situation individually.  Modifications, restructures, extensions and other changes are done to improve the Bank’s position and to protect the Bank’s capital.  If a borrower is not current with its payments, any additional loans to such borrowers are evaluated on an individual borrower basis.

The Company has not experienced any significant time lapses in recognizing the required provisions for collateral dependent loans, nor has the Company delayed appropriate charge offs.  When an updated appraisal value has been obtained, the Company has used the appraisal amount in determining the appropriate charge off or required reserve.  The Company also evaluates any changes in the financial condition of the borrower and guarantors (if applicable), economic conditions, and the Company’s loss experience with the type of property in question.  Any information utilized in addition to the appraisal is intended to identify additional charge offs or provisions, not to override the appraised value.

In accordance with Staff Accounting Bulletin No. 102, Selected Loan Loss Allowance Methodology and Documentation Issues, and Staff Accounting Bulletin No. 119, which aligns the staff's guidance with FASB ASC Topic 326, or CECL, the Company determines and assigns ratings to loans using factors that include the following: an assessment of the financial condition of the borrower; a realistic determination of the 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.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific reserve. In the event a collateral shortfall is identified during the credit review process, the Company will work with the borrower for a principal reduction and/or a pledge of additional collateral and/or additional guarantees. In the event that these options are not available, the loan may be subject to a downgrade of the credit risk rating. If the Company determines a loan amount or portion thereof, is uncollectible, the loan’s credit risk rating may be downgraded and the uncollectible amount charged-off or recorded as a specific allowance for losses.  The Bank’s credit and legal departments undertake a thorough and ongoing analysis to determine if additional specific reserves and/or charge-offs are appropriate and to begin a workout plan for the loan to minimize actual losses.

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The following table presents the allowance for credit losses as of September 30, 2021 and December 31, 2020 by loan category, the percentage of the allowance for each category to the total allowance, and the percentage of all loans in each category to total loans:

	September 30, 2021						December 31, 2020
	Amount		% of Total Allowance		% of Loans to Total Loans		Amount		% of Total Allowance		% of Loans to Total Loans
	(In Thousands)						(In Thousands)
Agricultural	$	2,118	5.95	%	3.55	%	$	2,508	6.77	%	3.50	%
Commercial and financial	4,348		12.22		8.60		4,885		13.18		10.56
Real estate:
Construction, 1 to 4 family residential	762		2.14		2.76		907		2.45		2.62
Construction, land development and commercial	1,535		4.31		4.47		1,412		3.81		4.13
Mortgage, farmland	4,663		13.10		9.11		4,173		11.26		9.12
Mortgage, 1 to 4 family first liens	7,922		22.26		33.85		10,871		29.32		32.92
Mortgage, 1 to 4 family junior liens	2,942		8.27		4.34		1,497		4.04		4.72
Mortgage, multi-family	3,713		10.43		14.69		4,462		12.04		13.80
Mortgage, commercial	6,505		18.28		15.45		4,953		13.36		15.39
Loans to individuals	633		1.78		1.21		752		2.03		1.16
Obligations of state and political subdivisions	449		1.26		1.97		650		1.74		2.08
	$	35,590	100.00	%	100.00	%	$	37,070	100.00	%	100.00	%

The allowance for credit losses (ACL) totaled $35.59 million at September 30, 2021 compared to the allowance for loan losses under the incurred loss method of $37.07 million at December 31, 2020. The percentage of the allowance to outstanding loans was 1.34% and 1.37% at September 30, 2021 and December 31, 2020, respectively.  The allowance was based on management’s consideration of a number of factors, including composition of the loan portfolio, loans with higher credit risks and the overall amount of loans outstanding. Due to the adoption of ASC 326 (CECL) in 2021, the ACL under CECL will not be comparable to the allowance for loan losses in 2020. The changes in the ACL in 2021 compared to December 31, 2020 is the result of the following factors: $2.75 million increase upon adoption of ASC 326 (CECL) on January 1, 2021; changes after adoption for the nine months ended September 30, 2021 include improvements in the economic factor forecasts, primarily Iowa unemployment, used in the ACL calculation which resulted in a decrease of $1.14 million; decrease in loan volume which resulted in a decrease of $0.75 million; changes in prepayment and curtailment rates resulting in a decrease of $1.03 million; decreases in historical loss rates along with net recoveries resulting in a decrease of $2.07 million; decreases in the individually analyzed loans reserve of $0.42 million; and increases in qualitative factors determined necessary by management which resulted in an increase of $0.71 million.

The adequacy of the allowance is reviewed quarterly and adjusted as appropriate after consideration has been given to the impact of economic conditions on the borrowers’ ability to repay, loan collateral values, past collection experience, the risk characteristics of the loan portfolio and such other factors that deserve current recognition. The growth of the loan portfolio and the trends in problem and watch loans are significant elements in the determination of the provision for credit losses.  Quantitative factors include the Company’s historical loss experience, which is then adjusted for levels and trends in past due, levels and trends in charged-off and recovered loans, trends in volume growth, trends in problem and watch loans, trends in restructured loans, local economic trends and conditions, industry and other conditions, and effects of changing interest rates.

Management has determined that the allowance for credit losses was adequate at September 30, 2021, and that the loan portfolio is diversified and secured, without undue concentration in any specific risk area. This process involves a high degree of management judgment; however, the allowance for credit losses is based on a comprehensive, well documented, and

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consistently applied analysis of the Company’s loan portfolio. This analysis takes into consideration all available information existing as of the financial statement date, including environmental factors such as economic, industry, geographical and political factors. The relative level of allowance for credit losses is reviewed and compared to industry data. This review encompasses levels of total collateral-dependent loans, portfolio mix, portfolio concentrations, current geographic risks and overall levels of net charge-offs.

Investment securities available for sale held by the Company increased by $92.89 million from December 31, 2020 to September 30, 2021.  The fair value of securities available for sale was $5.69 million more than the amortized cost of such securities as of September 30, 2021.  At December 31, 2020, the fair value of the securities available for sale was $11.70 million more than the amortized cost of such securities.

Deposits increased $275.69 million in the first nine months of 2021 primarily due to increased savings with the current negative economic environment. In the opinion of the Company’s management, the Company continues to have sufficient liquidity resources available to fund expected additional loan growth.

Brokered deposits are included in total deposits and totaled $51.58 million as of September 30, 2021 with an average rate of 0.36%.  Brokered deposits were $74.08 million as of December 31, 2020 with an average interest rate of 0.34%. As of September 30, 2021 and December 31, 2020, brokered deposits were 1.49% and 2.32% of total deposits, respectively.

Federal Home Loan Bank (FHLB) borrowings were $105 million as of September 30, 2021 and December 31, 2020. The FHLB funding source is considered when loan growth exceeds core deposit increases and the interest rates on funds borrowed from the FHLB are favorable compared to other funding alternatives.

Dividends and Equity

In January 2021, Hills Bancorporation paid a dividend of $8.77 million or $0.94 per share.  The dividend paid in January 2020 was $0.89 per share. After payment of the dividend and the adjustment for accumulated other comprehensive income, stockholders’ equity as of September 30, 2021 totaled $436.30 million. On January 1, 2015, the final rules of the Federal Reserve Board went into effect implementing in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision. The final rule also adopted changes to the agencies’ regulatory capital requirements that meet the requirements of section 171 and section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under the BASEL III rules, the minimum capital ratios are 4% for Tier 1 Leverage Capital Ratio, 4.5% for the Common Equity Tier 1 Capital Ratio, 6% for the Tier 1 Risk-Based Capital Ratio and 8% for the Total Risk-Based Capital Ratio. As of March 31, 2020, the Bank elected to use the Community Bank Leverage Ratio (CBLR) framework as provided for in the Economic Growth, Regulatory Relief and Consumer Protection Act. Under the CBLR framework, the Bank is required to maintain a CBLR of greater than 9%. The CARES Act reduced the minimum ratio to 8% beginning in the 2nd quarter of 2020 through December 31, 2020, increasing to 8.5% for 2021 and returning to 9% beginning January 1, 2022. As of September 30, 2021 and December 31, 2020, the Company had regulatory capital in excess of the Federal Reserve’s minimum and well-capitalized definition requirements. The actual amounts and capital ratios as of September 30, 2021 and December 31, 2020 are presented below (amounts in thousands):

	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Ratio
As of September 30, 2021:
Company:
Community Bank Leverage ratio	$	478,368	11.99	%	8.500	%
Bank:
Community Bank Leverage ratio	478,951		12.01		8.500

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	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Ratio
As of December 31, 2020:
Company:
Community Bank Leverage ratio	$	452,123	11.91	%	8.00	%
Bank:
Community Bank Leverage ratio	453,073		11.94		8.00

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Discussion of operations for the nine months ended September 30, 2021 and 2020

Net Income Overview

Net income increased $11.72 million for the nine months ended September 30, 2021 compared to the first nine months of 2020.  Total net income was $41.93 million in 2021 and $30.22 million in the comparable period in 2020, an increase of 38.77%.  The changes in net income in 2021 from the first nine months of 2020 were primarily the result of the following:

•Net interest income increased by $4.05 million, before credit loss expense, attributable in large part to a $7.31 million decrease in interest rate expense.

•For the nine months ended September 30, 2021, a reversal of credit loss reserves was recorded totaling $4.56 million. This represents a decrease of $9.06 million from the provision for loan losses under the incurred loss model of $4.50 million for the nine months ended September 30, 2020.

•Noninterest income increased by $5.06 million.

•Noninterest expenses increased by $2.96 million.

•Income tax expense increased by $3.49 million.

For the nine month period ended September 30, 2021 and September 30, 2020 basic earnings per share was $4.50 and $3.22, respectively. Diluted earnings per share was $4.50 for the nine months ended September 30, 2021 compared to $3.22 for the same period in 2020.

The Company’s net income for the period was driven primarily by three important factors.  The first important factor is credit loss expense recorded under CECL. The majority of the Company’s interest-earning assets are in loans outstanding, which amounted to more than $2.630 billion at September 30, 2021. Expected credit loss expense is computed on a quarterly basis and is a result of management’s determination of the quality of the loan portfolio.  The expense reflects a number of factors, including the size of the loan portfolio, the overall composition of the loan portfolio and loan concentrations, the borrowers’ ability to repay, past loss experience, loan collateral values, the level of collateral-dependent loans and loans past due ninety days or more.  In addition, management considers the credit quality of the loans based on management’s review of problem and watch loans, including loans with historically higher credit risk. Credit loss expense was a reduction of expense of $4.56 million in 2021 under CECL compared to an expense of $4.50 million in 2020 under the incurred loss model. The decrease is attributable to improvements in the economic factor forecasts, primarily Iowa unemployment, and continued improvement in asset quality, relative to the sizable expense taken for the first half of 2020 from management increases to qualitative factors as a result of the significant economic uncertainties surrounding the pandemic. The Company believes that credit loss expense is expected to be dependent on the Company’s loan growth, local economic conditions, including, but not limited to, conditions associated with the COVID-19 pandemic and the attendant risks and uncertainties related thereto, asset quality and will continue to have potential volatility for the foreseeable future resulting from the adoption of CECL in the first quarter and the uncertainties due to the COVID-19 pandemic.

The second important factor affecting the Company’s net income is the interaction between changes in net interest margin and changes in average volumes of the Bank's earnings assets.  Net interest income of $79.45 million for the first nine months of 2021 was derived from the Company’s $3.823 billion of average earning assets during that period and its tax-equivalent net interest margin of 2.83%.  Average earning assets in the nine months ended September 30, 2020 were $3.362 billion and the tax-equivalent net interest margin was 3.05%. Net interest income for the Company increased primarily as a result of the continued low interest rates on interest bearing deposits resulting in decreased interest expenses. The Company expects net interest compression to impact earnings for the foreseeable future due to competition for loans and deposits combined with the interest rate decreases by the Federal Reserve Board. The Company believes growth in net interest income will be contingent on the growth of the Company’s earning assets and maintaining yield on loans.

The third significant factor affecting the Company’s net income is noninterest income, primarily net gain on the sale of loans and trust fees. The net gain on the sale of loans was $6.24 million and $4.86 million for the nine months ended September 30, 2021 and 2020, respectively, an increase of 28.48% for the nine months ended September 30, 2021 compared to the same period in 2020. The amount of the net gain on sale of secondary market mortgage loans in each year can vary significantly. The volume of activity in these types of loans is directly related to the level of interest rates and has been significantly impacted by the Federal Reserve Board's reduction of the federal funds rate to 0.25%, resulting in a significant amount of mortgage loan refinance activity. Trust fees were $9.65 million and $7.45 million for the nine months ended September 30, 2021 and 2020, respectively, an increase of 29.46% for the nine months ended September 30, 2021 compared to the same period in 2020. This is primarily driven by the increase in assets under management of $0.45 billion from $1.98 billion as of September 30, 2020 to $2.43 billion as of September 30, 2021.

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Discussion of operations for the nine months ended September 30, 2021 and 2020

Net Interest Income

Net interest income increased for the nine months ended September 30, 2021 compared to the comparable period in 2020.  The increase was a result of the continued low interest rates on interest bearing deposits resulting in decreased interest expenses. The decrease in interest expense more than compensated for the decrease in interest income associated with the low rate environment. Net interest income is the excess of the interest and fees earned on interest-earning bearing assets over the interest expense of the interest-bearing liabilities.  The factors that have the greatest impact on net interest income are the average volume of earning assets for the period and the net interest margin.  The net interest margin for the first nine months of 2021 was 2.83% compared to 3.05% in 2020 for the same period.  Interest expense decreased $7.31 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily due to decreasing interest rates on deposits. The measure is shown on a tax-equivalent basis using a tax rate of 21% to make the interest earned on taxable and non-taxable assets more comparable.  The change in average balances and average rates between periods and the effect on the net interest income on a tax equivalent basis for the nine months ended in 2021 compared to the comparable period in 2020 are shown in the following table:

					Increase (Decrease) in Net Interest Income
	Change in Average Balance		Change in Average Rate		Volume Changes		Rate Changes		Net Change
	(Amounts in Thousands)
Interest income:
Loans, net	$	(40,757)	(0.07)	%	$	(1,648)	$	(1,406)	$	(3,054)
Taxable securities	58,102		(0.52)		607		(634)		(27)
Nontaxable securities	23,396		(0.33)		468		(548)		(80)
Federal funds sold	419,563		(0.24)		1,134		(1,283)		(149)
	$	460,304			$	561	$	(3,871)	$	(3,310)
Interest expense:
Interest-bearing demand deposits	$	200,364	(0.32)	%	$	(804)	$	2,423	$	1,619
Savings deposits	219,772		(0.19)		(499)		1,434		935
Time deposits	(37,519)		(0.46)		638		2,246		2,884
FHLB borrowings	(80,000)		(0.10)		1,789		81		1,870
Interest-bearing other liabilities	(1)		(0.79)		—		—		—
	$	302,616			$	1,124	$	6,184	$	7,308
Change in net interest income					$	1,685	$	2,313	$	3,998

Rate/volume variances are allocated on a consistent basis using the absolute values of changes in volume compared to the absolute values of the changes in rates. Interest on nontaxable securities and loans is shown on a tax-equivalent basis.

A summary of the net interest spread and margin is as follows:

(Tax Equivalent Basis)	2021		2020
Yield on average interest-earning assets	3.30	%	3.88	%
Rate on average interest-bearing liabilities	0.63		1.08
Net interest spread	2.67	%	2.80	%
Effect of noninterest-bearing funds	0.16		0.25
Net interest margin (tax equivalent interest income divided by average interest-earning assets)	2.83	%	3.05	%

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Discussion of operations for the nine months ended September 30, 2021 and 2020

In pricing loans and deposits, the Bank considers the U.S. Treasury indexes as benchmarks in determining interest rates.  The Federal Open Market Committee met six times during the first nine months of 2021.  The target rate decreased to 0.25% as of March 31, 2020.  Interest rates on loans are generally affected by the target rate since interest rates for the U.S. Treasury market normally increase or decrease when the Federal Reserve Board raises or lowers the federal funds rate.  As of September 30, 2021, the rate indexes for the one, three and five year indexes were 0.09%, 0.53% and 0.98%, respectively.  The one year index decreased 25.00% from 0.12% at September 30, 2020, the three year index increased 231.25% and the five year index increased 250.00%.  The three year index was 0.16% and the five year index was 0.28% at September 30, 2020.  The targeted federal funds rate was 0.25% at September 30, 2021 and 2020.  The Company anticipates short term and long term rates in the indexes to remain consistent throughout 2021.

Credit Loss Expense

Credit loss expense was a reduction of expense of $4.56 million for the nine months ended September 30, 2021 compared to an expense of $4.50 million in 2020 under the incurred loss model, a decrease of expense of $9.06 million.  Credit loss expense is the amount necessary to adjust the allowance for credit losses to the level considered by management to appropriately account for the estimated current expected credit losses within the Bank's loan portfolio. The credit loss expense taken to fund the allowance for credit losses is computed on a quarterly basis and is a result of management’s determination of the quality of the loan portfolio.  The expense reflects a number of factors, including the size of the loan portfolio, the overall composition of the loan portfolio and loan concentrations, the impact on the borrowers’ ability to repay, past loss experience, loan collateral values, the level of collateral-dependent loans and loans past due ninety days or more.  In addition, management considers the credit quality of the loans based on management’s review of problem and watch loans, including loans with historically higher credit risks. Also, under CECL, a significant component in estimating expected credit losses are economic forecasts such as Iowa unemployment, national real gross domestic product (GDP), all-transactions house price index for Iowa, Iowa real GDP, and the commercial real estate price index (CRE Index). The Company believes that credit loss expense is expected to be dependent on the Company’s loan growth, local economic conditions, including, but not limited to, conditions associated with the COVID-19 pandemic and the attendant risks and uncertainties related thereto, asset quality and will continue to have potential volatility for the foreseeable future resulting from the adoption of CECL in the first quarter and the uncertainties due to the COVID-19 pandemic.

The allowance for credit losses balance is affected by charge-offs, net of recoveries, for the periods presented.  For the nine months ended September 30, 2021 and 2020, recoveries were $2.19 million and $1.28 million, respectively; and charge-offs were $0.86 million in 2021 and $2.48 million in 2020.  The allowance for credit losses totaled $35.59 million at September 30, 2021 compared to $37.07 million for the allowance for loan losses under the incurred loss model as of December 31, 2020.  The allowance represented 1.34% and 1.37% of loans held for investment at September 30, 2021 and December 31, 2020.

Noninterest Income

The following table sets forth the various categories of noninterest income for the nine months ended September 30, 2021 and 2020.

	Nine Months Ended September 30,
	2021		2020		$ Change		% Change
	(Amounts in thousands)
Net gain on sale of loans	$	6,243	$	4,859	$	1,384	28.48	%
Trust fees	9,645		7,450		2,195		29.46
Service charges and fees	8,729		7,427		1,302		17.53
Other noninterest income	647		462		185		40.04
Gain on sale of investment securities	—		10		(10)		(100.00)
	$	25,264	$	20,208	$	5,056	25.02

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Discussion of operations for the nine months ended September 30, 2021 and 2020

In the nine months ended September 30, 2021 and 2020, the net gain on sale of loans was $6.24 million and $4.86 million, respectively.  The amount of the net gain on sale of secondary market mortgage loans in each year can vary significantly.  The volume of activity, margin and demand in these types of loans is directly related to the level of interest rates. The primary reason for the increase in 2021 compared to 2020 is the increased margin per loan in 2021. The servicing of the loans sold into the secondary market is not retained by the Company so these loans do not provide an ongoing stream of income.

Trust fees increased $2.20 million to $9.65 million for the nine months ended September 30, 2021 compared to the same period in 2020. This is due to the increase in assets under management of $0.45 billion from $1.98 billion as of September 30, 2020 to $2.43 billion as of September 30, 2021.

Service charges and fees increased $1.30 million to $8.73 million for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to increased debit card interchange fees from increased volume of transactions.

Other noninterest income categories experienced marginal period-to-period fluctuations for the nine months ended September 30, 2021.

Noninterest Expenses

The following table sets forth the various categories of noninterest expenses for the nine months ended September 30, 2021 and 2020.

	Nine Months Ended September 30,
	2021		2020		$ Change		% Change
	(Amounts in thousands)
Salaries and employee benefits	$	31,484	$	29,818	$	1,666	5.59	%
Occupancy	3,135		3,248		(113)		(3.48)
Furniture and equipment	5,523		5,778		(255)		(4.41)
Office supplies and postage	1,268		1,333		(65)		(4.88)
Advertising and business development	1,480		1,479		1		0.07
Outside services	9,781		8,020		1,761		21.96
FDIC insurance assessment	777		617		160		25.93
Other noninterest expense	1,668		1,861		(193)		(10.37)
	$	55,116	$	52,154	$	2,962	5.68

In the nine months ended September 30, 2021 and 2020, salaries and employee benefits expense increased $1.67 million. The increase is primarily the result of increased variable compensation due to the increase in loans originated for sale and processing of PPP loans.

Outside services increased $1.76 million to $9.78 million for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to increases in data processing expenses with the continued increases in mortgage refinance activity and other non-interest income.

Other noninterest expense categories experienced marginal period-to-period fluctuations for the nine months ended September 30, 2021.

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Discussion of operations for the three months ended September 30, 2021 and 2020

Net Income Overview

Net income increased $1.70 million for the three months ended September 30, 2021 compared to the same period in 2020.  Total net income was $13.13 million in 2021 and $11.43 million in the comparable period in 2020, an increase of 14.83%.  For the three month periods ended September 30, 2021 and 2020 basic earnings per share was $1.41 and $1.22, respectively. Diluted earnings per share was $1.41 for the three months ended September 30, 2021 compared to $1.22 for the same period in 2020.

Net Interest Income

Net interest income increased for the three months ended September 30, 2021 compared to the comparable period in 2020.  The increase was a result of the continued low interest rates on interest bearing deposits resulting in decreased interest expenses. The decrease in interest expense more than compensated for the decrease in interest income associated with the low rate environment. Net interest income is the excess of the interest and fees earned on interest-earning bearing assets over the interest expense of the interest-bearing liabilities.  The factors that have the greatest impact on net interest income are the average volume of earning assets for the period and the net interest margin. Interest expense decreased $2.29 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily due to decreasing interest rates on deposits. The net interest margin for the three months ended September 30, 2021 was 2.82% compared to 2.90% in 2020 for the same period.  The measure is shown on a tax-equivalent basis using a tax rate of 21% to make the interest earned on taxable and non-taxable assets more comparable.  The change in average balances and average rates between periods and the effect on the net interest income on a tax equivalent basis for the three months ended in 2021 compared to the comparable period in 2020 are shown in the following table:

					Increase (Decrease) in Net Interest Income
	Change in Average Balance		Change in Average Rate		Volume Changes		Rate Changes		Net Change
	(Amounts in Thousands)
Interest income:
Loans, net	$	(111,056)	0.07	%	$	(1,428)	$	663	$	(765)
Taxable securities	79,512		(0.49)		295		(244)		51
Nontaxable securities	35,003		(0.35)		231		(194)		37
Federal funds sold	350,448		0.05		89		97		186
	$	353,907			$	(813)	$	322	$	(491)
Interest expense:
Interest-bearing demand deposits	$	155,850	(0.20)	%	$	(159)	$	541	$	382
Savings deposits	235,776		(0.09)		(143)		249		106
Time deposits	(85,287)		(0.48)		435		740		1,175
FHLB borrowings	(80,000)		(0.12)		600		30		630
Interest-bearing other liabilities	(3)		0.12		—		—		—
	$	226,336			$	733	$	1,560	$	2,293
Change in net interest income					$	(80)	$	1,882	$	1,802

Rate/volume variances are allocated on a consistent basis using the absolute values of changes in volume compared to the absolute values of the changes in rates. Interest on nontaxable securities and loans is shown on a tax-equivalent basis.

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HILLS BANCORPORATION

Discussion of operations for the three months ended September 30, 2021 and 2020

A summary of the net interest spread and margin is as follows:

(Tax Equivalent Basis)	2021		2020
Yield on average interest-earning assets	3.24	%	3.62	%
Rate on average interest-bearing liabilities	0.57		0.96
Net interest spread	2.67	%	2.66	%
Effect of noninterest-bearing funds	0.15		0.24
Net interest margin (tax equivalent interest income divided by average interest-earning assets)	2.82	%	2.90	%

Credit Loss Expense

Credit loss expense was an expense of $0.08 million for the three months ended September 30, 2021 compared to a reduction of expense of $0.16 million in 2020 under the incurred loss model, an increase of expense of $0.24 million. Credit loss expense is the amount necessary to adjust the allowance for credit losses to the level considered by management to appropriately account for the estimated current expected credit losses within the Bank's loan portfolio. The credit loss expense taken to fund the allowance for credit losses is computed on a quarterly basis and is a result of management’s determination of the quality of the loan portfolio.  The expense reflects a number of factors, including the size of the loan portfolio, the overall composition of the loan portfolio and loan concentrations, the impact on the borrowers’ ability to repay, past loss experience, loan collateral values, the level of collateral-dependent loans and loans past due ninety days or more.  In addition, management considers the credit quality of the loans based on management’s review of problem and watch loans, including loans with historically higher credit risks. The Company believes that credit loss expense is expected to be dependent on the Company’s loan growth, local economic conditions, including, but not limited to, conditions associated with the COVID-19 pandemic and the attendant risks and uncertainties related thereto, asset quality and will continue to have potential volatility for the foreseeable future resulting from the adoption of CECL in the first quarter and the uncertainties due to the COVID-19 pandemic.

The allowance for credit losses balance is affected by charge-offs, net of recoveries, for the periods presented.  For the three months ended September 30, 2021 and 2020, recoveries were $0.65 million and $0.47 million, respectively; and charge-offs were $0.59 million in 2021 and $0.87 million in 2020. 

Noninterest Income

The following table sets forth the various categories of noninterest income for the three months ended September 30, 2021 and 2020.

	Three Months Ended September 30,
	2021		2020		$ Change		% Change
	(Amounts in thousands)
Net gain on sale of loans	$	1,512	$	2,303	$	(791)	(34.35)	%
Trust fees	3,568		2,494		1,074		43.06
Service charges and fees	3,075		2,636		439		16.65
Other noninterest income	89		77		12		15.58
	$	8,244	$	7,510	$	734	9.77

Trust fees increased $1.07 million to $3.57 million for the three months ended September 30, 2021 compared to the same period in 2020. This is due to the increase in assets under management of $0.45 billion from $1.98 billion as of September 30, 2020 to $2.43 billion as of September 30, 2021. Service charges and fees increased $0.44 million to $3.08 million for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to increased debit card interchange fees from increased volume of transactions. Other noninterest income categories experienced marginal period-to-period fluctuations for the three months ended September 30, 2021.

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Discussion of operations for the three months ended September 30, 2021 and 2020

Noninterest Expenses

The following table sets forth the various categories of noninterest expenses for the three months ended September 30, 2021 and 2020.

	Three Months Ended September 30,
	2021		2020		$ Change		% Change
	(Amounts in thousands)
Salaries and employee benefits	$	10,281	$	10,108	$	173	1.71	%
Occupancy	955		1,067		(112)		(10.50)
Furniture and equipment	1,652		2,028		(376)		(18.54)
Office supplies and postage	428		425		3		0.71
Advertising and business development	496		340		156		45.88
Outside services	3,496		2,818		678		24.06
FDIC insurance assessment	267		223		44		19.73
Other noninterest expense	623		1,046		(423)		(40.44)
	$	18,198	$	18,055	$	143	0.79

Outside services increased $0.68 million to $3.50 million compared to the same period in 2020, primarily due to increases in data and card processing expenses with the continued increase in mortgage refinance activity and other non-interest income.

Other noninterest expense decreased for the three months ended September 30, 2021 compared to the same period in 2020 due to a legal settlement in 2020 that did not recur.

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Income Taxes

Federal and state income tax expenses were $12.23 million and $8.74 million for the nine months ended September 30, 2021 and 2020, respectively. Income taxes as a percentage of income before taxes were 22.58% in 2021 and 22.43% in 2020.

Liquidity

The Company actively monitors and manages its liquidity position with the objective of maintaining sufficient cash flows to fund operations, meet client commitments, take advantage of market opportunities and provide a margin against unforeseeable liquidity needs.  Federal funds sold and investment securities available for sale are readily marketable assets.  Maturities of all investment securities are managed to meet the Company’s normal liquidity needs, to respond to market changes or to adjust the Company’s interest rate risk position.  Investment securities available for sale comprised 12.27% of the Company’s total assets at September 30, 2021 compared to 10.80% at December 31, 2020.

The Company has historically maintained a stable deposit base and a relatively low level of large deposits, which has mitigated the volatility in the Company’s liquidity position.  As of September 30, 2021, the Company had borrowed $105.00 million from the Federal Home Loan Bank (“FHLB”) of Des Moines.  Advances are used as a means of providing both long and short-term, fixed-rate funding for certain assets and for managing interest rate risk.  The Company had additional borrowing capacity available from the FHLB of approximately $748.05 million at September 30, 2021.

As additional sources of liquidity, the Company has the ability to borrow up to $10.00 million from the Federal Reserve Bank of Chicago, and has lines of credit with three banks totaling $538.95 million.  The borrowings under these credit lines would be secured by the Bank’s investment securities.  The combination of high levels of potentially liquid assets, low dependence on volatile liabilities and additional borrowing capacity provided sources of liquidity for the Company which management considered sufficient at September 30, 2021.

