County Bancorp, Inc. (Form: 10-Q, Received: 05/09/2019 14:36:05)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2019

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

For the transition period from _________ to __________

Commission File Number: 001-36808

COUNTY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Wisconsin	39-1850431
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

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

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

ICBK

Nasdaq Global Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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	☐	Smaller 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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May 9, 2019, the registrant had 6,714,254 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		44

PART I— FINANCIAL INFORMATION

Item 1. Financial Statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2019 and December 31, 2018

	March 31, 2019			December 31, 2018
	(unaudited)
	(dollars in thousands except per share data)
ASSETS
Cash and cash equivalents	$	62,426		$	61,087
Securities available-for-sale, at fair value		192,210			195,945
FHLB Stock, at cost		2,998			2,978
Loans held for sale		2,750			2,949
Loans, net of allowance for loan losses of $17,493 as of March 31, 2019; $16,505 as of December 31, 2018		1,165,470			1,190,790
Premises and equipment, net		15,965			16,075
Loan servicing rights		9,275			9,047
Other real estate owned, net		5,019			6,568
Cash surrender value of bank owned life insurance		17,953			17,842
Deferred tax asset, net		2,905			4,346
Goodwill		5,038			5,038
Core deposit intangible, net of accumulated amortization of $1,371 as of March 31, 2019; $1,288 as of December 31, 2018		430			513
Accrued interest receivable and other assets		8,949			7,849
Total assets	$	1,491,388		$	1,521,027

LIABILITIES
Deposits:
Noninterest-bearing	$	101,434		$	121,436
Interest-bearing		1,074,843			1,101,911
Total deposits		1,176,277			1,223,347
Other borrowings		1,412			827
Advances from FHLB		100,400			89,400
Subordinated debentures		44,742			44,703
Accrued interest payable and other liabilities		10,540			10,466
Total liabilities		1,333,371			1,368,743

SHAREHOLDERS' EQUITY
Preferred stock- $1,000 stated value; 15,000 shares authorized; 8,000 shares issued		8,000			8,000
Common stock - $0.01 par value; 50,000,000 authorized; 7,153,174 shares issued and 6,709,254 shares outstanding at March 31, 2019; 7,153,174 shares issued and 6,709,480 shares outstanding as of December 31, 2018		28			28
Surplus		53,280			53,162
Retained earnings		101,785			98,475
Treasury stock, at cost; 443,920 shares at March 31, 2019; 443,694 shares at December 31, 2018		(5,030	)		(5,030	)
Accumulated other comprehensive loss		(46	)		(2,351	)
Total shareholders' equity		158,017			152,284
Total liabilities and shareholders' equity	$	1,491,388		$	1,521,027

See accompanying notes to unaudited consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

	For the Three Months Ended March 31,
	2019			2018
	(dollars in thousands except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	15,501		$	13,691
Taxable securities		1,186			632
Tax-exempt securities		175			157
Federal funds sold and other		264			213
Total interest and dividend income		17,126			14,693

INTEREST EXPENSE
Deposits		5,424			3,796
FHLB advances and other borrowed funds		464			484
Subordinated debentures		678			143
Total interest expense		6,566			4,423
Net interest income		10,560			10,270
Provision for loan losses		752			97
Net interest income after provision for loan losses		9,808			10,173
NON-INTEREST INCOME
Services charges		353			365
Gain (loss) on sale of loans, net		(1	)		32
Loan servicing fees		1,747			1,462
Other		651			181
Total non-interest income		2,750			2,040
NON-INTEREST EXPENSE
Employee compensation and benefits		4,482			4,218
Occupancy		389			204
Information processing		563			465
Other		1,871			1,898
Total non-interest expense		7,305			6,785
Income before income taxes		5,253			5,428
Income tax expense		1,491			1,374
NET INCOME	$	3,762		$	4,054

NET INCOME PER SHARE:
Basic	$	0.54		$	0.59
Diluted	$	0.54		$	0.58
Dividends paid per share	$	0.05		$	0.07

See accompanying notes to unaudited consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

	For the Three Months Ended March 31,
	2019			2018
	(dollars in thousands)
Net income	$	3,762		$	4,054
Other comprehensive income:
Unrealized gain (loss) on securities available-for-sale		3,652			(2,543	)
Income tax benefit (expense)		(995	)		658
Total other comprehensive income (loss) on securities available-for-sale		2,657			(1,885	)
Unrealized loss on derivatives arising during the period		(481	)		—
Income tax benefit		129			—
Total other comprehensive loss on derivatives		(352	)		—
Total other comprehensive income (loss)		2,305			(1,885	)
Comprehensive income	$	6,067		$	2,169

See accompanying notes to unaudited consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

	Preferred Stock		Common Stock			Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(dollars in thousands except share data)
Balance at December 31, 2017	$	8,000	$	28		$	52,230	$	86,385		$	(5,030	)	$	(627	)	$	140,986
Net income		—		—			—		4,054			—			—			4,054
Other comprehensive loss		—		—			—		—			—			(1,885	)		(1,885	)
Stock compensation expense		—		—			117		—			—			—			117
Cash dividends declared on common stock		—		—			—		(468	)		—			—			(468	)
Cash dividends declared on preferred stock		—		—			—		(97	)		—			—			(97	)
Reclassification of par value to surplus		—		(21	)		21		—			—			—			—
Reclassification of stranded tax effects of rate change		—		—			—		126			—			(126	)		—
Proceeds from exercise of common stock options (2,952 shares)		—		—			107		—			—			—			107
Balance at March 31, 2018	$	8,000	$	7		$	52,475	$	90,000		$	(5,030	)	$	(2,638	)	$	142,814

Balance at December 31, 2018	$	8,000	$	28		$	53,162	$	98,475		$	(5,030	)	$	(2,351	)	$	152,284
Net income		—		—			—		3,762			—			—			3,762
Other comprehensive income		—		—			—		—			—			2,305			2,305
Stock compensation expense		—		—			118		—			—			—			118
Cash dividends declared on common stock		—		—			—		(335	)		—			—			(335	)
Cash dividends declared on preferred stock		—		—			—		(117	)		—			—			(117	)
Balance at March 31, 2019	$	8,000	$	28		$	53,280	$	101,785		$	(5,030	)	$	(46	)	$	158,017

See accompanying notes to unaudited consolidated financial statements.

COUNTY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)


	March 31, 2019			March 31, 2018
	(dollars in thousands)
Cash flows from operating activities
Net income	$	3,762		$	4,054
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of premises and equipment		342			271
Amortization of core deposit intangible		83			113
Amortization of subordinated debentures discount		39			17
Provision for loan losses		752			97
Realized gain on sales of other real estate owned		(136	)		—
Realized gain on sales of premises and equipment		—			(1	)
Increase in cash surrender value of bank owned life insurance		(111	)		(112	)
Deferred income tax expense (benefit)		398			(187	)
Stock compensation expense, net		118			117
Net amortization of securities		153			234
Net change in:
Accrued interest receivable and other assets		(1,250	)		(64	)
Loans held for sale		199			168
Loan servicing rights		(228	)		(9	)
Accrued interest payable and other liabilities		(228	)		77
Net cash provided by operating activities		3,893			4,775
Cash flows from investing activities
Proceeds from maturities, principal repayments, and call of securities available-for-sale		-			6,948
Purchases of securities available-for-sale		7,234			(25,055	)
Redemption (purchase) of FHLB stock		(20	)		230
Loan originations and principal collections, net		23,421			(18,723	)
Purchases of premises and equipment		(84	)		(5,067	)
Proceeds from sales of other real estate owned		2,832			—
Net cash provided by (used in) investing activities		33,383			(41,667	)
Cash flows from financing activities
Net decrease in demand and savings deposits		(14,388	)		(28,144	)
Net increase (decrease) in certificates of deposits		(32,682	)		90,457
Net change in other borrowings		585			(58	)
Proceeds from FHLB advances		94,000			63,000
Repayment of FHLB advances		(83,000	)		(64,000	)
Proceeds from issuance of common stock		—			107
Dividends paid on preferred stock		(117	)		(97	)
Dividends paid on common stock		(335	)		(468	)
Net cash provided by (used for) financing activities		(35,937	)		60,797
Net change in cash and cash equivalents		1,339			23,905
Cash and cash equivalents, beginning of period		61,087			66,771
Cash and cash equivalents, end of period	$	62,426		$	90,676

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	5,135		$	4,187
Income taxes	$	—		$	—
Noncash investing activities:
Transfer from loans to other real estate owned	$	1,147		$	4,417
Loans charged off	$	390		$	42

See accompanying notes to unaudited consolidated financial statements.

County Bancorp, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of County Bancorp, Inc. (“we,” “us,” ”our,” or the “Company”) and its subsidiaries, including Investors Community Bank (the “Bank”), have been prepared, in the opinion of management, to reflect all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows as of and for the three months ended March 31, 2019. The results of operations for the three months ended March 31, 2019 may not necessarily be indicative of the results to be expected for the year ending December 31, 2019, or for any other period.

Management of the Company is required to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ significantly from those estimates.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Certain information in footnote disclosure normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period.

New Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses , to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for the fiscal year beginning after December 15, 2018, including interim periods within those fiscal years. Entities should apply this amendment a modified-retrospective approach, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company has engaged a third-party software consultant and is currently testing the model’s methodology in parallel to current loss model calculations. At this time, the effect this ASU will have on its consolidated financial statements is still being quantified as the Company ensures data, assumptions, and methods all comply with the requirements of ASU 2016-13.

In March 2017, the FASB issued updated guidance codified within ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs , which is intended to enhance the accounting for the amortization of premiums for purchased callable debt securities. The amendment became effective January 1, 2019; however, the Company has no callable debt securities; therefore, this amendment has no effect on the Company’s consolidated financial statements.

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

In February 2016, the FASB issued ASU No. 2016-02, Leases: Amendments to the FASB Accounting Standards Codification which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of

cash flows is largely unchanged from previ ous GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements , which provide d an additional and optional transition method with which to adopt the new leases standard. The updated ASU allows entities to initially apply t he new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendment became effective January 1, 2019, and was adopted by the Company retrospectively t o the beginning of the adoption period. Since all of the Company’s leases are operating leases, there was no impact to the Statement of Operations, however, a right-of-use asset of $0.2 million and a corresponding liability were recorded on the Company’s balance sheet as of the effective date of the amendment.

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

NOTE 2 – EARNINGS PER SHARE

Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share plus the dilutive effect of share-based compensation using the treasury stock method.

	For the Three Months Ended
	March 31,
	2019		2018
	(dollars in thousands)
Net income from continuing operations	$	3,762	$	4,054
Less: preferred stock dividends		117		97
Income available to common shareholders for basic earnings per common share	$	3,645	$	3,957

Weighted average number of common shares issued		7,153,174		7,106,685
Less: weighted average treasury shares		443,729		439,833
Plus: weighted average of participating restricted stock units		16,260		11,309
Weighted average number of common shares and participating securities outstanding		6,725,705		6,678,161
Effect of dilutive options		21,323		90,804
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		6,747,028		6,768,965
Weighted average of anti-dilutive options		134,824		—

NOTE 3 – SECURITIES AVAILABLE-FOR-SALE

The amortized cost and fair value of securities available-for-sale as of March 31, 2019 and December 31, 2018 were as follows:

	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(dollars in thousands)
March 31, 2019
U.S. government and agency securities	$	3,964	$	—	$	(35	)	$	3,929
U.S. treasury securities		2,497		2		—			2,499
Municipal securities		31,615		333		(75	)		31,873
Mortgage-backed securities		153,534		1,353		(978	)		153,909
	$	191,610	$	1,688	$	(1,088	)	$	192,210
December 31, 2018
U.S. government and agency securities	$	4,368	$	—	$	(37	)	$	4,331
U.S. treasury securities		2,497		—		(6	)		2,491
Municipal securities		34,985		33		(498	)		34,520
Mortgage-backed securities		157,147		203		(2,747	)		154,603
	$	198,997	$	236	$	(3,288	)	$	195,945

The amortized cost and fair value of securities at March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
March 31, 2019
Due in one year or less	$	3,270	$	3,269
Due from one to five years		10,387		10,355
Due from five to ten years		8,659		8,694
Due after ten years		15,760		15,983
Mortgage-backed securities		153,534		153,909
	$	191,610	$	192,210
December 31, 2018
Due in one year or less	$	5,848	$	5,843
Due from one to five years		11,113		10,974
Due from five to ten years		8,458		8,382
Due after ten years		16,431		16,143
Mortgage-backed securities		157,147		154,603
	$	198,997	$	195,945

There were no security sales for the three months ended March 31, 2019 and 2018.

At March 31, 2019 and December 31, 2018, no securities were pledged to secure the Federal Home Loan Bank ( “FHLB” ) advances besides FHLB stock of $3.0 million . There were no securities pledged to secure the Federal Reserve Bank line of credit at March 31, 2019 and December 31, 2018; however, there were $33.5 million and $53.4 million of securitied pledged to secure municipial customer deposts at March 31, 2019 and December 31, 2019, respectively.

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temorarily impaired, aggregated by investment category and length of time that individual securiti es have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018:

	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)
March 31, 2019
U.S. government and agency securities	$	—	$	—		$	3,929	$	(35	)		3,929		(35	)
U.S. treasury securities		—		—			—		—			—		—
Municipal securities		—		—			11,723		(75	)		11,723		(75	)
Mortgage-backed securities		285		(1	)		79,778		(977	)		80,063		(978	)
	$	285	$	(1	)	$	95,430	$	(1,087	)	$	95,715	$	(1,088	)
December 31, 2018
U.S. government and agency securities	$	—	$	—		$	4,331	$	(37	)		4,331		(37	)
U.S. treasury securities		2,491		(6	)		—		—			2,491		(6	)
Municipal securities		4,291		(15	)		25,377		(483	)		29,668		(498	)
Mortgage-backed securities		41,925		(208	)		83,319		(2,539	)		125,244		(2,747	)
	$	48,707	$	(229	)	$	113,027	$	(3,059	)	$	161,734	$	(3,288	)

The unrealized losses on the investments at March 31, 2019 and December 31, 2018 were due to market conditions as well as normal fluctuations and pricing inefficiencies. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the amortized cost basis of the investment. Because the Company does not intend to sell the investments and it is not more-likely-than-not that the Company will be required to sell the investments before recovery of the amortized cost basis, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2019 and December 31, 2018.

NOTE 4 – LOANS

The components of loans were as follows:

	March 31,			December 31,
	2019			2018
	(dollars in thousands)
Agricultural loans	$	722,107		$	724,508
Commercial real estate loans		289,824			299,212
Commercial loans		113,666			116,460
Residential real estate loans		57,146			66,843
Installment and consumer other		220			272
Total gross loans		1,182,963			1,207,295
Allowance for loan losses		(17,493	)		(16,505	)
Net loans	$	1,165,470		$	1,190,790

Changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019 and 2018 were as follows:

	Agricultural			Commercial Real Estate			Commercial			Residential Real Estate			Installment and Consumer Other			Total
	(dollars in thousands)
March 31, 2019
Balance, beginning of year	$	12,258		$	2,779		$	1,414		$	53		$	1		$	16,505
Provision for loan losses		(135	)		1,138			(214	)		(37	)		—			752
Loans charged off		—			(390	)		—			—			—			(390	)
Recoveries		—			625			1			—			—			626
Balance, end of period	$	12,123		$	4,152		$	1,201		$	16		$	1		$	17,493

March 31, 2018
Balance, beginning of year	$	9,712		$	1,978		$	1,508		$	47		$	2		$	13,247
Provision for loan losses		1,537			(1,118	)		(319	)		(2	)		(1	)		97
Loans charged off		—			(42	)		—			—			—			(42	)
Recoveries		1			1,240			68			—			1			1,310
Balance, end of period	$	11,250		$	2,058		$	1,257		$	45		$	2		$	14,612

The following tables present the balances in the allowance for loan losses and the recorded balance in loans by portfolio segment and based on impairment method as of March 31, 2019 and December 31, 2018:

	March 31, 2019
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	2,691	$	9,432	$	12,123
Commercial real estate loans		2,472		1,680		4,152
Commercial loans		648		553		1,201
Residential real estate loans		—		16		16
Installment and consumer other		—		1		1
Total ending allowance for loan losses		5,811		11,682		17,493
Loans:
Agricultural loans		54,251		667,856		722,107
Commercial real estate loans		6,031		283,793		289,824
Commercial loans		1,135		112,531		113,666
Residential real estate loans		—		57,146		57,146
Installment and consumer other		—		220		220
Total loans		61,417		1,121,546		1,182,963
Net loans	$	55,606	$	1,109,864	$	1,165,470

