DEF 14A of Hawthorn Bancshares, Inc., Apr 21, 2025

DEF 14A of Hawthorn Bancshares, Inc.

Filed Apr 21, 2025 · FY20240000893847-25-000008

Open on EDGAR

  1. ITEM 1: ELECTION OF DIRECTORS

    ITEM 1: ELECTION OF DIRECTORS

  2. Who are this year’s nominees?

    Who are this year’s nominees? The nominating and corporate governance committee of our board of directors has designated Gregg A. Bexten, Shawna M. Hettinger, Kevin L. Riley and David T. Turner as the nominees proposed for election at the annual meeting. Each of these nominees currently serves on our board. Unless authority to vote for the nominees or a particular nominee is withheld, it is intended that the shares represented by properly executed proxies in the form enclosed will be voted for the election as directors of Messrs. Bexten, Riley, Turner and Mrs. Hettinger. The following table sets forth certain information with respect to each person nominated for election as a director at the annual meeting and each director whose term of office will continue after the annual meeting.

  3. Who are this year’s nominees?

    | Name | Age | Position With Our Company | Director Since | | NOMINEES | | | | | Class III: New Term to expire in 2028 | | | | | Gregg A. Bexten | 57 | President and Director | 2023 | | Shawna M. Hettinger | 53 | Director | 2022 | | Kevin L. Riley | 69 | Director | 1995 | | David T. Turner | 68 | Chairman and Director | 1997 | | DIRECTORS CONTINUING IN OFFICE | | | | | Class I: Term to expire in 2026 | | | | | Kathleen L. Bruegenhemke | 59 | Executive Vice President, Chief Operations Officer, Chief Risk Officer, Secretary and Director | 2017 | | Douglas T. Eden | 54 | Director | 2023 | | Philip D. Freeman | 71 | Director | 1993 | | Jonathan D. Holtaway | 54 | Director | 2019 | | Class II: Term to expire in 2027 | | | | | Frank E. Burkhead | 53 | Director | 2014 | | Brent M. Giles | 57 | Chief Executive Officer and Director | 2023 | | Jonathan L. States | 54 | Director | 2022 | | Gus S. Wetzel, III | 46 | Director | 2018 |