As of September 30, 2021, investment securities with a carrying value of $10.14 million were pledged to collateralize public and trust deposits, derivative financial instruments, and other borrowings.  As of December 31, 2020, investment securities with a carrying value of $10.23 million were pledged.

Contractual Obligations

There have been no material changes with regard to contractual obligations disclosed in the Company’s Form 10-K for the year ended December 31, 2020.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company's primary market risk exposure is to changes in interest rates.  Interest rate risk is the risk to current or anticipated earnings or capital arising from movements in interest rates.  Interest rate risk arises from repricing risk, basis risk, yield curve risk and options risk.  Repricing risk is the difference between the timing of rate changes and the timing of cash flows.  Basis risk is the difference from changing rate relationships among different yield curves affecting Bank activities.  Yield curve risk is the difference from changing rate relationships across the spectrum of maturities.  Option risk is the difference resulting from interest-related options imbedded in Bank products.  The Bank’s primary source of interest rate risk exposure arises from repricing risk.  To measure this risk the Bank uses a static gap measurement system that identifies the repricing gaps across the full maturity spectrum of the Bank’s assets and liabilities and an earnings simulation approach.  The gap schedule is known as the interest rate sensitivity report.  The report reflects the repricing characteristics of the Bank’s assets and liabilities.  The report details the calculation of the gap ratio.  This ratio indicates the amount of interest-earning assets repricing within a given period in comparison to the amount of interest-bearing liabilities repricing within the same period of time.  A gap ratio of 1.0 indicates a matched position, in which case the effect on net interest income due to interest rate movements will be minimal.  A gap ratio of less than 1.0 indicates that more liabilities than assets reprice within the time period, and a ratio greater than 1.0 indicates that more assets reprice than liabilities.

The Company's asset/liability management, or its management of interest rate risk, is focused primarily on evaluating and managing net interest income given various risk criteria.  Factors beyond the Company's control, such as market interest rates and competition, may also have an impact on the Company's interest income and interest expense.  In the absence of other factors, the Company's overall yield on interest-earning assets will increase as will its cost of funds on its interest-bearing liabilities when market interest rates increase over an extended period of time.  Inversely, the Company's yields and cost of funds will decrease when market rates decline.  The Company is able to manage these swings to some extent by attempting to control the maturity or rate adjustments of its interest-earning assets and interest-bearing liabilities over given periods of time.

The Bank maintains an Asset/Liability Committee, which meets at least quarterly to review the interest rate sensitivity position and to review and develop various strategies for managing interest rate risk within the context of the following factors: 1) capital adequacy, 2) asset/liability mix, 3) economic outlook, 4) market characteristics and 5) the interest rate forecast.  In addition, the Bank uses a simulation model to review various assumptions relating to interest rate movement.  The model attempts to limit rate risk even if it appears the Bank’s asset and liability maturities are perfectly matched and a favorable interest margin is present.  The Bank’s policy is to generally maintain a balance between profitability and interest rate risk.

In order to minimize the potential effects of adverse material and prolonged increases or decreases in market interest rates on the Company's operations, management has implemented an asset/liability program designed to mitigate the Company's interest rate sensitivity.  The program emphasizes the origination of adjustable rate loans, which are held in the portfolio, the investment of excess cash in short or intermediate term interest-earning assets, and the solicitation of transaction deposit accounts, which are less sensitive to changes in interest rates and can be re-priced rapidly.

There have been no material changes in the Bank's interest rate risk, as monitored by management, since December 31, 2020. Such risk remains elevated due to the significant Federal Reserve rate cuts in the first quarter of 2020 and the continued low interest rate environment.

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief 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) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective, as of the end of the period covered by this report, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports it files with the Securities and Exchange Commission.  There have been no changes in the Company’s internal controls over financial reporting during the nine months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Except as otherwise provided below, there have been no material changes from the risk factors disclosed in the Company’s Form 10-K for the year ended December 31, 2020.

Our allowances for credit losses for loans and debt securities may prove inadequate or we may be negatively affected by credit risk exposures. Also, future additions to our allowance for credit losses will reduce our future earnings.

Our business depends on the creditworthiness of our customers. As with most financial institutions, we maintain allowances for credit losses for loans and debt securities to provide for defaults and nonperformance, which represent an estimate of expected losses over the remaining contractual lives of the loan and debt security portfolios. This estimate is the result of our continuing evaluation of specific credit risks and loss experience, current loan and debt security portfolio quality, present economic, political and regulatory conditions, industry concentrations, reasonable and supportable forecasts for future conditions and other factors that may indicate losses. The determination of the appropriate levels of the allowances for loan and debt security credit losses inherently involves a high degree of subjectivity and judgment and requires us to make estimates of current credit risks and future trends, all of which may undergo material changes. Generally, our nonperforming loans and OREO reflect operating difficulties of individual borrowers and weaknesses in the economies of the markets we serve. The allowances may not be adequate to cover actual losses, and future allowance for credit losses could materially and adversely affect our financial condition, results of operations and cash flows.

Our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and we use estimates in determining the fair value of certain of our assets, the expected credit losses related to loans and debt securities, and the amount of other loss contingencies as of the balance sheet date, which estimates are subject to very large uncertainty.

A portion of our assets are carried on the balance sheet at fair value, including debt securities available for sale. Generally, for assets that are reported at fair value, we use quoted market prices or internal valuation models that utilize observable market data inputs to estimate their fair value as of the balance sheet date. In certain cases, observable market prices and data may not be readily available or their availability may be diminished due to market conditions. We use financial models to value certain of these assets. These models are complex and use asset-specific collateral data and market inputs for interest rates. Although we have processes and procedures in place governing internal valuation models and their testing and calibration, such assumptions are complex as we must make judgments about the effect of matters that are inherently uncertain. Different assumptions could have resulted in significant changes in valuation, which in turn would have affected earnings or resulted in significant changes in the dollar amount of assets reported on the balance sheet or both.

Page 72

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

The following table sets forth information about the Company’s stock purchases, all of which were made pursuant to the 2005 Stock Repurchase Program, for the three months ended September 30, 2021:

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (1)
July 1 to July 31	6,627	$	65.50	6,627	114,168
August 1 to August 31	1,928	66.37		1,928	112,240
September 1 to September 30	11,001	66.50		11,001	101,239
Total	19,556	$	66.15	19,556	101,239

(1)  On July 26, 2005, the Company’s Board of Directors authorized a program to repurchase up to 1,500,000 shares of the Company’s common stock (the “2005 Stock Repurchase Program”).  The Company’s Board of Directors has authorized the 2005 Stock Repurchase Program through December 31, 2022.  The Company expects the purchases pursuant to the 2005 Stock Repurchase Program to be made from time to time in private transactions at a price equal to the most recent quarterly independent appraisal of the shares of the Company’s common stock and with the Board reviewing the overall results of the 2005 Stock Repurchase Program on a quarterly basis.  All purchases made pursuant to the 2005 Stock Repurchase Program since its inception have been made on that basis.  The amount and timing of stock repurchases will be based on various factors, such as the Board’s assessment of the Company’s capital structure and liquidity, the amount of interest shown by shareholders in selling shares of stock to the Company at their appraised value, and applicable regulatory, legal and accounting factors. 

Page 73

Item 3. Defaults upon Senior Securities

Hills Bancorporation has no senior securities.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Page 74

Item 6. Exhibits

3.1	Restated Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q Filed with the Commission on May 6, 2015.
3.2	Amended and Restated Bylaws of Hills Bancorporation, incorporated by reference to Exhibit 3.2 to the Company's Form 10-Q Filed with the Commission on May 6, 2019.
4.1	Description of Registered Securities, incorporated by reference to Exhibit 4.1 to the Company's Form 10-K filed with the Commission on March 6, 2020.
31	Certifications under Section 302 of the Sarbanes-Oxley Act of 2002
32	Certifications under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document (1), (2)
101.SCH	XBRL Taxonomy Extension Schema Document (1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1)Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934, and are otherwise not subject to liability under these sections.

(2)The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Page 75

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.

		HILLS BANCORPORATION
Date:	November 5, 2021	By:  /s/ Dwight O. Seegmiller
		Dwight O. Seegmiller, Director, President and Chief Executive Officer
Date:	November 5, 2021	By:  /s/ Joseph A. Schueller
		Joseph A. Schueller, Treasurer, Chief Financial Officer and Chief Accounting Officer

Page 76

EX-31

Exhibit 31

CERTIFICATIONS

I, Dwight O. Seegmiller, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Hills Bancorporation;

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

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

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

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

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

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

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

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

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

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

Date:	November 5, 2021	By:  /s/ Dwight O. Seegmiller
		Dwight O. Seegmiller, Director, President and Chief Executive Officer

77

Exhibit 31

CERTIFICATIONS

I, Joseph A. Schueller, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Hills Bancorporation;

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

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

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

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

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

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

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

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

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

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

Date:	November 5, 2021	By:  /s/ Joseph A. Schueller
		Joseph A. Schueller, Treasurer, Chief Financial Officer and Chief Accounting Officer

78

EX-32

EXHIBIT 32

SECTION 906 CERTIFICATION BY DWIGHT O. SEEGMILLER

In connection with the quarterly report of Hills Bancorporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dwight O. Seegmiller, Director, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

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

Date:	November 5, 2021	By:  /s/ Dwight O. Seegmiller
		Dwight O. Seegmiller, Director, President and Chief Executive Officer

SECTION 906 CERTIFICATION BY JOSEPH A. SCHUELLER

In connection with the quarterly report of Hills Bancorporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph A. Schueller, Treasurer, Chief Financial Officer and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

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

Date:	November 5, 2021	By:  /s/ Joseph A. Schueller
		Joseph A. Schueller, Treasurer, Chief Financial Officer and Chief Accounting Officer

79

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 31, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	0-12668
Entity Registrant Name	Hills Bancorporation
Entity Incorporation, State or Country Code	IA
Entity Tax Identification Number	42-1208067
Entity Address, Address Line One	131 MAIN STREET
Entity Address, City or Town	HILLS
Entity Address, State or Province	IA
Entity Address, Postal Zip Code	52235
City Area Code	319
Local Phone Number	679-2291
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Smaller Reporting Company	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		9,302,242
Entity Central Index Key	0000732417
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Cash and cash equivalents	$ 869,098	$ 574,310
Investment securities available for sale at fair value (amortized cost September 30, 2021 $495,580; December 31, 2020 $396,670)	501,265	408,372
Stock of Federal Home Loan Bank	8,746	8,172
Loans held for sale	10,738	43,947
Loans, net of allowance for credit losses September 30, 2021 $35,590; net of allowance for loan losses December 31, 2020 $37,070	2,619,198	2,674,012
Property and equipment, net	34,740	35,878
Tax credit real estate investment	10,620	7,273
Accrued interest receivable	12,432	12,177
Deferred income taxes, net	8,431	6,088
Goodwill	2,500	2,500
Other assets	8,317	7,882
Total Assets	4,086,085	3,780,611
Liabilities
Noninterest-bearing deposits	581,011	532,190
Interest-bearing deposits	2,887,248	2,660,378
Total deposits	3,468,259	3,192,568
Federal Home Loan Bank borrowings	105,000	105,000
Accrued interest payable	1,255	1,733
Allowance for credit losses on off-balance sheet credit exposures	4,580	0
Other liabilities	21,856	17,905
Total Liabilities	3,600,950	3,317,206
Redeemable Common Stock Held by Employee Stock Ownership Plan (ESOP)	48,831	47,329
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 20,000,000 shares; issued September 30, 2021 10,329,937 shares; December 31, 2020 10,330,242 shares	0	0
Paid in capital	61,078	60,233
Retained earnings	468,239	439,831
Accumulated other comprehensive income	4,267	8,782
Treasury stock at cost (September 30, 2021 1,042,426 shares; December 31, 2020 999,247 shares)	(48,449)	(45,441)
Total Stockholders' Equity	485,135	463,405
Less maximum cash obligation related to ESOP shares	48,831	47,329
Total Stockholders' Equity Less Maximum Cash Obligation Related to ESOP Shares	436,304	416,076
Total Liabilities & Stockholders' Equity	$ 4,086,085	$ 3,780,611

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Investment securities available for sale, amortized cost	$ 495,580	$ 396,670
Loans, allowance for loan losses	$ 35,590	$ 37,070
STOCKHOLDERS' EQUITY
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	10,329,937	10,330,242
Treasury stock at cost (in shares)	1,042,426	999,247

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest income:
Loans, including fees	$ 29,004	$ 29,750	$ 86,956	$ 89,975
Investment securities:
Taxable	940	889	2,629	2,656
Nontaxable	963	933	2,880	2,941
Federal funds sold	289	103	652	801
Total interest income	31,196	31,675	93,117	96,373
Interest expense:
Deposits	3,414	5,077	11,416	16,854
FHLB borrowings	758	1,388	2,248	4,118
Total interest expense	4,172	6,465	13,664	20,972
Net interest income	27,024	25,210	79,453	75,401
Provision for credit losses (2021); Provision for loan losses (2020)	82	(157)	(4,561)	4,500
Net interest income after credit loss expense and provision for loan losses	26,942	25,367	84,014	70,901
Noninterest income:
Net gain on sale of loans	1,512	2,303	6,243	4,859
Other noninterest income	89	77	647	462
Gain on sale of investment securities	0	0	0	10
Noninterest income	8,244	7,510	25,264	20,208
Noninterest expenses:
Salaries and employee benefits	10,281	10,108	31,484	29,818
Occupancy	955	1,067	3,135	3,248
Furniture and equipment	1,652	2,028	5,523	5,778
Office supplies and postage	428	425	1,268	1,333
Advertising and business development	496	340	1,480	1,479
Outside services	3,496	2,818	9,781	8,020
FDIC insurance assessment	267	223	777	617
Other noninterest expense	623	1,046	1,668	1,861
Noninterest expenses	18,198	18,055	55,116	52,154
Income before income taxes	16,988	14,822	54,162	38,955
Income taxes	3,863	3,392	12,230	8,739
Net income	$ 13,125	$ 11,430	$ 41,932	$ 30,216
Earnings per share:
Basic (in dollars per share)	$ 1.41	$ 1.22	$ 4.50	$ 3.22
Diluted (in dollars per share)	$ 1.41	$ 1.22	$ 4.50	$ 3.22
Trust fees
Noninterest income:
Fee income	$ 3,568	$ 2,494	$ 9,645	$ 7,450
Service charges and fees
Noninterest income:
Fee income	$ 3,075	$ 2,636	$ 8,729	$ 7,427

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 13,125	$ 11,430	$ 41,932	$ 30,216
Securities:
Net change in unrealized (loss) income on securities available for sale	(1,510)	(84)	(6,017)	8,220
Reclassification adjustment for net gains realized in net income	0	0	0	(10)
Income taxes	377	21	1,502	(2,049)
Other comprehensive (loss) income on securities available for sale	(1,133)	(63)	(4,515)	6,161
Derivatives used in cash flow hedging relationships:
Net change in unrealized gain (loss) on derivatives	0	364	0	(726)
Income taxes	0	(91)	0	181
Other comprehensive income (loss) on cash flow hedges	0	273	0	(545)
Other comprehensive (loss) income, net of tax	(1,133)	210	(4,515)	5,616
Comprehensive income	$ 11,992	$ 11,640	$ 37,417	$ 35,832

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Cumulative change in accounting principle (Note 1)	Balance, January 1, 2021 (as adjusted for change in accounting principle)	Paid In Capital [Member]	Paid In Capital [Member] Balance, January 1, 2021 (as adjusted for change in accounting principle)	Retained Earnings [Member]	Retained Earnings [Member] Cumulative change in accounting principle (Note 1)	Retained Earnings [Member] Balance, January 1, 2021 (as adjusted for change in accounting principle)	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Other Comprehensive Income (Loss) [Member] Balance, January 1, 2021 (as adjusted for change in accounting principle)	Treasury Stock [Member]	Treasury Stock [Member] Balance, January 1, 2021 (as adjusted for change in accounting principle)	Maximum Cash Obligation Related To ESOP Shares [Member]	Maximum Cash Obligation Related To ESOP Shares [Member] Balance, January 1, 2021 (as adjusted for change in accounting principle)
Beginning Balance at Dec. 31, 2019	$ 375,211			$ 55,943		$ 409,509			$ 1,415		$ (39,830)		$ (51,826)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 13,120, 1,204, 105,542 and 5,957 shares of common stock for 3 months ended September 30, 2020 and 2021, and the 9 months ended September 30, 2020 and 2021, respectively	6,815			4,005							2,810
Issuance 1,861, 1,725, 5,430 and 5,564 shares of common stock under the employee stock purchase plan for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	304			304
Unearned restricted stock compensation	(81)			(81)
Forfeiture of 3,188, 2,114, 4,211 and 5,869 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(218)			(218)
Share-based compensation	19			19
Change related to ESOP shares	4,931												4,931
Net income	30,216					30,216
Cash dividends ($0.89 and $0.94 per share for 9 months ended September 30, 2020 and 2021, respectively)	(8,324)					(8,324)
Purchase of 29,807, 19,556, 112,407 and 49,136 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(7,230)										(7,230)
Other comprehensive income (loss)	5,616								5,616
Ending Balance at Sep. 30, 2020	407,259			59,972		431,401			7,031		(44,250)		(46,895)
Beginning Balance at Jun. 30, 2020	398,719			60,043		419,971			6,821		(42,787)		(45,329)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 13,120, 1,204, 105,542 and 5,957 shares of common stock for 3 months ended September 30, 2020 and 2021, and the 9 months ended September 30, 2020 and 2021, respectively	809			458							351
Issuance 1,861, 1,725, 5,430 and 5,564 shares of common stock under the employee stock purchase plan for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	104			104
Unearned restricted stock compensation	(474)			(474)
Forfeiture of 3,188, 2,114, 4,211 and 5,869 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(166)			(166)
Share-based compensation	7			7
Change related to ESOP shares	(1,566)												(1,566)
Net income	11,430					11,430
Purchase of 29,807, 19,556, 112,407 and 49,136 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(1,814)										(1,814)
Other comprehensive income (loss)	210								210
Ending Balance at Sep. 30, 2020	407,259			59,972		431,401			7,031		(44,250)		(46,895)
Beginning Balance at Dec. 31, 2020	416,076	$ (4,751)	$ 411,325	60,233	$ 60,233	439,831	$ (4,751)	$ 435,080	8,782	$ 8,782	(45,441)	$ (45,441)	(47,329)	$ (47,329)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 13,120, 1,204, 105,542 and 5,957 shares of common stock for 3 months ended September 30, 2020 and 2021, and the 9 months ended September 30, 2020 and 2021, respectively	384			225							159
Issuance 1,861, 1,725, 5,430 and 5,564 shares of common stock under the employee stock purchase plan for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	320			320
Unearned restricted stock compensation	603			603
Forfeiture of 3,188, 2,114, 4,211 and 5,869 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(321)			(321)
Share-based compensation	18			18
Change related to ESOP shares	(1,502)												(1,502)
Net income	41,932					41,932
Cash dividends ($0.89 and $0.94 per share for 9 months ended September 30, 2020 and 2021, respectively)	(8,773)					(8,773)
Purchase of 29,807, 19,556, 112,407 and 49,136 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(3,167)										(3,167)
Other comprehensive income (loss)	(4,515)								(4,515)
Ending Balance at Sep. 30, 2021	436,304			61,078		468,239			4,267		(48,449)		(48,831)
Beginning Balance at Jun. 30, 2021	425,377			60,776		455,114			5,400		(47,187)		(48,726)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 13,120, 1,204, 105,542 and 5,957 shares of common stock for 3 months ended September 30, 2020 and 2021, and the 9 months ended September 30, 2020 and 2021, respectively	80			48							32
Issuance 1,861, 1,725, 5,430 and 5,564 shares of common stock under the employee stock purchase plan for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	100			100
Unearned restricted stock compensation	273			273
Forfeiture of 3,188, 2,114, 4,211 and 5,869 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(125)			(125)
Share-based compensation	6			6
Change related to ESOP shares	(105)												(105)
Net income	13,125					13,125
Purchase of 29,807, 19,556, 112,407 and 49,136 shares of common stock for 3 months ended September 30, 2020 and 2021 and the 9 months ended September 30, 2020 and 2021, respectively	(1,294)										(1,294)
Other comprehensive income (loss)	(1,133)								(1,133)
Ending Balance at Sep. 30, 2021	$ 436,304			$ 61,078		$ 468,239			$ 4,267		$ (48,449)		$ (48,831)

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Issuance of common stock (in shares)	1,204	13,120	5,957	105,542
Issuance of common stock purchased under the employee stock purchase plan (in shares)	1,725	1,861	5,564	5,430
Forfeiture of shares of common stock (in shares)	2,114	3,188	5,869	4,211
Cash dividends (in dollars per share)			$ 0.94	$ 0.89
Purchase of common stock (in shares)	19,556	29,807	49,136	112,407

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows from Operating Activities
Net income	$ 41,932,000	$ 30,216,000
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation	2,325,000	2,623,000
Provision for credit losses (2021) and loan losses (2020)	(4,561,000)	4,500,000
Net gain on sale of investment securities available for sale	0	(10,000)
Forfeiture of common stock	(321,000)	(218,000)
Share-based compensation	18,000	19,000
Compensation expensed through issuance of common stock	384,000	971,000
Provision for deferred income taxes	738,000	(865,000)
Net gain on sale of other real estate owned and other repossessed assets	(25,000)	0
Increase in accrued interest receivable	(255,000)	(1,289,000)
Amortization of premium on investment securities, net	872,000	555,000
(Increase) decrease in other assets	(683,000)	1,320,000
Amortization of operating lease right-of-use assets	298,000	91,000
Increase (decrease) in accrued interest payable and other liabilities	5,072,000	(1,590,000)
Loans originated for sale	(356,975,000)	(359,531,000)
Proceeds on sales of loans	396,427,000	344,810,000
Net gain on sales of loans	(6,243,000)	(4,859,000)
Net cash and cash equivalents provided by operating activities	79,003,000	16,743,000
Cash Flows from Investing Activities
Proceeds from maturities of investment securities available for sale	76,242,000	64,096,000
Proceeds from sales of investment securities available for sale	0	313,000
Purchases of investment securities available for sale	(176,023,000)	(76,694,000)
Purchases of stock of Federal Home Loan Bank	574,000	310,000
Loans made to customers, net of collections	56,533,000	(129,294,000)
Proceeds on sale of other real estate owned and other repossessed assets	70,000	0
Purchases of property and equipment	(1,187,000)	(1,025,000)
Investment in tax credit real estate	(4,183,000)	0
Net changes from tax credit real estate investment	836,000	1,120,000
Net cash and cash equivalents used in investing activities	(48,286,000)	(141,794,000)
Cash Flows from Financing Activities
Net increase in deposits	275,691,000	453,187,000
Net increase in other borrowings	0	43,000
Issuance of common stock, net of costs	0	5,844,000
Purchase of treasury stock	(3,167,000)	(7,230,000)
Proceeds from the issuance of common stock through the employee stock purchase plan	320,000	304,000
Dividends paid	(8,773,000)	(8,324,000)
Net cash and cash equivalents provided by financing activities	264,071,000	443,824,000
Increase in cash and cash equivalents	294,788,000	318,773,000
Cash and cash equivalents:
Beginning of period	574,310,000	241,965,000
End of period	869,098,000	560,738,000
Cash payments for:
Interest paid to depositors	11,894,000	17,130,000
Interest paid on other obligations	2,248,000	4,118,000
Income taxes paid	6,073,000	7,329,000
Noncash activities:
Increase/(decrease) in maximum cash obligation related to ESOP shares	1,502,000	(4,931,000)
Transfers to other real estate owned	$ 96,000	$ 0

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with instructions for Form 10-Q and Regulation S-X.  These financial statements include all adjustments (consisting of normal recurring accruals) which in the opinion of management are considered necessary for the fair presentation of the financial position and results of operations for the periods shown.  Certain prior year amounts have been reclassified to conform to the current year presentation.  The Company considers that it operates as one business segment, a commercial bank.

Operating results for the nine month period ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Form 10-K Annual Report of Hills Bancorporation and subsidiary (the “Company”) for the year ended December 31, 2020 filed with the Securities Exchange Commission on March 5, 2021.  The consolidated balance sheet as of December 31, 2020, has been derived from the audited consolidated financial statements for that period.

The Company evaluated subsequent events through the filing date of its quarterly report on Form 10-Q with the SEC.

Accounting Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain Significant Estimates:

The allowance for credit losses and loan losses, fair values of securities and other financial instruments, and share-based compensation expense involve certain significant estimates made by management. These estimates are reviewed by management routinely and it is reasonably possible that circumstances that exist at September 30, 2021 may change in the near-term and the effect could be material to the consolidated financial statements. Actual amounts and values as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process.

Revenue Recognition:

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit and investment securities. Interest income on loans and investment securities is recognized on the accrual method in accordance with written contracts.

Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606 are the following: Service charges and fees on deposit accounts represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue which includes interchange income, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when the Company’s performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at

the time the performance obligations are satisfied. Trust income represents monthly fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, fees for trust services and similar fiduciary activities. Revenue is recognized when our performance obligation is completed each month, which is generally the time that payment is received.

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. As of September 30, 2021, the Company did not have any significant contract balances.

An entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. The Company has not incurred or capitalized any contract acquisition costs as of September 30, 2021.

Tax Credit Real Estate:

Tax credit real estate represents three multi-family rental properties, three assisted living rental properties, a multi-tenant rental property for persons with disabilities, and a multi-family senior living rental property, all of which are affordable housing projects as of September 30, 2021. The Bank has a 99% or greater limited partnership interest in each limited partnership. The investment in each was completed after the projects had been developed by the general partner. The Company evaluates the recoverability of the carrying value on a regular basis. If the recoverability was determined to be in doubt, a valuation allowance would be established by way of a charge to expense. Depreciation expense is provided on a straight-line basis over the estimated useful life of the assets. Expenditures for normal repairs and maintenance are charged to expense as incurred.

In 2016, the Company adopted ASU 2015-02 and the investments in tax credit real estate are recorded for all years presented using the equity method of accounting, with the exception of the investment in the affordable housing project described below. The operations of the properties are not expected to contribute significantly to the Company’s income before income taxes. However, the properties do contribute in the form of income tax credits, which lowers the Company’s effective tax rate. Once established, the credits on each property last for ten years and are passed through from the limited partnerships to the Bank and reduces the consolidated federal tax liability of the Company.

In February 2021, the Company provided construction financing and contributed capital of $4.18 million to Del Ray Ridge LP, as limited partner, which owns and operates an affordable housing property in Iowa City, Iowa. The Company accounts for the investment in this tax credit real estate using the proportional amortization method as provided for under Accounting Standards Codification (ASC) 323-740. The investment qualifies for the proportional amortization method as it meets all of the criteria under ASC 323-740-25-1. Substantially all of the projected benefits are from tax credits and other tax benefits due to the minimum buyout clause included in the partnership agreement.

Adoption of New Financial Accounting Standard Codification 326 (ASC 326 (CECL)):

On January 1, 2021, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the recognition of the allowance for credit losses be estimated using the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet (OBS) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and OBS credit exposures. Results for reporting periods beginning January 1, 2021 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to

retained earnings of $4.75 million as of January 1, 2021 for the cumulative effect of adopting ASC 326, which includes deferred taxes of $1.58 million. The transition adjustment includes a $2.75 million increase to the Allowance for Credit Losses and the recording of a $3.58 million Allowance for Credit Losses on OBS Credit Exposures.

The following table illustrates the impact of ASC 326 (amounts in thousands).

	January 1, 2021
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Loans
Allowance for credit losses on loans	$	39,816	$	37,070	$	2,746
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,584	$	—	$	3,584

Available-For-Sale Debt Securities and the Allowance For Credit Losses On Available-For-Sale Debt Securities: Debt securities that we might not hold until maturity are classified as available for sale ("AFS") and are reported at the fair value in the balance sheet. Fair value measurement is based upon quoted market prices in active markets, if available. If quoted prices in active markets are not available, fair value is measured using pricing models or other model-based valuation techniques such as present value of future cash flows, which consider prepayment assumptions and other factors such as credit losses and market liquidity. Unrealized gains and losses are excluded from earnings and reported, net of tax, in other comprehensive income ("OCI"). Purchase premiums and discounts are recognized in interest income using the effective interest method over the life of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For AFS debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes.

Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. For asset-backed securities performance indicators considered related to the underlying assets include default rates, delinquency rates, percentage of nonperforming assets, debt-to-collateral ratios, third-party guarantees, current levels of subordination, vintage, geographic concentration, analyst reports and forecasts, credit ratings and other market data. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis.

If we intend to sell a debt security or more likely than not we will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged against the allowance for credit losses with any incremental impairment reported in earnings.

Accrued interest receivable on AFS debt securities totaled $2.18 million at September 30, 2021 and is excluded from the estimate of credit losses.

Allowance for Credit Losses on Tax Credit Real Estate Investments: On a regular basis, the Company evaluates recoverability of the carrying value of the tax credit real estate investments to determine if an allowance for credit losses is necessary. The allowance for credit losses is measured by a comparison of the carrying amount of the investments to the future undiscounted

cash flows expected to be generated by the investment properties, including the low-income housing tax credits and any estimated proceeds from eventual disposition. If there is an indication of impairment, the allowance for credit losses would be established with a charge to credit loss expense. There were no indications of impairment based on management's evaluation and therefore no allowance for credit losses was determined necessary as of September 30, 2021.