	December 31, 2018
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
	(dollars in thousands)
Allowance for loan losses:
Agricultural loans	$	2,325	$	9,933	$	12,258
Commercial real estate loans		583		2,196		2,779
Commercial loans		745		669		1,414
Residential real estate loans		—		53		53
Installment and consumer other		—		1		1
Total ending allowance for loan losses		3,653		12,852		16,505
Loans:
Agricultural loans		52,947		671,561		724,508
Commercial real estate loans		2,037		297,175		299,212
Commercial loans		1,773		114,687		116,460
Residential real estate loans		—		66,843		66,843
Installment and consumer other		—		272		272
Total loans		56,757		1,150,538		1,207,295
Net loans	$	53,104	$	1,137,686	$	1,190,790

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

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
	(dollars in thousands)
March 31, 2019
Agricultural loans	$	3,269	$	167	$	7,048	$	10,484	$	711,623	$	722,107
Commercial real estate loans		1,012		3,998		—		5,010		284,814		289,824
Commercial loans		110		—		—		110		113,556		113,666
Residential real estate loans		—		—		—		—		57,146		57,146
Installment and consumer other		—		—		—		—		220		220
Total	$	4,391	$	4,165	$	7,048	$	15,604	$	1,167,359	$	1,182,963

December 31, 2018
Agricultural loans	$	460	$	969	$	7,968	$	9,397	$	715,111	$	724,508
Commercial real estate loans		—		—		2,037		2,037		297,175		299,212
Commercial loans		—		—		600		600		115,860		116,460
Residential real estate loans		—		—		—		—		66,843		66,843
Installment and consumer other		—		—		—		—		272		272
Total	$	460	$	969	$	10,605	$	12,034	$	1,195,261	$	1,207,295

The following table lists information on nonaccrual, troubled debt restructured, and certain past due loans at March 31, 2019 and December 31, 2018:

	March 31,		December 31,
	2019			2018
	(dollars in thousands)
Nonaccrual loans, 90 days or more past due	$	7,048	$	10,605
Nonaccrual loans 30-89 days past due		5,010		868
Nonaccrual loans, less than 30 days past due		13,822		11,510
Troubled debt restructured loans not on nonaccrual status		21,111		19,389
90 days or more past due and still accruing		—		—
Total	$	46,991	$	42,372

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

	March 31,		December 31,
	2019		2018
	(dollars in thousands)
Agricultural loans	$	19,735	$	19,173
Commercial real estate loans		5,010		2,037
Commercial loans		1,135		1,773
Total	$	25,880	$	22,983

The following table presents the average recorded investment and interest income recognized on impaired loans by portfolio segment for three months ended March 31, 2019 and 2018:

	As of and for the Three Months Ended March 31, 2019
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
	(dollars in thousands)
Agricultural loans	$	56,844	$	54,251	$	2,691	$	53,599	$	1,173
Commercial real estate loans		6,031		6,031		2,472		4,034		24
Commercial loans		1,142		1,135		648		1,454		2
Total	$	64,017	$	61,417	$	5,811	$	59,087	$	1,199

	As of and for the Three Months Ended March 31, 2018
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
	(dollars in thousands)
Agricultural loans	$	35,980	$	35,545	$	2,419	$	32,145	$	646
Commercial real estate loans		582		575		—		1,520		—
Commercial loans		1,163		1,153		273		1,473		1
Residential real estate loans		114		114		—		57		1
Total	$	37,839	$	37,387	$	2,692	$	35,195	$	648

Impaired loans include nonaccrual loans, troubled debt restructured loans, and loans that are 90 days or more past due and still accruing. For nonaccrual loans included in impaired loans, the interest income that would have been recognized had those loans been performing in accordance with their original terms would have been approximately $0.6 million and $0.4 million for the three months ended March 31, 2019 and 2018, respectively.

Troubled Debt Restructurings

The Company has allocated approximately $2.6 million and $2.0 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at March 31, 2019 and December 31, 2018, respectively. The Company had no additional lending commitments at March 31, 2019 or December 31, 2018 to customers with outstanding loans that are classified as TDRs.

A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and there has been a satisfactory period of performance according to the modified terms of the loan. Once this assurance is reached, the TDR is classified as a restructured loan. The following table presents the TDRs by loan class at March 31, 2019 and December 31, 2018:

	Non-Accrual		Restructured and Accruing		Total
	(dollars in thousands)
March 31, 2019
Agricultural loans	$	11,056	$	20,090	$	31,146
Commercial real estate loans		—		1,021		1,021
Commercial loans		1,135		—		1,135
Total	$	12,191	$	21,111	$	33,302

December 31, 2018
Agricultural loans	$	12,034	$	19,389	$	31,423
Commercial loans		92		—		92
Total	$	12,126	$	19,389	$	31,515

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

	For the Three Months Ended
	March 31, 2019				March 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Troubled debt restructurings:
Agricultural loans		8	$	1,704		7	$	2,842
Commercial real estate loans		1		1,021		—		—
Commercial loans		2		1,046		—		—
Total		11	$	3,771		7	$	2,842

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

	For the Three Months Ended
	March 31, 2019				March 31, 2018
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Agricultural loans
Payment concessions		1	$	262		6	$	2,751
Extension of interest-only payments		7		1,442		1		91
Commercial real estate loans
Payment concessions		1		1,021		—		—
Commercial loans
Combination of extension of term and interest rate concessions		2		1,046		—		—
Total		11	$	3,771		7	$	2,842

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes agricultural, commercial, and commercial real estate loans individually by classifying the credits as to credit risk. The process of analyzing loans for changes in risk rating is ongoing through routine monitoring of the portfolio and annual internal credit reviews for credits with total exposure in excess of $300,000. The Company uses the following definitions for credit risk ratings:

Sound. Credits classified as sound show very good probability of ongoing ability to meet and/or exceed obligations.

Acceptable. Credits classified as acceptable show a good probability of ongoing ability to meet and/or exceed obligations.

Satisfactory. Credits classified as satisfactory show fair probability of ongoing ability to meet and/or exceed obligations.

Low Satisfactory . Credits classified as low satisfactory show fair probability of ongoing ability to meet and/or exceed obligations. Low satisfactory credits may be newer or have a less established track record of financial performance, inconsistent earnings, or may be going through an expansion.

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

Special Mention. Credits classified as special mention show potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard – Performing. Credits classified as substandard – performing generally have well-defined weaknesses. Collateral coverage is adequate and the loans are not considered impaired. Payments are being made and the loans are on accrual status.

Substandard - Impaired . Credits classified as substandard generally have well-defined weaknesses that jeopardize the repayment of the debt. They have a distinct possibility that a loss will be sustained if the deficiencies are n ot corrected. Loans are considered impaired. Loans are either exhibiting signs of delinquency, are on non-accrual or are identified as a TDR.

Doubtful. Credits classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable.

The Company categorizes residential real estate, installment and consumer other loans as satisfactory at the time of origination based on information obtained as to the ability of the borrower(s) to service their debt, such as current financial information, employment status and history, historical payment experience, credit scores and type and amount of collateral among other factors. The Company updates relevant information on these types of loans at the time of refinance, troubled debt restructuring or other indications of financial difficulty, downgrading as needed using the same category descriptions as for agricultural, commercial, and commercial real estate loans. In addition, the Company further considers current payment status as an indicator of which risk category to assign the borrower.

The greater the level of deteriorated risk as indicated by a loan’s assigned risk category, the greater the likelihood a loss will occur in the future. If the loan is substandard - impaired, then the loan loss reserves for the loan are recorded at the loss level of impairment. If the loan is not impaired, then its loan loss reserves are determined by the application of a loss rate that increases with risk in accordance with the allowance for loan loss analysis.

Based on the most recent analysis performed by management, the risk category of loans by class of loans was as follows as of March 31, 2019 and December 31, 2018:

	As of March 31, 2019
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	479,399	$	156,910	$	540	$	31,007	$	54,251	$	722,107
Commercial real estate loans		258,101		10,303		2,593		12,796		6,031		289,824
Commercial loans		101,882		7,181		1,368		2,100		1,135		113,666
Residential real estate loans		56,726		248		—		172		—		57,146
Installment and consumer other		220		—		—		—		—		220
Total	$	896,328	$	174,642	$	4,501	$	46,075	$	61,417	$	1,182,963

	As of December 31, 2018
	Sound/ Acceptable/ Satisfactory/ Low Satisfactory		Watch		Special Mention		Substandard Performing		Substandard Impaired		Total Loans
	(dollars in thousands)
Agricultural loans	$	495,418	$	133,582	$	564	$	41,997	$	52,947	$	724,508
Commercial real estate loans		253,853		18,968		4,642		19,712		2,037		299,212
Commercial loans		95,842		15,237		1,360		2,248		1,773		116,460
Residential real estate loans		62,787		3,883		—		173		—		66,843
Installment and consumer other		272		—		—		—		—		272
Total	$	908,172	$	171,670	$	6,566	$	64,130	$	56,757	$	1,207,295

NOTE 5 – LOAN SERVICING RIGHTS

Loans serviced for others are not included in the accompanying consolidated balance sheets. The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates. The unpaid principal balances of mortgage and other loans serviced for others were approximately $675.3 million and $661.3 million at March 31, 2019 and December 31, 2018, respectively. The fair value of these rights were approximately $13.3 million and $13.2 million at March 31, 2019 and December 31, 2018. The fair value of servicing rights was determined using an assumed discount rate of 20 percent and prepayment speeds primarily ranging from 4 percent to 9 percent, depending upon the stratification of the specific right, and nominal credit losses.

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

	March 31,			December 31,
	2019			2018
	(dollars in thousands)
Loan servicing rights:
Balance, beginning of period	$	9,047		$	8,950
Additions		851			2,879
Impairment		(73	)		(597	)
Amortization		(550	)		(2,185	)
Balance, end of period	$	9,275		$	9,047

NOTE 6 – GOODWILL AND CORE DEPOSIT INTANGIBLE

The excess of the purchase price in an acquisition over the fair value of net assets acquired consists primarily of goodwill and the core deposit intangible. Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis. Core deposit intangible, which arose from value ascribed to the deposit base of a bank acquired, has an estimated finite life and is amortized on an accelerated basis to expense over a 66-month period.

Management will periodically review the carrying value of its long-lived and intangible assets to determine if any impairment has occurred, in which case an impairment charge would be recorded as an expense in the period of impairment, or whether changes in circumstances have occurred that would require a revision to the remaining useful life which would impact expense prospectively. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible.

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

Core deposit intangible: Core deposit intangible, primarily related to acquired customer relationships, is amortized over its estimated finite life. The core deposit intangible related to the Fox River Valley acquisition had a gross carrying amount of $1.8 million.

	March 31, 2019			December 31, 2018
	(dollars in thousands)
Core deposit intangible:
Gross carrying amount	$	1,801		$	1,801
Accumulated amortization		(1,371	)		(1,288	)
Net book value	$	430		$	513

NOTE 7 – DEPOSITS

Deposits are summarized as follows at March 31, 2019 and December 31, 2018:

	March 31,		December 31,
	2019		2018
	(dollars in thousands)
Demand deposits	$	101,434	$	121,436
NOW and interest checking		49,902		51,779
Savings		6,210		5,770
Money market accounts		225,975		218,929
National time deposits		146,805		160,445
Brokered deposits		269,917		308,504
Certificates of deposit		376,034		356,484
Total deposits	$	1,176,277	$	1,223,347

NOTE 8—ADVANCES FROM FHLB AND OTHER BORROWINGS

The Bank had advances outstanding from the FHLB in the amount of $100.4 million and $89.4 million on March 31, 2019 and December 31, 2018, respectively. These advances, rates, and maturities were as follows:

					March 31,		December 31,
	Maturity	Rate			2019		2018
					(dollars in thousands)
Fixed rate, fixed term	01/02/2019		2.54	%	$	—	$	3,000
Fixed rate, fixed term	01/04/2019		2.55	%		—		12,000
Fixed rate, fixed term	02/27/2019		1.47	%		—		5,000
Fixed rate, fixed term	03/08/2019		1.54	%		—		10,000
Fixed rate, fixed term	04/10/2019		2.58	%		9,000		—
Fixed rate, fixed term	04/18/2019		2.59	%		12,000		—
Fixed rate, fixed term	04/25/2019		2.56	%		10,000		—
Fixed rate, fixed term	06/06/2019		2.61	%		10,000		—
Fixed rate, fixed term	07/15/2019		1.11	%		8,000		8,000
Fixed rate, fixed term	08/12/2019		2.24	%		5,000		5,000
Fixed rate, fixed term	08/14/2019		1.77	%		2,000		2,000
Fixed rate, fixed term	02/20/2020		1.71	%		5,000		5,000
Fixed rate, fixed term	07/16/2020		1.85	%		800		800
Fixed rate, fixed term	08/25/2020		1.84	%		3,000		3,000
Fixed rate, fixed term	08/27/2020		1.88	%		5,000		5,000
Fixed rate, fixed term	12/30/2020		2.09	%		4,000		4,000
Fixed rate, fixed term	12/31/2020		1.94	%		600		600
Fixed rate, fixed term	04/12/2021		1.92	%		8,000		8,000
Fixed rate, fixed term	06/15/2021		1.39	%		5,000		5,000
Fixed rate, fixed term	08/16/2021		2.29	%		3,000		3,000
Fixed rate, fixed term	12/30/2021		2.29	%		2,000		2,000
Fixed rate, putable, no call 2 years	01/12/2023		2.03	%		8,000		8,000
					$	100,400	$	89,400

The terms of security agreements with the FHLB require the Bank to pledge collateral for its borrowings. The collateral consists of qualifying first mortgage loans and stock of the FHLB. At March 31, 2019 and December 31, 2018, the Bank had pledged qualifying mortgage loans of $434.4 million and $453.8 million, respectively.

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

Future maturities of FHLB borrowings as of March 31, 2019 and December 31, 2018 were as follows:

	March 31,		December 31,
	2019		2018
	(dollars in thousands)
1 year or less	$	61,000	$	45,000
1 to 2 years		13,400		18,400
2 to 3 years		18,000		18,000
3 to 4 years		8,000		8,000
	$	100,400	$	89,400

As of March 31, 2019 and December 31, 2018, the Bank also had a line of credit available with the Federal Reserve Bank of Chicago. Borrowings under this line of credit are limited by the amount of collateral pledged by the Bank, which totaled $137.4 million and $143.4 million in loans at March 31, 2019 and December 31, 2018, respectively. There were no outstanding advances included in other borrowings at March 31, 2019 and December 31, 2018.

As of March 31, 2019 and December 31, 2018, the Company had a credit agreement with U.S. Bank National Association for a $15.0 million revolving line of credit with an interest rate of the one-month LIBOR rate plus 2.25%. The line also bears a non-usage fee of 0.275% per annum. The line did not have an outstanding balance as of March 31, 2019 and December 31, 2018.

Other borrowings are borrowings as a result of sold loans that do not qualify for sale accounting. These agreements are recorded as financing transactions as the Bank maintains effective control over the transferred loans. The dollar amount of the loans underlying

the sale agreements continues to be carried in the Bank’s loan portfolio, and the transfer is reported as a secured borrowing with pledge of collateral. At March 31, 2019 and December 31, 2018, the amounts of these borrowings were $1.4 milli on and $0.8 million, respectively.

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

	March 31,			December 31,
	2019			2018
	(dollars in thousands)
Balance outstanding at end of period	$	1,412		$	827
Average amount outstanding during the period		844			1,027
Maximum amount outstanding at any month end		1,412			1,278
Weighted average interest rate during the period		5.27	%		4.81	%
Weighted average interest rate at end of period		5.22	%		4.51	%

NOTE 9 – EQUITY INCENTIVE PLAN

Under the Company’s 2016 Long Term Incentive Plan (the “Plan”), the Company may grant options to purchase shares of common stock and issue restricted stock to its directors, officers, and employees. Both qualified and non-qualified stock options and restricted stock may be granted and issued, respectively, under the Plan. As of March 31, 2019, 180,230 options or shares of restricted stock remain available under the Plan.

The exercise price of each option equals the market price of the Company’s stock on the date of grant and an option’s maximum term is ten years. Vesting periods range from one to five years from the date of grant. The restricted stock vesting periods range from one to five years from the date of issuance.

The status of the Plan as of March 31, 2019 and changes in the Plan during the three months ended March 31, 2019 were as follows:

	March 31, 2019
	Number of Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value ⁽¹⁾
	(dollars in thousands except option and per share data)
Outstanding, beginning of year		208,988		$	18.15
Granted		14,237			18.06
Exercised		—			—
Forfeited/expired		(1,678	)		19.88
Outstanding, end of period		221,547		$	18.13	$	392
Options exercisable at period-end		170,038		$	17.02	$	382
Weighted-average fair value of options granted during the period ⁽²⁾				$	6.31

(1)

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on March 31, 2019. This amount changes based on changes in the market value of the Company’s stock.

(2)	The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

Activity in restricted stock awards and restricted stock units for the three months ended March 31, 2019 was as follows:

	March 31, 2019
	Restricted Stock Awards			Weighted Average Grant Price
Outstanding, beginning of year		28,701		$	21.02
Granted		—			—
Vested		(11,552	)		19.19
Forfeited/expired		(226	)		27.15
Outstanding, end of period		16,923		$	22.19

	March 31, 2019
	Restricted Stock Units			Weighted Average Grant Price
Outstanding, beginning of year		11,772		$	27.15
Granted		18,178			18.11
Issued		—			—
Forfeited/expired		(375	)		18.11
Outstanding, end of period		29,575		$	21.91

For the three months ended March 31, 2019 and 2018, share-based compensation expense, including options and restricted stock awards, applicable to the Plan was $118 thousand and $117 thousand, respectively.