  4. Who are this year’s nominees?

    There is no arrangement or understanding between any director and any other person pursuant to which such director was selected as a director. What is the business experience of the nominees and of our continuing board members and the basis for the conclusion that each such person should serve on our board? Described below is the business experience for at least the last five years of each person nominated for election as a director at the annual meeting and each person whose term of office as director will continue after the annual meeting, as well as the specific experience, qualifications, attributes and skills of each such person that led to the conclusion that such person should serve on our board. Gregg A. Bexten has served as a director and president of our Company and of Hawthorn Bank since May 2023. From 2014 until May of 2023, he served as Regional President of the Central Region. From 1998 until 2014, he served as a commercial lender in our Central Region with the titles of Senior Vice President and Vice President and as Internal Auditor. Prior to joining the Bank, Mr. Bexten served as a commercial lender with another financial institution and as a Commissioned Bank Examiner for the Federal Reserve Bank of St. Louis. Mr. Bexten possesses considerable expertise in overseeing lending, various finance and regulatory compliance aspects of community banking, which he attained through over 30 years of service, first as a bank regulator and then as a dedicated, tenured employee of Hawthorn Bank. His expertise, and the community banking relationships he has developed in the mid-Missouri market, will benefit board discussions and decisions in the future. Kathleen L. Bruegenhemke, CPA has served as a director of our Company and of Hawthorn Bank since March 2017. She has served as Executive Vice President since May 2024. She served as Senior Vice President of the Company from 1997 until February 2024, as Secretary of the Company since 1997 and as Chief Risk Officer of the Company since June 2006. With the exception of six months (November 2023 - April 2024), Ms. Bruegenhemke has served as Chief Operations Officer of Hawthorn Bank since January 2017. From October 2014 until December 2016, she served as Columbia Market President. From January 1992 until November 1997, she served as Internal Auditor of Hawthorn Bank (or of one of its constituent predecessors). Prior to joining the Bank, Ms. Bruegenhemke served as a Commissioned Bank Examiner for the Federal Deposit Insurance Corporation. Ms. Bruegenhemke is a certified public accountant and possesses considerable expertise in overseeing various finance, regulatory compliance and risk management aspects of community banking, which she attained through over 30 years of service, first as a bank regulator and then as a dedicated employee of Hawthorn Bank. Her expertise, and the customer and community relationships she has developed, particularly in the Columbia, Missouri market, will benefit board discussions and decisions and support the conclusion that Ms. Bruegenhemke should serve on our board. Frank E. Burkhead, CPA AIF, has served as a director of Hawthorn Bank and of our Company since July 2014. Mr. Burkhead also serves on our nominating and corporate governance, audit and compensation committees. He is the co-owner of Burkhead & Associates LLC and owner of Burkhead Wealth Management since their founding in 1999. Mr. Burkhead is a certified public accountant and wealth and financial planner licensed in multiple states. Early in his working career, Mr. Burkhead served our Company as a teller, in customer service and as a loan adjuster in the Jefferson City market. Mr. Burkhead brings business success in over 30 years of experience in the financial planning and tax planning business. Mr. Burkhead contributes a strong accounting background as well as an excellent reputation as a business leader in the central Missouri business community. Douglas T. Eden has served as a director of our Company and of Hawthorn Bank since October 2023. He is currently the Principal and Investment Advisor Representative of Eden Capital Management, LLC based in Lakewood Ranch, Florida. Mr. Eden earned his Bachelor’s Degree in Economics from The Wharton School of the University of Pennsylvania in 1992 and worked in the property & casualty insurance industry for 24 years serving as Senior Vice President with CNA Financial in Chicago, Illinois, Senior Vice President with The Main Street America Group in Jacksonville, Florida and Executive Vice President with Selective Insurance Company in Branchville, New Jersey. Mr. Eden is an active investor, privately managing assets for more than 25 years and from 2012 until 2014 he served on the Investment Committee of the Main Street America Group with oversight of the Property & Casualty insurer’s $2 billion investment portfolio. It is anticipated that board discussions and decisions will benefit from his over 30 years of experience in the property & casualty insurance industry and investment advising. Philip D. Freeman has served as a director of Hawthorn Bank (or one of its constituent predecessors) since 1990 and of our Company since 1993. He is the owner of Freeman Properties JCMO, LLC. Mr. Freeman also serves on our nominating and corporate governance, audit and compensation committees. The conclusion that Mr. Freeman should serve on our board is founded on his over 50 years of experience in managing a successful business with compassion, which experience has given him an appreciation for the needs of people in our market and earned him the respect of many in the Jefferson City business community. His leadership on various committees of the board has been accompanied by his development of a high level of competency and expertise in areas of focus for our board, including executive compensation, financial reporting and investor relations. Brent M. Giles has served as a director and CEO of our Company and of Hawthorn Bank since May 2023. For the prior three years, Mr. Giles was the CEO of Wisconsin Bank and Trust and Bank of Blue Valley. From 2003 until the sale in 2019, Mr. Giles served as Chairman and Chief Executive Officer of Liberty Bancorp, Inc. and BankLiberty where he took the company public, and through several acquisitions and organic growth, became one of the nation’s top performing community banks. BankLiberty was recognized many times as a “best bank,” “best place to work,” and “strongest mid-size bank.” Prior to 2003, Mr. Giles had several commercial banking roles of increasing responsibility and spent 9 years as an FDIC examiner. Mr. Giles received his bachelor’s degree in banking and finance and his MBA both from the University of Missouri where he is still involved by speaking to graduate banking classes. Mr. Giles provides valuable insight to our board through his extensive experience in the banking industry, including serving as a chief executive officer at a number of financial institutions and his role as CEO. Shawna M. Hettinger has served as a director of Hawthorn Bank and of our Company since September 2022. Mrs. Hettinger is president and majority owner of Streetwise, Inc., a pavement marking and traffic control company based in Grandview, Missouri. She has over 15 years of experience in the construction industry. Mrs. Hettinger’s knowledge in business, the construction industry and her relationships with customers in our Kansas City and Springfield markets are of value to our Company and led to the conclusion that she should serve on our board.