Loans Held for Sale: Loans held for sale are stated at the lower of aggregate cost or estimated fair value. Loans are sold on a non-recourse basis with servicing released and gains and losses are recognized based on the difference between sales proceeds and the carrying value of the loan. The Company has had very few experiences of repurchasing loans previously sold into the secondary market. A specific reserve was not considered necessary based on the Company’s historical experience with repurchase activity.

Loans Held For Investment: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of deferred loan fees and costs. Accrued interest receivable on loans held for investment totaled $10.13 million at September 30, 2021 and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Nonrefundable loan fees and origination costs are deferred and recognized as a yield adjustment over the life of the related loan.

The policy for charging off loans is consistent throughout all loan categories. A loan is charged off based on criteria that includes but is not limited to: delinquency status, financial condition of the entire customer credit line and underlying collateral coverage, economic or external conditions that might impact full repayment of the loan, legal issues, overdrafts, and the customer’s willingness to work with the Company.

The accrual of interest income on loans is discontinued when, in the opinion of management, there is reasonable doubt as to the

borrower's ability to meet payments of interest or principal when they become due, which is generally when a loan is 90 days or

more past due unless the loan is well secured and in the process of collection. When a loan is placed on nonaccrual status, all previously accrued and unpaid interest is reversed against interest income. Loans are returned to an accrual status when all of the principal and interest amounts contractually due are brought current and repayment of the remaining contractual principal and interest is expected. A loan may also return to accrual status if additional collateral is received from the borrower and, in the opinion of management, the financial position of the borrower indicates that there is no longer any reasonable doubt as to the collection of the amount contractually due. Payment received on nonaccrual loans are applied first to principal. Once principal is recovered, any remaining payments received are applied to interest income.

A loan is accounted for and reported as a troubled debt restructuring ("TDR") when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses to the Company. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of payments, the debt's original contractual maturity or original expected duration.

TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR regardless of the accrual or performance status until the loan is paid off. However, if the TDR loan has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be de-designated as a TDR. Management evaluates loans where there is a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower for purposes of estimating the allowance for credit losses.

Section 4013 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, “Temporary Relief From Troubled Debt Restructurings,” allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. In March 2020, various regulatory agencies, including the FRB and the FDIC, issued an interagency statement, effective immediately, on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The agencies confirmed with the staff of the FASB that short-term

modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not to be considered TDRs. This includes short-term (e.g., six months) modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. See Note 5 for further discussion.

Allowance for Credit Losses For Loans Held For Investment: Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company's existing loans held for investment portfolio. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability on the balance sheet. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments which consist of agricultural, 1 to 4 family first and junior liens, commercial, and consumer lending. These segments are further disaggregated into loan classes, the level at which credit risk is monitored. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The key components in this estimation process include the following:

•An initial forecast period of one year for all portfolio segments and OBS credit exposures. This period reflects management's expectation of losses based on forward-looking economic scenarios over that time.

•A historical loss forecast period covering the remaining contractual life, adjusted for prepayments, by portfolio segment based on the change in key historical economic variables.

•A reversion period of up to 3 years connecting the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

•We primarily utilize the discounted cash flow (DCF) method to estimate credit losses by portfolio segment. The DCF methods obtain estimated life-time credit losses using the conceptual components described above. The exceptions being for the credit card and overdraft portfolios which utilize a remaining life methodology to estimate credit losses.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.

Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimation of expected credit losses. The following provides the credit quality indicators and risk elements that are most relevant and most carefully considered and monitored for each loan portfolio segment.

Agricultural - Agricultural operating loans include loans made to finance agricultural production and other loans to farmers and farming operations. Agricultural loans also include mortgage loans secured by farmland. Agricultural operating loans, most of which are secured by crops and machinery, are provided to finance capital improvement and farm operations as well as acquisitions of livestock and machinery. The ability of the borrower to repay may be affected by many factors outside of the borrower’s control including adverse weather conditions, loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural operating loans is dependent upon the profitable operation or management of the agricultural entity. Agricultural operating loans generally have a term of one year and may have a fixed or variable rate.

Mortgage loans secured by farmland are made to individuals and businesses within the Company's trade area. The primary source of repayment is the cash flow generated by the collateral underlying the loan. The secondary repayment source would be the liquidation of the collateral. Terms for real estate loans secured by farmland range from one to ten years with an amortization period of 25 years or less. Generally, interest rates are fixed for mortgage loans secured by farmland. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the national real gross domestic product (GDP).

1 to 4 Family First and Junior Liens - The 1 to 4 family first and junior liens portfolio segment is comprised of the single family and home equity loan classes, which are underwritten after evaluating a borrower's capacity to repay, credit, and collateral. Several factors are considered when assessing a borrower's capacity, including the borrower's employment, income,

current debt, assets, and level of equity in the property. Credit refers to how well a borrower manages their current and prior debts as documented by a credit report that provides credit scores and the borrower's current and past information about their credit history. Collateral refers to the type and use of property, occupancy, and market value. Property appraisals are obtained to assist in evaluating collateral. Loan-to-property value and debt-to-income ratios, loan amount, and lien position are also considered in assessing whether to originate a loan. These borrowers are particularly susceptible to downturns in economic trends such as conditions that negatively affect housing prices and demand and levels of unemployment. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the all-transactions house price index for Iowa.

Commercial - The commercial loan portfolio segment is comprised of the commercial real estate mortgage, multifamily residential mortgage, construction/land development and commercial and financial loan classes, whose underwriting standards consider the factors described for single family and home equity loan classes as well as others when assessing the borrower's and associated guarantors or other related party's financial position. These other factors include assessing liquidity, the level and composition of net worth, leverage, considering all other lender amounts and position, an analysis of cash expected to flow through the obligors including the outflow to other lenders, vacancies and prior experience with the borrower. This information is used to assess adequate financial capacity, profitability, and experience. Ultimate repayment of these loans is sensitive to interest rate changes, general economic conditions, liquidity, and availability of long-term financing. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate, the all-transactions house price index for Iowa, the Iowa real GDP and the commercial real estate price index (for commercial real estate).

Consumer Lending - The Bank offers consumer loans to individuals including personal loans and automobile loans. These consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than real estate-related loans. Consumer loans collections are dependent on the borrower's continuing financial stability and are more likely to be affected by adverse personal circumstances. Collateral for these loans generally includes automobiles, boats, recreational vehicles and real estate. However, depending on the overall financial condition of the borrower, some loans are made on an unsecured basis. The collateral securing these loans may depreciate over time, may be difficult to recover and may fluctuate in value based on condition. Key economic forecasts used in estimating expected credit losses for this segment include the Iowa unemployment rate and the Iowa real GDP.

Determining the Contractual Term: Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Credit Loss Measurement: The allowance level is influenced by loan volumes, loan credit quality indicator migration or delinquency status, historic loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For these loans, we recognize expected credit loss equal to the amount by which the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge- offs and deferred loan fees and costs), except when the loan is collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors.

All appraised values are adjusted for market-related trends based on the Company's experience in sales and other appraisals of similar property types as well as estimated selling costs. Each quarter management reviews all collateral-dependent loans on a loan-by-loan basis to determine whether updated appraisals are necessary based on loan performance, collateral type and guarantor support. At times, the Company measures the fair value of collateral-dependent loans using appraisals with dates prior to one year from the date of review. These appraisals are discounted by applying current, observable market data about similar property types such as sales contracts, estimations of value by individuals familiar with the market, other appraisals, sales or collateral assessments based on current market activity until updated appraisals are obtained. Depending on the length of time since an appraisal was performed, the data provided through reviews and estimated selling costs, collateral values are typically discounted by 0-35%. The use of an appraisal that exceeds twelve months needs approval by the credit underwriting department. Third-party appraisals are obtained from a pre-approved list of independent, third-party, local appraisal firms maintained by the credit underwriting department. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. Generally, appraisals are internally reviewed by the credit underwriting department to ensure the quality of the appraisal and the expertise and independence of the appraiser. Once the expected credit loss amount is determined an allowance is provided for equal to the calculated expected credit loss and included in the allowance for credit losses. If the calculated expected credit loss is determined to be permanent or not recoverable, the amount of expected credit loss will be charged off. Factors considered by management in determining if the expected credit loss is permanent or not recoverable include whether management judges the loan to be uncollectible, repayment is deemed to be protracted beyond reasonable time frames, or the loss becomes evident owing to the borrower's lack of assets or, for single family loans, the loan is 90 days or more past due unless both well-secured and in the process of collection.

In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the allowance for credit losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and purpose. This model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for all loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class. The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified or graded loans and the volume of nonaccrual loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans. Additional factors include the existence and effect of any concentrations of credit, and changes in the level of such concentrations and the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. Such factors are used to adjust the historical probabilities of default and severity of loss so that they reflect management expectation of future conditions based on a reasonable and supportable forecast. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the bank reduces, on a straight-line basis over the remaining life of the loans, the adjustments so that model reverts back to the historical rates of default and severity of loss.

Credit card receivables do not have stated maturities. In determining the estimated life of a credit card receivable, management first estimates the future cash flows expected to be received and then applies those expected future cash flows to the credit card balance. Expected credit losses for credit cards are determined through use of the remaining life method. The remaining life method utilizes average annual charge-off rates and remaining life to estimate the allowance for credit losses. This is done by estimating the amount and timing of principal payments expected to be received as payment for the balance outstanding as of the reporting period and applying those principal payments against the balance outstanding as of the reporting period along with the average annual charge-off rate until the expected payments have been fully allocated.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures, Including Unfunded Loan Commitments: The Company maintains a separate allowance for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments, which is disclosed on the balance sheet. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for loan loss methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan type. No credit loss estimate is reported for off-

balance-sheet credit exposures that are unconditionally cancelable by the Company, such as credit card receivables, or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. The allowance for credit losses on OBS credit exposures is adjusted as a provision for credit loss expense. Categories of OBS credit exposures correspond to the loan portfolio segments described previously.

Effect of New Financial Accounting Standards:

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing specific exceptions included in Topic 740, introducing other simplifications and making technical corrections. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The adoption of ASU 2019-12 by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs. The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. For each reporting period, to the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess (that is, the premium) shall be amortized to the next call date, unless the guidance in paragraph 310-20-35-26 is applied to consider estimated prepayments. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which consists of two sections. The first applicable section contains amendments that improve the consistency of the Codification by including all disclosure guidance in

the appropriate disclosure section and provide the option to give certain information either on the face of the financial statements or in the notes to the financial statements. The second section contains Codification improvements that vary in nature. The amendments in this Update do not change GAAP and, therefore, are not expected to result in a significant change in practice. For public business entities, these amendments are effective for annual periods beginning after December 15, 2020. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in this ASU affect entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. An entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option to compensate for goods or services in accordance with the guidance in Topic 718, Compensation-Stock Compensation. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is in the process of evaluating the impact of this ASU on the financial statements.

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Earnings Per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed using the weighted average number of actual common shares outstanding during the period.  Diluted earnings per share reflects the potential dilution that would occur from the exercise of common stock options outstanding.  ESOP shares are considered outstanding for this calculation unless unearned.

The computation of basic and diluted earnings per share for the periods presented is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Common shares outstanding at the beginning of the period	9,306,252		9,364,062		9,330,995		9,351,694
Weighted average number of net shares (redeemed) issued	(7,539)		(7,765)		(21,234)		28,137
Weighted average shares outstanding (basic)	9,298,713		9,356,297		9,309,761		9,379,831
Weighted average of potential dilutive shares attributable to stock options granted, computed under the treasury stock method	3,731		3,592		3,605		3,673
Weighted average number of shares (diluted)	9,302,444		9,359,889		9,313,366		9,383,504
Net income (In thousands)	$	13,125	$	11,430	$	41,932	$	30,216
Earnings per share:
Basic	$	1.41	$	1.22	$	4.50	$	3.22
Diluted	$	1.41	$	1.22	$	4.50	$	3.22

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

The following table summarizes the balances of each component of accumulated other comprehensive income (AOCI), included in stockholders’ equity, at September 30, 2021 and December 31, 2020:

	September 30, 2021		December 31, 2020
	(amounts in thousands)
Net unrealized gain on available-for-sale securities	$	5,685	$	11,702
Tax effect	(1,418)		(2,920)
Net-of-tax amount	$	4,267	$	8,782

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Securities

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The carrying values of investment securities at September 30, 2021 and December 31, 2020 are summarized in the following table (dollars in thousands):

	September 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Securities available for sale
U.S. Treasury	$	221,414	44.17	%	$	148,646	36.40	%
Other securities (FHLB, FHLMC and FNMA)	34,891		6.96		35,160		8.61
State and political subdivisions	235,207		46.92		224,566		54.99
Mortgage-backed securities and collateralized mortgage obligations	9,753		1.95		—		—
Total securities available for sale	$	501,265	100.00	%	$	408,372	100.00	%

Investment securities have been classified in the consolidated balance sheets according to management’s intent.  Available-for-sale securities consist of debt securities not classified as trading or held to maturity.  Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders' equity.  Municipal bonds are comprised of general obligation bonds and revenue bonds issued by various municipal corporations. As of September 30, 2021 and December 31, 2020, all securities held were rated investment grade based upon external ratings where available and, where not available, based upon management knowledge of the local issuers and their financial situations. There were no trading or held to maturity securities as of September 30, 2021 or December 31, 2020.

The carrying amount of available-for-sale securities, fair values and allowance for credit losses were as follows as of September 30, 2021 and December 31, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Allowance for Credit Losses		Estimated Fair Value
September 30, 2021
U.S. Treasury	$	219,281	$	3,065	$	(932)	$	—	$	221,414
Other securities (FHLB, FHLMC and FNMA)	35,377		—		(486)		—		34,891
State and political subdivisions	231,120		5,160		(1,073)		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	9,802		—		(49)		—		$	9,753
Total	$	495,580	$	8,225	$	(2,540)	$	—	$	501,265
December 31, 2020:
U.S. Treasury	$	143,467	$	5,179	$	—	$	—	$	148,646
Other securities (FHLB, FHLMC and FNMA)	35,195		35		(70)		—		35,160
State and political subdivisions	218,008		6,674		(116)		—		224,566
Total	$	396,670	$	11,888	$	(186)	$	—	$	408,372

The amortized cost and estimated fair value of available-for-sale securities classified according to their contractual maturities at September 30, 2021, were as follows (in thousands) below. Expected maturities of MBS may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary.

	Amortized Cost		Fair Value
Due in one year or less	$	51,863	$	52,206
Due after one year through five years	270,805		273,962
Due after five years through ten years	118,465		120,965
Due over ten years	44,645		44,379
	$	485,778	$	491,512
Mortgage-backed securities and collateralized mortgage obligations	9,802		9,753
	$	495,580	$	501,265

As of September 30, 2021 investment securities with a carrying value of $10.14 million were pledged to collateralize other borrowings. As of September 30, 2021, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders' equity.

There were no sales of available-for-sale securities for the three months ended September 30, 2021 and 2020. Sales proceeds and gross realized gains and losses on available-for-sale securities were as follows for the nine months ended September 30, 2021 and 2020 (in thousands):

	September 30, 2021		September 30, 2020
Sales proceeds	$	—	$	313
Gross realized gains	—		10
Gross realized losses	—		—

The following table shows the fair value, gross unrealized losses and the percentage of fair value represented by gross unrealized losses of applicable investment securities owned by the Company, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and December 31, 2020 (in thousands):

	Less than 12 months							12 months or more							Total
September 30, 2021 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	41	$	103,163	$	(932)	0.90	%	—	$	—	$	—	—	%	41	$	103,163	$	(932)	0.90	%
Other securities (FHLB, FHLMC and FNMA)	8	20,059		(265)		1.32		6	14,832		(221)		1.49		14	34,891		(486)		1.39
State and political subdivisions	189	65,805		(1,038)		1.58		10	1,915		(35)		1.83		199	67,720		(1,073)		1.58
Mortgage-backed securities and collateralized mortgage obligations	4	9,753		(49)		0.50		—	—		—		—		4	9,753		(49)		0.50
Total temporarily impaired securities	242	$	198,780	$	(2,284)	1.15	%	16	$	16,747	$	(256)	1.53	%	258	$	215,527	$	(2,540)	1.18	%

	Less than 12 months							12 months or more							Total
December 31, 2020 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	—	$	—	$	—	—	%	—	$	—	$	—	—	%	—	$	—	$	—	—	%
Other securities (FHLB, FHLMC and FNMA)	8	20,019		(70)		0.35		—	—		—		—		8	20,019		(70)		0.35
State and political subdivisions	35	14,168		(110)		0.78		4	370		(6)		1.62		39	14,538		(116)		0.80
Total temporarily impaired securities	43	$	34,187	$	(180)	0.53	%	4	$	370	$	(6)	1.62	%	47	$	34,557	$	(186)	0.54	%

The Company considered the following information in reaching the conclusion that the impairments disclosed in the table above are temporary and not other-than-temporary impairments.  None of the unrealized losses in the above table was due to the deterioration in the credit quality of any of the issues that might result in the non-collection of contractual principal and interest.  The unrealized losses are due to changes in interest rates.  The Company has not recognized any unrealized loss in income because management does not have the intent to sell the securities included in the previous table.  Management has concluded that it is more likely than not that the Company will not be required to sell these securities prior to recovery of the amortized cost basis. The securities are of high credit quality (investment grade credit ratings) and principal and interest payments are made timely with no payments past due as of September 30, 2021. The fair value is expected to recover as the securities approach maturity. The U.S. Treasury and other securities are issued and guaranteed by U.S. government-sponsored entities and agencies. The mortgage-backed securities and collateralized mortgage obligations have implied U.S. government guarantees of the agency securities. The Company evaluates if a credit loss exists by monitoring to ensure it has adequate credit support considering the nature of the investment, number and significance of investments in an unrealized loss position, collectability or delinquency issues, the underlying financial statements of the issuers, credit ratings and subsequent changes thereto, and other available relevant information. Considering the above factors and total unrealized losses being insignificant

as of September 30, 2021, management has determined that no allowance for credit losses is necessary for the securities portfolio as of September 30, 2021.

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Loans

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Loans

Loans

Classes of loans are as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Agricultural	$	94,210	$	94,842
Commercial and financial	228,181		286,242
Real estate:
Construction, 1 to 4 family residential	73,167		71,117
Construction, land development and commercial	118,623		111,913
Mortgage, farmland	241,650		247,142
Mortgage, 1 to 4 family first liens	898,333		892,089
Mortgage, 1 to 4 family junior liens	115,308		127,833
Mortgage, multi-family	389,805		374,014
Mortgage, commercial	410,050		417,139
Loans to individuals	32,235		31,325
Obligations of state and political subdivisions	52,299		56,488
	$	2,653,861	$	2,710,144
Net unamortized fees and costs	927		938
	$	2,654,788	$	2,711,082
Less allowance for credit losses (2021) and loan losses (2020)	35,590		37,070
	$	2,619,198	$	2,674,012

As of September 30, 2021 and December 31, 2020, the Company has outstanding balances of $24.55 million and $86.50 million, respectively, of loans issued under the Paycheck Protection Program (PPP) and $0.33 million and $2.12 million, respectively, of deferred PPP loan fees recorded with commercial and financial loans. For the nine months ended September 30, 2021, the Company has recognized $5.48 million of deferred PPP loan fees in interest income and has received total forgiveness payments of $160.48 million from the SBA. For the nine months ended September 30, 2020, there were $1.26 million PPP loan fees recognized and no forgiveness payments received from the SBA.

Changes in the allowance for credit losses, the allowance for credit losses applicable to individually evaluated loans and the related loan balance of individually evaluated loans for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance	$	2,055	$	4,802	$	2,483	$	4,904	$	10,879	$	9,707	$	1,110	$	35,940
Charge-offs	—		(14)		—		—		(181)		(255)		(138)		(588)
Recoveries	29		431		2		—		140		23		21		646
Credit loss expense	34		(871)		(188)		(241)		26		743		89		(408)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	2,508	$	4,885	$	2,319	$	4,173	$	12,368	$	9,415	$	1,402	$	37,070
Impact of adopting ASC 326	(328)		298		327		763		522		1,396		(232)		2,746
Charge-offs	—		(90)		(3)		(1)		(263)		(265)		(234)		(856)
Recoveries	117		966		93		25		648		240		98		2,187
Credit loss expense	(179)		(1,711)		(439)		(297)		(2,411)		(568)		48		(5,557)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
Ending balance, individually evaluated for credit losses	$	3	$	4	$	128	$	4	$	59	$	5	$	—	$	203
Ending balance, collectively evaluated for credit losses	$	2,115	$	4,344	$	2,169	$	4,659	$	10,805	$	10,213	$	1,082	$	35,387
Loans:
Ending balance	$	94,210	$	228,181	$	191,790	$	241,650	$	1,013,641	$	799,855	$	84,534	$	2,653,861
Ending balance, individually evaluated for credit losses	$	1,426	$	1,394	$	1,028	$	1,583	$	5,566	$	5,758	$	—	$	16,755
Ending balance, collectively evaluated for credit losses	$	92,784	$	226,787	$	190,762	$	240,067	$	1,008,075	$	794,097	$	84,534	$	2,637,106

Changes in the allowance for loan losses for the three and nine months ended September 30, 2020 were as follows:

	Three Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,547	$	5,777	$	2,433	$	4,089	$	12,282	$	9,173	$	1,319	$	37,620
Charge-offs	(8)		(478)		—		—		(115)		(210)		(63)		(874)
Recoveries	26		165		27		—		201		10		42		471
Provision	30		(119)		(167)		(41)		(210)		320		30		(157)
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
	Nine Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,400	$	4,988	$	2,599	$	3,950	$	10,638	$	7,859	$	1,326	$	33,760
Charge-offs	(43)		(1,253)		(43)		(1)		(576)		(290)		(276)		(2,482)
Recoveries	44		374		81		—		636		33		114		1,282
Provision	194		1,236		(344)		99		1,460		1,691		164		4,500
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
Ending balance, individually evaluated for impairment	$	80	$	477	$	87	$	1	$	86	$	—	$	14	$	745
Ending balance, collectively evaluated for impairment	$	2,515	$	4,868	$	2,206	$	4,047	$	12,072	$	9,293	$	1,314	$	36,315
Loans:
Ending balance	$	96,321	$	335,463	$	184,797	$	243,689	$	1,031,701	$	788,209	$	86,945	$	2,767,125
Ending balance, individually evaluated for impairment	$	1,742	$	5,949	$	7,933	$	2,440	$	6,980	$	3,614	$	14	$	28,672
Ending balance, collectively evaluated for impairment	$	94,579	$	329,514	$	176,864	$	241,249	$	1,024,721	$	784,595	$	86,931	$	2,738,453

Changes in the allowance for credit losses for off-balance sheet credit exposures for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance	$	494	$	1,529	$	864	$	107	$	791	$	275	$	30	$	4,090
Credit loss expense	15		117		132		61		13		156		(4)		490
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance, prior to adoption of ASC 326	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Impact of adopting ASC 326	385		1,585		736		180		471		212		15		3,584
Credit loss expense	124		61		260		(12)		333		219		11		996
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580

Credit loss expense for off-balance sheet credit exposures is included in credit loss expense on the consolidated statement of income for the three and nine months ended September 30, 2021.

Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company's risk rating methodology assigns risk ratings ranging from 1 to 6, where a higher rating represents higher risk. The Company differentiates its lending portfolios into loans sharing common risk characteristics for which expected credit loss is measured on a pool basis and loans not sharing common risk characteristics for which credit loss is measured individually.

The below are descriptions of the credit quality indicators:

Excellent – Excellent rated loans are prime quality loans covered by highly liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured. Loans are secured with cash, cash equivalents, or collateral with very low loan to values. The borrower would qualify for unsecured debt and guarantors provide excellent secondary support to the relationship. The borrower has a long-term relationship with Hills Bank, maintains high deposit balances and has an established payment history with Hills Bank and an established business in an established industry.

Good – Good rated loans are adequately secured by readily marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information. The relationship is not quite as strong as a borrower that is assigned an excellent rating but still has a very strong liquidity position, low leverage, and track record of strong performance. These loans have a strong collateral position with limited risk to bank capital. The collateral will not materially lose value in a distressed liquidation. Guarantors provide additional secondary support to mitigate possible bank losses. The borrower has a long-term relationship with Hills Bank with an established track record of payments; loans with shorter remaining loan amortization; deposit balances are consistent; loan payments could be made from cash reserves in the interim period; and source of income is coming from a stable industry.

Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate. The borrower's financial performance is consistent, ratios and trends are positive and the primary repayment source can clearly be identified and supported with acceptable financial information. The loan relationship could be vulnerable to changes in economic or industry conditions but have the ability to absorb unexpected issues. The loan collateral coverage is considered acceptable and guarantors can provide financial support but net worth might not be as liquid as a 1 or 2 rated relationship. The borrower has an established relationship with Hills Bank. The relationship is making timely loan payments, any operating line is revolving and deposit balances are positive with limited to no overdrafts. Management and industry is considered stable.

Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence. The relationship liquidity levels are minimal and the borrower’s leverage position is brought into question. The primary repayment source is showing signs of being stressed or is not proven. If the borrower performs as planned, the loan will be repaid. The collateral coverage is still considered acceptable but there might be some concern with the type of real estate securing the debt or highly dependent on chattel assets. Some loans may be better secured than others. Guarantors still provide some support but there is not an abundance of financial strength supporting the guaranty. A monitor credit may be appropriate when the borrower is experiencing rapid growth which is impacting liquidity levels and increasing debt levels. Other attributes to consider would include if the business is a start-up or newly acquired, if the relationship has significant financing relationships with other financial institutions, the quality of financial information being received, management depth of the company, and changes to the business model. The track history with Hills Bank has some deficiencies such as slow payments or some overdrafts.

Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral.  There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position.  A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories. Potential indicators of a special mention would include past due payments, overdrafts, management issues, poor financial performance, industry issues, or the need for additional short-term borrowing. The ability to continue to make payments is in question; there are “red flags” such as past due payments, non-revolving credit lines, overdrafts, and the inability to sell assets. The borrower is experiencing delinquent taxes, legal issues, etc., obtaining financial information has become a challenge, collateral coverage is marginal at best, and the value and condition could be brought into question. Collateral document deficiencies have been noted and if not addressed, could become material. Guarantors provide minimal support for this relationship. The credit may include an action plan or follow up established in the asset quality process. There is a change in the borrower’s communication pattern. Industry issues may be impacting the relationship. Adverse credit scores or history of payment deficiencies could be noted.

Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized.  These loans have a well-defined weakness or weaknesses.  Full repayment of the loan(s) according to the original terms and conditions is in question or not expected. For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected. There are identified shortfalls in the primary repayment source such as carry over debt, past due payments, and overdrafts. Obtaining quality and timely financial information is a weakness. The loan is under secured with exposure that could impact bank capital. It appears the liquidation of collateral has become the repayment source. The collateral may be difficult to foreclose or have little to no value. Collateral documentation deficiencies have been noted during the review process. Guarantor(s) provide minimal to no support of the relationship. The borrower’s communication with the bank continues to decrease and the borrower is not addressing the situation. There is some concern about the borrower’s ability and willingness to repay the loans. Problems may be the result of external issues such as economic or industry related issues.