As of March 31, 2019, unrecognized share-based compensation expense related to nonvested options and restricted stock awards amounted to $0.8 million and is expected to be recognized over a weighted average period of 1.88 years.

NOTE 10 – REGULATORY MATTERS

The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1 and Tier 1 Common Equity capital to risk-weighted assets, and of Tier 1 capital to average assets, as such terms are defined in the regulations. Management believed, as of March 31, 2019 and December 31, 2018, that the Company and the Bank met all capital adequacy requirements to which they were subject.

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%. The Bank has not elected to be subject to this new definition.

As of March 31, 2019, the Bank’s capital ratios met those required to be considered as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 Common Equity risk-based, and Tier 1 leverage ratios as set forth in the following tables.

The Bank’s actual capital amounts and ratios are presented in the following table:

	Actual					Minimum For Capital Adequacy Purposes ^(a) :					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
March 31, 2019
Total Capital (to risk weighted assets)	$	208,042		15.87	%	$	137,632		10.50	%	$	131,078		10.00	%
Tier 1 Capital (to risk weighted assets)		191,643		14.62	%		111,417		8.50	%		104,863		8.00	%
Tier 1 Capital (to average assets)		191,643		12.83	%		59,761		4.00	%		74,701		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets)		191,643		14.62	%		91,755		7.00	%		85,201		6.50	%

December 31, 2018
Total Capital (to risk weighted assets):
Consolidated	$	210,768		15.81	%	$	131,664		9.875	%	Not applicable
Bank		204,327		15.35	%		131,488		9.875	%	$	133,153		10.00	%
Tier 1 Capital (to risk weighted assets):
Consolidated		164,675		12.35	%		104,998		7.875	%	Not applicable
Bank		187,679		14.09	%		104,858		7.875	%		106,522		8.00	%
Tier 1 Capital (to average assets):
Consolidated		164,675		11.09	%		59,374		4.00	%	Not applicable
Bank		187,679		12.44	%		60,330		4.00	%		75,413		5.00	%
Tier 1 Common Equity Ratio (to risk weighted assets):
Consolidated		141,085		10.58	%		84,999		6.375	%	Not applicable
Bank		187,679		14.09	%		84,885		6.375	%		86,549		6.50	%

(a)

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

The rules of the Basel III regulatory capital framework implemented a capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation buffer was subject to a three year phase-in period that began on January 1, 2016 and was fully phased in on January 1, 2019 at 2.5%. The ratios for the Company and the Bank are sufficient to meet the conservation buffer.

NOTE 11 – FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives

the highest priority to quoted prices in a ctive markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2—Valuation is based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

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

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments recorded at fair value on a recurring basis:

Securities Available for Sale

Where quoted prices are available in an active market, the Company classifies the securities within Level 1 of the valuation hierarchy. Securities are defined as both long and short positions. Level 1 securities include highly liquid government bonds and exchange-traded equities.

If quoted market prices are not available, the Company estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes and credit spreads.

Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include U.S. government and agency securities, corporate bonds and other securities. Mortgage-backed securities are included in Level 2 if observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, the Company classifies those securities in Level 3.

Derivative Instruments

The Company's derivative instruments consist of interest rate swaps, which are accounted for as cash flow hedges. The Company's derivative positions are classified within Level 2 of the fair value hierarchy and are valued using models generally accepted in the financial services industry and that use actively quoted or observable market input values from external market data providers and/or non-binding broker-dealer quotations. The fair value of the derivatives is determined using discounted cash flow models. These models’ key assumptions include the contractual terms of the respective contract along with significant observable inputs, including interest rates, yield curves, nonperformance risk and volatility.

Assets measured at fair value on a recurring basis are summarized below:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
March 31, 2019
Securities available for sale:
U.S. government and agency securities	$	—	$	3,929	$	—	$	3,929
U.S. treasury Securities		—		2,499		—		2,499
Municipal securities		—		31,873		—		31,873
Mortgage-backed securities		—		153,909		—	$	153,909
Total assets at fair value	$	—	$	192,210	$	—	$	192,210
Derivative instruments, interest rate swaps		—		660		—	$	660
Total liabilities at fair value	$	—	$	660	$	—	$	660
December 31, 2018
Securities available for sale:
U.S. government and agency securities	$	—	$	4,331	$	—	$	4,331
U.S. treasury Securities		—		2,491		—		2,491
Municipal securities		—		34,520		—		34,520
Mortgage-backed securities		—		154,603		—	$	154,603
Total assets at fair value	$	—	$	195,945	$	—	$	195,945
Derivative instruments, interest rate swaps		—		179		—	$	179
Total liabilities at fair value	$	—	$	179	$	—	$	179

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy for which a nonrecurring change in fair value has been recorded:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(dollars in thousands)
March 31, 2019
Impaired loans	$	—	$	—	$	55,606
Other real estate owned		—		—		5,019
Total assets at fair value	$	—	$	—	$	60,625
December 31, 2018
Impaired loans	$	—	$	—	$	30,995
Other real estate owned		—		—		6,568
Total assets at fair value	$	—	$	—	$	37,563

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

March 31, 2019
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	3%-70% (31%)

December 31, 2018
	Valuation Techniques	Unobservable Inputs	Range (Average)
Impaired loans	Evaluation of collateral	Estimation of value	NM*
Other real estate owned	Appraisal	Appraisal adjustment	16%-39% (14%)

Not Meaningful. Evaluations of the underlying assets are completed for each impaired loan with a specific reserve. The types of collateral vary widely and could include accounts receivable, inventory, a variety of equipment, and real estate. Collateral evaluations are reviewed and discounted as appropriate based on knowledge of the specific type of collateral. In the case of real estate, an independent appraisal may be obtained. Types of discounts considered include aging of receivables, condition of the collateral, potential market for the collateral, and estimated disposal costs. These discounts will vary from loan to loan, thus providing a range would not be meaningful.

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

	March 31,				December 31,
	2019				2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Input Level
	(dollars in thousands)
Financial assets:
Cash and cash equivalents	$	62,426	$	62,426	$	61,087	$	61,087	1
Securities available for sale		192,210		192,210		195,945		195,945	2
FHLB Stock		2,998		2,998		2,978		2,978	2
Loans, net of allowance for loan losses		1,165,470		1,164,369		1,190,790		1,187,330	3
Loans held for sale		2,750		2,750		2,949		2,949	3
Accrued interest receivable		4,020		4,020		3,878		3,878	2
Loan servicing rights		9,275		13,320		9,047		13,198	3
Financial liabilities:
Deposits:
Time		772,967		772,053		805,240		801,267	2
Other deposits		403,310		403,310		418,107		418,107	1
Other borrowings		1,412		1,412		827		827	3
Advances from FHLB		100,400		100,016		89,400		88,725	2
Subordinated debentures		44,742		44,742		44,703		44,703	3
Accrued interest payable		5,215		5,215		4,013		4,013	2
Derivative instruments, interest rate swaps		660		660		179		179	2

NOTE 12 – OTHER REAL ESTATE OWNED

Changes in other real estate owned were as follows:

	For the Three Months Ended
	March 31,
		2019			2018
	(dollars in thousands)
Balance, beginning of period	$	6,568		$	4,962
Assets foreclosed		1,147			4,417
Net gain on sales of other real estate owned		136			—
Proceeds from sale of other real estate owned		(2,832	)		—
Balance, end of period	$	5,019		$	9,379

Income ( expenses) applicable to other real estate owned included in non-interest expense include d the following:

	For the Three Months Ended
	March 31,
		2019			2018
	(dollars in thousands)
Net gain on sales of other real estate owned	$	136		$	—
Operating expenses, net of rental income		(25	)		(108	)
	$	111		$	(108	)

NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS

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

The Company had two outstanding interest rate swaps designated as a cash flow hedge each with an aggregate notional value of $6.0 million at March 31, 2019 and December 31, 2018. Both interest rate swaps mature on June 15, 2028. A pre-tax unrealized loss of $0.5 thousand was recognized in accumulated other comprehensive income for the three months ended March 31, 2019, and there was no ineffective portion of this hedge. There were no interest rate swaps designated as a cash flow hedge outstanding at March 31, 2018.

The Company is exposed to credit risk in the event of nonperformance by the interest rate swaps counterparty. The Company minimizes this risk by entering into derivative contracts with only large, stable financial institutions, and the Company has not experienced, and does not expect, any losses from counterparty nonperformance on the interest rate swaps. The Company monitors counterparty risk in accordance with the provisions of FASB ASC 815. In addition, the interest rate swap agreements contains language outlining collateral-pledging requirements for each counterparty. Collateral must be posted when the market value exceeds certain threshold limits. Derivative contracts are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties should either party suffer a credit rating deterioration. The Company was required to pledge $0.5 million of cash as collateral to the counterparty as of March 31, 2019.

NOTE 14 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the financial statements were issued. There were no significant events or transactions occurring after March 31, 2019, but prior to May 9, 2019, that provided additional evidence about conditions that existed at March 31, 2019.

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

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q. This report contains statements that constitute forward-looking statements within the meaning of the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “estimate,” “project,” “predict,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “may,” “might,” “should,” “indicate,” “will,” “would,” “could,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements are not historical facts and include statements of our goals, intentions, expectations, business plans, and operating strategies.

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

•

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

•

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

•

competition among depository and other financial institutions;

•

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

•

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

•

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

•

our success in introducing new financial products;

•

our ability to attract and maintain deposits;

•

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

•

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

•

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

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

any negative perception of our reputation or financial strength;

•

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

•

changes in laws or government regulations or policies affecting financial institutions, including increased costs of compliance with such laws and regulations;

•

changes in accounting policies and practices;

•

our ability to retain key members of our senior management team;

•

the failure or security breaches of computer systems on which we depend;

•

the ability of key third-party service providers to perform their obligations to us;

•

the impact of any claims or legal actions, including any effect on our reputation;

•

the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and

•

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

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

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

Overview

County Bancorp, Inc. is a Wisconsin corporation founded in May 1996 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Our primary activities consist of operating through our wholly owned subsidiary bank, Investors Community Bank, headquartered in Manitowoc, Wisconsin, and providing a wide range of banking and related business services through the Bank and our other subsidiaries.

In addition to the Bank, we have three wholly-owned subsidiaries, County Bancorp Statutory Trust II, County Bancorp Statutory Trust III, and Fox River Valley Capital Trust I, which are Delaware statutory trusts. The Bank is the sole member of Investors Insurance Services, LLC and ABS 1, LLC, which are both Wisconsin limited liability companies.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans, and the interest we pay on interest-bearing liabilities, such as deposits. We generate most of our revenue from interest on loans and investments and loan- and deposit-related fees. Our loan portfolio consists of a mix of agricultural, commercial real estate, commercial, and residential real estate loans. Our primary source of funding is deposits. Our largest expenses are interest on these deposits and salaries and related employee benefits. We measure our performance through various metrics, including our pre-tax net income, net interest margin, net overhead ratio, return on average assets, earnings per share, and ratio of non-performing assets to total assets. We also utilize non-GAAP metrics, such as efficiency ratio, return on average common shareholders’ equity, tangible book value per share, ratio of tangible common equity to tangible assets, and adverse classified asset ratio to evaluate the Company’s performance. We are required to maintain appropriate regulatory leverage and risk-based capital ratios.

Operational Overview

•

Net income for the three months ended March 31, 2019 was $3.8 million compared to $4.1 million for the three months ended March 31, 2018.

•

Net interest income increased by $0.3 million from $10.3 million for the three months ended March 31, 2018, to $10.6 million for the three months ended March 31, 2019.

•

Total loans decreased $24.3 million, or 2.0%, from December 31, 2018 to $1.2 billion at March 31, 2019 and increased $18.4 million, or 1.6%, from March 31, 2018.

•

Participated loans that we continue to service totaled $675.3 million at March 31, 2019, an increase of $14.0 million, or 2.1%, since December 31, 2018, and an increase of $63.9 million, or 10.5%, since March 31, 2018.

•

Non-performing assets increased $1.3 million since December 31, 2018 to $30.9 million at March 31, 2019, an increase of 4.6%, and have increased $4.2 million, or 15.6%, since March 31, 2018.

•

Our reliance on wholesale funding (brokered deposits, national time deposits, and FHLB borrowings) decreased $41.2 million, or 7.4%, since December 31, 2018 to $517.1 million at March 31, 2019, and decreased $105.6 million, or 17.0%, since March 31, 2018.

Selected Financial Data

	As of and for						As of and for
	Three Months Ended						Year Ended
	March 31, 2019			March 31, 2018			December 31, 2018
	(unaudited)
	(Dollars in thousands, except per share data)
Selected Income Statement Data:
Interest income	$	17,126		$	14,693		$	64,217
Interest expense		6,566			4,423			22,262
Net interest income		10,560			10,270			41,955
Provision for loan losses		752			97			3,195
Net interest income after provision for loan losses		9,808			10,173			38,760
Non-interest income		2,750			2,040			8,833
Non-interest expense		7,305			6,785			28,283
Income tax expense		1,491			1,374			5,059
Net income	$	3,762		$	4,054		$	14,251

Per Common Share Data:
Basic earnings per common share	$	0.54		$	0.59		$	2.06
Diluted earnings per common share	$	0.54		$	0.58		$	2.04
Cash dividends per common share	$	0.05		$	0.07		$	0.28
Book value per share, end of period	$	22.36		$	20.17		$	21.50
Tangible book value per share, end of period ⁽¹⁾	$	21.54		$	19.29		$	20.65
Weighted average common shares - basic		6,725,705			6,678,161			6,712,551
Weighted average common shares - diluted		6,747,028			6,768,965			6,757,667
Common shares outstanding, end of period		6,709,254			6,684,923			6,709,480

Selected Balance Sheet Data:
Total assets	$	1,491,388		$	1,460,257		$	1,521,027
Securities available-for-sale		192,210			141,360			195,945
Total loans		1,182,963			1,164,525			1,207,295
Allowance for loan losses		(17,493	)		(14,612	)		(16,505	)
Total deposits		1,176,277			1,172,390			1,223,347
Other borrowings and FHLB advances		101,812			121,741			90,227
Subordinated debentures		44,742			15,540			44,703
Total shareholders' equity		158,017			142,814			152,284

Performance Ratios:
Return on average assets (annualized)		1.00	%		1.15	%		0.96	%
Return on average shareholders' equity (annualized)		9.78	%		11.62	%		7.58	%
Return on average common shareholders' equity ⁽¹⁾		9.99	%		12.04	%		9.74	%
Equity to assets ratio		10.60	%		9.78	%		10.00	%
Net interest margin		2.94	%		3.01	%		2.91	%
Interest rate spread		2.64	%		2.78	%		2.62	%
Non-interest income to average assets (annualized)		0.73	%		0.58	%		0.58	%
Non-interest expense to average assets (annualized)		1.95	%		1.92	%		1.87	%
Net overhead ratio (annualized) ⁽²⁾		1.22	%		1.34	%		1.29	%
Efficiency ratio ⁽¹⁾		55.91	%		55.12	%		54.42	%
Dividend payout ratio		9.26	%		12.07	%		13.73	%

Asset Quality Ratios:
Adverse classified asset ratio ⁽¹⁾		48.59	%		53.44	%		57.12	%
Non-performing loans to total loans ⁽³⁾		2.19	%		1.52	%		1.90	%
Allowance for loan losses to:
Total loans		1.48	%		1.25	%		1.37	%
Non-performing loans		67.59	%		82.34	%		71.81	%
Net recoveries to average loans		(0.02	)%		(0.11	)%		(0.01	)%
Non-performing assets to total assets ⁽³⁾		2.07	%		1.83	%		1.94	%

	March 31, 2019			March 31, 2018			December 31, 2018
	(unaudited)
Capital Ratios:
Shareholders' common equity to assets		10.06	%		9.23	%		9.49	%
Total capital to risk-weighted assets (Bank)		15.87	%		12.89	%		15.35	%
Tangible common equity to tangible assets ⁽¹⁾		9.73	%		8.87	%		9.15	%

(1)

Tangible book value per share, return on average common shareholders’ equity, the efficiency ratio, tangible common equity to tangible assets, and adverse classified asset ratio are not recognized under GAAP and are therefore considered to be non-GAAP financial measures. See below for reconciliations of these financial measures to their most comparable GAAP measures.

(2)	Net overhead ratio represents the difference between noninterest expense and noninterest income, divided by average assets.