  5. Who are this year’s nominees?

    Jonathan D. Holtaway has served as a director of our Company and of Hawthorn Bank since March 2019. He is President of Ategra Capital Management, LLC, a registered investment advisor founded by Mr. Holtaway in 2005 and based in Vienna, Virginia. He serves as managing member of Ategra GP, LLC, the general partner of Ategra Community Financial Institution Fund, LP, a fund which invests primarily in the securities of companies in the bank and thrift industry and Ategra LS500, LP, a fund which invests primarily in large capitalization equities in the United States. From July 1992 until September 2001, Mr. Holtaway served as Managing Director and Partner of Danielson Associates, an investment banking company which provided advisory services to community financial institutions. It is anticipated that board discussions and decisions will benefit from his understanding of the fundamentals of community banking derived from his over 30 years of experience as an analyst of, advisor to, and investor in, community banks and other financial institutions. Kevin L. Riley has served as a director of Hawthorn Bank (or one of its constituent predecessors) and of our Company since 1995. He was co-owner of Riley Chevrolet, Buick, GMC, Cadillac and Riley Toyota, Inc., each a Jefferson City, Missouri automobile dealership since 1986 and 1992, respectively, having recently retired. His plans are to continue to live in the Jefferson City area and stay active in business, charitable and different board functions. Mr. Riley also serves on our nominating and corporate governance, audit and compensation committees. Mr. Riley's years of experience in managing successful automobile dealerships (for which customer financing is an important part) and in regularly coming in contact with people in our market are of value to our Company and led to the conclusion that he should serve on our board. Board discussions and decisions benefit from his knowledge of customer relationship management. Jonathan L. States has served as a director of our Company and of Hawthorn Bank since September 2022. He is a member/owner of Little Dixie Construction, a Columbia, Missouri based general contracting firm. Mr. States has over 30 years’ experience in the commercial construction industry. Being in the construction business has allowed Mr. States the opportunity to be actively involved in the commercial real estate business keeping him aware of the local and regional market. His knowledge of the construction industry and his relationships with customers throughout Missouri are of value to our Company and led to the conclusion that he should serve on our board. David T. Turner has served as a director of our Company and of Hawthorn Bank (or of its constituent predecessors) since January 1997. He has served as our Chairman since his retirement as Executive Chairman in January 2024, and he previously served as Executive Chairman since April 2023. Mr. Turner served as president of our Company from March 2002 until April 2023 and as chairman and chief executive officer of our Company from January 2011 until his retirement in April 2023. He also served as chairman, chief executive officer and president of Hawthorn Bank from April 2002 until April 2023. Mr. Turner served as vice chairman of our Company from June 1998 through March 2002 and as senior vice president of our Company from 1993 until June 1998. He served as president of a predecessor to Hawthorn Bank from January 1997 through March 2002 when he assumed the position of chairman, chief executive officer and president. He served as senior vice president of that same predecessor from June 1992 through December 1996 and as its vice president from 1985 until June 1992. The conclusion that Mr. Turner should serve on our board is founded on his experience in the banking industry and familiarity with Hawthorn Bank and many of its customers. He brings valuable insights gained from his career at Hawthorn Bank in developing and promoting lasting customer relationships, sound ethical practices and a dedicated, service-oriented staff. Gus S. Wetzel, III has served as a director of our Company since November 2018 and as a director of Hawthorn Bank since April 2017. Mr. Wetzel also serves on our nominating and corporate governance, audit and compensation committees. Mr. Wetzel has held his real estate license with Re/Max Truman Lake since 2008. He is also currently an owner of Meadows Contracting, LLC and Meadows Development Company where he has actively developed commercial and residential properties for over 20 years. Mr. Wetzel is a leader within the Clinton, Missouri business community. Mr. Wetzel's knowledge of the Clinton, Missouri real estate environment and his relationships with customers in the community benefit directorate discussions.