The following tables present the credit quality indicators and origination years by type of loan in each category as of September 30, 2021 (amounts in thousands):

	Agricultural
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	424	$	235	$	30	$	17	$	—	$	—	$	5,138	$	5,844
Good	999		1,912		634		75		58		30		4,923		8,631
Satisfactory	6,883		6,649		1,966		2,003		501		141		23,082		41,225
Monitor	5,535		4,762		1,073		630		171		312		17,887		30,370
Special Mention	2,615		442		86		166		7		—		3,303		6,619
Substandard	875		85		210		116		—		—		235		1,521
Total	$	17,331	$	14,085	$	3,999	$	3,007	$	737	$	483	$	54,568	$	94,210

	Commercial and Financial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	6,153	$	1,007	$	5	$	260	$	42	$	—	$	1,231	$	8,698
Good	9,514		9,687		2,381		1,135		382		1,921		19,170		44,190
Satisfactory	42,268		24,288		8,225		3,956		2,686		1,255		35,106		117,784
Monitor	20,191		11,791		3,938		1,438		450		520		11,371		49,699
Special Mention	1,332		582		529		124		3		6		266		2,842
Substandard	3,156		1,019		294		68		131		—		300		4,968
Total	$	82,614	$	48,374	$	15,372	$	6,981	$	3,694	$	3,702	$	67,444	$	228,181

	Real Estate: Construction, 1 to 4 Family Residential
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Good	212		487		—		—		—		—		13,796		14,495
Satisfactory	4,403		1,882		—		—		—		—		42,675		48,960
Monitor	956		1,668		—		—		—		—		6,394		9,018
Special Mention	—		—		—		—		—		—		583		583
Substandard	111		—		—		—		—		—		—		111
Total	$	5,682	$	4,037	$	—	$	—	$	—	$	—	$	63,448	$	73,167

	Real Estate: Construction, Land Development and Commercial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	5,079	$	—	$	—	$	—	$	147	$	8	$	—	$	5,234
Good	1,925		2,235		—		—		154		247		9,774		14,335
Satisfactory	20,602		7,731		2,529		276		1,023		122		32,038		64,321
Monitor	6,465		1,429		7		39		262		—		18,354		26,556
Special Mention	86		—		—		—		—		—		—		86
Substandard	7,000		548		196		—		—		—		347		8,091
Total	$	41,157	$	11,943	$	2,732	$	315	$	1,586	$	377	$	60,513	$	118,623

	Real Estate: Mortgage, Farmland
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	3,591	$	124	$	60	$	102	$	58	$	139	$	4,074
Good	7,918		16,961		2,733		3,144		6,489		5,556		3,915		46,716
Satisfactory	38,291		42,353		12,483		9,244		9,152		12,934		9,822		134,279
Monitor	5,351		17,330		5,791		4,138		1,324		7,079		5,796		46,809
Special Mention	4,232		694		—		—		1,168		206		—		6,300
Substandard	2,477		450		294		48		—		203		—		3,472
Total	$	58,269	$	81,379	$	21,425	$	16,634	$	18,235	$	26,036	$	19,672	$	241,650

	Real Estate: Mortgage, 1 to 4 Family First Liens
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	465	$	1,358	$	434	$	22	$	153	$	306	$	—	$	2,738
Good	7,476		12,322		3,272		3,301		3,851		11,023		4,164		45,409
Satisfactory	187,076		190,199		75,462		72,729		64,914		115,599		8,590		714,569
Monitor	20,445		48,859		6,675		7,530		9,409		15,824		2,975		111,717
Special Mention	1,249		3,118		1,212		1,090		753		2,078		—		9,500
Substandard	1,709		1,827		1,534		1,610		802		6,918		—		14,400
Total	$	218,420	$	257,683	$	88,589	$	86,282	$	79,882	$	151,748	$	15,729	$	898,333

	Real Estate: Mortgage, 1 to 4 Family Junior Liens
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	14	$	—	$	—	$	—	$	—	$	463	$	477
Good	33		637		291		—		109		496		1,437		3,003
Satisfactory	10,451		10,780		6,266		8,046		5,893		6,676		55,630		103,742
Monitor	239		1,232		197		440		113		322		2,735		5,278
Special Mention	118		522		96		74		140		126		156		1,232
Substandard	100		354		104		418		102		200		298		1,576
Total	$	10,941	$	13,539	$	6,954	$	8,978	$	6,357	$	7,820	$	60,719	$	115,308

	Real Estate: Mortgage, Multi-Family
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	2,562	$	4,570	$	—	$	—	$	—	$	717	$	—	$	7,849
Good	5,682		42,254		1,817		165		2,836		9,333		—		62,087
Satisfactory	57,636		96,776		21,265		1,627		1,628		15,880		14,490		209,302
Monitor	38,871		41,629		178		1,175		1,600		1,461		6,312		91,226
Special Mention	644		—		826		—		—		—		—		1,470
Substandard	12,250		—		—		—		—		5,621		—		17,871
Total	$	117,645	$	185,229	$	24,086	$	2,967	$	6,064	$	33,012	$	20,802	$	389,805

	Real Estate: Mortgage, Commercial
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	99	$	17,194	$	—	$	—	$	3,436	$	365	$	—	$	21,094
Good	11,312		48,976		3,462		4,337		5,379		7,364		10,031		90,861
Satisfactory	49,134		51,957		16,814		13,058		18,510		25,967		15,679		191,119
Monitor	10,640		57,522		6,064		1,737		2,542		3,487		3,658		85,650
Special Mention	168		7,689		303		843		2,000		6,431		—		17,434
Substandard	1,362		2,213		—		212		—		105		—		3,892
Total	$	72,715	$	185,551	$	26,643	$	20,187	$	31,867	$	43,719	$	29,368	$	410,050

	Loans to Individuals
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Good	—		—		72		23		7		—		2		104
Satisfactory	10,340		6,988		2,737		1,223		195		9,813		56		31,352
Monitor	292		201		40		54		4		—		3		594
Special Mention	44		65		25		5		—		—		2		141
Substandard	5		14		15		1		3		3		3		44
Total	$	10,681	$	7,268	$	2,889	$	1,306	$	209	$	9,816	$	66	$	32,235

	Obligations of State and Political Subdivisions
September 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Grade:
Excellent	$	—	$	—	$	—	$	—	$	—	$	6,259	$	—	$	6,259
Good	—		3,216		—		—		—		9,225		—		12,441
Satisfactory	660		2,143		1,778		711		11,477		3,881		9,534		30,184
Monitor	—		836		208		249		179		1,800		—		3,272
Special Mention	—		—		—		—		—		143		—		143
Substandard	—		—		—		—		—		—		—		—
Total	$	660	$	6,195	$	1,986	$	960	$	11,656	$	21,308	$	9,534	$	52,299

The following table presents the credit quality indicators by type of loans in each category as of December 31, 2020 (amounts in thousands):

	Agricultural		Commercial and Financial		Real Estate: Construction, 1 to 4 family residential		Real Estate: Construction, land development and commercial
December 31, 2020
Grade:
Excellent	$	3,761	$	9,024	$	—	$	227
Good	12,369		62,310		13,675		15,187
Satisfactory	42,015		144,999		41,616		64,301
Monitor	29,381		56,439		13,654		23,368
Special Mention	5,143		8,258		1,857		7,137
Substandard	2,173		5,212		315		1,693
Total	$	94,842	$	286,242	$	71,117	$	111,913

	Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family first liens		Real Estate: Mortgage, 1 to 4 family junior liens		Real Estate: Mortgage, multi- family
December 31, 2020
Grade:
Excellent	$	5,706	$	2,303	$	204	$	14,650
Good	41,878		47,233		3,707		57,281
Satisfactory	129,210		701,273		115,731		197,493
Monitor	61,298		114,207		5,153		70,885
Special Mention	6,074		12,890		1,307		15,374
Substandard	2,976		14,183		1,731		18,331
Total	$	247,142	$	892,089	$	127,833	$	374,014

	Real Estate: Mortgage, commercial		Loans to individuals		Obligations of state and political subdivisions		Total
December 31, 2020
Grade:
Excellent	$	26,940	$	1	$	6,752	$	69,568
Good	92,699		145		13,094		359,578
Satisfactory	196,310		30,487		26,571		1,690,006
Monitor	77,125		479		9,924		461,913
Special Mention	19,731		127		147		78,045
Substandard	4,334		86		—		51,034
Total	$	417,139	$	31,325	$	56,488	$	2,710,144

Past due loans as of September 30, 2021 and December 31, 2020 were as follows:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Accruing Loans Past Due 90 Days or More
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	377	$	—	$	249	$	626	$	93,584	$	94,210	$	152
Commercial and financial	1,062		2,370		41		3,473		224,708		228,181		—
Real estate:
Construction, 1 to 4 family residential	2,085		124		422		2,631		70,536		73,167		423
Construction, land development and commercial	7,024		7,000		96		14,120		104,503		118,623		—
Mortgage, farmland	—		167		204		371		241,279		241,650		204
Mortgage, 1 to 4 family first liens	948		1,481		2,522		4,951		893,382		898,333		264
Mortgage, 1 to 4 family junior liens	60		24		106		190		115,118		115,308		—
Mortgage, multi-family	3,905		—		—		3,905		385,900		389,805		—
Mortgage, commercial	—		829		—		829		409,221		410,050		—
Loans to individuals	205		10		5		220		32,015		32,235		—
Obligations of state and political subdivisions	—		—		—		—		52,299		52,299		—
	$	15,666	$	12,005	$	3,645	$	31,316	$	2,622,545	$	2,653,861	$	1,043
December 31, 2020
Agricultural	$	438	$	—	$	629	$	1,067	$	93,775	$	94,842	$	111
Commercial and financial	867		195		140		1,202		285,040		286,242		20
Real estate:
Construction, 1 to 4 family residential	190		—		536		726		70,391		71,117		536
Construction, land development and commercial	—		—		—		—		111,913		111,913		—
Mortgage, farmland	279		28		—		307		246,835		247,142		—
Mortgage, 1 to 4 family first liens	4,969		1,342		2,486		8,797		883,292		892,089		342
Mortgage, 1 to 4 family junior liens	436		21		155		612		127,221		127,833		47
Mortgage, multi-family	—		—		—		—		374,014		374,014		—
Mortgage, commercial	783		—		461		1,244		415,895		417,139		—
Loans to individuals	218		59		4		281		31,044		31,325		—
Obligations of state and political subdivisions	—		—		—		—		56,488		56,488		—
	$	8,180	$	1,645	$	4,411	$	14,236	$	2,695,908	$	2,710,144	$	1,056

The Company does not have a material amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms.

Certain nonaccrual and TDR loan information by loan type at September 30, 2021 and December 31, 2020, was as follows:

	September 30, 2021								December 31, 2020
	Non-accrual loans (1)		Interest income recognized on non-accrual		Accruing loans past due 90 days or more		TDR loans		Non- accrual loans (1)		Accruing loans past due 90 days or more		TDR loans
	(Amounts In Thousands)								(Amounts In Thousands)
Agricultural	$	708	—		$	152	$	377	$	1,252	$	111	$	85
Commercial and financial	112		—		—		1,139		479		20		1,263
Real estate:
Construction, 1 to 4 family residential	111		—		423		—		315		536		—
Construction, land development and commercial	293		—		—		203		204		—		211
Mortgage, farmland	353		—		204		1,206		446		—		1,616
Mortgage, 1 to 4 family first liens	3,900		—		264		1,348		4,331		342		1,751
Mortgage, 1 to 4 family junior liens	184		—		—		20		193		47		20
Mortgage, multi-family	—		—		—		1,470		79		—		1,695
Mortgage, commercial	2,057		—		—		2,231		1,550		—		3,610
	$	7,718	$	—	$	1,043	$	7,994	$	8,849	$	1,056	$	10,251

(1)There were $2.76 million and $2.97 million of TDR loans included within nonaccrual loans as of September 30, 2021 and December 31, 2020, respectively.

Loans 90 days or more past due that are still accruing interest decreased $0.01 million from December 31, 2020 to September 30, 2021. As of September 30, 2021 there were six accruing loans past due 90 days or more with an average loan balance of $0.17 million. There were 12 accruing loans past due 90 days or more as of December 31, 2020 with an average loan balance of $0.09 million. The accruing loans past due 90 days or more balances are believed to be adequately collateralized and the Company expects to collect all principal and interest as contractually due under these loans.

The Company may modify the terms of a loan to maximize the collection of amounts due.  Such a modification is considered a troubled debt restructuring (“TDR”).  In most cases, the modification is either a reduction in interest rate, conversion to interest only payments or an extension of the maturity date.  The borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered.  TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles.

Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. In March 2020, various regulatory agencies, including the FRB and the FDIC, issued an interagency statement, effective immediately, on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not to be considered TDRs. This includes short-term (e.g., six months) modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of September 30, 2021, the total amount of the eligible loans in deferral (deferral of principal and/or interest) that met the requirements set forth under the CARES Act and therefore were not considered TDRs was 16

loans, totaling $9.5 million. As of December 31, 2020, there were 13 loans, totaling $9.4 million that met the requirements and were not considered TDRs.

Throughout 2020, COVID-19 related payment deferrals provided for customers totaled approximately 14.82% of total loans. As of September 30, 2021 and December 31, 2020, COVID-19 related payment deferrals were approximately 0.13% and 1.20% of total loans, respectively.

Below is a summary of information for TDR loans as of September 30, 2021 and December 31, 2020:

	September 30, 2021					December 31, 2020
	Number of contracts	Recorded investment		Commitments outstanding		Number of contracts	Recorded investment		Commitments outstanding
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	4	$	974	$	160	6	$	1,028	$	—
Commercial and financial	14	1,211		—		17	1,743		35
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	1	203		—		1	211		4
Mortgage, farmland	5	1,512		—		6	2,009		—
Mortgage, 1 to 4 family first liens	11	1,351		—		17	1,898		—
Mortgage, 1 to 4 family junior liens	1	20		—		1	20		—
Mortgage, multi-family	2	1,470		—		2	1,695		—
Mortgage, commercial	11	4,010		—		13	4,621		—
Loans to individuals	—	—		—		—	—		—
	49	$	10,751	$	160	63	$	13,225	$	39

The following is a summary of TDR loans that were modified during the three and nine months ended September 30, 2021:

	Three Months Ended September 30, 2021					Nine Months Ended September 30, 2021
	Number of contracts	Pre-modification recorded investment		Post-modification recorded investment		Number of contracts	Pre-modification recorded investment		Post-modification recorded investment
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	—	$	—	$	—	1	$	178	$	178
Commercial and financial	—	—		—		—	—		—
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	—	—		—		—	—		—
Mortgage, farmland	—	—		—		1	319		319
Mortgage, 1 to 4 family first lien	—	—		—		—	—		—
Mortgage, 1 to 4 family junior liens	—	—		—		—	—		—
Mortgage, multi-family	—	—		—		—	—		—
Mortgage, commercial	—	—		—		1	232		232
	—	$	—	$	—	3	$	729	$	729

The Company has allocated $0.02 million of allowance for TDR loans and the Company had commitments to lend $0.16 million in additional borrowings to restructured loan customers as of September 30, 2021.  The Company had commitments to lend $0.04 million in additional borrowings to restructured loan customers as of December 31, 2020.  These commitments were in the normal course of business.  The additional borrowings were not used to facilitate payments on these loans. The modifications of the terms of loans performed during the nine months ended September 30, 2021 included extensions of the maturity date.

There were no TDR loans that were in payment default (defined as past due 90 days or more) during the period ended September 30, 2021 and the year ended December 31, 2020.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:

	Primary Type of Collateral
	Real Estate		Accounts Receivable		Equipment		Other		Total		ACL Allocation
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	1,372	$	—	$	54	$	—	$	1,426	$	3
Commercial and financial	1,239		—		155		—		1,394		4
Real estate:
Construction, 1 to 4 family residential	533		—		—		—		533		115
Construction, land development and commercial	495		—		—		—		495		13
Mortgage, farmland	1,583		—		—		—		1,583		4
Mortgage, 1 to 4 family first liens	5,362		—		—		—		5,362		47
Mortgage, 1 to 4 family junior liens	204		—		—		—		204		12
Mortgage, multi-family	1,470		—		—		—		1,470		—
Mortgage, commercial	4,288		—		—		—		4,288		5
Loans to individuals	—		—		—		—		—		—
Obligations of state and political subdivisions	—		—		—		—		—		—
	$	16,546	$	—	$	209	$	—	$	16,755	$	203

Pre-ASC 326 (CECL) adoption impaired loans information as of December 31, 2020 is as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:	(Amounts In Thousands)
Agricultural	$	1,337	$	1,928	$	—
Commercial and financial	1,520		2,907		—
Real estate:
Construction, 1 to 4 family residential	315		337		—
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	6,253		8,013		—
Mortgage, 1 to 4 family junior liens	108		350		—
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,124		4,960		—
Loans to individuals	—		47		—
	$	17,906	$	23,459	$	—
With an allowance recorded:
Agricultural	$	206	$	206	$	86
Commercial and financial	671		724		411
Real estate:
Construction, 1 to 4 family residential	536		536		7
Construction, land development and commercial	—		—		—
Mortgage, farmland	—		—		—
Mortgage, 1 to 4 family first liens	924		975		56
Mortgage, 1 to 4 family junior liens	132		158		37
Mortgage, multi-family	—		—		—
Mortgage, commercial	303		304		14
Loans to individuals	51		51		51
	$	2,823	$	2,954	$	662
Total:
Agricultural	$	1,543	$	2,134	$	86
Commercial and financial	2,191		3,631		411
Real estate:
Construction, 1 to 4 family residential	851		873		7
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	7,177		8,988		56
Mortgage, 1 to 4 family junior liens	240		508		37
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,427		5,264		14
Loans to individuals	51		98		51
	$	20,729	$	26,413	$	662

Post-ASC 326 CECL Adoption:

The changes in the ACL in 2021 compared to December 31, 2020 is the result of the following factors: $2.75 million increase upon adoption of ASC 326 (CECL) on January 1, 2021; changes after adoption for the nine months ended September 30, 2021 include improvements in the economic factor forecasts, primarily Iowa unemployment, used in the ACL calculation which resulted in a decrease of $1.14 million; decrease in loan volume which resulted in a decrease of $0.75 million; changes in prepayment and curtailment rates resulting in a decrease of $1.03 million; decreases in historical loss rates along with net recoveries in the first half of 2021 resulting in a decrease of $1.59 million; decreases in the individually analyzed loans reserve of $0.42 million; and increases in qualitative factors determined necessary by management which resulted in an increase of $0.71 million.

The extent to which collateral secures collateral-dependent loans is provided in the previous individually analyzed loans table and changes in the extent to which collateral secures its collateral-dependent loans are described below. Collateral-dependent loans decreased $3.97 million from December 31, 2020 to September 30, 2021.  Collateral-dependent loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more and TDR loans. Collateral-dependent loans also include loans that, based on management’s evaluation of current information and events, the Company expects to be unable to collect in full according to the contractual terms of the original loan agreement.  Collateral-dependent loans were 0.63% of loans held for investment as of September 30, 2021 and 0.76% as of December 31, 2020.  The decrease in collateral-dependent loans is due to a decrease of $0.52 million in loans with a specific reserve, a decrease in nonaccrual loans of $1.13 million, a decrease in 90 days or more accruing loans of $0.01 million and a decrease in TDR loans of $2.26 million from December 31, 2020 to September 30, 2021. There were no significant changes noted in the extent to which collateral secures collateral-dependent loans.

The Company regularly reviews a substantial portion of the loans in the portfolio and assesses whether the loans share common risk characteristics for which expected credit loss is measured on a pool basis or if the loans do not share common risk characteristics and therefore expected credit loss is measured on an individual loan basis.  If the loans are assessed for credit losses on an individual basis, the Company determines if a specific allowance is appropriate.  In addition, the Company's management also reviews and, where determined necessary, provides allowances for particular loans based upon (1) reviews of specific borrowers and (2) management’s assessment of areas that management considers are of higher credit risk, including loans that have been restructured or where a TDR is reasonably possible.  Loans that are determined not to be collateral-dependent and for which there are no specific allowances are classified into one or more risk categories and expected credit loss is measured on a pool basis. See Note 1 Adoption of New Financial Accounting Standard for further discussion of the allowance for credit losses for loans held for investment.

Specific allowances for credit losses on loans assessed individually are established if the loan balances exceed the net present value of the relevant future cash flows or the fair value of the relevant collateral based on updated appraisals and/or updated collateral analysis for the properties if the loan is collateral dependent.  The Company may recognize a charge off or record a specific allowance related to an individually analyzed loan if there is a collateral shortfall or it is unlikely the borrower can make all principal and interest payments as contractually due.

For loans that are collateral-dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral.  In general, this is the amount that the carrying value of the loan exceeds the related appraised value less estimated costs to sell the collateral.  Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the credit loss is being measured.  The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variables affecting its value may have changed since the appraisal was performed. The charge off or loss adjustment supported by an appraisal is considered the minimum charge off.  Any adjustments made to the appraised value are to provide an additional charge off or specific reserve based on the applicable facts and circumstances.  In instances where there is an estimated decline in value, a specific reserve may be provided or a charge off taken pending confirmation of the amount of the loss from an updated appraisal.  Upon receipt of the new appraisals, an additional specific reserve may be provided or charge off taken based on the appraised value of the collateral.  On average, appraisals are obtained within one month of order.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

LeasesThe Bank leases branch offices, parking facilities and certain equipment under operating leases. The leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years, and some of which

include options to terminate the leases within 1 year. As the options are reasonably certain to be exercised, they are recognized as part of the right-of-use assets and lease liabilities.

For the nine months ended September 30, 2021 and 2020, total operating lease expense was $0.44 million and $0.42 million respectively, and is included in occupancy expenses in the consolidated statements of income. Included in this for the nine months ended September 30, 2021 and 2020 were $0.37 million and $0.35 million, respectively, of operating lease costs, $0.03 million and $0.03 million, respectively, of short term lease costs, and $0.04 million and $0.04 million, respectively, of variable lease costs.

For the nine months ended September 30, 2021 and 2020, cash paid for amounts included in the measurement of operating lease liabilities was $0.38 million and $0.35 million, respectively.

As of September 30, 2021 and December 31, 2020, operating lease right-of-use assets included in other assets was $2.57 million and $2.86 million respectively. Operating lease liabilities were $2.63 million and $2.91 million as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, the weighted average remaining lease term for operating leases was 10.01 years and 10.27 years, respectively, and the weighted average discount rate for operating leases was 3.48% and 3.45%, respectively. Discount rates used were determined from FHLB borrowing rates for comparable terms.

As of September 30, 2021, maturities of lease liabilities were as follows:

Year ending December 31:	(Amounts In Thousands)
2021 (excluding the nine months ended September 30, 2021)	$	117
2022	464
2023	317
2024	250
2025	254
Thereafter	1,755
Total lease payments	3,157
Less imputed interest	(529)
Total operating lease liabilities	$	2,628

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The carrying value and estimated fair values of the Company's financial instruments as of September 30, 2021 are as follows:

	September 30, 2021
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	869,098	$	869,098	$	869,098	$	—	$	—
Investment securities	510,011		510,011		221,414		288,597		—
Loans held for sale	10,738		10,738		—		10,738		—
Loans
Agricultural	92,092		92,185		—		—		92,185
Commercial and financial	223,833		223,726		—		—		223,726
Real estate:
Construction, 1 to 4 family residential	72,405		72,481		—		—		72,481
Construction, land development and commercial	117,088		116,577		—		—		116,577
Mortgage, farmland	236,987		236,664		—		—		236,664
Mortgage, 1 to 4 family first liens	891,338		889,507		—		—		889,507
Mortgage, 1 to 4 family junior liens	112,366		112,320		—		—		112,320
Mortgage, multi-family	386,092		384,065		—		—		384,065
Mortgage, commercial	403,545		403,004		—		—		403,004
Loans to individuals	31,602		31,710		—		—		31,710
Obligations of state and political subdivisions	51,850		52,119		—		—		52,119
Accrued interest receivable	12,432		12,432		—		12,432		—
Total financial instrument assets	$	4,021,477	$	4,016,637	$	1,090,512	$	311,767	$	2,614,358
Financial instrument liabilities
Deposits
Noninterest-bearing deposits	$	581,011	$	581,011	$	—	$	581,011	$	—
Interest-bearing deposits	2,887,248		2,895,755		—		2,895,755		—
Other borrowings	—		—		—		—		—
Federal Home Loan Bank borrowings	105,000		113,880		—		113,880		—
Accrued interest payable	1,255		1,255		—		1,255		—
Total financial instrument liabilities	$	3,574,514	$	3,591,901	$	—	$	3,591,901	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	616,208	$	—	$	—	$	—	$	—
Letters of credit	7,523		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	623,731	$	—	$	—	$	—	$	—

(1)Considered Level 1 under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

The carrying value and estimated fair values of the Company's financial instruments as of December 31, 2020 are as follows:

	December 31, 2020
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	574,310	$	574,310	$	574,310	$	—	$	—
Investment securities	416,544		416,544		148,646		267,898		—
Loans held for sale	43,947		43,947		—		43,947		—
Loans
Agricultural	92,334		92,922		—		—		92,922
Commercial and financial	281,357		282,015		—		—		282,015
Real estate:
Construction, 1 to 4 family residential	70,210		70,432		—		—		70,432
Construction, land development and commercial	110,501		110,039		—		—		110,039
Mortgage, farmland	242,969		242,978		—		—		242,978
Mortgage, 1 to 4 family first liens	882,156		890,409		—		—		890,409
Mortgage, 1 to 4 family junior liens	126,336		124,945		—		—		124,945
Mortgage, multi-family	369,552		370,538		—		—		370,538
Mortgage, commercial	412,186		413,409		—		—		413,409
Loans to individuals	30,573		31,164		—		—		31,164
Obligations of state and political subdivisions	55,838		59,300		—		—		59,300
Accrued interest receivable	12,177		12,177		—		12,177		—
Total financial instrument assets	$	3,720,990	$	3,735,129	$	722,956	$	324,022	$	2,688,151
Financial instrument liabilities:
Deposits
Noninterest-bearing deposits	$	532,190	$	532,190	$	—	$	532,190	$	—
Interest-bearing deposits	2,660,378		2,673,815		—		2,673,815		—
Federal Home Loan Bank borrowings	105,000		115,259		—		115,259		—
Accrued interest payable	1,733		1,733		—		1,733		—
Total financial instrument liabilities	$	3,299,301	$	3,322,997	$	—	$	3,322,997	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	483,602	$	—	$	—	$	—	$	—
Letters of credit	8,056		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	491,658	$	—	$	—	$	—	$	—

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

Fair value of financial instruments:  FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) provides a single definition for fair value, a framework for measuring fair value and expanded disclosures concerning fair value.  Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company determines the fair market value of its financial instruments based on the fair value hierarchy established in ASC 820.  There are three levels of inputs that may be used to measure fair value as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than quoted prices included within Level 1.  Observable inputs include the quoted prices for similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability.

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

It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.  The Company is required to use observable inputs, to the extent available, in the fair value estimation process unless that data results from forced liquidations or distressed sales. 

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

ASSETS

Investment securities available for sale:  Investment securities available for sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If a quoted price is not available, the fair value is obtained from benchmarking the security against similar securities. U.S. Treasury securities are considered Level 1 with the remaining securities considered Level 2.

The pricing for investment securities is obtained from an independent source.  There are no Level 3 investment securities owned by the Company.  The Company obtains an understanding of the independent source’s valuation methodologies used to determine fair value by level of security. The Company validates assigned fair values on a sample basis using an additional third-party provider pricing service to determine if the fair value measurement is reasonable. Due to the nature of our investment portfolio, we do not expect significant and unusual fluctuations as fair value changes primarily relate to interest rate changes.   No unusual fluctuations were identified during the nine months ended September 30, 2021. If a fluctuation requiring investigation was identified, the Company would research the change with the independent source or other available information.

Loans held for sale and Loans:  ASU 2016-01, Financial Instruments -Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Methodologies utilized for this financial statement period are as follows:

•Income Approach: Fair value is determined based on a discounted cash flow analysis. The discounted cash flow analysis was based on the contractual maturity of the loan and market indications of rates, prepayment speeds, defaults and credit risk.

•Asset Approach: Fair value is determined based on the estimated values of the underlying collateral or individual analysis of receipts. This provides a better indication of value than the contractual income streams as these loans are not performing or exhibit strong signs indicative of non-performance.

Fair value has been estimated in accordance with ASC 820, Fair Value Measurements and Disclosures, and is intended to represent the price that would be received in an orderly transaction between market participants as of the measurement date. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, at least one significant assumption not observable in the market was utilized. These unobservable assumptions reflect estimates that market participants would use in pricing the asset or liability. Inputs to these valuation techniques are subjective in nature, involve uncertainties and require significant judgment and therefore cannot be determined with precision. Accordingly, the fair value estimates presented are not necessarily indicative of the amounts to be realized in a current market exchange. Loans are classified as Level 3.

Loans held for sale are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the short time between origination of the loan and its sale on the secondary market (Level 2). The market is active for these loans and as a result prices for similar assets are available.

Individually analyzed loans under ASC 326 CECL: See Note 1 for further discussion of individually analyzed loans under CECL.

Impaired loans pre-ASC 326: A loan is considered to be impaired when it is probable that all of the principal and interest due may not be collected according to its contractual terms. Generally, when a loan is considered impaired, the amount of reserve required under ASC 310, Receivables, is measured based on the fair value of the underlying collateral. The Company makes such measurements on all material loans deemed impaired using the fair value of the collateral for collateral dependent loans or based on the present value of the estimated future cash flows of interest and principal discounted at the loans effective interest rate or the fair value of the loan if determinable. The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors. All appraised values are adjusted for market-related trends based on the Company's experience in sales and other appraisals of similar property types as well as estimated selling costs. Each quarter management reviews all collateral dependent impaired loans on a loan-by-loan basis to determine whether updated appraisals are necessary based on loan performance, collateral type and guarantor support. At times, the Company measures the fair value of collateral dependent impaired loans using appraisals with dates prior to one year from the date of review. These appraisals are discounted by applying current, observable market data about similar property types such as sales contracts, estimations of value by individuals familiar with the market, other appraisals, sales or collateral assessments based on current market activity until updated appraisals are obtained. Depending on the length of time since an appraisal was performed, the data provided through reviews and estimated selling costs, collateral values are typically discounted by 0-35%. These loans are considered Level 3 as the instruments used to determine fair market value require significant management judgment and estimation.

Foreclosed assets:  The Company does not record foreclosed assets at fair value on a recurring basis.  Foreclosed assets consist mainly of other real estate owned but may include other types of assets repossessed by the Company.  Foreclosed assets are adjusted to the lower of carrying value or fair value less the cost of disposal.   Fair value is generally based upon independent market prices or appraised values of the collateral, and may include a marketability discount as deemed necessary by management based on its experience with similar types of real estate.  The value of foreclosed assets is evaluated periodically as a nonrecurring fair value adjustment.  Foreclosed assets are classified as Level 3.