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

Non-GAAP Financial Measures

“Efficiency ratio” is defined as non-interest expense, excluding gains and losses on sales and write-downs of other real estate owned, divided by operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities. In our judgment, the adjustments made to non-interest expense allow investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

	Three Months Ended						Year Ended
	March 31, 2019			March 31, 2018			December 31, 2018
	(dollars in thousands)
Efficiency Ratio GAAP to Non-GAAP reconciliation:
Non-interest expense	$	7,305		$	6,785		$	28,283
Plus (less): net gain (loss) on sales and write-downs of OREO		136			—			(642	)
Adjusted non-interest expense (non-GAAP)	$	7,441		$	6,785		$	27,641

Net interest income	$	10,560		$	10,270		$	41,955
Non-interest income		2,750			2,040			8,833
Operating revenue	$	13,310		$	12,310		$	50,788
Efficiency ratio		55.91	%		55.12	%		54.42	%

Return on average common shareholders’ equity is a non-GAAP based financial measure calculated using non-GAAP based amounts. The most directly comparable GAAP based measure is return on average shareholders’ equity. We calculate return on average common shareholders’ equity by excluding the average preferred shareholders’ equity and the related dividends. Management uses the return on average common shareholders’ equity in order to review our core operating results and our performance.

	Three Months Ended						Year Ended
	March 31, 2019			March 31, 2018			December 31, 2018
Return on Average Common Shareholders' Equity GAAP to Non-GAAP reconciliation:
Return on average shareholders' equity		9.78	%		11.62	%		9.50	%
Effect of excluding average preferred shareholders' equity		0.21	%		0.42	%		0.24	%
Return on average common shareholders' equity		9.99	%		12.04	%		9.74	%

Tangible book value per share and ratio of tangible common equity to tangible assets are non-GAAP financial measures based on GAAP amounts. In our judgment, the adjustments made to book value, equity and assets allow investors to better assess our capital adequacy and net worth by removing the effect of goodwill and intangible assets that are unrelated to our core business.

	March 31, 2019			March 31, 2018			December 31, 2018
	(dollars in thousands, except per share data)
Tangible book value per share and tangible common equity to tangible assets reconciliation:
Common equity	$	150,017		$	134,814		$	144,284
Less: Goodwill		5,038			5,038			5,038
Less: Core deposit intangible, net of amortization		430			806			513
Tangible common equity	$	144,549		$	128,970		$	138,733
Common shares outstanding		6,709,254			6,684,923			6,673,381
Tangible book value per share	$	21.54		$	19.29		$	20.79

Total assets	$	1,491,238		$	1,460,257		$	1,521,027
Less: Goodwill		5,038			5,038			5,038
Less: Core deposit intangible, net of amortization		430			806			513
Tangible assets	$	1,485,770		$	1,454,413		$	1,515,476
Tangible common equity to tangible assets		9.73	%		8.87	%		9.15	%

Adverse classified asset ratio is a non-GAAP financial measure based on GAAP amounts. In our judgment, the adjustments made to non-performing assets allows management to better assess asset quality and monitor the amount of capital coverage necessary for non-performing assets.

	March 31, 2019			March 31, 2018			December 31, 2018
	(dollars in thousands, except per share data)
Adverse classified asset ratio:
Substandard loans	$	107,492		$	82,648		$	120,887
Less: Impaired performing restructured loans		(6,382	)		(1,164	)		(5,078	)
Net substandard loans		101,110			81,484			115,809
Other real estate owned		5,019			8,982			6,568
Substandard unused commitments		976			2,309			1,625
Less: Substandard government guarantees		(5,864	)		(3,605	)		(7,111	)
Total adverse classified assets (non-GAAP)	$	101,241		$	89,170		$	116,891

Total equity (Bank)	$	191,287		$	149,105		$	185,458
Accumulated other comprehensive loss (gain) on available-for-sale securities		(436	)		2,603			2,221
Allowance for loan losses		17,493			14,612			16,505
Allowance for unused commitments		—			553			475
Adjusted total equity (non-GAAP)	$	208,344		$	166,873		$	204,659
Adverse classified asset ratio		48.59	%		53.44	%		57.12	%

Results of Operations

Our operating revenue is comprised of interest income and non-interest income. Net interest income increased by 2.8% to $10.6 million for the three months ended March 31, 2019 compared to the three months ended March 31, 2018, primarily attributable to loan growth of 1.5% and a 0.47% improvement in average loan yield between the same periods which was partially offset by a 0.51% increase in average rates paid interest-bearing deposits.

Interest income increased to $17.1 million for the first quarter of 2019 compared to $14.7 million for the first quarter of 2018 primarily as the result of increased volume of loans and an increase in loan yield from 4.67% for the first quarter of 2018 to 5.14% for the first quarter of 2019. The increase in interest income was partially offset by an increase in interest expense from $4.4 million for

the first quarter of 2018 to $6. 6 million for the first quarter of 2019, which was primarily the result of increases in rates paid on deposits, and the issuance of $30 .0 million in junior subordinated notes in the second quarter of 2018.

Non-interest income for the three months ended March 31, 2019 increased 34.8% to $2.8 million from $2.0 million for the three months ended March 31, 2018, primarily due to the reduction of the allowance for unused commitments of $0.5 million that caused an increase to other non-interest income. The Company evaluated the need for this allowance during the first quarter of 2019 and concluded there was no longer sufficient evidence of credit loss inherent in these commitments to substantiate the necessity of this reserve at March 31, 2019 and concluded that this allowance could be eliminated. The Company will continue to evaluate credit risk on these off-balance sheet commitments going forward and make appropriate adjustments to an allowance as necessary. Also during the first quarter of 2019, the Company reduced a valuation allowance on its loan servicing rights portfolio which resulted in an increase of $0.2 million of loan servicing rights. The reduction of the valuation allowance is expected to continue throughout the remainder of 2019.

Non-interest expense increased 7.7% to $7.3 million for the three months ended March 31, 2019 compared to $6.8 million for the same period in 2018. This increase was primarily the result of increased employee compensation and benefits in connection with a 24.1% increase in the premium cost of employee health insurance benefits.

Analysis of Net Interest Income

Net interest income is the largest component of our income and is dependent on the volumes of and yields on interest-earning assets as compared to the volumes of and rates paid on interest-bearing liabilities. The following table reflects the components of net interest income for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31, 2019								March 31, 2018
	Average Balance ⁽¹⁾			Income/ Expense		Yields/ Rates			Average Balance ⁽¹⁾			Income/ Expense		Yields/ Rates
	(dollars in thousands)
Assets
Investment securities	$	192,963		$	1,361		2.82	%	$	136,722		$	789		2.31	%
Loans ⁽²⁾		1,207,240			15,501		5.14	%		1,172,786			13,691		4.67	%
Interest bearing deposits due from other banks		36,227			264		2.92	%		55,784			213		1.53	%
Total interest-earning assets	$	1,436,430		$	17,126		4.77	%	$	1,365,292		$	14,693		4.30	%

Allowance for loan losses		(17,005	)							(13,722	)
Other assets		78,654								62,000
Total assets	$	1,498,079							$	1,413,570

Liabilities
Savings, NOW, money market, interest checking	$	295,418		$	1,184		1.60	%	$	282,313		$	640		0.91	%
Time deposits		797,476			4,240		2.13	%		742,465			3,156		1.70	%
Total interest-bearing deposits	$	1,092,894		$	5,424		1.99	%	$	1,024,778		$	3,796		1.48	%
Other borrowings		844			11		5.27	%		1,286			16		4.97	%
FHLB advances		92,900			453		1.95	%		121,067			468		1.55	%
Junior subordinated debentures		44,606			678		6.08	%		15,529			143		3.68	%
Total interest-bearing liabilities	$	1,231,244		$	6,566		2.13	%	$	1,162,660		$	4,423		1.52	%

Non-interest bearing deposits		101,532								103,669
Other liabilities		11,362								7,743
Total liabilities	$	1,344,138							$	1,274,072

Shareholders' equity		153,941								139,498
Total liabilities and equity	$	1,498,079							$	1,413,570

Net interest income				$	10,560							$	10,270
Interest rate spread ⁽³⁾							2.64	%							2.78	%
Net interest margin ⁽⁴⁾							2.94	%							3.01	%
Ratio of interest-earning assets to interest-bearing liabilities		1.17								1.17

(1)

Average balances are calculated on amortized cost.

(2)

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

(3)

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

(4)

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

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income between the periods indicated. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The net column represents the sum of the volume and rate columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended March 31, 2019 v. 2018
	Increase (Decrease) Due to Change in Average
	Volume			Rate			Net
	(dollars in thousands)
Interest Income:
Investment securities	$	371		$	201		$	572
Loans		413			1,397			1,810
Federal funds sold and interest-bearing deposits with banks		(33	)		84			51
Total interest income		751			1,682			2,433
Interest Expense:
Savings, NOW, money market and interest checking		31			513			544
Time deposits		247			837			1,084
Other borrowings		(6	)		1			(5	)
FHLB advances		114			(129	)		(15	)
Junior subordinated debentures		397			138			535
Total interest expense		783			1,360			2,143
Net interest income	$	(32	)	$	322		$	290

Provision for Loan Losses

Based on our analysis of the components of the allowance for loan losses, management recorded a provision for loan losses of $0.8 million for the three months ended March 31, 2019 compared to a provision of $0.1 million for the three months ended March 31, 2018. The increased provision is directly related to the $24.8 million increase in substandard performing and substandard impaired loans from the first quarter of 2018 compared to the first quarter of 2019. During the first quarter of 2019, we charged-off $0.4 million in loans, and recovered $0.6 million in loans that had been previously written-off.

The specific reserve related to impaired loans increased 115.8% from $2.7 million at March 31, 2018 to $5.8 million at March 31, 2019 due to a 64.3% increase in substandard impaired loans from $37.4 million at March 31, 2018 to $61.4 million at March 31, 2019. In addition, non-performing assets have increased $4.2 million since March 31, 2018 to $30.9 million at March 31, 2019. This increase in non-performing assets is primarily due to the continued depressed dairy market pricing, which has been further complicated by recent tariff discussions by the federal government and the response to such tariffs by other countries, which have affected our agricultural borrowers. Despite the recent increase in Class III milk prices, we anticipate some additional stress in our agricultural portfolio will continue throughout 2019 due to the length of the depressed prices that our agricultural borrowers endured; however, management believes this increased risk is adequately captured by the existing agriculture qualitative factors in our allowance for loan losses methodology. Additionally, management is encouraged by the proposed revision of the North American Free Trade Agreement among the U.S., Canada, and Mexico, called the United States Mexico Canada Agreement, which has been signed but not ratified by the United States, which includes a pledge to curb protection for Canada’s dairy industry.

There have been no substantive changes to our methodology for estimating the appropriate level of allowance for loan losses from what was previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. Based upon this methodology, which includes actively monitoring the asset quality and inherent risks within the loan and lease portfolio, management concluded that an allowance for loan losses of $17.5 million , or 1.48% of total loans, was appropriate as of March 31, 2019. This is compared to an allowance for loan losses of $14.6 million, or 1.25% of total loans, at March 31, 2018, and $16.5 million, or 1.37% of total loans, at December 31, 2018.

Non-Interest Income

Non-interest income for the three months ended March 31, 2019 increased by 34.8% to $2.8 million from $2.0 million for the three months ended March 31, 2018. During the first quarter of 2019, the Company eliminated the allowance for unused commitments of $0.5 million after concluding that there was no longer sufficient evidence of credit loss inherent in these commitments to substantiate the necessity of this reserve at March 31, 2019. The elimination of this reserve resulted in an increase of other non-interest income. The Company will continue to evaluate credit risk on these off-balance sheet commitments going forward and make appropriate adjustments to an allowance as necessary. In addition, the Company also reduced a valuation allowance on its loan servicing rights portfolio which resulted in an increase of $0.2 million of loan servicing rights which are included in loan servicing fees in our consolidated statement of operations. The reduction of the valuation allowance is expected to continue throughout the remaining quarters of 2019.

The following table reflects the components of non-interest income for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31, 2019			March 31, 2018
	(dollars in thousands)
Service charges	$	353		$	365
Gain (loss) on sale of loans, net		(1	)		32
Loan servicing fees		1,519			1,452
Loan servicing right origination		228			10
Income on other real estate owned		26			32
Other		625			149
Total non-interest income	$	2,750		$	2,040

Non-Interest Expense

Non-interest expense increased 7.7% for the three months ended March 31, 2019 to $7.3 million compared to $6.8 million for the three months ended March 31, 2018. The increase is primarily the result of increased employee compensation and benefits related to a 24.1% increase in the premium cost of employee benefits. In addition, increased occupancy and information processing expenses are directly related to the new corporate headquarters which the Company moved into during the third quarter of 2018.

The following table reflects the components of our non-interest expense for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31, 2019			March 31, 2018
	(dollars in thousands)
Employee compensation and benefits	$	4,482		$	4,218
Occupancy		389			204
Information processing		563			465
Professional fees		399			315
Business development		325			299
Other real estate owned expenses		51			140
Net gain on other real estate owned		(136	)		—
Depreciation and amortization		337			314
Other		895			830
Total non-interest expense	$	7,305		$	6,785

Income taxes

The Company accounts for income taxes in accordance with income tax accounting guidance, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.

The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences

bet ween the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50%; the terms “examined” and “upon examination” also include resolution of the related appeals or litigation processes, if any. A tax position that meets the “more likely than not” recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the “more likely than not” recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company files income tax returns in the U.S. federal jurisdiction and in the state of Wisconsin. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2015.

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

Income tax expense for the three months ended March 31, 2019 and 2018, was $1.5 million and $1.4 million, respectively, which represents an effective tax rate of 28.4% and 25.3%, respectively. The increase in the effective tax rate year-over-year is primarily the result of the exercise of stock options during the first quarter of 2018 that resulted in additional permanent tax deductions. There were no stock option exercises during the first quarter of 2019.

Financial Condition

Total assets decreased $29.6 million, or 1.9%, from December 31, 2018 to $1.5 billion at March 31, 2019. Total loans decreased by $24.3 million, or 2.0%, since December 31, 2018 as the result of normal pay-downs and $14.0 million in loan sales and participations.

Total liabilities decreased $35.4 million, or 2.6%, from $1.4 billion at December 31, 2018 to $1.3 billion at March 31, 2019. This decrease is primarily attributed to a decrease in brokered deposits and national certificates of deposits of $52.2 million in the first quarter of 2019, which was partially offset by $11.0 million of additional FHLB borrowings. Client deposits, defined as demand deposits, money market accounts, and certificates of deposit, increased $5.2 million, or 0.7%, since December 31, 2018.

Shareholders’ equity increased $5.7 million, or 3.8%, to $158.0 million at March 31, 2019 from $152.3 million at December 31, 2018. This increase was due primarily to net income for the three months ended March 31, 2019 of $3.8 million and a $2.7 million tax-effected increase to the fair market value of the investment portfolio, which was partially offset by the payment of $0.5 million of dividends on common and preferred stock during the three months ended March 31, 2019.

Net Loans

Total net loans decreased by $25.3 million, or 2.1%, to $1.2 billion at March 31, 2019 from December 31, 2018. This decrease was driven primarily by normal pay-downs and $14.0 million of loan sales and participations that took place during the first quarter. The proceeds from the loan sales and participations were used to pay-off some brokered and national time deposits and reduce our reliance on wholesale funding which is a long-term strategy of the Company.

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

	March 31, 2019						December 31, 2018
	Amount			Percent			Amount			Percent
	(dollars in thousands)
Agriculture loans	$	722,107			61.0	%	$	724,508			60.0	%
Commercial real estate loans		289,824			24.5	%		299,212			24.8	%
Commercial loans		113,666			9.7	%		116,460			9.7	%
Residential real estate loans		57,146			4.8	%		66,843			5.5	%
Installment and consumer other		220			0.0	%		272			0.0	%
Total gross loans	$	1,182,963			100.0	%	$	1,207,295			100.0	%
Allowance for loan losses		(17,493	)					(16,505	)
Loans, net	$	1,165,470					$	1,190,790

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense, which affects our earnings directly. Loans are charged against the allowance for loan losses when management believes that the collectability of all or some of the principal is unlikely. Subsequent recoveries are added to the allowance. The allowance is an amount that reflects management’s estimate of the level of probable incurred losses in the loan portfolio. Factors considered by management in determining the adequacy of the allowance include, but are not limited to, detailed reviews of individual loans, historical and current trends in loan charge-offs for the various portfolio segments evaluated, the level of the allowance in relation to total loans and to historical loss levels, levels and trends in non-performing and past due loans, volume and migratory direction of adversely graded loans, external factors including regulation, reputation, and competition, and management’s assessment of economic conditions. Our board of directors reviews the recommendations of management regarding the appropriate level for the allowance for loan losses based upon these factors.

The provision for loan losses is the charge to operating earnings necessary to maintain an adequate allowance for loan losses. We have developed policies and procedures for evaluating the overall quality of our loan portfolio and the timely identification of problem credits. Management continuously reviews these policies and procedures and makes further improvements as needed. The adequacy of our allowance for loan losses and the effectiveness of our internal policies and procedures are also reviewed periodically by our regulators, our auditors, and external loan review personnel. Our regulators may advise us to recognize additions to the allowance based upon their judgments about information available to them at the time of their examination. Such regulatory guidance is taken under consideration by management, and we may recognize additions to the allowance as a result.