  6. Consideration of Director Nominees

    Consideration of Director Nominees In identifying and evaluating director nominees, the nominating and corporate governance committee of our board of directors may receive recommendations from management, from other directors and from shareholders. The committee reviews and considers information on each candidate and evaluates it in light of the needs and requirements of our Company. The committee believes that our board and its committees should be comprised of persons who are of high character and integrity, who have a personal and professional reputation that is consistent with the image and reputation of our Company, and who have expertise that may be useful to our Company. The committee also considers various factors, including the independence of the candidate, as well as his or her education or special skills, areas of expertise, experience, business associations, reputation and other characteristics and qualities that the committee believes are likely to enhance the effectiveness of our board and its committees. In determining whether a director should be retained and stand for re-election, the committee also considers the director's past attendance at meetings and participation in and contributions to the activities of our board and each committee on which such director serves. The committee does not assign specific weights to particular factors and no particular factor is necessarily applicable to all prospective nominees. No person will be eligible to stand for election as a director if he or she has been convicted of a felony without right of further appeal. In addition, no person may serve as a director after the end of the term in which his or her 75th birthday occurred, nor may any person be eligible to stand for election as a director after his or her 75th birthday. The committee does not have a formal policy concerning its consideration of diversity in identifying director nominees. Although the committee may consider diversity in identifying director nominees, it did not do so with respect to the selection of the nominees for this annual meeting. The committee seeks to identify and recruit the best available candidates, without regard to race, color, religion, sex, age, marital status, ancestry, national origin or disability. Shareholders who wish the nominating and corporate governance committee to consider their recommendations for nominees for the position of director should submit their recommendations in writing to the nominating and corporate governance committee in care of our corporate secretary at Hawthorn Bancshares, Inc., P.O. Box 688, Jefferson City, MO 65102. All nominees, including those submitted by shareholders in accordance with these procedures, will be evaluated using generally the same methods and criteria described above, although those methods and criteria are not standardized and may vary from time to time. Shareholders also may submit director nominations to our Company in accordance with the procedures described below under "Shareholder Proposals."

  7. Director Compensation

    Director Compensation Only outside (non-employee) members of our board of directors receive compensation for their service to our Company as a director. Each of these outside (non-employee) directors receive a monthly retainer of $2,000, $900 for each board meeting and $650 for each committee meeting attended. All directors of our Company are also directors of Hawthorn Bank, and in that capacity may receive compensation from Hawthorn Bank. For their service to Hawthorn Bank as a director, each of Hawthorn Bank's outside (non-employee) directors is paid $650 for each meeting of the board attended. Compensation earned in 2024 by each person currently serving as a non-employee director during such year for service on our board and its committees is presented in the table below.

  8. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) (1) | All Other Compensation ($) | Total ($) | | Frank E. Burkhead | 43,800 | — | 43,800 | | Douglas T. Eden | 36,650 | — | 36,650 | | Philip D. Freeman | 43,150 | — | 43,150 | | Shawna M. Hettinger | 34,700 | — | 34,700 | | Jonathan D. Holtaway | 35,750 | — | 35,750 | | Kevin L. Riley | 40,550 | — | 40,550 | | Jonathan L. States | 36,000 | — | 36,000 | | David T. Turner (2) | 33,650 | 182,689 | 216,339 | | Gus S. Wetzel, III | 43,800 | — | 43,800 |

  9. Director Compensation

    _____________ (1)Includes fees received for service as directors and committee members of our Company, and of our subsidiary bank, Hawthorn Bank, as follows:

  10. Director Compensation

    | Name | Hawthorn Bancshares Retainer ($) | Hawthorn Bancshares Meeting Fees ($) | Hawthorn Bank Meeting Fees ($) | Total Fees Earned or Paid in Cash ($) | | Frank E. Burkhead | 24,000 | 17,850 | 1,950 | 43,800 | | Douglas T. Eden | 24,000 | 10,700 | 1,950 | 36,650 | | Philip D. Freeman | 24,000 | 17,850 | 1,300 | 43,150 | | Shawna M. Hettinger | 24,000 | 8,750 | 1,950 | 34,700 | | Jonathan D. Holtaway | 24,000 | 9,800 | 1,950 | 35,750 | | Kevin L. Riley | 24,000 | 15,250 | 1,300 | 40,550 | | Jonathan L. States | 24,000 | 10,050 | 1,950 | 36,000 | | David T. Turner | 22,000 | 8,100 | 3,550 | 33,650 | | Gus S. Wetzel, III | 24,000 | 17,850 | 1,950 | 43,800 |