Off-balance sheet instruments:  Fair values for outstanding letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.  The fair value of the outstanding letters of credit is not significant. Unfunded loan commitments are not valued since the loans are generally priced at market at the time of funding (Level 2).

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The table below represents the balances of assets and liabilities measured at fair value on a recurring basis:

	September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	221,414	$	—	$	—	$	221,414
State and political subdivisions	—		235,207		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	—		9,753		—		9,753
Other securities (FHLB, FHLMC and FNMA)	—		34,891		—		34,891
Total	$	221,414	$	279,851	$	—	$	501,265

	December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	148,646	$	—	$	—	$	148,646
State and political subdivisions	—		224,566		—		224,566
Other securities (FHLB, FHLMC and FNMA)	—		35,160		—		35,160
Total	$	148,646	$	259,726	$	—	$	408,372

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

There were no transfers between Levels 1, 2 or 3 during the nine months ended September 30, 2021 and the year ended December 31, 2020.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

The Company is required to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP.  These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.  The valuation methodologies used to measure these fair value adjustments are described above.    The following tables present the Company’s assets that are measured at fair value on a nonrecurring basis.

	September 30, 2021								Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	886	$	886	$	—	$	—
Commercial and financial	—		—		1,188		1,188		—		—
Real Estate:											—
Construction, 1 to 4 family residential	—		—		386		386		—		—
Construction, land development and commercial	—		—		96		96		—		—
Mortgage, farmland	—		—		1,217		1,217		—		—
Mortgage, 1 to 4 family first liens	—		—		5,084		5,084		114		147
Mortgage, 1 to 4 family junior liens	—		—		193		193		9		9
Mortgage, multi-family	—		—		1,470		1,470		—		—
Mortgage, commercial	—		—		4,222		4,222		255		255
Loans to individuals	—		—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—		—
Total	$	—	$	—	$	14,742	$	14,742	$	378	$	411

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis (continued)

	December 31, 2020								Year Ended December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	1,081	$	1,081	$	—
Commercial and financial	—		—		1,692		1,692		385
Real Estate:
Construction, 1 to 4 family residential	—		—		414		414		—
Construction, land development and commercial	—		—		315		315		—
Mortgage, farmland	—		—		1,718		1,718		—
Mortgage, 1 to 4 family first liens	—		—		5,906		5,906		252
Mortgage, 1 to 4 family junior liens	—		—		176		176		19
Mortgage, multi-family	—		—		1,773		1,773		—
Mortgage, commercial	—		—		5,082		5,082		250
Loans to individuals	—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—
Total	$	—	$	—	$	18,157	$	18,157	$	906

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

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Stock Repurchase Program	9 Months Ended
	Sep. 30, 2021
Equity [Abstract]
Stock Repurchase Program	Stock Repurchase ProgramOn July 26, 2005, the Company’s Board of Directors authorized a program to repurchase up to a total of 1,500,000 shares of the Company’s common stock (the “2005 Stock Repurchase Program”).  The Company’s Board of Directors has authorized the 2005 Stock Repurchase Program through December 31, 2022.  The Company expects the purchases pursuant to the 2005 Stock Repurchase Program to be made from time to time in private transactions at a price equal to the most recent quarterly independent appraisal of the shares of the Company’s common stock and with the Board reviewing the overall results of the 2005 Stock Repurchase Program on a quarterly basis.  All purchases made pursuant to the 2005 Stock Repurchase Program since its inception have been made on that basis.  The amount and timing of stock repurchases will be based on various factors, such as the Board’s assessment of the Company’s capital structure and liquidity, the amount of interest shown by shareholders in selling shares of stock to the Company at their appraised value, and applicable regulatory, legal and accounting factors.  The Company has purchased 1,398,761 shares of its common stock in privately negotiated transactions from August 1, 2005 through September 30, 2021.  Of these 1,398,761 shares, 19,556 shares were purchased during the quarter ended September 30, 2021, at an average price per share of $66.15.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Concentrations of credit risk:  The Bank’s loans, commitments to extend credit, unused lines of credit and outstanding letters of credit have been granted to customers within the Bank's market area.  Investments in securities issued by state and political subdivisions within the state of Iowa totaled approximately $86.49 million.  The concentrations of credit by type of loan are set forth in Note 5 to the Consolidated Financial Statements.  Outstanding letters of credit were granted primarily to commercial borrowers.  Although the Bank has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon the economic conditions in Johnson, Linn and Washington Counties, Iowa.

Contingencies:  In the normal course of business, the Company and its subsidiaries are subject to pending and threatened legal actions, some of which seek substantial relief or damages.  While the ultimate outcome of such legal proceedings cannot be predicted with certainty, after reviewing pending and threatened litigation with counsel, management believes at this time that the outcome of such litigation will not have a material adverse effect on the Company’s business, financial conditions, or results of operations.

The outbreak of Coronavirus Disease 2019 (“COVID-19”) continues to adversely impact a broad range of industries in which the Company’s customers operate and impair their ability to fulfill their financial obligations to the Company. The World Health Organization declared COVID-19 to be a global pandemic indicating that almost all public commerce and related business activities must be, to varying degrees, curtailed with the goal of decreasing the rate of new infections.

The spread of the outbreak has caused significant disruptions in the U.S. economy and is highly likely to disrupt banking and other financial activity in the areas in which the Company operates and could also potentially create widespread business continuity issues for the Company. The Company’s business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. If the global response to contain COVID-19 escalates or is unsuccessful, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows. See Note 5 for further discussion regarding the financial impact of COVID-19.

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

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, credit card participations and standby letters of credit is represented by the contractual amount of those instruments.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  A summary of the Bank’s commitments at September 30, 2021 and December 31, 2020 is as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Firm loan commitments and unused portion of lines of credit:
Home equity loans	$	79,686	$	69,974
Credit cards	64,910		60,535
Commercial, real estate and home construction	173,754		118,186
Commercial lines and real estate purchase loans	297,858		234,907
Outstanding letters of credit	7,523		8,056

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Income Taxes	9 Months Ended
	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesFederal income tax expense for the nine months ended September 30, 2021 and 2020 was computed using the consolidated effective federal tax rate.  The Company also recognized income tax expense pertaining to state franchise taxes payable individually by the subsidiary bank.  The Company files a consolidated tax return for federal purposes and separate tax returns for State of Iowa purposes.  The tax years ended December 31, 2020, 2019, and 2018 remain subject to examination by the Internal Revenue Service.  For state tax purposes, the tax years ended December 31, 2020, 2019, and 2018 remain open for examination.  There were no material unrecognized tax benefits at September 30, 2021  and December 31, 2020 and therefore no interest or penalties on unrecognized tax benefits has been recorded.  As of September 30, 2021, the Company does not anticipate any significant increase in unrecognized tax benefits during the twelve-month period ending September 30, 2022. Income taxes as a percentage of income before taxes were 22.58% for the nine months ended September 30, 2021 and 22.43% for the same period in 2020.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

In the normal course of business, the Bank may use derivative financial instruments to manage its interest rate risk.  These instruments carry varying degrees of credit, interest rate and market or liquidity risks.  Derivative instruments are recognized as either assets or liabilities in the accompanying financial statement and are measured at fair value.  The Bank’s objectives are to add stability to its net interest margin and to manage its exposure to movements in interest rates.  The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amount to be exchanged between the counterparties.  The Bank is exposed to credit risk in the event of nonperformance by counterparties to financial instruments.  The Bank minimizes this risk by entering into derivative contracts with large, stable financial institutions.  The Bank has not experienced any losses from nonperformance by counterparties.  The Bank monitors counterparty risk in accordance with the provisions of ASC 815.  In addition, the Bank’s interest rate-related derivative instruments contain language outlining collateral pledging requirements for each counterparty.  Collateral must be posted when the market value exceeds certain threshold limits which are determined by credit ratings of each counterparty.  The Bank terminated one interest rate swap in December 2020 and the other matured in November 2020, therefore the Bank was not required to pledge collateral as of September 30, 2021 and December 31, 2020.

Cash Flow Hedges:

The Bank executed two forward-starting interest rate swap transactions on November 7, 2013.  One of the interest rate swap transactions had an effective date of November 9, 2015, and an expiration date of November 9, 2020, effectively converting $25.00 million of variable rate debt to fixed rate debt.  The other interest rate swap transaction had an effective date of November 7, 2016 and an expiration date of November 7, 2023, effectively converting $25.00 million of variable rate debt to fixed rate debt.  For accounting purposes, these swap transactions were designated as a cash flow hedge of the changes in cash flows attributable to changes in three-month LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on an amount of the Bank’s debt principal equal to the then-outstanding swap notional amount.  At inception, the Bank asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps. The Bank terminated the remaining interest rate swap in December 2020 and in connection with the termination paid $2.684 million to the counterparty. The losses realized on the interest rate swap were reclassified into the income statement from other comprehensive income. In connection with the termination of the swap, the related FHLB borrowings were paid off. There were no remaining derivative instruments designated as cash flow hedges as of September 30, 2021 and December 31, 2020.

There were no gains or losses recognized on the Bank's derivative instruments designated as cash flow hedges for the nine months ended September 30, 2021. The table below identifies the gains and losses recognized on the Bank’s derivative instruments designated as cash flow hedges for the nine months ended September 30, 2020:

	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
	(Amounts in Thousands)
September 30, 2020
Interest rate swap	$	81	Interest Expense	$	—	Other Income	$	—
Interest rate swap	(626)		Interest Expense	—		Other Income	—

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with instructions for Form 10-Q and Regulation S-X.  These financial statements include all adjustments (consisting of normal recurring accruals) which in the opinion of management are considered necessary for the fair presentation of the financial position and results of operations for the periods shown.  Certain prior year amounts have been reclassified to conform to the current year presentation.  The Company considers that it operates as one business segment, a commercial bank.

Revenue Recognition

Revenue Recognition:

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit and investment securities. Interest income on loans and investment securities is recognized on the accrual method in accordance with written contracts.

Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606 are the following: Service charges and fees on deposit accounts represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue which includes interchange income, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when the Company’s performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at

the time the performance obligations are satisfied. Trust income represents monthly fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, fees for trust services and similar fiduciary activities. Revenue is recognized when our performance obligation is completed each month, which is generally the time that payment is received.

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. As of September 30, 2021, the Company did not have any significant contract balances.

An entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less.

Effect of New Financial Accounting Standards

Effect of New Financial Accounting Standards:

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing specific exceptions included in Topic 740, introducing other simplifications and making technical corrections. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The adoption of ASU 2019-12 by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs. The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. For each reporting period, to the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess (that is, the premium) shall be amortized to the next call date, unless the guidance in paragraph 310-20-35-26 is applied to consider estimated prepayments. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which consists of two sections. The first applicable section contains amendments that improve the consistency of the Codification by including all disclosure guidance in

the appropriate disclosure section and provide the option to give certain information either on the face of the financial statements or in the notes to the financial statements. The second section contains Codification improvements that vary in nature. The amendments in this Update do not change GAAP and, therefore, are not expected to result in a significant change in practice. For public business entities, these amendments are effective for annual periods beginning after December 15, 2020. The adoption of the ASU by the Company on January 1, 2021 did not have a material impact on the financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in this ASU affect entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. An entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option to compensate for goods or services in accordance with the guidance in Topic 718, Compensation-Stock Compensation. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is in the process of evaluating the impact of this ASU on the financial statements.

Earnings Per Share

Earnings Per ShareBasic earnings per share is computed using the weighted average number of actual common shares outstanding during the period.  Diluted earnings per share reflects the potential dilution that would occur from the exercise of common stock options outstanding.  ESOP shares are considered outstanding for this calculation unless unearned.

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule of Impact of ASC 326

The following table illustrates the impact of ASC 326 (amounts in thousands).

	January 1, 2021
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Loans
Allowance for credit losses on loans	$	39,816	$	37,070	$	2,746
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,584	$	—	$	3,584

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted earnings per share

The computation of basic and diluted earnings per share for the periods presented is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Common shares outstanding at the beginning of the period	9,306,252		9,364,062		9,330,995		9,351,694
Weighted average number of net shares (redeemed) issued	(7,539)		(7,765)		(21,234)		28,137
Weighted average shares outstanding (basic)	9,298,713		9,356,297		9,309,761		9,379,831
Weighted average of potential dilutive shares attributable to stock options granted, computed under the treasury stock method	3,731		3,592		3,605		3,673
Weighted average number of shares (diluted)	9,302,444		9,359,889		9,313,366		9,383,504
Net income (In thousands)	$	13,125	$	11,430	$	41,932	$	30,216
Earnings per share:
Basic	$	1.41	$	1.22	$	4.50	$	3.22
Diluted	$	1.41	$	1.22	$	4.50	$	3.22

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Components of accumulated other comprehensive income (AOCI)

The following table summarizes the balances of each component of accumulated other comprehensive income (AOCI), included in stockholders’ equity, at September 30, 2021 and December 31, 2020:

	September 30, 2021		December 31, 2020
	(amounts in thousands)
Net unrealized gain on available-for-sale securities	$	5,685	$	11,702
Tax effect	(1,418)		(2,920)
Net-of-tax amount	$	4,267	$	8,782

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Securities (Tables)

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Carrying values of investment securities

The carrying values of investment securities at September 30, 2021 and December 31, 2020 are summarized in the following table (dollars in thousands):

	September 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Securities available for sale
U.S. Treasury	$	221,414	44.17	%	$	148,646	36.40	%
Other securities (FHLB, FHLMC and FNMA)	34,891		6.96		35,160		8.61
State and political subdivisions	235,207		46.92		224,566		54.99
Mortgage-backed securities and collateralized mortgage obligations	9,753		1.95		—		—
Total securities available for sale	$	501,265	100.00	%	$	408,372	100.00	%

Carrying amount of available-for-sale securities and approximate fair values

The carrying amount of available-for-sale securities, fair values and allowance for credit losses were as follows as of September 30, 2021 and December 31, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Allowance for Credit Losses		Estimated Fair Value
September 30, 2021
U.S. Treasury	$	219,281	$	3,065	$	(932)	$	—	$	221,414
Other securities (FHLB, FHLMC and FNMA)	35,377		—		(486)		—		34,891
State and political subdivisions	231,120		5,160		(1,073)		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	9,802		—		(49)		—		$	9,753
Total	$	495,580	$	8,225	$	(2,540)	$	—	$	501,265
December 31, 2020:
U.S. Treasury	$	143,467	$	5,179	$	—	$	—	$	148,646
Other securities (FHLB, FHLMC and FNMA)	35,195		35		(70)		—		35,160
State and political subdivisions	218,008		6,674		(116)		—		224,566
Total	$	396,670	$	11,888	$	(186)	$	—	$	408,372

There were no sales of available-for-sale securities for the three months ended September 30, 2021 and 2020. Sales proceeds and gross realized gains and losses on available-for-sale securities were as follows for the nine months ended September 30, 2021 and 2020 (in thousands):

	September 30, 2021		September 30, 2020
Sales proceeds	$	—	$	313
Gross realized gains	—		10
Gross realized losses	—		—

Available-for-sale securities classified as per contractual maturities

The amortized cost and estimated fair value of available-for-sale securities classified according to their contractual maturities at September 30, 2021, were as follows (in thousands) below. Expected maturities of MBS may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary.

	Amortized Cost		Fair Value
Due in one year or less	$	51,863	$	52,206
Due after one year through five years	270,805		273,962
Due after five years through ten years	118,465		120,965
Due over ten years	44,645		44,379
	$	485,778	$	491,512
Mortgage-backed securities and collateralized mortgage obligations	9,802		9,753
	$	495,580	$	501,265

Available-for-sale securities, summary of proceeds, gains and losses

The carrying amount of available-for-sale securities, fair values and allowance for credit losses were as follows as of September 30, 2021 and December 31, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Allowance for Credit Losses		Estimated Fair Value
September 30, 2021
U.S. Treasury	$	219,281	$	3,065	$	(932)	$	—	$	221,414
Other securities (FHLB, FHLMC and FNMA)	35,377		—		(486)		—		34,891
State and political subdivisions	231,120		5,160		(1,073)		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	9,802		—		(49)		—		$	9,753
Total	$	495,580	$	8,225	$	(2,540)	$	—	$	501,265
December 31, 2020:
U.S. Treasury	$	143,467	$	5,179	$	—	$	—	$	148,646
Other securities (FHLB, FHLMC and FNMA)	35,195		35		(70)		—		35,160
State and political subdivisions	218,008		6,674		(116)		—		224,566
Total	$	396,670	$	11,888	$	(186)	$	—	$	408,372

There were no sales of available-for-sale securities for the three months ended September 30, 2021 and 2020. Sales proceeds and gross realized gains and losses on available-for-sale securities were as follows for the nine months ended September 30, 2021 and 2020 (in thousands):

	September 30, 2021		September 30, 2020
Sales proceeds	$	—	$	313
Gross realized gains	—		10
Gross realized losses	—		—

Available-for-sale securities, continuous unrealized loss position, fair value

The following table shows the fair value, gross unrealized losses and the percentage of fair value represented by gross unrealized losses of applicable investment securities owned by the Company, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and December 31, 2020 (in thousands):

	Less than 12 months							12 months or more							Total
September 30, 2021 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	41	$	103,163	$	(932)	0.90	%	—	$	—	$	—	—	%	41	$	103,163	$	(932)	0.90	%
Other securities (FHLB, FHLMC and FNMA)	8	20,059		(265)		1.32		6	14,832		(221)		1.49		14	34,891		(486)		1.39
State and political subdivisions	189	65,805		(1,038)		1.58		10	1,915		(35)		1.83		199	67,720		(1,073)		1.58
Mortgage-backed securities and collateralized mortgage obligations	4	9,753		(49)		0.50		—	—		—		—		4	9,753		(49)		0.50
Total temporarily impaired securities	242	$	198,780	$	(2,284)	1.15	%	16	$	16,747	$	(256)	1.53	%	258	$	215,527	$	(2,540)	1.18	%

	Less than 12 months							12 months or more							Total
December 31, 2020 Description of Securities	#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%		#	Fair Value		Unrealized Loss		%
U.S. Treasury	—	$	—	$	—	—	%	—	$	—	$	—	—	%	—	$	—	$	—	—	%
Other securities (FHLB, FHLMC and FNMA)	8	20,019		(70)		0.35		—	—		—		—		8	20,019		(70)		0.35
State and political subdivisions	35	14,168		(110)		0.78		4	370		(6)		1.62		39	14,538		(116)		0.80
Total temporarily impaired securities	43	$	34,187	$	(180)	0.53	%	4	$	370	$	(6)	1.62	%	47	$	34,557	$	(186)	0.54	%

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Loans (Tables)

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Schedule of classes of loans

Classes of loans are as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Agricultural	$	94,210	$	94,842
Commercial and financial	228,181		286,242
Real estate:
Construction, 1 to 4 family residential	73,167		71,117
Construction, land development and commercial	118,623		111,913
Mortgage, farmland	241,650		247,142
Mortgage, 1 to 4 family first liens	898,333		892,089
Mortgage, 1 to 4 family junior liens	115,308		127,833
Mortgage, multi-family	389,805		374,014
Mortgage, commercial	410,050		417,139
Loans to individuals	32,235		31,325
Obligations of state and political subdivisions	52,299		56,488
	$	2,653,861	$	2,710,144
Net unamortized fees and costs	927		938
	$	2,654,788	$	2,711,082
Less allowance for credit losses (2021) and loan losses (2020)	35,590		37,070
	$	2,619,198	$	2,674,012

Schedule of changes in allowance for loan losses

Changes in the allowance for credit losses, the allowance for credit losses applicable to individually evaluated loans and the related loan balance of individually evaluated loans for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance	$	2,055	$	4,802	$	2,483	$	4,904	$	10,879	$	9,707	$	1,110	$	35,940
Charge-offs	—		(14)		—		—		(181)		(255)		(138)		(588)
Recoveries	29		431		2		—		140		23		21		646
Credit loss expense	34		(871)		(188)		(241)		26		743		89		(408)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	2,508	$	4,885	$	2,319	$	4,173	$	12,368	$	9,415	$	1,402	$	37,070
Impact of adopting ASC 326	(328)		298		327		763		522		1,396		(232)		2,746
Charge-offs	—		(90)		(3)		(1)		(263)		(265)		(234)		(856)
Recoveries	117		966		93		25		648		240		98		2,187
Credit loss expense	(179)		(1,711)		(439)		(297)		(2,411)		(568)		48		(5,557)
Ending balance	$	2,118	$	4,348	$	2,297	$	4,663	$	10,864	$	10,218	$	1,082	$	35,590
Ending balance, individually evaluated for credit losses	$	3	$	4	$	128	$	4	$	59	$	5	$	—	$	203
Ending balance, collectively evaluated for credit losses	$	2,115	$	4,344	$	2,169	$	4,659	$	10,805	$	10,213	$	1,082	$	35,387
Loans:
Ending balance	$	94,210	$	228,181	$	191,790	$	241,650	$	1,013,641	$	799,855	$	84,534	$	2,653,861
Ending balance, individually evaluated for credit losses	$	1,426	$	1,394	$	1,028	$	1,583	$	5,566	$	5,758	$	—	$	16,755
Ending balance, collectively evaluated for credit losses	$	92,784	$	226,787	$	190,762	$	240,067	$	1,008,075	$	794,097	$	84,534	$	2,637,106

Changes in the allowance for loan losses for the three and nine months ended September 30, 2020 were as follows:

	Three Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,547	$	5,777	$	2,433	$	4,089	$	12,282	$	9,173	$	1,319	$	37,620
Charge-offs	(8)		(478)		—		—		(115)		(210)		(63)		(874)
Recoveries	26		165		27		—		201		10		42		471
Provision	30		(119)		(167)		(41)		(210)		320		30		(157)
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
	Nine Months Ended September 30, 2020
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for loan losses:
Beginning balance	$	2,400	$	4,988	$	2,599	$	3,950	$	10,638	$	7,859	$	1,326	$	33,760
Charge-offs	(43)		(1,253)		(43)		(1)		(576)		(290)		(276)		(2,482)
Recoveries	44		374		81		—		636		33		114		1,282
Provision	194		1,236		(344)		99		1,460		1,691		164		4,500
Ending balance	$	2,595	$	5,345	$	2,293	$	4,048	$	12,158	$	9,293	$	1,328	$	37,060
Ending balance, individually evaluated for impairment	$	80	$	477	$	87	$	1	$	86	$	—	$	14	$	745
Ending balance, collectively evaluated for impairment	$	2,515	$	4,868	$	2,206	$	4,047	$	12,072	$	9,293	$	1,314	$	36,315
Loans:
Ending balance	$	96,321	$	335,463	$	184,797	$	243,689	$	1,031,701	$	788,209	$	86,945	$	2,767,125
Ending balance, individually evaluated for impairment	$	1,742	$	5,949	$	7,933	$	2,440	$	6,980	$	3,614	$	14	$	28,672
Ending balance, collectively evaluated for impairment	$	94,579	$	329,514	$	176,864	$	241,249	$	1,024,721	$	784,595	$	86,931	$	2,738,453

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:

	Primary Type of Collateral
	Real Estate		Accounts Receivable		Equipment		Other		Total		ACL Allocation
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	1,372	$	—	$	54	$	—	$	1,426	$	3
Commercial and financial	1,239		—		155		—		1,394		4
Real estate:
Construction, 1 to 4 family residential	533		—		—		—		533		115
Construction, land development and commercial	495		—		—		—		495		13
Mortgage, farmland	1,583		—		—		—		1,583		4
Mortgage, 1 to 4 family first liens	5,362		—		—		—		5,362		47
Mortgage, 1 to 4 family junior liens	204		—		—		—		204		12
Mortgage, multi-family	1,470		—		—		—		1,470		—
Mortgage, commercial	4,288		—		—		—		4,288		5
Loans to individuals	—		—		—		—		—		—
Obligations of state and political subdivisions	—		—		—		—		—		—
	$	16,546	$	—	$	209	$	—	$	16,755	$	203

Schedule of allowance for credit losses for off-balance sheet credit exposure

Changes in the allowance for credit losses for off-balance sheet credit exposures for the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance	$	494	$	1,529	$	864	$	107	$	791	$	275	$	30	$	4,090
Credit loss expense	15		117		132		61		13		156		(4)		490
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580
	Nine Months Ended September 30, 2021
	Agricultural		Commercial and Financial		Real Estate: Construction and land development		Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family		Real Estate: Mortgage, multi- family and commercial		Other		Total
	(Amounts In Thousands)
Allowance for credit losses for off-balance sheet credit exposures:
Beginning balance, prior to adoption of ASC 326	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Impact of adopting ASC 326	385		1,585		736		180		471		212		15		3,584
Credit loss expense	124		61		260		(12)		333		219		11		996
(Charge-offs), net recoveries	—		—		—		—		—		—		—		—
Ending balance	$	509	$	1,646	$	996	$	168	$	804	$	431	$	26	$	4,580

Schedule of credit quality indicators by type of loans

The following table presents the credit quality indicators by type of loans in each category as of December 31, 2020 (amounts in thousands):

	Agricultural		Commercial and Financial		Real Estate: Construction, 1 to 4 family residential		Real Estate: Construction, land development and commercial
December 31, 2020
Grade:
Excellent	$	3,761	$	9,024	$	—	$	227
Good	12,369		62,310		13,675		15,187
Satisfactory	42,015		144,999		41,616		64,301
Monitor	29,381		56,439		13,654		23,368
Special Mention	5,143		8,258		1,857		7,137
Substandard	2,173		5,212		315		1,693
Total	$	94,842	$	286,242	$	71,117	$	111,913

	Real Estate: Mortgage, farmland		Real Estate: Mortgage, 1 to 4 family first liens		Real Estate: Mortgage, 1 to 4 family junior liens		Real Estate: Mortgage, multi- family
December 31, 2020
Grade:
Excellent	$	5,706	$	2,303	$	204	$	14,650
Good	41,878		47,233		3,707		57,281
Satisfactory	129,210		701,273		115,731		197,493
Monitor	61,298		114,207		5,153		70,885
Special Mention	6,074		12,890		1,307		15,374
Substandard	2,976		14,183		1,731		18,331
Total	$	247,142	$	892,089	$	127,833	$	374,014

	Real Estate: Mortgage, commercial		Loans to individuals		Obligations of state and political subdivisions		Total
December 31, 2020
Grade:
Excellent	$	26,940	$	1	$	6,752	$	69,568
Good	92,699		145		13,094		359,578
Satisfactory	196,310		30,487		26,571		1,690,006
Monitor	77,125		479		9,924		461,913
Special Mention	19,731		127		147		78,045
Substandard	4,334		86		—		51,034
Total	$	417,139	$	31,325	$	56,488	$	2,710,144

Schedule of past due loans

Past due loans as of September 30, 2021 and December 31, 2020 were as follows:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Accruing Loans Past Due 90 Days or More
	(Amounts In Thousands)
September 30, 2021
Agricultural	$	377	$	—	$	249	$	626	$	93,584	$	94,210	$	152
Commercial and financial	1,062		2,370		41		3,473		224,708		228,181		—
Real estate:
Construction, 1 to 4 family residential	2,085		124		422		2,631		70,536		73,167		423
Construction, land development and commercial	7,024		7,000		96		14,120		104,503		118,623		—
Mortgage, farmland	—		167		204		371		241,279		241,650		204
Mortgage, 1 to 4 family first liens	948		1,481		2,522		4,951		893,382		898,333		264
Mortgage, 1 to 4 family junior liens	60		24		106		190		115,118		115,308		—
Mortgage, multi-family	3,905		—		—		3,905		385,900		389,805		—
Mortgage, commercial	—		829		—		829		409,221		410,050		—
Loans to individuals	205		10		5		220		32,015		32,235		—
Obligations of state and political subdivisions	—		—		—		—		52,299		52,299		—
	$	15,666	$	12,005	$	3,645	$	31,316	$	2,622,545	$	2,653,861	$	1,043
December 31, 2020
Agricultural	$	438	$	—	$	629	$	1,067	$	93,775	$	94,842	$	111
Commercial and financial	867		195		140		1,202		285,040		286,242		20
Real estate:
Construction, 1 to 4 family residential	190		—		536		726		70,391		71,117		536
Construction, land development and commercial	—		—		—		—		111,913		111,913		—
Mortgage, farmland	279		28		—		307		246,835		247,142		—
Mortgage, 1 to 4 family first liens	4,969		1,342		2,486		8,797		883,292		892,089		342
Mortgage, 1 to 4 family junior liens	436		21		155		612		127,221		127,833		47
Mortgage, multi-family	—		—		—		—		374,014		374,014		—
Mortgage, commercial	783		—		461		1,244		415,895		417,139		—
Loans to individuals	218		59		4		281		31,044		31,325		—
Obligations of state and political subdivisions	—		—		—		—		56,488		56,488		—
	$	8,180	$	1,645	$	4,411	$	14,236	$	2,695,908	$	2,710,144	$	1,056

Schedule of impaired loan information

Certain nonaccrual and TDR loan information by loan type at September 30, 2021 and December 31, 2020, was as follows:

	September 30, 2021								December 31, 2020
	Non-accrual loans (1)		Interest income recognized on non-accrual		Accruing loans past due 90 days or more		TDR loans		Non- accrual loans (1)		Accruing loans past due 90 days or more		TDR loans
	(Amounts In Thousands)								(Amounts In Thousands)
Agricultural	$	708	—		$	152	$	377	$	1,252	$	111	$	85
Commercial and financial	112		—		—		1,139		479		20		1,263
Real estate:
Construction, 1 to 4 family residential	111		—		423		—		315		536		—
Construction, land development and commercial	293		—		—		203		204		—		211
Mortgage, farmland	353		—		204		1,206		446		—		1,616
Mortgage, 1 to 4 family first liens	3,900		—		264		1,348		4,331		342		1,751
Mortgage, 1 to 4 family junior liens	184		—		—		20		193		47		20
Mortgage, multi-family	—		—		—		1,470		79		—		1,695
Mortgage, commercial	2,057		—		—		2,231		1,550		—		3,610
	$	7,718	$	—	$	1,043	$	7,994	$	8,849	$	1,056	$	10,251

(1)There were $2.76 million and $2.97 million of TDR loans included within nonaccrual loans as of September 30, 2021 and December 31, 2020, respectively.