We continually refine our methodology for determining the allowance for loan losses by comparing historical loss ratios utilized to actual experience and by classifying loans for analysis based on similar risk characteristics. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreements; however, cash receipts on impaired and nonaccrual loans for which the accrual of interest has been discontinued are applied to principal and interest income depending upon the overall risk of principal loss to us.

At March 31, 2019 and December 31, 2018, the allowance for loan losses was $17.5 million and $16.5 million, respectively, which resulted in a ratio of the allowance to total loans of 1.48% and 1.37%, respectively. The overall increase in the allowance for loan losses was largely the result of a $2.2 increase in specific reserve primarily related to a commercial real estate relationship that lost its anchor tenant which was offset by lower general reserve due to the lower substandard loan balances and a $0.6 million recovery that was collected during the first quarter of 2019.

Charge-offs and recoveri es by loan category for three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended
	March 31, 2019			March 31, 2018
	(dollars in thousands)
Balance, beginning of period	$	16,505		$	13,247
Loans charged off:
Agriculture loans		—			—
Commercial real estate loans		390			42
Commercial loans		—			—
Residential real estate loans		—			—
Installment and consumer other		—			—
Total loans charged off	$	390		$	42
Recoveries:
Agriculture loans		—			1
Commercial real estate loans		625			1,240
Commercial loans		1			68
Residential real estate loans		—			—
Installment and consumer other		—			1
Total recoveries		626			1,310
Net loans recovered	$	(236	)	$	(1,268	)
Provision for loan losses		752			97
Allowance for loan losses, end of period	$	17,493		$	14,612

Selected loan quality ratios:
Net recoveries to average loans		(0.02	)%		(0.11	)%
Allowance for loan losses to total loans (end of period)		1.48	%		1.25	%
Allowance for loan losses to non-performing loans and performing troubled debt restructurings (end of period)		33.63	%		39.26	%

Loan Servicing Rights

As part of our growth and risk management strategy, we have actively developed a loan participation and loan sales network. Our ability to sell loan participations and whole loans benefits us by freeing up capital and funding to lend to new customers as well as to increase non-interest income through the recognition of loan sale and servicing revenue. Because we continue to service these loans, we are able to maintain a relationship with the customer. Additionally, we receive a servicing fee that offsets some of the cost of administering the loan, while maintaining the customer relationship.

Servicing assets are recognized as separate assets when rights are acquired through the sale of financial assets. Servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer. The Company subsequently measures each class of servicing asset using the amortization method. Under the amortization method, servicing rights are amortized in proportion to and over the period of estimated net servicing income. The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date.

Fair value is based on market prices for comparable servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. These variables may have an adverse impact on the value of the servicing right and may result in a reduction to non-interest income.

Servicing assets measured using the amortization method are evaluated and measured for impairment. Impairment is determined by stratifying rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual tranche, to the extent that fair value is less than the carrying amount of the servicing assets for that tranche. The valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measure of the impairment.

Changes in the valuation allowances are reported with loan servicing fees on the Company’s consolidated statements of operations. Fair valu e in excess of the carrying amount of servicing assets for that stratum is not recognized.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of loan servicing rights is netted against loan servicing fee income.

Information about the loan servicing portfolio is shown below:

	March 31, 2019			December 31, 2018
	(dollars in thousands)
Total loans	$	1,182,963		$	1,207,295
Less: Nonqualified loan sales included below		(1,412	)		(827	)
Loans serviced:
Agricultural		624,673			623,725
Commercial		44,587			35,832
Commercial real estate		6,008			1,700
Total loans serviced		675,268			661,257
Total loans and loans serviced	$	1,856,819		$	1,867,725

Securities

Our securities portfolio is predominately composed of municipal securities, investment grade mortgage-backed securities, U.S. government and agency securities and U.S. treasury securities. We classify substantially all of our securities as available for sale. We do not engage in active securities trading in carrying out our investment strategies.

Securities decreased to $192.2 million at March 31, 2019 from $195.9 million at December 31, 2018. During the three months ended March 31, 2019, we recognized unrealized holding gains of $3.6 million before income taxes through other comprehensive income due to decreases in interest rates.

There were no security sales during the three months ended March 31, 2019 or 2018.

The following table sets forth the amortized cost and fair values of our securities portfolio at March 31, 2019 and December 31, 2018:

	March 31, 2019				December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(dollars in thousands)
Available for sale:
U.S. government and agency securities	$	3,964	$	3,929	$	4,368	$	4,331
U.S. treasury securities		2,497		2,499		2,497		2,491
Municipal securities		31,615		31,873		34,985		34,520
Mortgage-backed securities		153,534		153,909		157,147		154,603
Total available for sale	$	191,610	$	192,210	$	198,997	$	195,945

Deposits

Deposits are the major source of our funds for lending and other investment purposes. Deposits are attracted principally from within our primary market area through the offering of a broad variety of deposit instruments including checking accounts, noninterest-bearing demand accounts, money market accounts, savings accounts, time deposit accounts (including “jumbo” certificates in denominations of $100,000 or more), and retirement savings plans.

Deposits decreased $47.1 million, or 3.8%, from December 31, 2018 to $1.2 billion at March 31, 2019 which was primarily the result of a $52.2 million decrease in brokered deposits and national time deposits since December 31, 2018, partially offset by a $5.2 million increase in client deposit (demand deposits, money market accounts, and certificates of deposit) generation.

Reducing our reliance on wholesale funding is a key strategic focus for 2019. Brokered deposits and national certificates of deposit at March 31, 2019 were $416.7 million, which was a decrease of $52.2 million, or 11.1%, from December 31, 2018, and a

de crease of $ 85.5 million, or 1 7.0 %, from March 31, 2018 . Because of t he reduction in brokered deposits and national certificates of deposit in the first quarter of 2019 , we increased FHLB borrowings by $11.0 million .

As of March 31, 2019 and December 31, 2018, the distribution by type of deposit account was as follows:

	March 31, 2019					December 31, 2018
	Amount		% of Deposits			Amount		% of Deposits
	(dollars in thousands)
Demand, noninterest-bearing	$	101,434		8.7	%	$	121,436		9.9	%
NOW accounts and interest checking		49,902		4.2	%		51,779		4.2	%
Savings		6,210		0.5	%		5,770		0.5	%
Money market accounts		225,975		19.2	%		218,929		18.0	%
Certificates of deposit		376,034		32.0	%		356,484		29.1	%
Brokered deposits		269,917		22.9	%		308,504		25.2	%
National time deposits		146,805		12.5	%		160,445		13.1	%
Total deposits	$	1,176,277		100.0	%	$	1,223,347		100.0	%

Hedging Activities

As of March 31, 2019, the Company had two outstanding interest rate swaps designated as a cash flow hedge each with an aggregate notional value of $6.0 million. Both interest rate swaps mature on June 15, 2028. A pre-tax unrealized loss of $0.5 million was recognized in accumulated other comprehensive income during the three months ended March 31, 2019, with a corresponding increase reported in accrued interest payable and other liabilities on the consolidated balance sheets. There was no ineffective portion of this hedge. There were no interest rate swaps designated as a cash flow hedge outstanding at March 31, 2018.

Liquidity Management and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature including, but not limited to, funding loans and depositor withdrawals. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities and borrowings from the FHLB. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, calls of investment securities and borrowed funds and prepayments on loans are greatly influenced by general interest rates, economic conditions and competition.

At March 31, 2019, advances from the FHLB were $100.4 million compared to $89.4 million at December 31, 2018. There were no borrowings outstanding at the Federal Reserve Bank of Chicago. The Company also has a credit agreement with U.S. Bank National Association for a $15.0 million revolving line of credit with an interest rate equal to the one-month LIBOR rate plus 2.25%. The line of credit also bears a non-usage fee of 0.275% per annum. The line of credit did not have an outstanding balance as of March 31, 2019.

On May 30, 2018, the Company entered into a subordinated note purchase agreement to sell and issue $30.0 million of notes to certain institutional investors. The notes carry a fixed interest rate of 5.875% until May 31, 2023, and have a stated maturity of June 1, 2028. As of June 1, 2023, the notes are redeemable in whole or in part, and bear an interest rate of 3-month LIBOR plus 288.4 basis points. The notes are unsecured, subordinated obligations of the Company and rate junior in right of payment to the Company’s current and future senior indebtedness.

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

Management adjusts our investments in liquid assets based upon an assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, (4) the objectives of our interest-rate risk and investment policies and (5) the risk toler ance of management and our board of directors.

Our cash flows are composed of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $3.9 million and $4.8 million for the three months ended March 31, 2019 and 2018, respectively. Net cash provided by (used in) investing activities, which consists primarily of purchases of and proceeds from the sale, maturities, calls, and principal repayments of securities available for sale, as well as loan originations, net of repayments, was $33.4 million and ($41.7) million for the three months ended March 31, 2019 and 2018, respectively. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts and FHLB advances, was ($35.9) million and $60.8 million for the three months ended March 31, 2019 and 2018, respectively.

At March 31, 2019, the Bank exceeded all of its regulatory capital requirements, with Tier 1 leverage capital of $191.6 million, or 12.83% of adjusted average total assets, which is above the minimum level to be well-capitalized of $74.7 million, or 5.0% of adjusted average total assets, and total risk-based capital of $208.0 million, or 15.87% of risk-weighted assets, which is above the minimum level to be well-capitalized of $131.1 million, or 10.0% of risk-weighted assets.

At the holding company level, our primary sources of liquidity are dividends from the Bank, investment income and net proceeds from investment sales, borrowings and capital offerings. The main uses of liquidity are the payment of interest to holders of our junior subordinated debentures and subordinated notes and the payment of interest or dividends to common and preferred shareholders. The Bank is subject to certain regulatory limitations regarding its ability to pay dividends to the Company; however, we do not believe that the Company will be adversely affected by these dividend limitations. At March 31, 2019, there were $103.5 million of retained earnings available for the payment of dividends by the Bank to the Company, but would be limited to the Bank maintaining minimum regulatory capital ratios. Management believed liquidity to be sufficient as of March 31, 2019.

Off-Balance Sheet Arrangements

As of March 31, 2019, there were no other significant changes to our contractual obligations and off-balance sheet arrangements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. We continue to believe that we have adequate capital and liquidity available from various sources to fund projected obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

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

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

Deposit accounts typically react more quickly to changes in market interest rates than loans because of the shorter maturities of deposits. However, given the asset sensitive nature of our balance sheet, a decrease in interest rates may adversely affect our earnings while increases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. Our

strategy for managing interest rate risk emphasizes adjustable-rate loans for retention in our loan portfolio, promoting core deposit products and time deposits, adjusting the maturities of borrowings and adjusting the investment portfolio mix and duration.

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

Our goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income and net income and control exposure to interest rate risk within policy limits approved by our board of directors. These limits and guidelines reflect our tolerance for interest rate risk over both short-term and long-term horizons. We analyze our sensitivity to changes in interest rates through our net interest income simulation model. Exposures are reported on a monthly basis to the asset and liability committee and at meetings of our board of directors.

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

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

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

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

Rate Shift	Net Interest Income Year 1 Forecast		Year 1 Change from Base			Net Interest Income Year 2 Forecast		Year 2 Change from Base
	(dollars in thousands)					(dollars in thousands)
+400 bps	$	56,700		26.56	%	$	108,800		23.36	%
+200 bps		50,700		13.17	%		98,400		11.56	%
+100 bps		47,600		6.25	%		93,000		5.44	%
Base		44,800		0.00	%		88,200		0.00	%
-100 bps		41,800		(6.70	)%		82,600		(6.35	)%
-200 bps		38,200		(14.73	)%		75,000		(14.97	)%

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

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

Economic Value of Equity Analysis. We also analyze the sensitivity of our financial condition to changes in interest rates through our economic value of equity model. This analysis measures the difference between predicted changes in the present value of our assets and predicted changes in the present value of our liabilities assuming various changes in current interest rates. As with the net interest income simulation model, the estimates of changes in the economic value of our equity require certain assumptions to be

made. These assumptions include loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inhe rently uncertain, and, as a result, we cannot precisely predict the impact of changes in interest rates on the economic value of our equity. Although our economic value of equity analysis provides an indication of our interest rate risk exposure at a parti cular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on the economic value of our equity and will differ from actual results.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2019. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2019, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There are inherent limitations in the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of disclosure controls and procedures can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

P ART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We and our subsidiaries may be involved from time to time in ordinary routine litigation incidental to our respective businesses. Neither we nor any of our subsidiaries are currently engaged in, nor is any of our property the subject of, any legal proceedings, other than ordinary routine litigation incidental to the business, that are expected to have a material adverse effect on our results of operations or financial position.

Item 1A. Risk Factors.

There are no material changes to the risk factors set forth in “Risk Factors” in Item 1A to Part I of our Annual Report on Form 10-K for the year ended December 31, 2018.

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

The Company did not issue any unregistered equity securities or repurchase any shares of its common stock during the quarter ended March 31, 2019.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. E xhibits.

Exhibit Number		Description

10.1		Employment Agreement among County Bancorp, Inc., Investors Community Bank and Mark A. Miller, dated as of August 7, 2017 (Filed herewith)

31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

S IGNATURES

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.

	County Bancorp, Inc .

Date: May 9, 2019	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President (principal executive officer)

Date: May 9, 2019	By:	/s/ Glen L. Stiteley
		Glen L. Stiteley
		Chief Financial Officer (principal financial and accounting officer)

Exhibit 10.1

County Bancorp, Inc.
Investors Community bank

Employment Agreement

This Employment Agreement (this “ Agreement ”) is made and entered into as of August 7, 2017 (the “ Effective Date ”), by and between County Bancorp, Inc. (the “ Company ”), Investors Community Bank (the “ Bank ” and together with the Company, the “ Employer ”) and Mark A. Miller (the “ Executive ,” and together with the Employer, the “ Parties ”).

A. The Company is the sole shareholder of the Bank.

B. The Executive is currently employed by the Company and the Bank pursuant to the terms of that certain employment agreement dated November 5, 2014 , as subsequently amended (the “ Prior Employment Agreement ”), by and between the Bank and the Executive.

C. The Employer desires to continue to employ the Executive pursuant to the terms of this Agreement and the Executive desires to continue such employment pursuant to the terms of this Agreement.

D. The Parties have made commitments to each other on a variety of important issues concerning the Executive’s employment, including the performance that will be expected of the Executive, the compensation the Executive will be paid, how long and under what circumstances the Executive will remain employed and the financial details relating to any decision that either the Employer or the Executive may make to terminate this Agreement.

E. The Parties desire to enter into this Agreement as of the Effective Date and, to the extent provided herein, to have this Agreement supersede all of the terms of all prior employment agreements between the Parties, whether or not in writing, including the Prior Employment Agreement, and any such prior employment agreement shall become null and void as of the Effective Date, and the parties thereunder shall have no rights or interests therein.

Now, therefore , in consideration of the foregoing and the mutual promises and covenants of the Parties set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby expressly covenant and agree as follows:

1. Employment Term . The term of this Agreement (the “ Term ”) and the Executive’s employment under this Agreement shall commence as of the Effective Date and end on December 31, 2017, unless sooner terminated as provided herein. The Term shall be extended automatically for one (1) additional year beginning on January 1, 2018 and on each January 1 thereafter unless either Party notifies the other Party, by written notice delivered no later than ninety (90) days prior to such January 1, that the Term shall not be extended for an additional year. Notwithstanding any provision of this Agreement to the contrary, if a Change of Control occurs during the Term, this Agreement shall remain in effect for the two (2)-year period following the Change of Control and shall then terminate.

2. Duties . During the Term, the Executive shall devote the Executive’s full business time, energies and talents to serving as the Secretary and Securities Compliance Officer of the Company and Secretary, Executive Vice President – Chief Risk Officer, and Counsel of the Bank, at the direction of the Company’s Board of Directors Audit Committee (the “ Board ”) and the Chief Executive Officer (“ CEO ”). The Executive shall have such duties and responsibilities as may be assigned to the Executive from time to time by the Board/CEO, which duties and responsibilities shall be commensurate with the Executive’s position, shall perform all duties assigned to the Executive faithfully and efficiently, subject to the direction of the Board/CEO, and shall have

such authorities and powers as are inherent to the undertakings applicable to the Executive’s position and necessary to carry out the responsibilities and duties required of the Executive hereunder. Notwithstanding the foregoing provisions of this Section 2 , during the Term, the Executive may devote reasonable time to activities other than those required under this Agreement, including activities of a charitable, educational, religious or similar nature (including professional associations) to the extent such activities do not, in the reasonable judgment of the Board / CEO, inhibit, prohibit, interfere with or conflict with the Executive’s duties under this Agreement or conflict in any material way with the business of the Employer or an Affiliate; provided, however, that the Executive shall not serve on the board of directors of any business (other than the Employer or an Affiliate) or hold any other position with any business without receiving the prior written consent of the Board / CEO. For purposes of this Agreement, “ Affiliate ” means each company, corporation, partnership, Financial Institution or other entity that, directly or indirectly, is controlled by, controls, or is under common control with, the Employer, where “control” means (i) the ownership of fifty-one percent (51%) or more of the voting securities or other voting or equity interests of any corporation, partnership, joint venture or other business entity, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, partnership, joint venture or other business entity.