  11. Director Compensation

    (2)Mr. Turner retired as Executive Chairman effective January 5, 2024, but did not perform any services as an executive officer during 2024. Mr. Turner received the following benefits in connection with his retirement or for his services provided prior to his retirement: (i) a cash payment of $102,941 for regular pay and accrued but unpaid holiday pay and unused vacation; (ii) the Company transferred a Company-owned car to Mr. Turner as a gift in recognition of his past services to the Company with an incremental cost of $58,674; and (iii) contributions to the Hawthorn Bancshares, Inc. Profit-Sharing 401(k) Plan (and its predecessor plans) paid by our Company.

  12. Compensation Discussion and Analysis

    | | Form | Features | Rationale | | Fixed Compensation | Base Salary | Determined annually; based on individual performance (subject to broader Company goals), internal pay equity and peer group practices at or near the median | Provides a source of predictable income | | Variable Compensation | Performance-Based Incentive Cash Awards | Annual cash bonus, with the amount contingent on attainment of absolute performance measures | Aligns pay and short-term Company performance | | | Performance-Based Incentive Equity Awards | Shares are issued in a “target” amount at the beginning of a three-year performance cycle and relative performance measures are designated, with final payouts contingent on actual performance during the cycle | Aligns pay and long-term Company performance | | | Time-Based Equity Awards | Shares are issued at the beginning of a service-based vesting period, with vesting subject to continuous employment during the period | Acts as a retention device |

  13. Compensation Discussion and Analysis

    Section 162(m) of the Internal Revenue Code generally disallows an income tax deduction to public companies for compensation over $1 million paid to certain executive officers. Our policy is to take reasonable and practical steps to avoid or minimize compensation that exceeds the cap so that all or most compensation is tax deductible. All compensation paid to our named executive officers in 2024 was deductible for federal income tax purposes. Shareholder Advisory Approval of Executive Compensation At the annual meeting of shareholders held on June 4, 2024, shareholders provided advisory approval of the compensation of our executives disclosed in the proxy statement for that meeting pursuant to the compensation disclosure rules of the SEC. Over 94% of the shares voted were voted for approval of the compensation of our executives at that annual meeting, which encouraged the compensation committee to continue its practices in determining executive compensation. At the annual meeting of the shareholders held on June 2, 2020, shareholders provided advisory approval for holding future advisory votes on executive compensation every year. In light of this shareholder approval for annual advisory votes on executive compensation, shareholders are being asked again to consider and act upon providing advisory approval for the compensation of our executives at this year's annual meeting of shareholders. We value the opinions of shareholders and, to the extent there is any significant advisory vote against the compensation of our executives, the compensation committee will consider the concerns of shareholders reflected by such vote and will evaluate whether any actions are necessary to address those concerns. It is anticipated that shareholders will next be asked to provide advisory approval concerning the frequency of providing advisory approval of the compensation of our executives at our 2026 annual meeting of shareholders. Grant Practices Specific to Stock Options Our Company does not currently grant stock options as part of our equity compensation programs. If stock options were to be granted in the future, we would not grant such options in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock. In addition, we generally do not grant stock options (i) during trading blackout periods established under our insider trading policy, or (ii) at any time during the four business days prior to or the one business day following the filing of our periodic reports or the filing or furnishing of a Form 8-K that discloses material nonpublic information. These restrictions do not apply to other types of equity awards that do not include an exercise price related to the market price of our common stock on the date of grant. During fiscal year 2024, (i) none of our named executive officers were awarded stock options with an effective grant date during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed material nonpublic information, and ending one business day after the filing or furnishing of such reports, and (ii) we did not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

  14. Summary Compensation Table

    Summary Compensation Table The following summary compensation table summarizes the compensation paid or accrued by our Company or subsidiary bank in the years indicated with respect to our principal executive officer and our two other most highly compensated executive officers for 2024. In this proxy statement, these individuals are referred to as our "named executive officers."