Schedule of information for TDR loans

Below is a summary of information for TDR loans as of September 30, 2021 and December 31, 2020:

	September 30, 2021					December 31, 2020
	Number of contracts	Recorded investment		Commitments outstanding		Number of contracts	Recorded investment		Commitments outstanding
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	4	$	974	$	160	6	$	1,028	$	—
Commercial and financial	14	1,211		—		17	1,743		35
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	1	203		—		1	211		4
Mortgage, farmland	5	1,512		—		6	2,009		—
Mortgage, 1 to 4 family first liens	11	1,351		—		17	1,898		—
Mortgage, 1 to 4 family junior liens	1	20		—		1	20		—
Mortgage, multi-family	2	1,470		—		2	1,695		—
Mortgage, commercial	11	4,010		—		13	4,621		—
Loans to individuals	—	—		—		—	—		—
	49	$	10,751	$	160	63	$	13,225	$	39

The following is a summary of TDR loans that were modified during the three and nine months ended September 30, 2021:

	Three Months Ended September 30, 2021					Nine Months Ended September 30, 2021
	Number of contracts	Pre-modification recorded investment		Post-modification recorded investment		Number of contracts	Pre-modification recorded investment		Post-modification recorded investment
		(Amounts In Thousands)					(Amounts In Thousands)
Agricultural	—	$	—	$	—	1	$	178	$	178
Commercial and financial	—	—		—		—	—		—
Real estate:
Construction, 1 to 4 family residential	—	—		—		—	—		—
Construction, land development and commercial	—	—		—		—	—		—
Mortgage, farmland	—	—		—		1	319		319
Mortgage, 1 to 4 family first lien	—	—		—		—	—		—
Mortgage, 1 to 4 family junior liens	—	—		—		—	—		—
Mortgage, multi-family	—	—		—		—	—		—
Mortgage, commercial	—	—		—		1	232		232
	—	$	—	$	—	3	$	729	$	729

Schedule of impaired loans

Pre-ASC 326 (CECL) adoption impaired loans information as of December 31, 2020 is as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:	(Amounts In Thousands)
Agricultural	$	1,337	$	1,928	$	—
Commercial and financial	1,520		2,907		—
Real estate:
Construction, 1 to 4 family residential	315		337		—
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	6,253		8,013		—
Mortgage, 1 to 4 family junior liens	108		350		—
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,124		4,960		—
Loans to individuals	—		47		—
	$	17,906	$	23,459	$	—
With an allowance recorded:
Agricultural	$	206	$	206	$	86
Commercial and financial	671		724		411
Real estate:
Construction, 1 to 4 family residential	536		536		7
Construction, land development and commercial	—		—		—
Mortgage, farmland	—		—		—
Mortgage, 1 to 4 family first liens	924		975		56
Mortgage, 1 to 4 family junior liens	132		158		37
Mortgage, multi-family	—		—		—
Mortgage, commercial	303		304		14
Loans to individuals	51		51		51
	$	2,823	$	2,954	$	662
Total:
Agricultural	$	1,543	$	2,134	$	86
Commercial and financial	2,191		3,631		411
Real estate:
Construction, 1 to 4 family residential	851		873		7
Construction, land development and commercial	415		421		—
Mortgage, farmland	2,061		2,598		—
Mortgage, 1 to 4 family first liens	7,177		8,988		56
Mortgage, 1 to 4 family junior liens	240		508		37
Mortgage, multi-family	1,773		1,898		—
Mortgage, commercial	4,427		5,264		14
Loans to individuals	51		98		51
	$	20,729	$	26,413	$	662

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Maturities of lease liabilities, Topic 842

As of September 30, 2021, maturities of lease liabilities were as follows:

Year ending December 31:	(Amounts In Thousands)
2021 (excluding the nine months ended September 30, 2021)	$	117
2022	464
2023	317
2024	250
2025	254
Thereafter	1,755
Total lease payments	3,157
Less imputed interest	(529)
Total operating lease liabilities	$	2,628

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Carrying value and estimated fair values of entity's financial instruments

The carrying value and estimated fair values of the Company's financial instruments as of September 30, 2021 are as follows:

	September 30, 2021
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	869,098	$	869,098	$	869,098	$	—	$	—
Investment securities	510,011		510,011		221,414		288,597		—
Loans held for sale	10,738		10,738		—		10,738		—
Loans
Agricultural	92,092		92,185		—		—		92,185
Commercial and financial	223,833		223,726		—		—		223,726
Real estate:
Construction, 1 to 4 family residential	72,405		72,481		—		—		72,481
Construction, land development and commercial	117,088		116,577		—		—		116,577
Mortgage, farmland	236,987		236,664		—		—		236,664
Mortgage, 1 to 4 family first liens	891,338		889,507		—		—		889,507
Mortgage, 1 to 4 family junior liens	112,366		112,320		—		—		112,320
Mortgage, multi-family	386,092		384,065		—		—		384,065
Mortgage, commercial	403,545		403,004		—		—		403,004
Loans to individuals	31,602		31,710		—		—		31,710
Obligations of state and political subdivisions	51,850		52,119		—		—		52,119
Accrued interest receivable	12,432		12,432		—		12,432		—
Total financial instrument assets	$	4,021,477	$	4,016,637	$	1,090,512	$	311,767	$	2,614,358
Financial instrument liabilities
Deposits
Noninterest-bearing deposits	$	581,011	$	581,011	$	—	$	581,011	$	—
Interest-bearing deposits	2,887,248		2,895,755		—		2,895,755		—
Other borrowings	—		—		—		—		—
Federal Home Loan Bank borrowings	105,000		113,880		—		113,880		—
Accrued interest payable	1,255		1,255		—		1,255		—
Total financial instrument liabilities	$	3,574,514	$	3,591,901	$	—	$	3,591,901	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	616,208	$	—	$	—	$	—	$	—
Letters of credit	7,523		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	623,731	$	—	$	—	$	—	$	—

(1)Considered Level 1 under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

The carrying value and estimated fair values of the Company's financial instruments as of December 31, 2020 are as follows:

	December 31, 2020
	Carrying Amount		Estimated Fair Value		Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)
	(Amounts In Thousands)
Financial instrument assets:
Cash and cash equivalents	$	574,310	$	574,310	$	574,310	$	—	$	—
Investment securities	416,544		416,544		148,646		267,898		—
Loans held for sale	43,947		43,947		—		43,947		—
Loans
Agricultural	92,334		92,922		—		—		92,922
Commercial and financial	281,357		282,015		—		—		282,015
Real estate:
Construction, 1 to 4 family residential	70,210		70,432		—		—		70,432
Construction, land development and commercial	110,501		110,039		—		—		110,039
Mortgage, farmland	242,969		242,978		—		—		242,978
Mortgage, 1 to 4 family first liens	882,156		890,409		—		—		890,409
Mortgage, 1 to 4 family junior liens	126,336		124,945		—		—		124,945
Mortgage, multi-family	369,552		370,538		—		—		370,538
Mortgage, commercial	412,186		413,409		—		—		413,409
Loans to individuals	30,573		31,164		—		—		31,164
Obligations of state and political subdivisions	55,838		59,300		—		—		59,300
Accrued interest receivable	12,177		12,177		—		12,177		—
Total financial instrument assets	$	3,720,990	$	3,735,129	$	722,956	$	324,022	$	2,688,151
Financial instrument liabilities:
Deposits
Noninterest-bearing deposits	$	532,190	$	532,190	$	—	$	532,190	$	—
Interest-bearing deposits	2,660,378		2,673,815		—		2,673,815		—
Federal Home Loan Bank borrowings	105,000		115,259		—		115,259		—
Accrued interest payable	1,733		1,733		—		1,733		—
Total financial instrument liabilities	$	3,299,301	$	3,322,997	$	—	$	3,322,997	$	—
	Face Amount
Financial instrument with off-balance sheet risk:
Loan commitments	$	483,602	$	—	$	—	$	—	$	—
Letters of credit	8,056		—		—		—		—
Total financial instrument liabilities with off-balance-sheet risk	$	491,658	$	—	$	—	$	—	$	—

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

Schedule of assets and liabilities measured at fair value on a recurring basis

The table below represents the balances of assets and liabilities measured at fair value on a recurring basis:

	September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	221,414	$	—	$	—	$	221,414
State and political subdivisions	—		235,207		—		235,207
Mortgage-backed securities and collateralized mortgage obligations	—		9,753		—		9,753
Other securities (FHLB, FHLMC and FNMA)	—		34,891		—		34,891
Total	$	221,414	$	279,851	$	—	$	501,265

	December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Securities available for sale	(Amounts In Thousands)
U.S. Treasury	$	148,646	$	—	$	—	$	148,646
State and political subdivisions	—		224,566		—		224,566
Other securities (FHLB, FHLMC and FNMA)	—		35,160		—		35,160
Total	$	148,646	$	259,726	$	—	$	408,372

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

Schedule of assets measured at fair value on a nonrecurring basis

The following tables present the Company’s assets that are measured at fair value on a nonrecurring basis.

	September 30, 2021								Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	886	$	886	$	—	$	—
Commercial and financial	—		—		1,188		1,188		—		—
Real Estate:											—
Construction, 1 to 4 family residential	—		—		386		386		—		—
Construction, land development and commercial	—		—		96		96		—		—
Mortgage, farmland	—		—		1,217		1,217		—		—
Mortgage, 1 to 4 family first liens	—		—		5,084		5,084		114		147
Mortgage, 1 to 4 family junior liens	—		—		193		193		9		9
Mortgage, multi-family	—		—		1,470		1,470		—		—
Mortgage, commercial	—		—		4,222		4,222		255		255
Loans to individuals	—		—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—		—
Total	$	—	$	—	$	14,742	$	14,742	$	378	$	411

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis (continued)

	December 31, 2020								Year Ended December 31, 2020
	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value		Total Losses
	(Amounts in Thousands)
Loans (4)
Agricultural	$	—	$	—	$	1,081	$	1,081	$	—
Commercial and financial	—		—		1,692		1,692		385
Real Estate:
Construction, 1 to 4 family residential	—		—		414		414		—
Construction, land development and commercial	—		—		315		315		—
Mortgage, farmland	—		—		1,718		1,718		—
Mortgage, 1 to 4 family first liens	—		—		5,906		5,906		252
Mortgage, 1 to 4 family junior liens	—		—		176		176		19
Mortgage, multi-family	—		—		1,773		1,773		—
Mortgage, commercial	—		—		5,082		5,082		250
Loans to individuals	—		—		—		—		—
Foreclosed assets (5)	—		—		—		—		—
Total	$	—	$	—	$	18,157	$	18,157	$	906

(1)Considered Level 1 under ASC 820.

(2)Considered Level 2 under ASC 820.

(3)Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4)Represents carrying value and related write-downs of loans for which adjustments are based on the value of the collateral. The carrying value of loans fully-charged off is zero.

(5)Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Schedule of banks commitments

A summary of the Bank’s commitments at September 30, 2021 and December 31, 2020 is as follows:

	September 30, 2021		December 31, 2020
	(Amounts In Thousands)
Firm loan commitments and unused portion of lines of credit:
Home equity loans	$	79,686	$	69,974
Credit cards	64,910		60,535
Commercial, real estate and home construction	173,754		118,186
Commercial lines and real estate purchase loans	297,858		234,907
Outstanding letters of credit	7,523		8,056

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Identification of the gains and losses recognized on the derivative instruments designated as cash flow hedges

There were no gains or losses recognized on the Bank's derivative instruments designated as cash flow hedges for the nine months ended September 30, 2021. The table below identifies the gains and losses recognized on the Bank’s derivative instruments designated as cash flow hedges for the nine months ended September 30, 2020:

	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
	(Amounts in Thousands)
September 30, 2020
Interest rate swap	$	81	Interest Expense	$	—	Other Income	$	—
Interest rate swap	(626)		Interest Expense	—		Other Income	—

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Summary of Significant Accounting Policies (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($) property segment	Jun. 30, 2021 USD ($)	Feb. 28, 2021 USD ($)	Jan. 01, 2021 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accrued interest receivable on AFS debt securities	$ 2,180
Net decrease to retained earnings	436,304	$ 425,377			$ 416,076	$ 407,259	$ 398,719	$ 375,211
Accrued interest receivable	$ 12,432				12,177
Number of operating segments | segment	1
Number of multi family rental properties | property	3
Number of assisted living rental properties | property	3
Duration of tax credit of each property	10 years
Limited partnership, capital contribution			$ 4,180
Operating lease, right-of-use asset	$ 2,570				2,860
ACL Allocation	35,590	35,940		$ 37,070	37,070	37,060	37,620	33,760
Impact of adopting ASC 326	4,580	4,090		0	0
Loans Held For Investment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accrued interest receivable	$ 10,130
Each Limited Partnership
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Ownership interest in each limited partnership (or greater)	99.00%
As Reported Under ASC 326
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net decrease to retained earnings					411,325
ACL Allocation				39,816
Impact of adopting ASC 326				3,584
Impact of ASC 326 Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net decrease to retained earnings					(4,751)
ACL Allocation				2,746	2,746
Impact of adopting ASC 326				3,584	3,584
Deferred income taxes, net				1,580
Retained Earnings [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net decrease to retained earnings	$ 468,239	$ 455,114			439,831	$ 431,401	$ 419,971	$ 409,509
Retained Earnings [Member] | As Reported Under ASC 326
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net decrease to retained earnings					435,080
Retained Earnings [Member] | Impact of ASC 326 Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net decrease to retained earnings				$ 4,750	$ (4,751)

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Summary of computation of basic and diluted earnings per share [Abstract]
Common shares outstanding at the beginning of the period (shares)					9,306,252	9,330,995	9,364,062	9,351,694
Weighted average number of net shares (redeemed) issued (shares)	(7,539)	(7,765)	(21,234)	28,137
Weighted average shares outstanding (basic) (shares)	9,298,713	9,356,297	9,309,761	9,379,831
Weighted average of potential dilutive shares attributable to stock options granted, computed under the treasury stock method (shares)	3,731	3,592	3,605	3,673
Weighted average number of shares (diluted) (shares)	9,302,444	9,359,889	9,313,366	9,383,504
Net income (In thousands)	$ 13,125	$ 11,430	$ 41,932	$ 30,216
Earnings per share:
Basic (in dollars per share)	$ 1.41	$ 1.22	$ 4.50	$ 3.22
Diluted (in dollars per share)	$ 1.41	$ 1.22	$ 4.50	$ 3.22

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Accumulated Other Comprehensive Income Loss [Line Items]
Tax effect	$ (1,418)	$ (2,920)
Net-of-tax amount	4,267	8,782
Net unrealized loss on available-for-sale securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Net unrealized gain (loss)	$ 5,685	$ 11,702

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Securities (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2021 USD ($) security	Sep. 30, 2021 USD ($) security	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) security
Securities available for sale
Securities available for sale, Percent	100.00%	100.00%		100.00%
Available-for-sale Securities Reconciliation [Abstract]
Amortized Cost	$ 495,580,000	$ 495,580,000		$ 396,670,000
Gross Unrealized Gains	8,225,000	8,225,000		11,888,000
Gross Unrealized (Losses)	(2,540,000)	(2,540,000)		(186,000)
Allowance for Credit Losses	0	0		0
Amortized Cost
Due in one year or less	51,863,000	51,863,000
Due after one year through five years	270,805,000	270,805,000
Due after five years through ten years	118,465,000	118,465,000
Due over ten years	44,645,000	44,645,000
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Amortized Cost, Total	485,778,000	485,778,000
Fair Value
Due in one year or less	52,206,000	52,206,000
Due after one year through five years	273,962,000	273,962,000
Due after five years through ten years	120,965,000	120,965,000
Due over ten years	44,379,000	44,379,000
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Fair Value, Total	491,512,000	491,512,000
Carrying value of investment securities pledged to collateralize short-term borrowings	501,265,000	501,265,000		$ 408,372,000
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract]
Sales proceeds	$ 0	0	$ 313,000
Gross realized gains		0	10,000
Gross realized losses		$ 0	$ 0
Less than 12 months
Number of securities | security	242	242		43
Fair Value	$ 198,780,000	$ 198,780,000		$ 34,187,000
Unrealized Loss	$ (2,284,000)	$ (2,284,000)		$ (180,000)
Percentage	1.15%	1.15%		0.53%
12 months or more
Number of securities | security	16	16		4
Fair Value	$ 16,747,000	$ 16,747,000		$ 370,000
Unrealized Loss	$ (256,000)	$ (256,000)		$ (6,000)
Percentage	1.53%	1.53%		1.62%
Total
Number of securities | security	258	258		47
Fair Value	$ 215,527,000	$ 215,527,000		$ 34,557,000
Unrealized Loss	$ (2,540,000)	$ (2,540,000)		$ (186,000)
Percentage	1.18%	1.18%		0.54%
Collateralized Securities [Member]
Fair Value
Carrying value of investment securities pledged to collateralize short-term borrowings	$ 10,140,000	$ 10,140,000
U.S. Treasury [Member]
Securities available for sale
Securities available for sale, Percent	44.17%	44.17%		36.40%
Available-for-sale Securities Reconciliation [Abstract]
Amortized Cost	$ 219,281,000	$ 219,281,000		$ 143,467,000
Gross Unrealized Gains	3,065,000	3,065,000		5,179,000
Gross Unrealized (Losses)	(932,000)	(932,000)		0
Allowance for Credit Losses	0	0		0
Fair Value
Carrying value of investment securities pledged to collateralize short-term borrowings	$ 221,414,000	$ 221,414,000		$ 148,646,000
Less than 12 months
Number of securities | security	41	41		0
Fair Value	$ 103,163,000	$ 103,163,000		$ 0
Unrealized Loss	$ (932,000)	$ (932,000)		$ 0
Percentage	0.90%	0.90%		0.00%
12 months or more
Number of securities | security	0	0		0
Fair Value	$ 0	$ 0		$ 0
Unrealized Loss	$ 0	$ 0		$ 0
Percentage	0.00%	0.00%		0.00%
Total
Number of securities | security	41	41		0
Fair Value	$ 103,163,000	$ 103,163,000		$ 0
Unrealized Loss	$ (932,000)	$ (932,000)		$ 0
Percentage	0.90%	0.90%		0.00%
Other securities [Member]
Securities available for sale
Securities available for sale, Percent	6.96%	6.96%		8.61%
Available-for-sale Securities Reconciliation [Abstract]
Amortized Cost	$ 35,377,000	$ 35,377,000		$ 35,195,000
Gross Unrealized Gains	0	0		35,000
Gross Unrealized (Losses)	(486,000)	(486,000)		(70,000)
Allowance for Credit Losses	0	0		0
Fair Value
Carrying value of investment securities pledged to collateralize short-term borrowings	$ 34,891,000	$ 34,891,000		$ 35,160,000
Less than 12 months
Number of securities | security	8	8		8
Fair Value	$ 20,059,000	$ 20,059,000		$ 20,019,000
Unrealized Loss	$ (265,000)	$ (265,000)		$ (70,000)
Percentage	1.32%	1.32%		0.35%
12 months or more
Number of securities | security	6	6		0
Fair Value	$ 14,832,000	$ 14,832,000		$ 0
Unrealized Loss	$ (221,000)	$ (221,000)		$ 0
Percentage	1.49%	1.49%		0.00%
Total
Number of securities | security	14	14		8
Fair Value	$ 34,891,000	$ 34,891,000		$ 20,019,000
Unrealized Loss	$ (486,000)	$ (486,000)		$ (70,000)
Percentage	1.39%	1.39%		0.35%
State and political subdivisions [Member]
Securities available for sale
Securities available for sale, Percent	46.92%	46.92%		54.99%
Available-for-sale Securities Reconciliation [Abstract]
Amortized Cost	$ 231,120,000	$ 231,120,000		$ 218,008,000
Gross Unrealized Gains	5,160,000	5,160,000		6,674,000
Gross Unrealized (Losses)	(1,073,000)	(1,073,000)		(116,000)
Allowance for Credit Losses	0	0		0
Fair Value
Carrying value of investment securities pledged to collateralize short-term borrowings	$ 235,207,000	$ 235,207,000		$ 224,566,000
Less than 12 months
Number of securities | security	189	189		35
Fair Value	$ 65,805,000	$ 65,805,000		$ 14,168,000
Unrealized Loss	$ (1,038,000)	$ (1,038,000)		$ (110,000)
Percentage	1.58%	1.58%		0.78%
12 months or more
Number of securities | security	10	10		4
Fair Value	$ 1,915,000	$ 1,915,000		$ 370,000
Unrealized Loss	$ (35,000)	$ (35,000)		$ (6,000)
Percentage	1.83%	1.83%		1.62%
Total
Number of securities | security	199	199		39
Fair Value	$ 67,720,000	$ 67,720,000		$ 14,538,000
Unrealized Loss	$ (1,073,000)	$ (1,073,000)		$ (116,000)
Percentage	1.58%	1.58%		0.80%
Mortgage Backed Securities, Other
Securities available for sale
Securities available for sale, Percent	1.95%	1.95%		0.00%
Available-for-sale Securities Reconciliation [Abstract]
Amortized Cost	$ 9,802,000	$ 9,802,000
Gross Unrealized Gains	0	0
Gross Unrealized (Losses)	(49,000)	(49,000)
Allowance for Credit Losses	0	0
Amortized Cost
Mortgage-backed securities and collateralized mortgage obligations, Amortized Cost	9,802,000	9,802,000
Fair Value
Mortgage-backed securities and collateralized mortgage obligations. Fair Value	9,753,000	9,753,000
Carrying value of investment securities pledged to collateralize short-term borrowings	$ 9,753,000	$ 9,753,000		$ 0
Less than 12 months
Number of securities | security	4	4
Fair Value	$ 9,753,000	$ 9,753,000
Unrealized Loss	$ (49,000)	$ (49,000)
Percentage	0.50%	0.50%
12 months or more
Number of securities | security	0	0
Fair Value	$ 0	$ 0
Unrealized Loss	$ 0	$ 0
Percentage	0.00%	0.00%
Total
Number of securities | security	4	4
Fair Value	$ 9,753,000	$ 9,753,000
Unrealized Loss	$ (49,000)	$ (49,000)
Percentage	0.50%	0.50%

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Loans (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Jan. 01, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Summary of classes of loans (abstract)
Loans and receivable	$ 2,653,861	$ 2,767,125			$ 2,710,144
Net unamortized fees and costs	927				938
Total	2,654,788				2,711,082
Less allowance for credit losses and loan losses	35,590	37,060	$ 35,940	$ 37,070	37,070	$ 37,620	$ 33,760
Loans and receivable, net	2,619,198				2,674,012
Loans and Leases Receivable, Allowance	35,590				37,070
financing receivable, allowance for credit loss, change due to economic factors	1,140
Financing Receivable, Allowance for Credit Losses, change due to loan volume	750
Financing Receivable, Allowance for Credit Losses, change in prepayment and curtailment rates	1,030
Financing Receivable, Allowance for Credit Losses, change due to historical loss rates	1,590
Impact of ASC 326 Adoption
Summary of classes of loans (abstract)
Less allowance for credit losses and loan losses				$ 2,746	2,746
Agricultural [Member]
Summary of classes of loans (abstract)
Loans and receivable	94,210	96,321			94,842
Total	94,210
Less allowance for credit losses and loan losses	2,118	2,595	2,055		2,508	2,547	2,400
Agricultural [Member] | Impact of ASC 326 Adoption
Summary of classes of loans (abstract)
Less allowance for credit losses and loan losses					(328)
Commercial and Financial [Member]
Summary of classes of loans (abstract)
Loans and receivable	228,181	335,463			286,242
Total	228,181
Less allowance for credit losses and loan losses	4,348	5,345	4,802		4,885	5,777	4,988
Commercial and Financial [Member] | Impact of ASC 326 Adoption
Summary of classes of loans (abstract)
Less allowance for credit losses and loan losses					298
Commercial and Financial [Member] | Small Business Administration SBA, CARES Act, Paycheck Protection Program
Summary of classes of loans (abstract)
Loans and Leases Receivable, Before Unamortized Fees and Costs	24,550				86,500
Loans and Leases Receivable, Deferred Loan Fees included with Loans	330				2,120
Interest and fee income, Loans and Leases, PPP Loan fees recognized in income	5,480	1,260
Payment for (Proceeds from) Loans and Leases, Payment of PPP loans forgiven	160,480	0
Real Estate Construction One to Four Family Residential [Member]
Summary of classes of loans (abstract)
Loans and receivable	73,167				71,117
Total	73,167
Real Estate: Construction, land development and commercial [Member]
Summary of classes of loans (abstract)
Loans and receivable	118,623				111,913
Total	118,623
Real Estate: Mortgage, farmland [Member]
Summary of classes of loans (abstract)
Loans and receivable	241,650	243,689			247,142
Total	241,650
Less allowance for credit losses and loan losses	4,663	$ 4,048	$ 4,904		4,173	$ 4,089	$ 3,950
Real Estate: Mortgage, farmland [Member] | Impact of ASC 326 Adoption
Summary of classes of loans (abstract)
Less allowance for credit losses and loan losses					763
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Summary of classes of loans (abstract)
Loans and receivable	898,333				892,089
Total	898,333
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Summary of classes of loans (abstract)
Loans and receivable	115,308				127,833
Total	115,308
Real Estate: Mortgage, multi-family [Member]
Summary of classes of loans (abstract)
Loans and receivable	389,805				374,014
Total	389,805
Real Estate: Mortgage, commercial [Member]
Summary of classes of loans (abstract)
Loans and receivable	410,050				417,139
Total	410,050
Loans to individuals [Member]
Summary of classes of loans (abstract)
Loans and receivable	32,235				31,325
Total	32,235
Obligations of state and political subdivisions [Member]
Summary of classes of loans (abstract)
Loans and receivable	52,299				$ 56,488
Total	$ 52,299