3. Compensation and Benefits .

(a) Base Salary . For services performed by the Executive for the Employer pursuant to this Agreement during the Term, the Employer shall pay the Executive a base salary at the rate of Two Hundred Forty-Five Thousand Dollars ($245,000.00) per year, payable in substantially equal installments in accordance with the Employer’s regular payroll practices (“ Salary ”). Beginning on or about January 1, 2018, and on or about each January 1 thereafter, the Executive’s rate of Salary shall be reviewed by the Compensation Committee (the “ Committee ”) of the Board and, following such review, the Salary may be increased, but not decreased, with such adjusted amount then becoming the “Salary” for purposes of this Agreement.

(b) Annual Bonuses . The Executive shall be eligible to receive performance-based annual incentive bonuses (each, the “ Incentive Bonus ”) from the Employer for each fiscal year ending during the Term. Any Incentive Bonus shall be paid not later than two and one-half months following the close of the year in which it is earned, provided that any Incentive Bonus shall not be considered earned until the Board has made all determinations and taken all actions necessary to establish such Incentive Bonus.

(c) Long Term Incentive Program . The Executive shall be eligible to participate in the Employer’s long-term equity incentive program, as determined in the sole discretion of the Committee.

(d) Other Benefits . Executive shall be eligible to participate, subject to the terms thereof, in all other plans of the Company as may be in effect from time to time with respect to senior executives employed by the Company, as determined by the Committee (excluding participation in any non-qualified retirement or deferred compensation programs, unless specifically selected for participation by the Committee). During the Employment Period, Executive and Executive’s dependents, as the case may be, shall be eligible to participate, subject to the terms thereof, in all tax qualified retirement and similar benefit plans and all medical, dental, disability, group and executive life, accidental death and travel accident insurance, and other similar welfare benefit plans of the Company as may be in effect from time to time with respect to employees of the Company generally.

(e) Business Reimbursements . The Executive shall be eligible to be reimbursed by the Employer, on terms that are substantially similar to those that apply to other similarly situated and performing executives employed by the Employer, for reasonable out-of-pocket expenses for entertainment, travel, meals, lodging, and similar items that are consistent with the Employer’s expense reimbursement policy and that are actually incurred by the Executive in the promotion of the Employer’s business.

4. Termination . Either Party may terminate the Executive’s employment and this Agreement pursuant to the terms of this Section 4 . The Executive’s right to benefits and payments, if any, for periods after the Date of Termination shall be determined in accordance with Section 5 .

(a) Death or Disability . This Agreement shall terminate immediately in the event of the Executive’s Disability or death. In accordance with Section 13 , the Company shall promptly give the Executive written notice of any such determination of the Executive’s Disability and of any decision of the Board to terminate the Executive’s employment by reason thereof. In the event of Disability, until the Date of Termination, the Salary payable to the Executive shall be reduced dollar-for-dollar by the amount of disability benefits paid to the Executive in accordance with any disability policy or program of the Company or the Bank.

(b) Discharge for Cause . In accordance with the procedures hereinafter set forth, the Company may discharge the Executive from the Executive’s employment hereunder for Cause. This Agreement shall terminate immediately as of the Date of Termination in the event the Executive is discharged for Cause. Any discharge of the Executive for Cause shall be communicated by a written notice of termination to the Executive given in accordance with Section 13 .

(c) Resignation for Good Reason . Prior to the Executive’s termination for Good Reason, the Executive shall give the Employer written notice in accordance with Section 13 of the occurrence of the event or condition that the Executive believes constitutes a Good Reason within thirty (30) days of the initial existence of such event or condition. If the Employer determines that the events or conditions exist as alleged by the Executive, and does not cure such events or conditions within thirty (30) days of the Executive’s written notice, then this Agreement and the Executive’s employment hereunder shall terminate on the thirtieth (30 ^th ) day following the Executive’s written notice.

(d) Discharge without Cause; Resignation without Good Reason . Either Party may terminate this Agreement and the Executive’s employment hereunder for any reason by delivering written notice of termination in accordance with Section 13 to the other Party no fewer than thirty (30) days before the Date of Termination, which date shall be specified in the notice of termination. The Employer may provide for an earlier Date of Termination, provided the Employer pays to the Executive the Salary that would have been earned during such notice period. Any payment in lieu of notice pursuant to this Section 4(d) shall be made in a single lump sum on the first payroll date following the Date of Termination.

5. Rights upon Termination . If either Party terminates t his Agreement and the Executive’s employment under this Agreement, the Executive’s right to benefits, if any, for periods after the Date of Termination shall be determined in accordance with this Section 5 :

(a) Accrued Obligations . If the Date of Termination occurs during the Term for any reason, the Executive shall be entitled to the Accrued Obligations, in addition to any other benefits to which the Executive may be entitled under the following provisions of this Section 5 or the express terms of any employee benefit plan or as required by law. Any benefits to be provided to the Executive pursuant to this Section 5(a) shall be provided within thirty (30) days after the Date of Termination; provided , however , that any benefits, incentives or awards payable as described in Section 5(e) shall be provided in accordance with the terms of the applicable plan, program or arrangement. Except as may expressly be provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring the Executive to be treated as employed by the Employer following the Date of Termination for purposes of any plan, program or arrangement.

(b) Termination for Cause, Death, Disability, Voluntary Resignation without Good Reason, or Non-Renewal . If the Date of Termination occurs during the Term and is a result of a termination for Cause, the Executive’s Disability or death, or a termination by the Executive other than for Good Reason, or if this Agreement expires due to notice of non-renewal by either Party as provided under Section 1 or at the end of a Covered Period, then, other than the Accrued Obligations, the Executive shall have no right to benefits

under this Agreement (and the Employer shall have no obligation to provide any such benefits) for periods after the Date of Termination. In the event of a termination due to the executive’s death or Disability, the Employer shall also provide the Executive, or Executive’s estate or beneficiary, a Pro Rata Bonus.

(c) Termination other than for Cause or Termination for Good Reason . If the Executive’s employment with the Employer is subject to a Termination, other than during a Covered Period, then, in addition to the Accrued Obligations, the Employer shall provide the Executive the following benefits:

(i) On the thirtieth (30th) day following the Date of Termination, the Executive shall commence receiving the Severance Amount (less any amount described in Section 5(c)(ii) , with such amount to be paid in substantially equal monthly installments, equal in number to the number of months utilized in determining the Severance Amount, but in no event more than twelve (12) months , with each successive payment being due on the first payroll date following the monthly anniversary of the Date of Termination.

(ii) To the extent any portion of the Severance Amount exceeds the “safe harbor” amount described in Treasury Regulation §1.409A-1(b)(9)(iii)(A), the Executive shall receive such portion of the Severance Amount that exceeds the “safe harbor” amount in a single lump sum payment payable on the thirtieth (30th) day following the Date of Termination.

(d) Termination upon a Change of Control . If the Executive’s employment with the Employer is subject to a Termination within a Covered Period, then, in addition to Accrued Obligations, the Employer shall provide the Executive the following benefits:

(i) On the thirtieth (30th) day following the Date of Termination, the Employer shall pay the Executive a lump sum payment in an amount equal to the Severance Amount.

(e) Other Benefits .

(i) The Executive’s rights following a termination of employment with the Employer for any reason with respect to any benefits, incentives or awards provided to the Executive pursuant to the terms of any plan, program or arrangement sponsored or maintained by the Employer, whether tax-qualified or not, which are not specifically addressed herein, shall be subject to the terms of such plan, program or arrangement and this Agreement shall have no effect upon such terms except as specifically provided herein.

(ii) Except as specifically provided herein, the Employer shall have no further obligations to the Executive under this Agreement following the Executive’s termination of employment for any reason.

(f) Continuing Obligations after Termination . If the Executive’s employment with the Employer terminates for any reason, the Employer’s obligations and the Executive’s obligations under Sections 5 through 25 shall continue after termination of the employment relationship.

6. Release . Notwithstanding any provision of this Agreement to the contrary, no benefits owed to the Executive under Section 5 (except for the Accrued Obligations) shall be provided to the Executive unless the Executive executes (without subsequent revocation) and delivers to the Employer a general release and waiver, in a form that is substantially similar to the release attached hereto as Exhibit B (the “ Release ”).

7. Excise Tax Limitation .

(a) It is the intention of the Employer and the Executive that no portion of any payment under this Agreement, or payments to or for the benefit of the Executive under any other agreement or plan, be deemed to be an “ Excess Parachute Payment ” as defined in Section 280G of the Internal Revenue Code

of 1986, as amended (the “ Code ”), or its successors. It is agreed that the present value of and payments to or for the benefit of the Executive in the nature of compensation, receipt of which is contingent on a Change of Control, and to which Section 280G of the Code applies (in the aggregate “ Total Payments ”) shall not exceed an amount equal to one dollar less than the maximum amount which the Employer may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with Section 280G(d)(4) of the Code. Within one hundred and twenty (120) days following the earlier of (A) the giving of the notice of termination or (B) the giving of notice by the Employer to the Executive of its belief that there is a payment or benefit due the Executive which will result in an Excess Parachute Payment, the Executive and the Employer, at the Employer’s expense, shall obtain the opinion of an Independent Advisor (as defined below), which opinion need not be unqualified, which sets forth (A) the Executive’s applicable Base Amount (as defined under Section 280G of the Code), (B) the present value of Total Payments and (C) the amount and present value of any Excess Parachute Payments. In the event that such opinion determines that there would be an Excess Parachute Payment, the payment hereunder or any other payment determined by such Independent Advisor to be includable in Total Payments shall be modified, reduced or eliminated as specified by the Parties shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no Excess Parachute Payment; provided that any such modification, reduction or elimination must be in accordance with Section 409A of the Code. The provisions of this Section 7 , including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that (A) the compensation and benefits provided for in Section 5 hereof and (B) any other compensation earned by the Executive pursuant to the Employer’s compensation programs which would have been paid in any event, are reasonable compensation for services rendered, even though the timing of such payment is triggered by the Change of Control. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 7 shall be of no further force or effect.

(b) The Employer and the Executive hereby recognize that the Restrictive Covenants under Section 8 have value and that the value shall be recognized in the Section 280G calculations by an allocation of a portion of the termination benefits to the restrictive covenant provisions based on the fair market value of such restrictive covenant provisions. The Independent Advisor shall make the determination of the fair value to be allocated to the restrictive covenant provisions.

(c) For purposes of this Agreement, “ Independent Advisor ” shall mean an independent nationally recognized accounting firm approved by the Employer and the Executive, where such approval shall not be unreasonably withheld by either party.

8. Restrictive Covenants .

(a) Confidential Information . The Executive acknowledges that, as a result of the Executive’s employment with the Employer, the Executive has and will produce and access to confidential and/or proprietary, non‑public information concerning the Employer or its Affiliates, including marketing materials, financial and other information concerning customers and prospective customers, customer lists, records, data, trade secrets, proprietary business information, pricing and profitability information and policies, strategic planning, commitments, plans, procedures, litigation, pending litigation and other information not generally available to the public (collectively, “ Confidential Information ”). The Executive shall not directly or indirectly use, disclose, copy or make lists of Confidential Information for the benefit of anyone other than the Employer, either during the Executive’s employment with the Employer or for a period of five (5) years thereafter, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Employer, required by law or any competent administrative agency or judicial authority, or otherwise as is reasonably necessary or appropriate in connection with the performance by the Executive of the Executive’s duties hereunder. Unless otherwise prohibited by law, if the Executive receives a subpoena or other court order or is otherwise required by law to provide information to a governmental authority or other person concerning the activities of the Employer or any of its Affiliates, or the Executive’s activities in connection with the business of the Employer or any of its Affiliates, the Executive shall immediately notify the Employer of such subpoena, court order or other

requirement and deliver forthwith to the Employer a copy thereof and any attachments and non-privileged correspondence related thereto. The Executive shall take reasonable precautions to protect against the inadvertent disclosure of Confidential Information. The Executive shall abide by the Employer’s reasonable policies, as in effect from time to time, respecting avoidance of interests conflicting with those of the Employer and its Affiliates. In this regard, the Executive shall not directly or indirectly render services to any person or entity where the Executive’s service would involve the use or disclosure of Confidential Information. The Executive shall not use any Confidential Information to guide the Executive in searching publications or other publicly available information, selecting a series of items of knowledge from unconnected sources and fitting them together to claim that the Executive did not violate any agreements set forth in this Agreement .

The Executive shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Accordingly, the Executive has the right to disclose in confidence trade secrets to Federal, State, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The Executive also has the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Nothing in this Agreement shall be construed to authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by unauthorized means.

(b) Documents and Property .

(i) All records, files, documents and other materials or copies thereof relating to the business of the Employer or its Affiliates that the Executive prepares, receives, or uses, shall be and remain the sole property of the Employer and, other than in connection with the performance by the Executive of the Executive’s duties hereunder, shall not be removed from the premises of the Employer or any of its Affiliates without the Employer’s prior written consent, and shall be promptly returned to the Employer upon the Executive’s termination of employment for any reason, together with all copies (including copies or recordings in electronic form), abstracts, notes or reproductions of any kind made from or about the records, files, documents or other materials.

(ii) The Executive acknowledges that the Executive’s access to and permission to use the Employer’s and any Affiliate’s computer systems, networks and equipment, and all the Employer and Affiliate information contained therein, is restricted to legitimate business purposes on behalf of the Employer. Any other access to or use of such systems, network, equipment and information is without authorization and is prohibited. The restrictions contained in this Section 8 extend to any personal computers or other electronic devices of the Executive that are used for business purposes relating to the Employer or any Affiliate. The Executive shall not transfer any Employer or Affiliate information to any personal computer or other electronic device that is not otherwise used for any business purpose relating to the Employer. Upon the termination of the Executive’s employment with the Employer for any reason, the Executive’s authorization to access and permission to use the Employer’s and any Affiliate’s computer systems, networks and equipment, and any Employer and Affiliate information contained therein, shall cease.

(c) Non-Competition and Non-Solicitation . As an essential ingredient of, and in consideration of the substantial severance benefits provided pursuant to this Agreement in addition to the Executive’s employment, or continued employment, with the Employer, the Executive shall not, during the Restricted Period, directly or indirectly do any of the following:

(i) Engage or invest in, own, manage, operate, finance, control, participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner connected with, serve as a director, officer, or consultant to, lend the Executive’s name or any similar name to, lend the Executive’s credit to or render services or advice to, any Financial Institution with an office located, or to be located at an address identified in a filing with any regulatory authority, within the Restricted Area; provided , however , that the ownership by the Executive of shares of the capital stock of any Financial Institution, which shares are listed on a securities exchange and that do not represent more than 1% of the institution’s outstanding capital stock, shall not violate any terms of this Agreement. For purposes of clarification and not limitation or expansion, it is the parties intent that the foregoing is not intended to limit Executive from performing services outside of the Restricted Area for a person or entity solely because the person or entity has a location within the Restricted Area, unless Executive’s services are directed towards activities on behalf of such person or entity within the Restricted Area;

(ii) (A) Hire, or induce or attempt to induce any employee of the Employer or its Affiliates (limited to all officer-level employees, Executive’s direct reports, or members of Executive’s department or area of responsibility) to leave the employ of the Employer or its Affiliates; (B) interfere with the relationship between the Employer or its Affiliates and any such employee of the Employer or its Affiliates; or (C) induce or attempt to induce any customer, supplier, licensee, or other business relation of the Employer or its Affiliates with whom the Executive had an ongoing business relationship while employed by the Employer or its Affiliates to cease doing business with the Employer or its Affiliates or interfere with the relationship between the Employer its Affiliates and their respective customers, suppliers, licensees, or other business relations with whom the Executive had an ongoing business relationship.

(iii) Solicit the business of any person or entity known to the Executive to be a customer of the Employer or its Affiliates, where the Executive, or any person reporting to the Executive, had accessed Confidential Information of, had an ongoing business relationship with while employed by the Employer of its Affiliates, or had made Substantial Business Efforts with respect to, such person or entity, with respect to products, activities, or services that compete in whole or in part with the products, activities, or services of the Employer its Affiliates.