  15. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Nonqualified Deferred Compensation Earnings ($) | All other Compensation ($) (3) | Total ($) | | Brent M. Giles (4) | 2024 | 450,000 | — | — | 225,027 | 157,500 | — | 27,926 | 860,453 | | Chief Executive Officer | 2023 | 300,000 | — | — | 225,037 | 156,000 | — | 10,278 | 691,315 | | Gregg A. Bexten (5) | 2024 | 350,000 | — | — | — | 87,500 | — | 37,022 | 474,522 | | President | 2023 | 311,844 | 3,750 | — | — | 65,626 | — | 42,912 | 424,132 | | Martin J. Weishaar | 2024 | 275,000 | — | — | 32,010 | 68,750 | — | 15,276 | 391,036 | | Executive Vice President, General Counsel | | | | | | | | | |

  16. Summary Compensation Table

    ______________ (1)Amounts reflect the aggregate grant date fair value of such awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. For policies used in determining these values refer to Note 13 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. These amounts reflect an accounting expense and do not necessarily correspond to the actual value that may be earned by the named executive officer. (2)The amounts in this column reflect compensation earned under our incentive bonus program for each named executive officer, which is discussed above under the caption "Compensation Discussion and Analysis -- Compensation Components -- Incentive Compensation.” (3)The amounts in this column for 2024 reflect: •contributions to the Hawthorn Bancshares, Inc. Profit-Sharing 401(k) Plan (and its predecessor plans) paid by our Company for each named executive officer; •life insurance premiums paid by our Company for each named executive officer; •our incremental cost attributable to personal use by each named executive officer of a Company-provided automobile (calculated in accordance with Internal Revenue Service guidelines): (Mr. Giles -- $5,377; Mr. Bexten --$4,467 and Mr. Weishaar --$2,512); and •country club membership dues paid by our Company for some named executive officers (Mr. Giles -- $0; Mr. Bexten --$9,159; and Mr. Weishaar -- $0). (4)Mr. Giles salary was established pursuant to his Employment Agreement to be no less than $450,000 and is prorated for 2023. (5)Mr. Bexten was appointed President of our Company effective May 1, 2023. Mr. Bexten’s salary for 2023 reflects his salary for serving as Regional President prior to May 1, 2023 and his increased salary for serving as President on and after May 1, 2023.

  17. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table provides information regarding outstanding awards held by our named executive officers as of December 31, 2024. There are no outstanding options.

  18. Outstanding Equity Awards at Fiscal Year End

    | | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Brent M. Giles | 19,336 (2) | 548,176 | — | — | | Gregg A. Bexten | — | — | — | — | | Martin J. Weishaar | 3,000 (3) | 85,050 | — | — |

  19. Outstanding Equity Awards at Fiscal Year End

    (1)The market value is based on the closing market price of the Company’s common stock as of December 31, 2024 (the last trading day in the 2024 fiscal year), which was $28.35 per share. (2)The RSUs were granted to Mr. Giles under the Equity Plan pursuant to his Employment Agreement. The RSUs vest in three equal annual installments on the first, second and third anniversary date of the grants, subject to Mr. Giles’ continued employment on such vesting dates. The RSUs vest as follows: 3,717 units on May 1, 2025; 4,092 units on June 30, 2025; 3,717 units on May 1, 2026; 4,093 units on June 30, 2026; and 3,717 units on May 1, 2027. (3)The RSUs were granted to Mr. Weishaar under the Equity Plan and vest in three equal annual installments on the first, second and third anniversary date of the grants subject to Mr. Weishaar’s continued employment on such vesting dates. The RSUs vest as follows: 1,333 units on December 8, 2025; 1,333 units on December 8, 2026 and 334 units on December 8, 2027.

  20. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between compensation actually paid to our principal executive officers ("PEO") and the other named executive officers (the "Non-PEO NEOs") and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC.

