2022 Proxy Statement

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In addition to the compensation arrangements with directors and executive officers described in “Executive Compensation” above, the following is a description of transactions in the 2020 and 2021 fiscal year to which we have been a party in which the amount involved exceeded or will exceed $120 thousand, and in which any of our directors, executive officers or beneficial holders of more than five percent of our capital stock, or their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest. Our branch in Greenwood, Minnesota, is leased by the Bank from Greenwood, an entity owned by certain of our executive officers and directors. Mr. Baack, Chairman of the Board, Chief Executive Officer and President, and Mr. Shellberg, our Executive Vice President, Chief Credit Officer and Director are members and are on the board of governors of Greenwood, and Mr. Shellberg also serves as the chief manager of the entity. The following directors of the Company and the Bank are also members of Greenwood: Messrs. Johnson, Juran, Trutna and Urness. Messrs. Baack, Shellberg, Johnson, Juran, Trutna and Urness each own a 12.5% membership interest in Greenwood. In 2020, the Bank exercised a renewal option to extend the term of the lease to August 1, 2026. The Bank has one additional five-year renewal option that will permit the Bank to extend the lease through August 1, 2031. The total amount of rent payable by the Bank to Greenwood during the remaining current term of the lease is approximately $1.26 million (inclusive of base rent, estimated real estate taxes and estimated operating costs). The total amount of rent paid by the Bank to Greenwood during 2020 was approximately $257 thousand and the amount paid in 2021 was approximately $262 thousand (in both cases, inclusive of base rent, real estate taxes and operating costs). In lieu of the Company’s stated related party transaction approval process, described below, our Board formed a special committee in 2020 to review the transaction consisting of all of the Company’s non-employee directors that did not have an interest in the transaction. In approving the related party transaction, the special committee considered, among other factors, the fairness of the transaction, the direct or indirect nature of the related party’s interest in the transaction, the appearance of any improper conflicts of interest for any director or executive officer taking into account the size of the transaction and the financial position of the related party, whether the transaction would impair an outside director’s independence, the acceptability of the transaction to our regulators and any potential violations of other corporate policies. The Company and the Bank believe the terms of this lease are consistent with the terms for similar properties that could be received in arm’s-length negotiations with third parties. In 2020 and prior years, the Company purchased loan participation interests from and held an interest in a syndicated loan originated by Colliers Mortgage LLC. Mr. Juran, is an executive officer of and owns more than ten percent of Colliers Mortgage Holdings LLC, the parent company of Colliers Mortgage LLC and Colliers Securities LLC (referenced below), and previously served as an executive officer and owned more than ten percent of the predecessor parent company of such entities, Dougherty Financial Group LLC. For each of the loans, Colliers Mortgage acts as the servicer of the loans. Pursuant to servicing and participation agreements for each of the loans, in lieu of a direct payment of a servicing fee by the Company to Colliers Mortgage, the loans have pass-through rates which are between 15 basis points and 125 basis points lower than the loan’s contractual rate. Servicing fees are negotiated on a loan by loan basis. In 2020, the servicing fees to Colliers Mortgage were approximately $169 thousand, and in 2021, the servicing fees to Colliers Mortgage were approximately $95 thousand. Additionally, the Company purchased a number of municipal bonds in 2020 and 2021 for which Colliers Securities acted as broker and received commissions of approximately $11 thousand and $16 thousand, respectively. In 2021, Colliers Securities was engaged by the Company’s lead book-running manager, D.A. Davidson & Co., as a selling group member in the Company’s underwritten public offering of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, and received commissions of approximately $340 thousand in connection with such offering. Ordinary Banking Relationships Our directors, officers, certain of our beneficial owners of more than five percent of our common stock and their respective associates were customers of and had transactions with us in the past, and additional transactions with these persons are expected to take place in the future. All outstanding loans and commitments to lend with these persons were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank, and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved by the Bank’s board of directors in accordance with applicable bank regulatory requirements. Similarly, all certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially

2022 Proxy Statement

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