(d) Remedies for Breach of Restrictive Covenant . The Executive has reviewed the provisions of this Agreement with legal counsel, or has been given adequate opportunity to seek such counsel, and the Executive acknowledges that the covenants contained in this Section 8 are reasonable with respect to their duration, geographical area and scope. The Executive further acknowledges that the restrictions contained in this Section 8 are reasonable and necessary for the protection of the legitimate business interests of the Employer, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Employer and such interests, and that such restrictions were a material inducement to the Employer to enter into this Agreement. In the event of any violation or threatened violation of these restrictions, the Employer, in addition to and not in limitation of, any other rights, remedies or damages available to the Employer under this Agreement or otherwise at law or in equity, shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by the Executive and any and all persons directly or indirectly acting for or with the Executive, as the case may be. If the Executive violates the Restrictive Covenant and the Employer brings legal action for injunctive or other relief, the Employer shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Restrictive Covenant. Accordingly, the Restrictive Covenant shall be deemed to have the duration specified herein computed from the date the relief is granted but reduced by the time between the period when the Restrictive Period began to run and the date of the first violation of the Restrictive Covenant by the Executive. Notwithstanding anything contained in this Agreement to the contrary, in the event that the Executive’s employment is terminated without Cause or the Executive resigns for Good Reason and the Employer reasonably determines in good faith that the Executive has violated any provision of Section 8 , then the Employer shall be entitled to discontinue any payments or benefits that would otherwise be provided to the

Executive under Sections 5(c) , and 5(d) , and the Executive shall forfeit the Executive’s rights to the same.

(e) Other Agreements . In the event of the existence of another agreement between the Parties that (i) is in effect during the Restricted Period, and (ii) contains restrictive covenants that conflict with any of the provisions of Section 8 , then the more restrictive of such provisions from the two agreements shall control for the period during which both agreements would otherwise be in effect.

9. Defense and Indemnification .

(a) The Employer agrees that if the Executive is made a party to or involved in, or is threatened to be made a party to or otherwise to be involved in, any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that the Executive is or was a director, officer or employee of the Employer or is or was serving at the request of the Employer as a director, officer, member, employee or agent of another corporation, limited liability corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Employer against any and all liabilities, losses, expenses, judgments, penalties, fines and amounts reasonably paid in settlement in connection therewith, and shall be advanced reasonable expenses (including reasonable attorneys’ fees) as and when incurred in connection therewith, to the fullest extent legally permitted or authorized by the Employer’s By-laws or, if greater, by the laws of the State of Wisconsin, as may be in effect from time to time, subject to receipt by the Employer of an undertaking by the Executive or on the Executive’s behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Employer. The rights conferred on the Executive by this Section 9 shall not be exclusive of any other rights which the Executive may have or hereafter acquire under any statute, the By-laws, agreement, vote of shareholders or disinterested directors, or otherwise. The indemnification and advancement of expenses provided for by this Section 9 shall continue as to the Executive after the Executive ceases to be a director, officer or employee and shall inure to the benefit of the Executive’s heirs, executors and administrators.

(b) During the Term and thereafter for the duration of any statute of limitations or other period during which a claim might be successfully brought against the Executive, the Executive shall be covered to the same extent as directors by any directors’ and officers’ liability insurance policy maintained by the Employer from time to time.

10. Regulatory Suspension and Termination .

(a) If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Company’s and/or the Bank’s affairs by a notice served under Section 8(e)(3) (12 U.S.C. § 1818(e)(3)) or 8(g) (12 U.S.C. § 1818(g)) of the Federal Deposit Insurance Act, as amended, the Employer’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall: (i) pay the Executive all of the compensation withheld while their contract obligations were suspended, and; (ii) reinstate any of the obligations, which were suspended.

(b) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s and/or the Bank’s affairs by an order issued under Section 8(e) (12 U.S.C. § 1818(e)) or 8(g) (12 U.S.C. § 1818(g)) of the Federal Deposit Insurance Act, as amended, all obligations of the Employer under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(c) If the Company and/or the Bank is in default as defined in Section 3(x) (12 U.S.C. § 1813(x)(1)) of the Federal Deposit Insurance Act, as amended, all obligations of the Employer under this

contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(d) Except to the extent the Federal Deposit Insurance Corporation (the “FDIC”) or the Board of Governors of the Federal Reserve System (each a “primary federal regulator”) determines that continuation of this contract is necessary for the continued operation of the Employer:

(e) All obligations of the Employer under this contract shall be terminated by or at the direction of a primary federal regulator at the time: (A) the FDIC enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1823(c)); or (B) a primary federal regulator approves a supervisory acquisition to resolve problems related to the operation of the Employer; provided, however, that any rights of the parties that have already vested shall not be affected by such termination; and

(f) All obligations of the Employer under this contract shall be suspended by or at the direction of a primary federal regulator if such primary federal regulator determines that the Employer is in an unsafe or unsound condition for the period, and such suspension shall continue so long as such determination remains in effect.

(g) Any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) (12 U.S.C. §1828(k)) of the Federal Deposit Insurance Act as amended, and any regulations promulgated thereunder.

11. No Set-Off; No Mitigation . Except as provided herein, the Employer’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense or other right which the Employer may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.

12. Binding Effect . This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the successors and assigns of the Employer.

13. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or by recognized commercial delivery service or if mailed within the continental United States by first class certified mail, return receipt requested, postage prepaid, addressed as follows:

(a) If to the Employer, to :

County Bancorp, Inc.

PO Box 700

860 North Rapids Rd

Manitowoc, WI, 54221

Attention: President

(b) If to the Executive, to :

The most recent address reflected in Employer records.

Such addresses may be changed by written notice sent to the other Party at the last recorded address of that Party.

14. Source of Funds . The Company and the Bank shall be jointly and severally liable for all payments and benefits to be provided pursuant to the terms of this Agreement. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Company or the Bank; provided, however , that to the extent that any payments and benefits provided for in this Agreement are paid to or received by the Executive from either the Company or the Bank, such payments and benefits shall not also be an obligation of the other, with the intent that there not be any duplication of benefits.

15. Tax Withholding . The Employer shall provide for the withholding of any taxes required to be withheld by federal, state or local law with respect to any payment in cash, shares of stock and/or other property made by or on behalf of the Employer to or for the benefit of the Executive under this Agreement or otherwise. The Employer may, at its option: (a) withhold such taxes from any cash payments owing to the Executive hereunder, (b) require the Executive to pay to the Employer in cash such amount as may be required to satisfy such withholding obligations and/or (c) make other satisfactory arrangements with the Executive to satisfy such withholding obligations.

16. Applicable Law . All questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by the internal laws of the State of Wisconsin applicable to agreements made and wholly to be performed in such state without regard to conflicts of law provisions of any jurisdiction.

17. Mandatory Arbitration . Except as provided in Section 8(d) , if any dispute or controversy arises under or in connection with this Agreement, and such dispute or controversy cannot be settled through negotiation, the Parties shall first try in good faith to settle the dispute or controversy by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures. If such mediation is not successful, the dispute or controversy shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding the foregoing, the Company may resort to the applicable federal or state court, with proper jurisdiction, located in or nearest to Manitowoc, Wisconsin, for injunctive and such other relief as may be available in the event that the Employee engages in conduct, after termination of this Agreement, that amounts to a violation of the Wisconsin Uniform Trade Secrets Act or amounts to unlawful interference with the business expectations of the Company or its Affiliates. The FDIC may appear at any arbitration hearing but any decision made thereunder shall not be binding on the FDIC.

18. Service of Process . Each Party may be served with process in any manner permitted under State of Wisconsin law, or by United States registered or certified mail, return receipt requested.

19. Entire Agreement; Severability . This Agreement constitutes the entire agreement between the Executive and the Employer concerning the subject matter hereof, and supersedes all prior negotiations, undertakings, agreements and arrangements with respect thereto, whether written or oral. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect. The various covenants and provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations. Without limiting the generality of the foregoing, if the scope of any covenant contained in this Agreement is too broad to permit enforcement to its full extent, such covenant shall be enforced to the maximum extent permitted by law, and the Parties hereby agree that such scope may be judicially modified accordingly.

20. No Assignment . The Executive’s rights to receive payments or benefits under this Agreement shall not be assignable or transferable whether by pledge, creation of a security interest or otherwise, other than a transfer by will or by the laws of descent or distribution. In the event of any attempted assignment or transfer contrary to this Section, the Employer shall have no liability to pay any amount so attempted to be assigned or

transferred. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees , and legatees.

21. Successors . This Agreement shall be binding upon and inure to the benefit of the Employer, its successors and assigns (including, without limitation, any company into or with which the Employer may merge or consolidate). The Employer agrees that it will not affect the sale or other disposition of all or substantially all of its assets unless either (a) the person or entity acquiring the assets, or a substantial portion of the assets, shall expressly assume by an instrument in writing all duties and obligations of the Employer under this Agreement, or (b) the Employer shall provide, through the establishment of a separate reserve, for the payment in full of all amounts which are or may reasonably be expected to become payable to the Executive under this Agreement.

22. Execution in Counterparts . This Agreement may be executed by the Parties in two (2) or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute one (1) and the same instrument, and all signatures need not appear on any one (1) counterpart.

23. Prior Understandings . This Agreement embodies the entire understanding of the Parties and supersedes all other oral or written agreements or understandings between them regarding the subject matter hereof, including but not limited to the Prior Employment Agreement. No change, alteration or modification hereof may be made except in writing, signed by each of the Parties. The headings in this Agreement are for convenience of reference only and shall not be construed as part of this Agreement or to limit or otherwise affect the meaning hereof.

24. Code Section 409A .

(a) To the extent any provision of this Agreement or action by the Employer would subject the Executive to liability for interest or additional taxes under Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Employer. It is intended that this Agreement will comply with, or be exempt from, Code Section 409A, and this Agreement shall be administered accordingly and interpreted and construed on a basis consistent with such intent. Notwithstanding any provision of this Agreement to the contrary, no termination or similar payments or benefits shall be payable hereunder on account of the Executive’s termination of employment unless such termination constitutes a “separation from service” within the meaning of Code Section 409A. For purposes of Code Section 409A, all installment payments of deferred compensation made hereunder, or pursuant to another plan or arrangement, shall be deemed to be separate payments. To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Code Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treasury Regulation §1.409A-3(i)(1)(iv). This Agreement may be amended to the extent necessary (including retroactively) by the Employer to avoid the application of taxes or interest under Code Section 409A, while maintaining to the maximum extent practicable the original intent of this Agreement. This Section 24 shall not be construed as a guarantee of any particular tax effect for the Executive’s benefits under this Agreement and the Employer does not guarantee that any such benefits will satisfy the provisions of Code Section 409A.

(b) Notwithstanding any provision of this Agreement to the contrary, if Executive is determined to be a Specified Employee as of the Date of Termination, then, to the extent required pursuant to Code Section 409A, payments due under this Agreement that are deemed to be deferred compensation shall be subject to a six-month delay following the Date of Termination; and all delayed payments shall be accumulated and paid in a lump-sum payment as of the first day of the seventh month following the Date of Termination (or, if earlier, as of Executive’s death), with all such delayed payments being credited with interest (compounded monthly) for this period of delay equal to the prime rate in effect on the first day of such six-month period (based on the prime rate as reflected in the Wall Street Journal ). Any portion of the benefits hereunder that were not otherwise due to be paid during the six-month period following the Date of Termination shall be paid to Executive in accordance with the payment schedule established herein.

25. Amendment . This Agreement may not be amended or modified except by written agreement signed by the Executive and the Employer

26. Definitions . For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below:

(a) “ Accrued Obligations ” shall mean, as of the Date of Termination, the sum of (i) the Executive’s Salary under Section 3(a) earned through the Date of Termination to the extent not theretofore paid, (ii) the amount of any Incentive Bonus earned for any completed performance periods (which is a calendar year performance period as of the Effective Date) to the extent not theretofore paid (iii) any accrued but unpaid vacation pay for the period ending on the Date of Termination, and (iv) any incurred but unreimbursed business expenses that are properly submitted prior to or within thirty (30) days of the Date of Termination. For the purpose of this Section 26(a) , dollar amounts shall be deemed to accrue ratably over the period during which they are earned, but no discretionary compensation shall be deemed earned or accrued unless it has been specifically approved by the Board in accordance with the applicable plan, program or policy.

(b) “ Average Incentive Bonus ” means the total Incentive Bonuses paid (or yet to be paid) for the 3 most recently completed performance periods divided by 3 (regardless of the number of years employed prior to the Date of Termination; provided, however , that in the event that the Date of Termination occurs during a Covered Period, the term “Average Incentive Bonus” shall mean the higher of: (i) the foregoing amount, or (ii) the Incentive Bonus paid (or yet to be paid) for the most recently completed performance period.

(i) the Executive’s willful and continued failure to substantially perform the Executive’s duties under this Agreement (other than as a result of physical or mental illness or injury);

(ii) the Executive’s conviction of, or the pleading of nolo contender to, embezzlement, fraud or a felony (as evidenced by binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion of all rights of appeal) or such other crime or legal violation which disqualifies the Executive from serving as an executive officer or director of the Employer or otherwise substantially impairs the Executive’s ability to perform the Executive’s duties or responsibilities;

(iii) the Executive’s engagement in one or more unsafe or unsound banking practices that have a material adverse effect on the Employer;

(iv) the Executive’s removal or permanent suspension from banking pursuant to Section 8(e) of the FDIA or any other applicable state or federal law;

(v) the Executive’s breach of a fiduciary responsibility in connection with the Executive’s duties set forth in this Agreement;

(vi) an act or omission by the Executive that leads to a material harm (financial or reputational) to the Employer or an Affiliate in the community;

(vii) a material breach of Employer policies as may be in effect from time to time, provided such policies are uniformly applied and enforced;

(viii) the Executive’s material breach of this Agreement; or

(ix) the Executive’s knowing and material violation of any applicable material law or regulation respecting the business of the Employer that has had, or is reasonably expected to have, a material adverse effect upon the Employer, on a consolidated basis.

For purposes of this Agreement, no act or failure to act, on the Executive’s part, shall be considered willful if it is done, or omitted to be done, by the Executive in good faith and with a reasonable belief that the Executive’s action or omission was in the best interests of the Employer.

Further, a termination for Cause shall be deemed to have occurred if, after the Termination, facts and circumstances arising during the course of such employment or engagement are discovered that would have warranted a termination for Cause.

Further, with respect to subsections (i), (vi), (vii), and (viii), the Executive shall be entitled to at least 30 days’ prior written notice of the Employer’s intention to terminate the Executive’s employment for Cause, which notice shall specify the grounds for the termination for Cause; and the Executive shall be provided a reasonable opportunity to cure any conduct or act, if curable, alleged as grounds for the termination for Cause.

(d) “ Change of Control ” shall mean the first to occur of the following:

(i) Individuals who, on the Effective Date, constitute the Board (the “ Incumbent Directors ”) cease during any 12 month period, for any reason, to constitute at least a majority of the Board; provided, that any person becoming a director subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director;

(ii) Any Person is or becomes a “beneficial owner” (as defined in Exchange Act Rule 13d-3), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then Voting Securities; provided, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (i) by the Company or any Subsidiary; (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities; or (iv) pursuant to a “Non-Qualifying Transaction” (as defined in paragraph (iii), below); or

(iii) The consummation of a merger, consolidation, statutory share exchange, sale of all or substantially all of the Company’s assets, a plan of liquidation or dissolution of the Company or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “ Business Transaction ”), unless immediately following such Business Transaction: (i) 50% or more of the total voting power of (A) the corporation resulting from such Business Transaction (the “ Surviving Corporation ”), or (B) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “ Parent Corporation ”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Transaction (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Transaction), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Transaction; (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation); and (iii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Transaction were Incumbent

Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Transaction (any Business Transaction that satisfies all of the criteria specified in (i), (iii) and (iii) above shall be deemed to be a “ Non-Qualifying Transaction ”).

(iv) Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Voting Securities as a result of the acquisition of Voting Securities by the Company which reduces the number of Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Voting Securities that increases the percentage of outstanding Voting Securities beneficially owned by such Person, a Change in Control of the Company shall then occur.

(v) Further notwithstanding any provision in the foregoing definition of Change in Control to the contrary, in the event that any Award constitutes deferred compensation, and the settlement of, or distribution of benefits under such Award is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a “change in control event” under Code Section 409A.

(e) “ Covered Period ” shall mean the period beginning six (6) prior to the effective date of the Change of Control and ending two (2) years following such date.

(f) “ Date of Termination ” shall mean (i) in the event of a discharge of the Executive by the Board for Cause, the date specified in such notice of termination, (ii) in the event of the Executive’s Disability, the date the Executive is determined to have incurred such Disability, (iii) in the event of the Executive’s death, the date of the Executive’s death, and (iv) in the case of any other termination of employment, the date specified in the written notice provided by the Employer or the Executive to the other. Applicable notice period requirements are determined in accordance with Section 4 .

(g) “ Disability ” shall mean means that (i) Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Employer.

(h) “ Financial Institution ” shall mean any person, firm, partnership, corporation, trust or other entity that owns or operates, a bank, savings and loan association, credit union or similar financial institution.

(i) “ Good Reason ” shall mean any of the following:

(i) a material and adverse change in the nature or scope of the Executive’s duties and responsibilities (notwithstanding a change in title);

(ii) a material diminution in the Executive’s Salary or Incentive Bonus target, if applicable, without the Executive’s consent; or

(iii) a change, without the Executive’s written consent, in the location of the Executive’s principal place of employment with the Employer by more than twenty‑five (25) miles from the location of Employer’s main office as of the Effective Date which is not closer to the Executive’s principal residence at the time of relocation.