  21. PAY VERSUS PERFORMANCE

    | Year (a) | Summary Compensation Table Total for PEO-1 ($)(1) (b) | Compensation Actually Paid to PEO-1 ($)(5) (c) | Summary Compensation Table Total for PEO-2 ($)(2) (d) | Compensation Actually Paid to PEO-2 ($)(4) (e) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) (f) | Average Compensation Actually Paid to Non-PEO NEOs ($)(4) (g) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return ($)(6) (h) | Net Income ($) (000's) (i) | | 2024 | 860,453 | 953,156 | — | — | 432,779 | 449,934 | 129.95 | 18,256 | | 2023 | 691,315 | 777,745 | 786,183 | 786,183 | 371,792 | 371,792 | 112.58 | 956 | | 2022 | — | — | 847,364 | 847,364 | 356,106 | 356,106 | 89.66 | 20,751 |

  22. PAY VERSUS PERFORMANCE

    ______________ (1)The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Giles (“PEO-1”) for each corresponding year in the “Total” column of the Summary Compensation Table for each year during which he served as Chief Executive Officer. (2)The dollar amounts reported in column (d) are the amounts of total compensation reported for Mr. Turner (“PEO-2”) for each corresponding year in the “Total” column of the Summary Compensation Table for each year during which he served as Executive Chairman or Chairman and Chief Executive Officer. (3)The dollar amounts reported in column (f) represent the average of the amounts reported for the Company’s Non-PEO NEOs as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) 2024: Mr. Bexten and Mr. Weishaar; (ii) 2023: Mr. Bexten and Ms. Bruegenhemke; and 2022: Ms. Bruegenhemke and Stephen E. Guthrie, our former Chief Financial Officer. (4)The dollar amounts reported in column (e) reflect no deductions from or deletions to the amounts shown in column (d), as the Company has not granted, and therefore, did not report in the Summary Compensation Table, any stock or option awards for PEO-2 during the reported periods. (5)The dollar amounts reported in columns (c) and (g) represent the amount of “compensation actually paid” to Mr. Giles, or our PEO-1, and our Non PEO NEOs as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned or paid during 2024. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to total compensation for 2024 to determine the compensation actually paid;

  23. PAY VERSUS PERFORMANCE

    | Year | Reported Summary Compensation Table Total ($) | Subtract: Reported Value of Equity Awards ($) (a) | Equity Award Adjustments ($)(b) | Compensation Actually Paid ($) | | Brent M. Giles, CEO | | | | | | 2024 | 860,453 | (225,027) | 317,730 | 953,156 | | 2023 | 691,315 | (225,037) | 311,467 | 777,745 | | Average Other NEOs | | | | | | 2024 | 432,779 | (16,005) | 33,160 | 449,934 | | 2023 | 371,792 | — | — | 371,792 |

  24. PAY VERSUS PERFORMANCE

    (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for Mr. Giles for 2024 and an average for the Non-PEO NEOs for 2024. (b) The equity award adjustments include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

  25. PAY VERSUS PERFORMANCE

    | Year | Average Year End Fair Value of Equity Awards Granted and Outstanding in the Year | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2024 | 316,131 | 24,391 | — | (22,792) | — | — | 317,730 | | 2023 | 311,467 | — | — | — | — | — | 311,467 |

  26. PAY VERSUS PERFORMANCE

    (6)Cumulative total shareholder return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The following chart sets forth the relationship between Compensation Actually Paid to our PEO-1 and PEO-2, the average of Compensation Actually Paid to our Non-PEO NEOs and the Company’s cumulative total shareholder return (TSR) over the three most recently completed fiscal years. The following chart sets forth the relationship between Compensation Actually Paid to our PEO-1 and PEO-2, the average of Compensation Actually Paid to our Non-PEO NEOs and our net income during the three most recently completed fiscal years. (1)Consolidated net income decreased $19.8 million to $1.0 million, or $0.14 per diluted share, for the year ended December 31, 2023 compared to $20.8 million, or $2.94 per diluted share, for the year ended December 31, 2022. The Company proactively elected a strategy to begin repositioning its balance sheet during the fourth quarter of 2023 by selling $83.7 million in book value of investment securities, with an average yield of 1.57%, for an after-tax realized loss of $9.1 million. In addition, the Company recognized a $1.1 million mortgage servicing rights valuation write-down upon accepting a letter of intent to sell the Company's servicing portfolio during the first quarter of 2023 and recorded a $4.7 million valuation write-down primarily related to two foreclosed property relationships.