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Loans, Allowance For Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jan. 01, 2021	Dec. 31, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 35,940	$ 37,620	$ 37,070	$ 33,760
Charge-offs	(588)	(874)	(856)	(2,482)
Recoveries	646	471	2,187	1,282
Provision	(408)	(157)	(5,557)	4,500
Ending balance	35,590	37,060	35,590	37,060
Ending balance, individually evaluated for impairment	203	745	203	745
Ending balance, collectively evaluated for impairment	35,387	36,315	35,387	36,315
Loan [Abstract]
Total Loans Receivable	2,653,861	2,767,125	2,653,861	2,767,125		$ 2,710,144
Ending balance, individually evaluated for impairment	16,755	28,672	16,755	28,672
Ending balance, collectively evaluated for impairment	2,637,106	2,738,453	2,637,106	2,738,453
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	4,090		0
Impact of adopting ASC 326	4,580		4,580		$ 0	0
Credit loss expense	490		996
(Charge-offs), net recoveries	0		0
Ending balance	4,580		4,580
Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			2,746
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			3,584
Impact of adopting ASC 326					$ 3,584	3,584
Agricultural [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	2,055	2,547	2,508	2,400
Charge-offs	0	(8)	0	(43)
Recoveries	29	26	117	44
Provision	34	30	(179)	194
Ending balance	2,118	2,595	2,118	2,595
Ending balance, individually evaluated for impairment	3	80	3	80
Ending balance, collectively evaluated for impairment	2,115	2,515	2,115	2,515
Loan [Abstract]
Total Loans Receivable	94,210	96,321	94,210	96,321		94,842
Ending balance, individually evaluated for impairment	1,426	1,742	1,426	1,742
Ending balance, collectively evaluated for impairment	92,784	94,579	92,784	94,579
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	494		0
Impact of adopting ASC 326	509		509			0
Credit loss expense	15		124
(Charge-offs), net recoveries	0		0
Ending balance	509		509
Agricultural [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			(328)
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			385
Impact of adopting ASC 326						385
Commercial and Financial [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	4,802	5,777	4,885	4,988
Charge-offs	(14)	(478)	(90)	(1,253)
Recoveries	431	165	966	374
Provision	(871)	(119)	(1,711)	1,236
Ending balance	4,348	5,345	4,348	5,345
Ending balance, individually evaluated for impairment	4	477	4	477
Ending balance, collectively evaluated for impairment	4,344	4,868	4,344	4,868
Loan [Abstract]
Total Loans Receivable	228,181	335,463	228,181	335,463		286,242
Ending balance, individually evaluated for impairment	1,394	5,949	1,394	5,949
Ending balance, collectively evaluated for impairment	226,787	329,514	226,787	329,514
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	1,529		0
Impact of adopting ASC 326	1,646		1,646			0
Credit loss expense	117		61
(Charge-offs), net recoveries	0		0
Ending balance	1,646		1,646
Commercial and Financial [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			298
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			1,585
Impact of adopting ASC 326						1,585
Real Estate: Construction and land development [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	2,483	2,433	2,319	2,599
Charge-offs	0	0	(3)	(43)
Recoveries	2	27	93	81
Provision	(188)	(167)	(439)	(344)
Ending balance	2,297	2,293	2,297	2,293
Ending balance, individually evaluated for impairment	128	87	128	87
Ending balance, collectively evaluated for impairment	2,169	2,206	2,169	2,206
Loan [Abstract]
Total Loans Receivable	191,790	184,797	191,790	184,797
Ending balance, individually evaluated for impairment	1,028	7,933	1,028	7,933
Ending balance, collectively evaluated for impairment	190,762	176,864	190,762	176,864
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	864		0
Impact of adopting ASC 326	996		996			0
Credit loss expense	132		260
(Charge-offs), net recoveries	0		0
Ending balance	996		996
Real Estate: Construction and land development [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			327
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			736
Impact of adopting ASC 326						736
Real Estate: Mortgage, farmland [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	4,904	4,089	4,173	3,950
Charge-offs	0	0	(1)	(1)
Recoveries	0	0	25	0
Provision	(241)	(41)	(297)	99
Ending balance	4,663	4,048	4,663	4,048
Ending balance, individually evaluated for impairment	4	1	4	1
Ending balance, collectively evaluated for impairment	4,659	4,047	4,659	4,047
Loan [Abstract]
Total Loans Receivable	241,650	243,689	241,650	243,689		247,142
Ending balance, individually evaluated for impairment	1,583	2,440	1,583	2,440
Ending balance, collectively evaluated for impairment	240,067	241,249	240,067	241,249
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	107		0
Impact of adopting ASC 326	168		168			0
Credit loss expense	61		(12)
(Charge-offs), net recoveries	0		0
Ending balance	168		168
Real Estate: Mortgage, farmland [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			763
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			180
Impact of adopting ASC 326						180
Real Estate: Mortgage, 1 to 4 family [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	10,879	12,282	12,368	10,638
Charge-offs	(181)	(115)	(263)	(576)
Recoveries	140	201	648	636
Provision	26	(210)	(2,411)	1,460
Ending balance	10,864	12,158	10,864	12,158
Ending balance, individually evaluated for impairment	59	86	59	86
Ending balance, collectively evaluated for impairment	10,805	12,072	10,805	12,072
Loan [Abstract]
Total Loans Receivable	1,013,641	1,031,701	1,013,641	1,031,701
Ending balance, individually evaluated for impairment	5,566	6,980	5,566	6,980
Ending balance, collectively evaluated for impairment	1,008,075	1,024,721	1,008,075	1,024,721
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	791		0
Impact of adopting ASC 326	804		804			0
Credit loss expense	13		333
(Charge-offs), net recoveries	0		0
Ending balance	804		804
Real Estate: Mortgage, 1 to 4 family [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			522
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			471
Impact of adopting ASC 326						471
Real Estate: Mortgage, multi-family and commercial [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	9,707	9,173	9,415	7,859
Charge-offs	(255)	(210)	(265)	(290)
Recoveries	23	10	240	33
Provision	743	320	(568)	1,691
Ending balance	10,218	9,293	10,218	9,293
Ending balance, individually evaluated for impairment	5	0	5	0
Ending balance, collectively evaluated for impairment	10,213	9,293	10,213	9,293
Loan [Abstract]
Total Loans Receivable	799,855	788,209	799,855	788,209
Ending balance, individually evaluated for impairment	5,758	3,614	5,758	3,614
Ending balance, collectively evaluated for impairment	794,097	784,595	794,097	784,595
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	275		0
Impact of adopting ASC 326	431		431			0
Credit loss expense	156		219
(Charge-offs), net recoveries	0		0
Ending balance	431		431
Real Estate: Mortgage, multi-family and commercial [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			1,396
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			212
Impact of adopting ASC 326						212
Others [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	1,110	1,319	1,402	1,326
Charge-offs	(138)	(63)	(234)	(276)
Recoveries	21	42	98	114
Provision	89	30	48	164
Ending balance	1,082	1,328	1,082	1,328
Ending balance, individually evaluated for impairment	0	14	0	14
Ending balance, collectively evaluated for impairment	1,082	1,314	1,082	1,314
Loan [Abstract]
Total Loans Receivable	84,534	86,945	84,534	86,945
Ending balance, individually evaluated for impairment	0	14	0	14
Ending balance, collectively evaluated for impairment	84,534	$ 86,931	84,534	$ 86,931
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326	30		0
Impact of adopting ASC 326	26		26			0
Credit loss expense	(4)		11
(Charge-offs), net recoveries	0		0
Ending balance	$ 26		26
Others [Member] | Impact of ASC 326 Adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance			(232)
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance, prior to adoption of ASC 326			$ 15
Impact of adopting ASC 326						$ 15

XML

Loans, Credit Quality Indicators (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	$ 2,653,861	$ 2,710,144	$ 2,767,125
Summary of credit quality indicators by type of loans [Abstract]
Total	2,654,788	2,711,082
Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	94,210	94,842	96,321
Summary of credit quality indicators by type of loans [Abstract]
2020	17,331
2019	14,085
2018	3,999
2017	3,007
2016	737
Prior	483
Revolving Loans Amortized Cost Basis	54,568
Total	94,210
Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	228,181	286,242	335,463
Summary of credit quality indicators by type of loans [Abstract]
2020	82,614
2019	48,374
2018	15,372
2017	6,981
2016	3,694
Prior	3,702
Revolving Loans Amortized Cost Basis	67,444
Total	228,181
Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	73,167	71,117
Summary of credit quality indicators by type of loans [Abstract]
2020	5,682
2019	4,037
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	63,448
Total	73,167
Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	118,623	111,913
Summary of credit quality indicators by type of loans [Abstract]
2020	41,157
2019	11,943
2018	2,732
2017	315
2016	1,586
Prior	377
Revolving Loans Amortized Cost Basis	60,513
Total	118,623
Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	241,650	247,142	$ 243,689
Summary of credit quality indicators by type of loans [Abstract]
2020	58,269
2019	81,379
2018	21,425
2017	16,634
2016	18,235
Prior	26,036
Revolving Loans Amortized Cost Basis	19,672
Total	241,650
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	898,333	892,089
Summary of credit quality indicators by type of loans [Abstract]
2020	218,420
2019	257,683
2018	88,589
2017	86,282
2016	79,882
Prior	151,748
Revolving Loans Amortized Cost Basis	15,729
Total	898,333
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	115,308	127,833
Summary of credit quality indicators by type of loans [Abstract]
2020	10,941
2019	13,539
2018	6,954
2017	8,978
2016	6,357
Prior	7,820
Revolving Loans Amortized Cost Basis	60,719
Total	115,308
Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	389,805	374,014
Summary of credit quality indicators by type of loans [Abstract]
2020	117,645
2019	185,229
2018	24,086
2017	2,967
2016	6,064
Prior	33,012
Revolving Loans Amortized Cost Basis	20,802
Total	389,805
Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	410,050	417,139
Summary of credit quality indicators by type of loans [Abstract]
2020	72,715
2019	185,551
2018	26,643
2017	20,187
2016	31,867
Prior	43,719
Revolving Loans Amortized Cost Basis	29,368
Total	410,050
Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	32,235	31,325
Summary of credit quality indicators by type of loans [Abstract]
2020	10,681
2019	7,268
2018	2,889
2017	1,306
2016	209
Prior	9,816
Revolving Loans Amortized Cost Basis	66
Total	32,235
Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable	52,299	56,488
Summary of credit quality indicators by type of loans [Abstract]
2020	660
2019	6,195
2018	1,986
2017	960
2016	11,656
Prior	21,308
Revolving Loans Amortized Cost Basis	9,534
Total	52,299
Excellent [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		69,568
Excellent [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		3,761
Summary of credit quality indicators by type of loans [Abstract]
2020	424
2019	235
2018	30
2017	17
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	5,138
Total	5,844
Excellent [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		9,024
Summary of credit quality indicators by type of loans [Abstract]
2020	6,153
2019	1,007
2018	5
2017	260
2016	42
Prior	0
Revolving Loans Amortized Cost Basis	1,231
Total	8,698
Excellent [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		0
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	0
Excellent [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		227
Summary of credit quality indicators by type of loans [Abstract]
2020	5,079
2019	0
2018	0
2017	0
2016	147
Prior	8
Revolving Loans Amortized Cost Basis	0
Total	5,234
Excellent [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		5,706
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	3,591
2018	124
2017	60
2016	102
Prior	58
Revolving Loans Amortized Cost Basis	139
Total	4,074
Excellent [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		2,303
Summary of credit quality indicators by type of loans [Abstract]
2020	465
2019	1,358
2018	434
2017	22
2016	153
Prior	306
Revolving Loans Amortized Cost Basis	0
Total	2,738
Excellent [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		204
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	14
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	463
Total	477
Excellent [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		14,650
Summary of credit quality indicators by type of loans [Abstract]
2020	2,562
2019	4,570
2018	0
2017	0
2016	0
Prior	717
Revolving Loans Amortized Cost Basis	0
Total	7,849
Excellent [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		26,940
Summary of credit quality indicators by type of loans [Abstract]
2020	99
2019	17,194
2018	0
2017	0
2016	3,436
Prior	365
Revolving Loans Amortized Cost Basis	0
Total	21,094
Excellent [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	0
Excellent [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		6,752
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	6,259
Revolving Loans Amortized Cost Basis	0
Total	6,259
Good [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		359,578
Good [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		12,369
Summary of credit quality indicators by type of loans [Abstract]
2020	999
2019	1,912
2018	634
2017	75
2016	58
Prior	30
Revolving Loans Amortized Cost Basis	4,923
Total	8,631
Good [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		62,310
Summary of credit quality indicators by type of loans [Abstract]
2020	9,514
2019	9,687
2018	2,381
2017	1,135
2016	382
Prior	1,921
Revolving Loans Amortized Cost Basis	19,170
Total	44,190
Good [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		13,675
Summary of credit quality indicators by type of loans [Abstract]
2020	212
2019	487
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	13,796
Total	14,495
Good [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		15,187
Summary of credit quality indicators by type of loans [Abstract]
2020	1,925
2019	2,235
2018	0
2017	0
2016	154
Prior	247
Revolving Loans Amortized Cost Basis	9,774
Total	14,335
Good [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		41,878
Summary of credit quality indicators by type of loans [Abstract]
2020	7,918
2019	16,961
2018	2,733
2017	3,144
2016	6,489
Prior	5,556
Revolving Loans Amortized Cost Basis	3,915
Total	46,716
Good [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		47,233
Summary of credit quality indicators by type of loans [Abstract]
2020	7,476
2019	12,322
2018	3,272
2017	3,301
2016	3,851
Prior	11,023
Revolving Loans Amortized Cost Basis	4,164
Total	45,409
Good [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		3,707
Summary of credit quality indicators by type of loans [Abstract]
2020	33
2019	637
2018	291
2017	0
2016	109
Prior	496
Revolving Loans Amortized Cost Basis	1,437
Total	3,003
Good [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		57,281
Summary of credit quality indicators by type of loans [Abstract]
2020	5,682
2019	42,254
2018	1,817
2017	165
2016	2,836
Prior	9,333
Revolving Loans Amortized Cost Basis	0
Total	62,087
Good [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		92,699
Summary of credit quality indicators by type of loans [Abstract]
2020	11,312
2019	48,976
2018	3,462
2017	4,337
2016	5,379
Prior	7,364
Revolving Loans Amortized Cost Basis	10,031
Total	90,861
Good [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		145
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	72
2017	23
2016	7
Prior	0
Revolving Loans Amortized Cost Basis	2
Total	104
Good [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		13,094
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	3,216
2018	0
2017	0
2016	0
Prior	9,225
Revolving Loans Amortized Cost Basis	0
Total	12,441
Satisfactory [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1,690,006
Satisfactory [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		42,015
Summary of credit quality indicators by type of loans [Abstract]
2020	6,883
2019	6,649
2018	1,966
2017	2,003
2016	501
Prior	141
Revolving Loans Amortized Cost Basis	23,082
Total	41,225
Satisfactory [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		144,999
Summary of credit quality indicators by type of loans [Abstract]
2020	42,268
2019	24,288
2018	8,225
2017	3,956
2016	2,686
Prior	1,255
Revolving Loans Amortized Cost Basis	35,106
Total	117,784
Satisfactory [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		41,616
Summary of credit quality indicators by type of loans [Abstract]
2020	4,403
2019	1,882
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	42,675
Total	48,960
Satisfactory [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		64,301
Summary of credit quality indicators by type of loans [Abstract]
2020	20,602
2019	7,731
2018	2,529
2017	276
2016	1,023
Prior	122
Revolving Loans Amortized Cost Basis	32,038
Total	64,321
Satisfactory [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		129,210
Summary of credit quality indicators by type of loans [Abstract]
2020	38,291
2019	42,353
2018	12,483
2017	9,244
2016	9,152
Prior	12,934
Revolving Loans Amortized Cost Basis	9,822
Total	134,279
Satisfactory [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		701,273
Summary of credit quality indicators by type of loans [Abstract]
2020	187,076
2019	190,199
2018	75,462
2017	72,729
2016	64,914
Prior	115,599
Revolving Loans Amortized Cost Basis	8,590
Total	714,569
Satisfactory [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		115,731
Summary of credit quality indicators by type of loans [Abstract]
2020	10,451
2019	10,780
2018	6,266
2017	8,046
2016	5,893
Prior	6,676
Revolving Loans Amortized Cost Basis	55,630
Total	103,742
Satisfactory [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		197,493
Summary of credit quality indicators by type of loans [Abstract]
2020	57,636
2019	96,776
2018	21,265
2017	1,627
2016	1,628
Prior	15,880
Revolving Loans Amortized Cost Basis	14,490
Total	209,302
Satisfactory [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		196,310
Summary of credit quality indicators by type of loans [Abstract]
2020	49,134
2019	51,957
2018	16,814
2017	13,058
2016	18,510
Prior	25,967
Revolving Loans Amortized Cost Basis	15,679
Total	191,119
Satisfactory [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		30,487
Summary of credit quality indicators by type of loans [Abstract]
2020	10,340
2019	6,988
2018	2,737
2017	1,223
2016	195
Prior	9,813
Revolving Loans Amortized Cost Basis	56
Total	31,352
Satisfactory [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		26,571
Summary of credit quality indicators by type of loans [Abstract]
2020	660
2019	2,143
2018	1,778
2017	711
2016	11,477
Prior	3,881
Revolving Loans Amortized Cost Basis	9,534
Total	30,184
Monitor [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		461,913
Monitor [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		29,381
Summary of credit quality indicators by type of loans [Abstract]
2020	5,535
2019	4,762
2018	1,073
2017	630
2016	171
Prior	312
Revolving Loans Amortized Cost Basis	17,887
Total	30,370
Monitor [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		56,439
Summary of credit quality indicators by type of loans [Abstract]
2020	20,191
2019	11,791
2018	3,938
2017	1,438
2016	450
Prior	520
Revolving Loans Amortized Cost Basis	11,371
Total	49,699
Monitor [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		13,654
Summary of credit quality indicators by type of loans [Abstract]
2020	956
2019	1,668
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	6,394
Total	9,018
Monitor [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		23,368
Summary of credit quality indicators by type of loans [Abstract]
2020	6,465
2019	1,429
2018	7
2017	39
2016	262
Prior	0
Revolving Loans Amortized Cost Basis	18,354
Total	26,556
Monitor [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		61,298
Summary of credit quality indicators by type of loans [Abstract]
2020	5,351
2019	17,330
2018	5,791
2017	4,138
2016	1,324
Prior	7,079
Revolving Loans Amortized Cost Basis	5,796
Total	46,809
Monitor [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		114,207
Summary of credit quality indicators by type of loans [Abstract]
2020	20,445
2019	48,859
2018	6,675
2017	7,530
2016	9,409
Prior	15,824
Revolving Loans Amortized Cost Basis	2,975
Total	111,717
Monitor [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		5,153
Summary of credit quality indicators by type of loans [Abstract]
2020	239
2019	1,232
2018	197
2017	440
2016	113
Prior	322
Revolving Loans Amortized Cost Basis	2,735
Total	5,278
Monitor [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		70,885
Summary of credit quality indicators by type of loans [Abstract]
2020	38,871
2019	41,629
2018	178
2017	1,175
2016	1,600
Prior	1,461
Revolving Loans Amortized Cost Basis	6,312
Total	91,226
Monitor [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		77,125
Summary of credit quality indicators by type of loans [Abstract]
2020	10,640
2019	57,522
2018	6,064
2017	1,737
2016	2,542
Prior	3,487
Revolving Loans Amortized Cost Basis	3,658
Total	85,650
Monitor [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		479
Summary of credit quality indicators by type of loans [Abstract]
2020	292
2019	201
2018	40
2017	54
2016	4
Prior	0
Revolving Loans Amortized Cost Basis	3
Total	594
Monitor [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		9,924
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	836
2018	208
2017	249
2016	179
Prior	1,800
Revolving Loans Amortized Cost Basis	0
Total	3,272
Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		78,045
Special Mention [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		5,143
Summary of credit quality indicators by type of loans [Abstract]
2020	2,615
2019	442
2018	86
2017	166
2016	7
Prior	0
Revolving Loans Amortized Cost Basis	3,303
Total	6,619
Special Mention [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		8,258
Summary of credit quality indicators by type of loans [Abstract]
2020	1,332
2019	582
2018	529
2017	124
2016	3
Prior	6
Revolving Loans Amortized Cost Basis	266
Total	2,842
Special Mention [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1,857
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	583
Total	583
Special Mention [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		7,137
Summary of credit quality indicators by type of loans [Abstract]
2020	86
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	86
Special Mention [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		6,074
Summary of credit quality indicators by type of loans [Abstract]
2020	4,232
2019	694
2018	0
2017	0
2016	1,168
Prior	206
Revolving Loans Amortized Cost Basis	0
Total	6,300
Special Mention [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		12,890
Summary of credit quality indicators by type of loans [Abstract]
2020	1,249
2019	3,118
2018	1,212
2017	1,090
2016	753
Prior	2,078
Revolving Loans Amortized Cost Basis	0
Total	9,500
Special Mention [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1,307
Summary of credit quality indicators by type of loans [Abstract]
2020	118
2019	522
2018	96
2017	74
2016	140
Prior	126
Revolving Loans Amortized Cost Basis	156
Total	1,232
Special Mention [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		15,374
Summary of credit quality indicators by type of loans [Abstract]
2020	644
2019	0
2018	826
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	1,470
Special Mention [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		19,731
Summary of credit quality indicators by type of loans [Abstract]
2020	168
2019	7,689
2018	303
2017	843
2016	2,000
Prior	6,431
Revolving Loans Amortized Cost Basis	0
Total	17,434
Special Mention [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		127
Summary of credit quality indicators by type of loans [Abstract]
2020	44
2019	65
2018	25
2017	5
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	2
Total	141
Special Mention [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		147
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	143
Revolving Loans Amortized Cost Basis	0
Total	143
Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		51,034
Substandard [Member] | Agricultural [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		2,173
Summary of credit quality indicators by type of loans [Abstract]
2020	875
2019	85
2018	210
2017	116
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	235
Total	1,521
Substandard [Member] | Commercial and Financial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		5,212
Summary of credit quality indicators by type of loans [Abstract]
2020	3,156
2019	1,019
2018	294
2017	68
2016	131
Prior	0
Revolving Loans Amortized Cost Basis	300
Total	4,968
Substandard [Member] | Real Estate Construction One to Four Family Residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		315
Summary of credit quality indicators by type of loans [Abstract]
2020	111
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	111
Substandard [Member] | Real Estate: Construction, land development and commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1,693
Summary of credit quality indicators by type of loans [Abstract]
2020	7,000
2019	548
2018	196
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	347
Total	8,091
Substandard [Member] | Real Estate: Mortgage, farmland [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		2,976
Summary of credit quality indicators by type of loans [Abstract]
2020	2,477
2019	450
2018	294
2017	48
2016	0
Prior	203
Revolving Loans Amortized Cost Basis	0
Total	3,472
Substandard [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		14,183
Summary of credit quality indicators by type of loans [Abstract]
2020	1,709
2019	1,827
2018	1,534
2017	1,610
2016	802
Prior	6,918
Revolving Loans Amortized Cost Basis	0
Total	14,400
Substandard [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		1,731
Summary of credit quality indicators by type of loans [Abstract]
2020	100
2019	354
2018	104
2017	418
2016	102
Prior	200
Revolving Loans Amortized Cost Basis	298
Total	1,576
Substandard [Member] | Real Estate: Mortgage, multi-family [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		18,331
Summary of credit quality indicators by type of loans [Abstract]
2020	12,250
2019	0
2018	0
2017	0
2016	0
Prior	5,621
Revolving Loans Amortized Cost Basis	0
Total	17,871
Substandard [Member] | Real Estate: Mortgage, commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		4,334
Summary of credit quality indicators by type of loans [Abstract]
2020	1,362
2019	2,213
2018	0
2017	212
2016	0
Prior	105
Revolving Loans Amortized Cost Basis	0
Total	3,892
Substandard [Member] | Loans to individuals [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		86
Summary of credit quality indicators by type of loans [Abstract]
2020	5
2019	14
2018	15
2017	1
2016	3
Prior	3
Revolving Loans Amortized Cost Basis	3
Total	44
Substandard [Member] | Obligations of state and political subdivisions [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and receivable		$ 0
Summary of credit quality indicators by type of loans [Abstract]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Total	$ 0

XML

Loans, Past Due Receivables (Details) $ in Thousands	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)
Financing Receivable, Past Due [Line Items]
Number of accruing loans past due 90 days or more	6	12
Schedule of past due loans [Abstract]
Total Past Due	$ 31,316	$ 14,236
Current	2,622,545	2,695,908
Total Loans Receivable	2,653,861	2,710,144	$ 2,767,125
Accruing Loans Past Due 90 Days or More	1,043	1,056
Agricultural [Member]
Schedule of past due loans [Abstract]
Total Past Due	626	1,067
Current	93,584	93,775
Total Loans Receivable	94,210	94,842	96,321
Accruing Loans Past Due 90 Days or More	152	111
Commercial and Financial [Member]
Schedule of past due loans [Abstract]
Total Past Due	3,473	1,202
Current	224,708	285,040
Total Loans Receivable	228,181	286,242	335,463
Accruing Loans Past Due 90 Days or More	0	20
Real Estate Construction One to Four Family Residential [Member]
Schedule of past due loans [Abstract]
Total Past Due	2,631	726
Current	70,536	70,391
Total Loans Receivable	73,167	71,117
Accruing Loans Past Due 90 Days or More	423	536
Real Estate: Construction, land development and commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	14,120	0
Current	104,503	111,913
Total Loans Receivable	118,623	111,913
Accruing Loans Past Due 90 Days or More	0	0
Real Estate: Mortgage, farmland [Member]
Schedule of past due loans [Abstract]
Total Past Due	371	307
Current	241,279	246,835
Total Loans Receivable	241,650	247,142	$ 243,689
Accruing Loans Past Due 90 Days or More	204	0
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	4,951	8,797
Current	893,382	883,292
Total Loans Receivable	898,333	892,089
Accruing Loans Past Due 90 Days or More	264	342
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	190	612
Current	115,118	127,221
Total Loans Receivable	115,308	127,833
Accruing Loans Past Due 90 Days or More	0	47
Real Estate: Mortgage, multi-family [Member]
Schedule of past due loans [Abstract]
Total Past Due	3,905	0
Current	385,900	374,014
Total Loans Receivable	389,805	374,014
Accruing Loans Past Due 90 Days or More	0	0
Real Estate: Mortgage, commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	829	1,244
Current	409,221	415,895
Total Loans Receivable	410,050	417,139
Accruing Loans Past Due 90 Days or More	0	0
Loans to individuals [Member]
Schedule of past due loans [Abstract]
Total Past Due	220	281
Current	32,015	31,044
Total Loans Receivable	32,235	31,325
Accruing Loans Past Due 90 Days or More	0	0
State and political subdivisions [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
Current	52,299	56,488
Total Loans Receivable	52,299	56,488
Accruing Loans Past Due 90 Days or More	0	0
30 - 59 Days Past Due [Member]
Schedule of past due loans [Abstract]
Total Past Due	15,666	8,180
30 - 59 Days Past Due [Member] | Agricultural [Member]
Schedule of past due loans [Abstract]
Total Past Due	377	438
30 - 59 Days Past Due [Member] | Commercial and Financial [Member]
Schedule of past due loans [Abstract]
Total Past Due	1,062	867
30 - 59 Days Past Due [Member] | Real Estate Construction One to Four Family Residential [Member]
Schedule of past due loans [Abstract]
Total Past Due	2,085	190
30 - 59 Days Past Due [Member] | Real Estate: Construction, land development and commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	7,024	0
30 - 59 Days Past Due [Member] | Real Estate: Mortgage, farmland [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	279
30 - 59 Days Past Due [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	948	4,969
30 - 59 Days Past Due [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	60	436
30 - 59 Days Past Due [Member] | Real Estate: Mortgage, multi-family [Member]
Schedule of past due loans [Abstract]
Total Past Due	3,905	0
30 - 59 Days Past Due [Member] | Real Estate: Mortgage, commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	783
30 - 59 Days Past Due [Member] | Loans to individuals [Member]
Schedule of past due loans [Abstract]
Total Past Due	205	218
30 - 59 Days Past Due [Member] | State and political subdivisions [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
60 - 89 Days Past Due [Member]
Schedule of past due loans [Abstract]
Total Past Due	12,005	1,645
60 - 89 Days Past Due [Member] | Agricultural [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
60 - 89 Days Past Due [Member] | Commercial and Financial [Member]
Schedule of past due loans [Abstract]
Total Past Due	2,370	195
60 - 89 Days Past Due [Member] | Real Estate Construction One to Four Family Residential [Member]
Schedule of past due loans [Abstract]
Total Past Due	124	0
60 - 89 Days Past Due [Member] | Real Estate: Construction, land development and commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	7,000	0
60 - 89 Days Past Due [Member] | Real Estate: Mortgage, farmland [Member]
Schedule of past due loans [Abstract]
Total Past Due	167	28
60 - 89 Days Past Due [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	1,481	1,342
60 - 89 Days Past Due [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	24	21
60 - 89 Days Past Due [Member] | Real Estate: Mortgage, multi-family [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
60 - 89 Days Past Due [Member] | Real Estate: Mortgage, commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	829	0
60 - 89 Days Past Due [Member] | Loans to individuals [Member]
Schedule of past due loans [Abstract]
Total Past Due	10	59
60 - 89 Days Past Due [Member] | State and political subdivisions [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
90 Days or More Past Due [Member]
Schedule of past due loans [Abstract]
Total Past Due	3,645	4,411
90 Days or More Past Due [Member] | Agricultural [Member]
Schedule of past due loans [Abstract]
Total Past Due	249	629
90 Days or More Past Due [Member] | Commercial and Financial [Member]
Schedule of past due loans [Abstract]
Total Past Due	41	140
90 Days or More Past Due [Member] | Real Estate Construction One to Four Family Residential [Member]
Schedule of past due loans [Abstract]
Total Past Due	422	536
90 Days or More Past Due [Member] | Real Estate: Construction, land development and commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	96	0
90 Days or More Past Due [Member] | Real Estate: Mortgage, farmland [Member]
Schedule of past due loans [Abstract]
Total Past Due	204	0
90 Days or More Past Due [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	2,522	2,486
90 Days or More Past Due [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Schedule of past due loans [Abstract]
Total Past Due	106	155
90 Days or More Past Due [Member] | Real Estate: Mortgage, multi-family [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	0
90 Days or More Past Due [Member] | Real Estate: Mortgage, commercial [Member]
Schedule of past due loans [Abstract]
Total Past Due	0	461
90 Days or More Past Due [Member] | Loans to individuals [Member]
Schedule of past due loans [Abstract]
Total Past Due	5	4
90 Days or More Past Due [Member] | State and political subdivisions [Member]
Schedule of past due loans [Abstract]
Total Past Due	$ 0	$ 0

XML

Loans, Impaired Financing Receivable Loan Type (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Summary of certain impaired loan information [Abstract]
Non-accrual loans	$ 7,718	$ 8,849
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	1,043	1,056
TDR loans	7,994	$ 10,251
Decrease accruing loans past due 90 days or more	$ 10
Number of accruing loans past due 90 days or more	6	12
Average 90 days or more past due loan balance	$ 170	$ 90
Agricultural [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	708	1,252
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	152	111
TDR loans	377	85
Commercial and financial [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	112	479
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	0	20
TDR loans	1,139	1,263
Real Estate Construction One to Four Family Residential [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	111	315
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	423	536
TDR loans	0	0
Real Estate: Construction, land development and commercial [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	293	204
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	0	0
TDR loans	203	211
Real Estate: Mortgage, farmland [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	353	446
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	204	0
TDR loans	1,206	1,616
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	3,900	4,331
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	264	342
TDR loans	1,348	1,751
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	184	193
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	0	47
TDR loans	20	20
Real Estate: Mortgage, multi-family [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	0	79
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	0	0
TDR loans	1,470	1,695
Real Estate: Mortgage, commercial [Member]
Summary of certain impaired loan information [Abstract]
Non-accrual loans	2,057	1,550
Interest income recognized on non-accrual	0
Accruing loans past due 90 days or more	0	0
TDR loans	2,231	3,610
Loans to individuals [Member]
Summary of certain impaired loan information [Abstract]
Accruing loans past due 90 days or more	0	0
Troubled Debt Restructuring [Member]
Summary of certain impaired loan information [Abstract]
TDR Loans included within nonaccrual loans	$ 2,760	$ 2,970