(j) “ Monthly Compensation ” shall mean one twelfth of the sum of (i) the Executive’s Salary, and (ii) the Average Incentive Bonus.

(k) “ Pro Rata Bonus ” means an Incentive Bonus for the year of termination, based upon the actual performance of the Employer for the year of termination and prorated based upon the number of days in the calendar year of termination preceding and including the date of termination, divided by 365; provided however, that in the event of a termination due to the Executive’s death or Disability, the term “Pro Rata Bonus” shall mean an amount determined based upon the amount accrued by the Employer as of the end of the month in which such termination occurs.

(l) “ Restricted Area ” means the area that encompasses a 25-mile radius from each banking or other office location of the Employer and its Affiliates for which the Executive has provided services during the 12-month period immediately preceding the executive’s termination; provided , however , that in the event of a Change in Control, the Restricted Area shall be determined as of the date immediately preceding the Change in Control.

(m) “ Restricted Period ” shall mean during the Executive’s employment with the Employer and for a period of twelve (12) months immediately following the termination of the Executive’s employment for any reason, whether such termination occurs during the Term or thereafter; provided, however , that in the event that the Date of Termination occurs during a Covered Period the “Restricted Period” shall be reduced to the twelve (12) month period immediately following the date of the Change in Control for purposes of Section 8(c) .

(n) “ Restrictive Covenants ” shall mean those restrictions individually and collectively set forth in Section 8 .

(o) “ Severance Amount ” means:

(i) For any Termination that occurs during the Term and not during a Covered Period shall be an amount equal to the sum of (i) twelve (12) times the Executive’s Monthly Compensation, plus (ii) a Pro Rata Bonus; or

(ii) For any Termination that occurs during a Covered Period, an amount equal to the sum of (i) twenty-four (24) times the Executive’s Monthly Compensation, plus (ii) a Pro Rata Bonus.

(p) “ Specified Employee ” means any person who is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company based upon the 12-month period ending on each December 31st (such 12-month period is referred to below as the “identification period”). If Executive is determined to be a key employee, Executive shall be treated as a Specified Employee for purposes of this Agreement during the 12-month period that begins on the April 1 following the close of the identification period. For purposes of determining whether Executive is a key employee, “compensation” means Executive’s W-2 compensation as reported by the Company for a particular calendar year.

(q) “ Substantial Business Efforts ” means marketing, promotional, purchasing, sales, or solicitation activities undertaken on behalf of the Employer or an Affiliate, which include (i) in person and voice communications and (ii) either or both of (A) delivery of a quote, bid, proposal, or request for any of the foregoing or (B) visits to the site of the actual or potential business development and other similar meetings or visits (conducted alone or with other employees of the Employer or an Affiliate), where such activities would enjoy a reasonable prospect of success in the absence of any breach of this Agreement

(r) “ Termination ” shall mean termination of the Executive’s employment either:

(i) by the Employer or its successor, as the case may be, other than a termination for Cause or any termination as a result of the Executive’s Disability or death; or

(ii) by the Executive for Good Reason.

(s) “ Voting Securities ” shall mean any securities that ordinarily possess the power to vote in the election of directors without the happening of any precondition or contingency.

27. Construction . In this Agreement, unless otherwise stated, the following uses apply: (i) references to a statute shall refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as amended, or its successors, as in effect at the relevant time; (ii) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until,” and “ending on” (and the like) mean “to, and including”; (iii) references to a governmental or quasi-governmental agency, authority, or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority, or instrumentality; (iv) indications of time of day shall be based upon the time applicable to the location of the principal headquarters of the Employer; (v) the words “include,” “includes,” and “including” (and the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation,” (and the like) respectively; (vi) a ll references to preambles, recitals, sections, and exhibits are to preambles, recitals, sections, and exhibits in or to this Agreement ; (vii) the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder,” (and the like) refer to this Agreement as a whole (including exhibits); (viii) any reference to a document or set of documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals, substitutions, or replacements thereof; (ix) all words used shall be construed to be of such gender or number as the circumstances and context require; (x) the captions and headings of preambles, recitals, sections, and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (xi) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.

In Witness Whereof , the Employer has caused this Agreement to be executed by its duly authorized officer and the Executive has signed this Agreement, effective as of the date first written above.

County Bancorp, Inc.By: _/s/ Timothy J. Schneider___________Name: Timothy J. SchneiderTitle: President

Investors Community bank

By: __ /s/ Timothy J. Schneider _______

Name: Timothy J. Schneider
Title: CEO

EXECUTIVE

By: _ /s/ Mark A. Miller ________________

Mark A. Miller

EXHIBIT A

General Release and Waiver

This General Release and Waiver (“ Agreement ”) is made and entered into by and between County Bancorp, Inc. (the “ Company ”) and ___________ (the “ Executive ”).

Whereas , the Executive and the Company desire to settle fully and amicably all issues between them, including any issues arising out of the Executive’s employment with the Company and the termination of that employment; and

Whereas , the Executive and the Company are parties to that certain Employment Agreement, made and entered into as of ___________, as amended (the “ Employment Agreement ”).

Now, therefore , for and in consideration of the mutual promises contained herein, and for other good and sufficient consideration, receipt of which is hereby acknowledged, the Executive and the Company (collectively, the “ Parties ” and, individually, each a “ Party ”), intending to be legally bound, hereby agree as follows:

1. Termination of Employment. The Executive’s employment with the Company shall terminate effective as of the close of business on _____________ (the “ Date of Termination ”).

2. Compensation and Benefits. Subject to the terms of this Agreement, the Company shall compensate the Executive under this Agreement as follows (collectively, the “ Severance Payments ”):

(a) Severance Payments . _______________.

(b) Accrued Salary and Vacation . The Executive shall be entitled to a lump sum payment in an amount equal to the Executive’s earned but unpaid annual base salary and vacation pay for the period ending on the Date of Termination, with such payment to be made on the first payroll date following the Date of Termination.

(c) Executive Acknowledgement . The Executive acknowledges that, subject to fulfillment of all obligations provided for herein, the Executive has been fully compensated by the Company, including under all applicable laws, and that nothing further is owed to the Executive with respect to wages, bonuses, severance, other compensation, or benefits. The Executive further acknowledges that the Severance Payments (other than (b) above) are consideration for the Executive’s promises contained in this Agreement, and that the Severance Payments are above and beyond any wages, bonuses, severance, other compensation, or benefits to which the Executive is entitled from the Company under the terms of the Executive’s employment or under any other contract or law that the Executive would be entitled to absent execution of this Agreement.

(d) Withholding . The Severance Payments shall be treated as wages and subject to all taxes and other payroll deductions required by law.

3. Termination of Benefits. Except as provided in Section 2 above or as may be required by law, the Executive’s participation in all employee benefit (pension and welfare) and compensation plans of the Company shall cease as of the Date of Termination. Nothing contained herein shall limit or otherwise impair the Executive’s right to receive pension or similar benefit payments that are vested as of the Date of Termination under any applicable tax-qualified pension or other plans, pursuant to the terms of the applicable plan.

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4. Release of Claims and Waiver of Rights. The Executive, on the Executive’s own behalf and that of the Executive’s heirs, executors, attorneys, administrators, successors, and assigns, fully releases and discharges the Company, its predecessors, successors, parents, subsidiaries, affiliates, and assigns, and its and their directors, officers, trustees, employees, and agents, both in their individual and official capacities, and the current and former trustees and administrators of each retirement and other benefit plan applicable to the employees and former employees of the Company, both in their official and individual capacities (the “ Releasees ”) from all liability, claims, demands, and actions the Executive now has, may have had, or may ever have, whether currently known or unknown, as of or prior to the Executive’s execution of this Agreement (the “ Release ”), including liability claims, demands, and actions:

(a) Arising from or relating to the Executive’s employment or other association with the Company, or the termination of such employment,

(b) Relating to wages, bonuses, other compensation, or benefits,

(d) Relating to any employment law, including

(i) The United States and State of Wisconsin,

(ii) The Civil Rights Act of 1964,

(iii) The Civil Rights Act of 1991,

(iv) The Equal Pay Act,

(v) The Employee Retirement Income Security Act of 1974,

(vi) The Age Discrimination in Employment Act (the “ ADEA ”),

(vii) The Americans with Disabilities Act,

(viii) Executive Order 11246, and

(ix) Any other federal, state, or local statute, ordinance, or regulation relating to employment,

(e) Relating to any right of payment for disability,

(f) Relating to any statutory or contractual right of payment, and

(g) For relief on the basis of any alleged tort or breach of contract under the common laws of the State of Wisconsin, or any other state, including defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, and negligence.

The Executive acknowledges that the Executive is aware that statutes exist that render null and void releases and discharges of any claims, rights, demands, liabilities, actions, and causes of action that are unknown to the releasing or discharging party at the time of execution of the release and discharge. The Executive waives, surrenders, and shall forego any protection to which the Executive would otherwise

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be entitled by virtue of the existence of any such statutes in any jurisdiction, including the State of Wisconsin.

5. Exclusions from General Release. Excluded from the Release are any claims or rights (i) that cannot be waived by law, (ii) to indemnification from the Company pursuant to the Employment Agreement, the Company’s bylaws, or any charter provision, (iii) to coverage under any applicable directors’ and officers’ liability insurance coverage for the Company or any affiliate, or (iv) to file a charge with an administrative agency or participate in any agency investigation. The Executive is, however, waiving the right to recover any money in connection with a charge or investigation. The Executive is also waiving the right to recover any money in connection with a charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency.

6. Covenant Not to Sue.

(a) A “covenant not to sue” is a legal term that means the Executive promises not to file a lawsuit in court. It is different from the release of claims and waiver of rights contained in Section 4 above. Besides waiving and releasing the claims covered by Section 4 above, the Executive shall never sue the Releasees in any forum for any reason covered by the Release. Notwithstanding this covenant not to sue, the Executive may bring a claim against the Company to enforce this Agreement, to challenge the validity of this Agreement under the ADEA or for any claim that arises after execution of this Agreement. If the Executive sues any of the Releasees in violation of this Agreement, the Executive shall be liable to them for their reasonable attorneys’ fees and costs (including the costs of experts, evidence, and counsel) and other litigation costs incurred in defending against the Executive’s suit.

(b) If the Executive has previously filed any lawsuit against any of the Releasees, the Executive shall immediately take all necessary steps and execute all necessary documents to withdraw or dismiss such lawsuit to the extent the Executive’s agreement to withdraw, dismiss, or not file a lawsuit would not be a violation of any applicable law or regulation.

7. Whistleblower Reporting and Recovery . Notwithstanding any provision in this Release to the contrary, Executive is not waiving the right to report possible securities law violations to the Securities and Exchange Commission or other governmental agencies or the right to receive any resulting whistleblower awards

8. Representations by Executive. The Executive warrants that the Executive is legally competent to execute this Agreement and that the Executive has not relied on any statements or explanations made by the Company or its attorneys. The Executive acknowledges that the Executive has been afforded the opportunity to be advised by legal counsel regarding the terms of this Agreement, including the Release. The Executive acknowledges that the Executive has been offered at least twenty-one 21 days to consider this Agreement. After being so advised, and without coercion of any kind, the Executive freely, knowingly, and voluntarily enters into this Agreement. The Executive acknowledges that the Executive may revoke this Agreement within seven (7) days after the Executive has signed this Agreement and acknowledges understanding that this Agreement shall not become effective or enforceable until seven (7) days after the Executive has signed this Agreement (the “Effective Date”), as evidenced by the date set forth below the Executive’s signature on the signature page hereto. Any revocation must be in writing and directed to the Chief Executive Officer. If sent by mail, any revocation must be postmarked within the seven-day period described above and sent by certified mail, return receipt requested.

9. Restrictive Covenants. Section 8 of the Employment Agreement (entitled “Restrictive Covenants”) shall continue in full force and effect as if fully restated herein.

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10. Non-Disparagement. The Parties shall not engage in any disparagement or vilification of the other Party, and shall refrain from making any false, negative, critical, or disparaging statements, implied or expressed, concerning the other Party, including regarding management style, methods of doing business, the quality of products and services, role in the community, or treatment of employees. The Parties shall do nothing that would damage the other Party’s business reputation or goodwill.

11. Company Property .

(a) The Executive shall return to the Company all information, property, and supplies belonging to the Company or any of its affiliates, including any confidential or proprietary information, Company autos, keys (for equipment or facilities), laptop computers and related equipment, cellular phones, smart phones or PDAs (including SIM cards), security cards, corporate credit cards, and the originals and all copies of all files, materials, and documents (whether in tangible or electronic form) containing confidential or proprietary information or relating to the business of the Company or any of its affiliates.

(b) The Executive shall not, at any time on or after the Date of Termination, directly or indirectly use, access, or in any way alter or modify any of the databases, e-mail systems, software, computer systems, or hardware or other electronic, computerized, or technological systems of the Company or any of its affiliates. The Executive acknowledges that any such conduct by the Executive would be illegal and would subject the Executive to legal action by the Company, including claims for damages and/or appropriate injunctive relief.

12. No Admissions. The Company denies that the Company or any of its affiliates, or any of their employees or agents, has taken any improper action against the Executive, and this Agreement shall not be admissible in any proceeding as evidence of improper action by the Company or any of its affiliates or any of their employees or agents.

13. Confidentiality of Agreement. The Executive shall keep the existence and the terms of this Agreement confidential, except for The Executive’s immediate family members and the Executive’s legal and tax advisors in connection with services related hereto and except as may be required by law or in connection with the preparation of tax returns.

14. Non-Waiver. The Company’s waiver of a breach of this Agreement by the Executive shall not be construed or operate as a waiver of any subsequent breach by the Executive of the same or of any other provision of this Agreement.

15. Applicable Law; Mandatory Arbitration and Equitable Relief. All questions concerning the construction, validity, and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by Sections 16 and 17 of the Employment Agreement as if restated herein in their entirety.

16. Legal Fees . In the event that either Party commences mediation, arbitration, litigation, or any similar action to enforce or protect such Party’s rights in accordance with and under this Agreement, the prevailing Party in any such action shall be entitled to recover reasonable attorneys’ fees and costs (including the costs of experts, evidence, and counsel) and other costs relating to such action, in addition to all other entitled relief, including damages and injunctive relief.

17. Entire Agreement. This Agreement sets forth the entire agreement of the Parties regarding the subject matter hereof, and shall be final and binding as to all claims that have been or could have been advanced on behalf of the Executive pursuant to any claim arising out of or related in any way to the Executive’s employment with the Company and the termination of that employment.

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18. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

19. Successors. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns.

20. Enforcement. The provisions of this Agreement shall be regarded as divisible and separable and if any provision should be declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remaining provisions shall not be affected thereby. If the scope of any restriction or requirement contained in this Agreement is too broad to permit enforcement of such restriction or requirement to its full extent, then such restriction or requirement shall be enforced to the maximum extent permitted by law, and the Executive hereby consents that any court of competent jurisdiction may so modify such scope in any proceeding brought to enforce such restriction or requirement.

21. Construction. In this Agreement, unless otherwise stated, the following uses apply: (a) references to a statute refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as amended, or its successors, as in effect at the relevant time; (b) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including, “ and the words “to,” “until,” and “ending on” (and the like) mean “to, and including”; (c) references to a governmental or quasi-governmental agency, authority, or instrumentality also refer to a regulatory body that succeeds to the functions of the agency, authority, or instrumentality; (d) the words “include,” “includes,” and “including” (and the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation,” (and the like) respectively; (e) a ll references to preambles, recitals, sections, and exhibits are to preambles, recitals, sections, and exhibits in or to this Agreement ; (f) the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder,” (and the like) refer to this Agreement as a whole (including exhibits); (g) any reference to a document or set of documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals, substitutions, or replacements thereof; (h) all words used shall be construed to be of such gender or number as the circumstances and context require; (i) the captions and headings of preambles, recitals, sections, and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (j) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.

In witness whereof , the Parties have duly executed this Agreement as of the dates set forth below their respective signatures below.

County Bancorp, Inc.

By:
Name:
Title:

Executive

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Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy J. Schneider, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of County Bancorp, Inc.;

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

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

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: May 9, 2019	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Glen L. Stiteley, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of County Bancorp, Inc.;

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

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

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)

(b)

(c)

(d)

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)

(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: May 9, 2019	By:	/s/ Glen L. Stiteley
		Glen L. Stiteley
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of County Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy J. Schneider, as President of the Company, hereby 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; and

(2)

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

Date: May 9, 2019	By:	/s/ Timothy J. Schneider
		Timothy J. Schneider
		President

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of County Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glen L. Stiteley, as Chief Financial Officer of the Company, hereby 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; and

(2)

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

Date: May 9, 2019	By:	/s/ Glen L. Stiteley
		Glen L. Stiteley
		Chief Financial Officer