XML

Loans, Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) contract	Sep. 30, 2021 USD ($) contract loan	Dec. 31, 2020 USD ($) contract loan
Summary of information for TDR loans [Abstract]
Number of contracts | contract		49	63
Recorded investment	$ 10,751	$ 10,751	$ 13,225
Commitments outstanding	$ 160	$ 160	39
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	3
Pre-modification recorded investment	$ 0	$ 729
Post-modification recorded investment	0	729
Allowance for TDR loans	20	20
Commitments to lend additional borrowings	$ 160	$ 160	$ 40
Number of TDR loans default payment | loan		0	0
COVID-19 Related
Summary of troubled debt restructuring loans were modified [Abstract]
Financing Receivable, Modifications, Principal Deferred, Number Of Loans | loan		16	13
Financing Receivable, Modifications, Principal Deferred		$ 9,500	$ 9,400
Financing Receivable, Modifications, Payment Deferrals, Total Loans, Percent			14.82%
Financing Receivable, Modifications, Payment Deferrals At Period End, Total Loans, Percent	0.13%	0.13%	1.20%
Agricultural [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		4	6
Recorded investment	$ 974	$ 974	$ 1,028
Commitments outstanding	$ 160	$ 160	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	1
Pre-modification recorded investment	$ 0	$ 178
Post-modification recorded investment	0	$ 178
Commercial and Financial [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		14	17
Recorded investment	1,211	$ 1,211	$ 1,743
Commitments outstanding	$ 0	$ 0	$ 35
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate Construction One to Four Family Residential [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		0	0
Recorded investment	0	$ 0	$ 0
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate: Construction, land development and commercial [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		1	1
Recorded investment	203	$ 203	$ 211
Commitments outstanding	$ 0	$ 0	$ 4
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate: Mortgage, farmland [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		5	6
Recorded investment	1,512	$ 1,512	$ 2,009
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	1
Pre-modification recorded investment	$ 0	$ 319
Post-modification recorded investment	0	$ 319
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		11	17
Recorded investment	1,351	$ 1,351	$ 1,898
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		1	1
Recorded investment	20	$ 20	$ 20
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate: Mortgage, multi-family [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		2	2
Recorded investment	1,470	$ 1,470	$ 1,695
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	0
Pre-modification recorded investment	$ 0	$ 0
Post-modification recorded investment	0	$ 0
Real Estate: Mortgage, commercial [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		11	13
Recorded investment	4,010	$ 4,010	$ 4,621
Commitments outstanding	$ 0	$ 0	$ 0
Summary of troubled debt restructuring loans were modified [Abstract]
Number of contracts | contract	0	1
Pre-modification recorded investment	$ 0	$ 232
Post-modification recorded investment	0	$ 232
Loans to individuals [Member]
Summary of information for TDR loans [Abstract]
Number of contracts | contract		0	0
Recorded investment	0	$ 0	$ 0
Commitments outstanding	$ 0	$ 0	$ 0

XML

Loans, Collateral Dependent Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Jan. 01, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 2,654,788			$ 2,711,082
ACL Allocation	35,590	$ 35,940	$ 37,070	37,070	$ 37,060	$ 37,620	$ 33,760
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	16,546,000
Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	209,000
Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	16,755,000
ACL Allocation	203,000
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	94,210
ACL Allocation	2,118	2,055		2,508	2,595	2,547	2,400
Agricultural [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,372,000
Agricultural [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Agricultural [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	54,000
Agricultural [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Agricultural [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,426,000
ACL Allocation	3,000
Commercial and Financial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	228,181
ACL Allocation	4,348	4,802		4,885	5,345	5,777	4,988
Commercial and Financial [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,239,000
Commercial and Financial [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Commercial and Financial [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	155,000
Commercial and Financial [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Commercial and Financial [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,394,000
ACL Allocation	4,000
Real Estate Construction One to Four Family Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	73,167
Real Estate Construction One to Four Family Residential [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	533,000
Real Estate Construction One to Four Family Residential [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate Construction One to Four Family Residential [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate Construction One to Four Family Residential [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate Construction One to Four Family Residential [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	533,000
ACL Allocation	115,000
Real Estate: Construction, land development and commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	118,623
Real Estate: Construction, land development and commercial [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	495,000
Real Estate: Construction, land development and commercial [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Construction, land development and commercial [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Construction, land development and commercial [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Construction, land development and commercial [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	495,000
ACL Allocation	13,000
Real Estate: Mortgage, farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	241,650
ACL Allocation	4,663	$ 4,904		$ 4,173	$ 4,048	$ 4,089	$ 3,950
Real Estate: Mortgage, farmland [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,583,000
Real Estate: Mortgage, farmland [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, farmland [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, farmland [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, farmland [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,583,000
ACL Allocation	4,000
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	898,333
Real Estate: Mortgage, 1 to 4 family first liens [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	5,362,000
Real Estate: Mortgage, 1 to 4 family first liens [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family first liens [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family first liens [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family first liens [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	5,362,000
ACL Allocation	47,000
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	115,308
Real Estate: Mortgage, 1 to 4 family junior liens [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	204,000
Real Estate: Mortgage, 1 to 4 family junior liens [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family junior liens [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family junior liens [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, 1 to 4 family junior liens [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	204,000
ACL Allocation	12,000
Real Estate: Mortgage, multi-family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	389,805
Real Estate: Mortgage, multi-family [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,470,000
Real Estate: Mortgage, multi-family [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, multi-family [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, multi-family [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, multi-family [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,470,000
ACL Allocation	0
Real Estate: Mortgage, commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	410,050
Real Estate: Mortgage, commercial [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,288,000
Real Estate: Mortgage, commercial [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, commercial [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, commercial [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Real Estate: Mortgage, commercial [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,288,000
ACL Allocation	5,000
Loans to individuals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	32,235
Loans to individuals [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Loans to individuals [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Loans to individuals [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Loans to individuals [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Loans to individuals [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
ACL Allocation	0
Obligations of state and political subdivisions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	52,299
Obligations of state and political subdivisions [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Obligations of state and political subdivisions [Member] | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Obligations of state and political subdivisions [Member] | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Obligations of state and political subdivisions [Member] | Other Collateral [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
Obligations of state and political subdivisions [Member] | Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss	0
ACL Allocation	$ 0

XML

Loans, Impaired Financing Receivables Activity (Details) - USD ($)	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Recorded Investment
With no related allowance recorded		$ 17,906,000
With an allowance recorded		2,823,000
Total impaired loans		20,729,000
Unpaid Principal Balance
With no related allowance recorded		23,459,000
With an allowance recorded		2,954,000
Total		26,413,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		662,000
Total		$ 662,000
Decrease in impaired loans	$ 3,970,000
Percentages of impaired loans to loans held for investment (in hundredths)	0.63%	0.76%
Decrease in TDR loans	$ 2,260,000
Decrease in nonaccrual loans	1,130,000
Increase (Decrease) accruing loans past days or more financing receivable unpaid principal balance	$ 10,000.00
Prior period within which impairment is being measured	1 year
Number of period within which average appraisals obtained	1 month
Financing Receivable, Allowance for Credit Losses, change due to historical loss rates	$ 1,590,000
Financing Receivable, Allowance for Credit Losses, change due to individually analyzed loans reserve	420,000
Financing Receivable, Allowance for Credit Losses, change due to qualitative factors	710,000
Agricultural and Farmland Real Estate [Member]
Related Allowance
Decrease in impaired loans	$ 520,000
Agricultural [Member]
Recorded Investment
With no related allowance recorded		$ 1,337,000
With an allowance recorded		206,000
Total impaired loans		1,543,000
Unpaid Principal Balance
With no related allowance recorded		1,928,000
With an allowance recorded		206,000
Total		2,134,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		86,000
Total		86,000
Commercial and Financial [Member]
Recorded Investment
With no related allowance recorded		1,520,000
With an allowance recorded		671,000
Total impaired loans		2,191,000
Unpaid Principal Balance
With no related allowance recorded		2,907,000
With an allowance recorded		724,000
Total		3,631,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		411,000
Total		411,000
Real Estate Construction One to Four Family Residential [Member]
Recorded Investment
With no related allowance recorded		315,000
With an allowance recorded		536,000
Total impaired loans		851,000
Unpaid Principal Balance
With no related allowance recorded		337,000
With an allowance recorded		536,000
Total		873,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		7,000
Total		7,000
Real Estate: Construction, land development and commercial [Member]
Recorded Investment
With no related allowance recorded		415,000
With an allowance recorded		0
Total impaired loans		415,000
Unpaid Principal Balance
With no related allowance recorded		421,000
With an allowance recorded		0
Total		421,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		0
Total		0
Real Estate: Mortgage, farmland [Member]
Recorded Investment
With no related allowance recorded		2,061,000
With an allowance recorded		0
Total impaired loans		2,061,000
Unpaid Principal Balance
With no related allowance recorded		2,598,000
With an allowance recorded		0
Total		2,598,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		0
Total		0
Real Estate: Mortgage, 1 to 4 family first liens [Member]
Recorded Investment
With no related allowance recorded		6,253,000
With an allowance recorded		924,000
Total impaired loans		7,177,000
Unpaid Principal Balance
With no related allowance recorded		8,013,000
With an allowance recorded		975,000
Total		8,988,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		56,000
Total		56,000
Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Recorded Investment
With no related allowance recorded		108,000
With an allowance recorded		132,000
Total impaired loans		240,000
Unpaid Principal Balance
With no related allowance recorded		350,000
With an allowance recorded		158,000
Total		508,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		37,000
Total		37,000
Real Estate: Mortgage, multi-family [Member]
Recorded Investment
With no related allowance recorded		1,773,000
With an allowance recorded		0
Total impaired loans		1,773,000
Unpaid Principal Balance
With no related allowance recorded		1,898,000
With an allowance recorded		0
Total		1,898,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		0
Total		0
Real Estate: Mortgage, commercial [Member]
Recorded Investment
With no related allowance recorded		4,124,000
With an allowance recorded		303,000
Total impaired loans		4,427,000
Unpaid Principal Balance
With no related allowance recorded		4,960,000
With an allowance recorded		304,000
Total		5,264,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		14,000
Total		14,000
Loans to individuals [Member]
Recorded Investment
With no related allowance recorded		0
With an allowance recorded		51,000
Total impaired loans		51,000
Unpaid Principal Balance
With no related allowance recorded		47,000
With an allowance recorded		51,000
Total		98,000
Related Allowance
With no related allowance recorded		0
With an allowance recorded		51,000
Total		$ 51,000

XML

Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Operating lease, renewal term	10 years
Operating lease, option to termination term	1 year
Operating lease expense	$ 440	$ 420
Operating lease cost	370	350
Short-term lease cost	30	30
Variable lease cost	40	40
Operating lease payments	380	$ 350
Operating lease, right-of-use asset	2,570		$ 2,860
Total operating lease liabilities	$ 2,628		$ 2,910
Weighted average remaining lease term	10 years 3 days		10 years 3 months 7 days
Weighted average discount rate	3.48%		3.45%
Minimum [Member]
Lessee, Lease, Description [Line Items]
Operating lease, term	1 year
Maximum [Member]
Lessee, Lease, Description [Line Items]
Operating lease, term	15 years

XML

Leases - Minimum Future Rental Commitments, Topic 842 (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
2021 (excluding the nine months ended September 30, 2021)	$ 117
2022	464
2023	317
2024	250
2025	254
Thereafter	1,755
Total lease payments	3,157
Less imputed interest	(529)
Total operating lease liabilities	$ 2,628	$ 2,910

XML

Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Readily Available Market Prices [Member]
Financial instrument assets:
Cash and cash equivalents	$ 869,098	$ 574,310
Investment securities	221,414	148,646
Loans held for sale	0	0
Loans
Agricultural	0	0
Commercial and financial	0	0
Real estate:
Construction, 1 to 4 family residential	0	0
Construction, land development and commercial	0	0
Mortgage, farmland	0	0
Mortgage, 1 to 4 family first liens	0	0
Mortgage, 1 to 4 family junior liens	0	0
Mortgage, multi-family	0	0
Mortgage, commercial	0	0
Loans to individuals	0	0
Obligations of state and political subdivisions	0	0
Accrued interest receivable	0	0
Total financial instrument assets	1,090,512	722,956
Deposits
Noninterest-bearing deposits	0	0
Interest-bearing deposits	0	0
Other borrowings	0
Federal Home Loan Bank borrowings	0	0
Accrued interest payable	0	0
Total financial instrument liabilities	0	0
Financial instrument with off-balance sheet risk:
Loan commitments	0	0
Letters of credit	0	0
Total financial instrument liabilities with off-balance-sheet risk	0	0
Observable Market Prices [Member]
Financial instrument assets:
Cash and cash equivalents	0	0
Investment securities	288,597	267,898
Loans held for sale	10,738	43,947
Loans
Agricultural	0	0
Commercial and financial	0	0
Real estate:
Construction, 1 to 4 family residential	0	0
Construction, land development and commercial	0	0
Mortgage, farmland	0	0
Mortgage, 1 to 4 family first liens	0	0
Mortgage, 1 to 4 family junior liens	0	0
Mortgage, multi-family	0	0
Mortgage, commercial	0	0
Loans to individuals	0	0
Obligations of state and political subdivisions	0	0
Accrued interest receivable	12,432	12,177
Total financial instrument assets	311,767	324,022
Deposits
Noninterest-bearing deposits	581,011	532,190
Interest-bearing deposits	2,895,755	2,673,815
Other borrowings	0
Federal Home Loan Bank borrowings	113,880	115,259
Accrued interest payable	1,255	1,733
Total financial instrument liabilities	3,591,901	3,322,997
Financial instrument with off-balance sheet risk:
Loan commitments	0	0
Letters of credit	0	0
Total financial instrument liabilities with off-balance-sheet risk	0	0
Company Determined Market Prices [Member]
Financial instrument assets:
Cash and cash equivalents	0	0
Investment securities	0	0
Loans held for sale	0	0
Loans
Agricultural	92,185	92,922
Commercial and financial	223,726	282,015
Real estate:
Construction, 1 to 4 family residential	72,481	70,432
Construction, land development and commercial	116,577	110,039
Mortgage, farmland	236,664	242,978
Mortgage, 1 to 4 family first liens	889,507	890,409
Mortgage, 1 to 4 family junior liens	112,320	124,945
Mortgage, multi-family	384,065	370,538
Mortgage, commercial	403,004	413,409
Loans to individuals	31,710	31,164
Obligations of state and political subdivisions	52,119	59,300
Accrued interest receivable	0	0
Total financial instrument assets	2,614,358	2,688,151
Deposits
Noninterest-bearing deposits	0	0
Interest-bearing deposits	0	0
Other borrowings	0
Federal Home Loan Bank borrowings	0	0
Accrued interest payable	0	0
Total financial instrument liabilities	0	0
Financial instrument with off-balance sheet risk:
Loan commitments	0	0
Letters of credit	0	0
Total financial instrument liabilities with off-balance-sheet risk	0	0
Carrying Amount [Member]
Financial instrument assets:
Cash and cash equivalents	869,098	574,310
Investment securities	510,011	416,544
Loans held for sale	10,738	43,947
Loans
Agricultural	92,092	92,334
Commercial and financial	223,833	281,357
Real estate:
Construction, 1 to 4 family residential	72,405	70,210
Construction, land development and commercial	117,088	110,501
Mortgage, farmland	236,987	242,969
Mortgage, 1 to 4 family first liens	891,338	882,156
Mortgage, 1 to 4 family junior liens	112,366	126,336
Mortgage, multi-family	386,092	369,552
Mortgage, commercial	403,545	412,186
Loans to individuals	31,602	30,573
Obligations of state and political subdivisions	51,850	55,838
Accrued interest receivable	12,432	12,177
Total financial instrument assets	4,021,477	3,720,990
Deposits
Noninterest-bearing deposits	581,011	532,190
Interest-bearing deposits	2,887,248	2,660,378
Other borrowings	0
Federal Home Loan Bank borrowings	105,000	105,000
Accrued interest payable	1,255	1,733
Total financial instrument liabilities	3,574,514	3,299,301
Financial instrument with off-balance sheet risk:
Loan commitments	616,208	483,602
Letters of credit	7,523	8,056
Total financial instrument liabilities with off-balance-sheet risk	623,731	491,658
Estimated Fair Value [Member]
Financial instrument assets:
Cash and cash equivalents	869,098	574,310
Investment securities	510,011	416,544
Loans held for sale	10,738	43,947
Loans
Agricultural	92,185	92,922
Commercial and financial	223,726	282,015
Real estate:
Construction, 1 to 4 family residential	72,481	70,432
Construction, land development and commercial	116,577	110,039
Mortgage, farmland	236,664	242,978
Mortgage, 1 to 4 family first liens	889,507	890,409
Mortgage, 1 to 4 family junior liens	112,320	124,945
Mortgage, multi-family	384,065	370,538
Mortgage, commercial	403,004	413,409
Loans to individuals	31,710	31,164
Obligations of state and political subdivisions	52,119	59,300
Accrued interest receivable	12,432	12,177
Total financial instrument assets	4,016,637	3,735,129
Deposits
Noninterest-bearing deposits	581,011	532,190
Interest-bearing deposits	2,895,755	2,673,815
Other borrowings	0
Federal Home Loan Bank borrowings	113,880	115,259
Accrued interest payable	1,255	1,733
Total financial instrument liabilities	3,591,901	3,322,997
Financial instrument with off-balance sheet risk:
Loan commitments	0	0
Letters of credit	0	0
Total financial instrument liabilities with off-balance-sheet risk	$ 0	$ 0

XML

Fair Value Measurements, Assets and Liabilities Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	$ 501,265	$ 408,372
U.S. Treasury [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	221,414	148,646
State and political subdivisions [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	235,207	224,566
Mortgage Backed Securities, Other
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	9,753	0
Readily Available Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	1,090,512	722,956
Observable Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	311,767	324,022
Company Determined Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	2,614,358	2,688,151
Recurring Basis [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	501,265	408,372
Recurring Basis [Member] | U.S. Treasury [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	221,414	148,646
Recurring Basis [Member] | State and political subdivisions [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	235,207	224,566
Recurring Basis [Member] | Mortgage Backed Securities, Other
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	9,753
Recurring Basis [Member] | Other securities (FHLB, FHLMC and FNMA) [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	34,891	35,160
Recurring Basis [Member] | Readily Available Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	221,414	148,646
Recurring Basis [Member] | Readily Available Market Prices [Member] | U.S. Treasury [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	221,414	148,646
Recurring Basis [Member] | Readily Available Market Prices [Member] | State and political subdivisions [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0	0
Recurring Basis [Member] | Readily Available Market Prices [Member] | Mortgage Backed Securities, Other
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0
Recurring Basis [Member] | Readily Available Market Prices [Member] | Other securities (FHLB, FHLMC and FNMA) [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0	0
Recurring Basis [Member] | Observable Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	279,851	259,726
Recurring Basis [Member] | Observable Market Prices [Member] | U.S. Treasury [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0	0
Recurring Basis [Member] | Observable Market Prices [Member] | State and political subdivisions [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	235,207	224,566
Recurring Basis [Member] | Observable Market Prices [Member] | Mortgage Backed Securities, Other
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	9,753
Recurring Basis [Member] | Observable Market Prices [Member] | Other securities (FHLB, FHLMC and FNMA) [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	34,891	35,160
Recurring Basis [Member] | Company Determined Market Prices [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Total	0	0
Recurring Basis [Member] | Company Determined Market Prices [Member] | U.S. Treasury [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0	0
Recurring Basis [Member] | Company Determined Market Prices [Member] | State and political subdivisions [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0	0
Recurring Basis [Member] | Company Determined Market Prices [Member] | Mortgage Backed Securities, Other
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	0
Recurring Basis [Member] | Company Determined Market Prices [Member] | Other securities (FHLB, FHLMC and FNMA) [Member]
Summary of assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities available for sale	$ 0	$ 0

XML

Fair Value Measurements, Assets and Liabilities on a Nonrecurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020
Readily Available Market Prices [Member]
Loans
Agricultural	$ 0	$ 0	$ 0
Commercial and financial	0	0	0
Real Estate [Abstract]
Construction, land development and commercial	0	0	0
Mortgage, farmland	0	0	0
Mortgage, 1 to 4 family first liens	0	0	0
Mortgage, 1 to 4 family junior liens	0	0	0
Mortgage, multi-family	0	0	0
Mortgage, commercial	0	0	0
Loans to individuals	0	0	0
Total financial instrument assets	1,090,512	1,090,512	722,956
Observable Market Prices [Member]
Loans
Agricultural	0	0	0
Commercial and financial	0	0	0
Real Estate [Abstract]
Construction, land development and commercial	0	0	0
Mortgage, farmland	0	0	0
Mortgage, 1 to 4 family first liens	0	0	0
Mortgage, 1 to 4 family junior liens	0	0	0
Mortgage, multi-family	0	0	0
Mortgage, commercial	0	0	0
Loans to individuals	0	0	0
Total financial instrument assets	311,767	311,767	324,022
Company Determined Market Prices [Member]
Loans
Agricultural	92,185	92,185	92,922
Commercial and financial	223,726	223,726	282,015
Real Estate [Abstract]
Construction, land development and commercial	116,577	116,577	110,039
Mortgage, farmland	236,664	236,664	242,978
Mortgage, 1 to 4 family first liens	889,507	889,507	890,409
Mortgage, 1 to 4 family junior liens	112,320	112,320	124,945
Mortgage, multi-family	384,065	384,065	370,538
Mortgage, commercial	403,004	403,004	413,409
Loans to individuals	31,710	31,710	31,164
Total financial instrument assets	2,614,358	2,614,358	2,688,151
Nonrecurring Basis [Member]
Loans
Agricultural	886	886	1,081
Commercial and financial	1,188	1,188	1,692
Real Estate [Abstract]
Construction, 1 to 4 family residential	386	386	414
Construction, land development and commercial	96	96	315
Mortgage, farmland	1,217	1,217	1,718
Mortgage, 1 to 4 family first liens	5,084	5,084	5,906
Mortgage, 1 to 4 family junior liens	193	193	176
Mortgage, multi-family	1,470	1,470	1,773
Mortgage, commercial	4,222	4,222	5,082
Loans to individuals	0	0	0
Foreclosed assets	0	0	0
Total financial instrument assets	14,742	14,742	18,157
Total Losses	378	411	906
Nonrecurring Basis [Member] | Agricultural [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Commercial and Financial [Member]
Real Estate [Abstract]
Total Losses	0	0	385
Nonrecurring Basis [Member] | Real Estate Construction One to Four Family Residential [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Real Estate: Construction, land development and commercial [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Real Estate: Mortgage, farmland [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Real Estate: Mortgage, 1 to 4 family first liens [Member]
Real Estate [Abstract]
Total Losses	114	147	252
Nonrecurring Basis [Member] | Real Estate: Mortgage, 1 to 4 family junior liens [Member]
Real Estate [Abstract]
Total Losses	9	9	19
Nonrecurring Basis [Member] | Real Estate: Mortgage, multi-family [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Real Estate: Mortgage, commercial [Member]
Real Estate [Abstract]
Total Losses	255	255	250
Nonrecurring Basis [Member] | Loans to individuals [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Foreclosed assets [Member]
Real Estate [Abstract]
Total Losses	0	0	0
Nonrecurring Basis [Member] | Readily Available Market Prices [Member]
Loans
Agricultural	0	0	0
Commercial and financial	0	0	0
Real Estate [Abstract]
Construction, 1 to 4 family residential	0	0	0
Construction, land development and commercial	0	0	0
Mortgage, farmland	0	0	0
Mortgage, 1 to 4 family first liens	0	0	0
Mortgage, 1 to 4 family junior liens	0	0	0
Mortgage, multi-family	0	0	0
Mortgage, commercial	0	0	0
Loans to individuals	0	0	0
Foreclosed assets	0	0	0
Total financial instrument assets	0	0	0
Nonrecurring Basis [Member] | Observable Market Prices [Member]
Loans
Agricultural	0	0	0
Commercial and financial	0	0	0
Real Estate [Abstract]
Construction, 1 to 4 family residential	0	0	0
Construction, land development and commercial	0	0	0
Mortgage, farmland	0	0	0
Mortgage, 1 to 4 family first liens	0	0	0
Mortgage, 1 to 4 family junior liens	0	0	0
Mortgage, multi-family	0	0	0
Mortgage, commercial	0	0	0
Loans to individuals	0	0	0
Foreclosed assets	0	0	0
Total financial instrument assets	0	0	0
Nonrecurring Basis [Member] | Company Determined Market Prices [Member]
Loans
Agricultural	886	886	1,081
Commercial and financial	1,188	1,188	1,692
Real Estate [Abstract]
Construction, 1 to 4 family residential	386	386	414
Construction, land development and commercial	96	96	315
Mortgage, farmland	1,217	1,217	1,718
Mortgage, 1 to 4 family first liens	5,084	5,084	5,906
Mortgage, 1 to 4 family junior liens	193	193	176
Mortgage, multi-family	1,470	1,470	1,773
Mortgage, commercial	4,222	4,222	5,082
Loans to individuals	0	0	0
Foreclosed assets	0	0	0
Total financial instrument assets	$ 14,742	$ 14,742	$ 18,157

XML

Stock Repurchase Program (Details) - $ / shares	3 Months Ended		9 Months Ended		194 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Jul. 26, 2005
Equity [Abstract]
Maximum number of share authorized to repurchase under the program (in shares)						1,500,000
Common stock purchased during the period (in shares)	19,556	29,807	49,136	112,407	1,398,761
Average price per share (in dollars per share)	$ 66.15

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
State and political subdivisions [Member]
Concentration Risk [Line Items]
Investment in securities issued by state and political subdivisions within the state of Iowa	$ 86,490
Home equity loans [Member]
Firm loan commitments and unused portion of lines of credit [Abstract]
Total financial instrument liabilities with off-balance-sheet risk	79,686	$ 69,974
Credit cards [Member]
Firm loan commitments and unused portion of lines of credit [Abstract]
Total financial instrument liabilities with off-balance-sheet risk	64,910	60,535
Commercial, real estate and home construction [Member]
Firm loan commitments and unused portion of lines of credit [Abstract]
Total financial instrument liabilities with off-balance-sheet risk	173,754	118,186
Commercial lines and real estate purchase loans [Member]
Firm loan commitments and unused portion of lines of credit [Abstract]
Total financial instrument liabilities with off-balance-sheet risk	297,858	234,907
Outstanding letters of credit [Member]
Firm loan commitments and unused portion of lines of credit [Abstract]
Total financial instrument liabilities with off-balance-sheet risk	$ 7,523	$ 8,056

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Income Taxes (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Income Tax Examination [Line Items]
Effective tax rate	22.58%	22.43%
Unrecognized tax benefits	$ 0		$ 0
Interest or penalties on unrecognized tax benefits	0		$ 0
Increase in unrecognized tax benefits is reasonably possible	$ 0
Internal Revenue Service (IRS) [Member]
Income Tax Examination [Line Items]
Income tax examination, years under examination	December 31, 2020, 2019, and 2018
State and Local Jurisdiction [Member]
Income Tax Examination [Line Items]
Income tax examination, years under examination	December 31, 2020, 2019, and 2018

XML

Derivative Financial Instruments (Details)	1 Months Ended	9 Months Ended
	Dec. 31, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Nov. 07, 2013 USD ($) derivative
Interest Rate Swap 1 [Member] | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Notional amount				$ 25,000,000
Interest Rate Swap 1 [Member] | Accumulated Other Comprehensive Income (Loss) [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Net change in unrealized gain (loss) on derivatives		$ 0	$ 81,000
Interest Rate Swap 1 [Member] | Interest Expense [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Amount of Gain (Loss), Reclassified from AOCI into Income			0
Interest Rate Swap 1 [Member] | Other Income [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Amount of Gain (Loss), Recognized in Income on Derivatives			0
Interest Rate Swap 2 [Member] | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Notional amount				$ 25,000,000
Interest Rate Swap 2 [Member] | Accumulated Other Comprehensive Income (Loss) [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Net change in unrealized gain (loss) on derivatives		$ 0	(626,000)
Interest Rate Swap 2 [Member] | Interest Expense [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Amount of Gain (Loss), Reclassified from AOCI into Income			0
Interest Rate Swap 2 [Member] | Other Income [Member]
Gain (Loss) Recognized in Other Comprehensive Income, Net [Abstract]
Amount of Gain (Loss), Recognized in Income on Derivatives			$ 0
Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Number of interest rate swaps held | derivative				2
Designated as Hedging Instrument [Member] | Interest Rate Swap 1 [Member]
Derivatives, Fair Value [Line Items]
Number of interest rate swaps held | derivative				1
Designated as Hedging Instrument [Member] | Interest Rate Swap 2 [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments, Contract Termination Fee Paid	$ 2,684,000