Business Wire | Oct 27, 2021 09:00PM EDT

Affinity Bancshares, Inc Announces Third Quarter 2021 Financial Results

Oct. 28, 2021

COVINGTON, Ga.--(BUSINESS WIRE)--Oct. 28, 2021--Affinity Bancshares, Inc. (NASDAQ:"AFBI"), (the "Company"), the holding company for Affinity Bank (the "Bank"), today announced net income of $1.8 million for the three months ended September 30, 2021 as compared to $1.9 million for the corresponding prior year period. For the nine months ended September 30, 2021, the Company reported net income of $6.3 million as compared to $1.7 million for the corresponding prior year period.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211027006210/en/

AFBI Selected Data (Graphic: Business Wire)

For the three months ended, For the nine months ended,

Performance September June March September September SeptemberRatios: 30,2021 30,2021 31,2021 30,2020 30,2021 30, 2020

Return on average 0.91 % 1.18 % 1.11 % 0.90 % 1.06 % 0.31 %assets

Return on average 6.00 % 7.95 % 8.03 % 9.46 % 7.29 % 2.86 %equity

Net interest 3.78 % 4.10 % 4.65 % 3.81 % 4.17 % 3.69 %margin

Efficiency ratio 65.87 % 58.30 % 64.96 % 60.95 % 63.08 % 82.94 %

Results of Operations

Net income was $1.8 million for the three months ended September 30, 2021, compared to $1.9 million for the three months ended September 30, 2020. We have strategically made additional hires to further enhance our business development efforts. Net income increased $4.6 million to $6.3 million for the nine months ended September 30, 2021, compared to $1.7 million for the nine months ended September 30, 2020. Our net income in 2020 was reduced as a result of merger related expenses. Merger related expenses for the nine months ended September 30, 2020, were $2.8 million.

Net Interest Income and Margin

Net interest income decreased $300,000, and was $6.9 million for the three months ended September 30, 2021, compared to $7.2 million for the three months ended September 30, 2020. Average interest-earning assets decreased by $34.5 million for the three months ended September 30, 2021. Net interest income increased $4.4 million, and was $22.6 million for the nine months ended September 30, 2021, compared to $18.2 million for the nine months ended September 30, 2020. Average interest-earning assets increased by $66.2 million for the nine months ended September 30, 2021. Net interest margin for the three months ended September 30, 2021, decreased to 3.78%, from 3.81% for the same prior year period. The net interest margin compression was primarily due to the excess balance sheet liquidity and the lower interest rate environment. Net interest margin for the nine months ended September 30, 2021, increased to 4.17% from 3.69% for the same prior year period. For the three months ended September 30, 2021, the cost of average interest-bearing liabilities decreased to 0.65% from 1.00% for the corresponding prior year period. For the nine months ended September 30, 2021, the cost of average interest-bearing liabilities decreased to 0.69% from 1.18% for the corresponding prior year period. The total cost of deposits (including non-interest-bearing deposits) was 0.60% for the three months ended September 30, 2021 compared to 1.03% for the three months ended September 30, 2020. For the nine months ended September 30, 2021, the cost of deposits was 0.66% compared to 1.21% for the nine months ended September 30, 2020. The decrease was due to decreasing deposit rates related to the decrease in market rates.

Provision for Loan Losses

For the three months ended September 30, 2021, the provision for loan loss expense was $225,000 compared to $600,000 for the three months ended September 30, 2020. We increased our provision expense in 2020 due to the uncertainty related to the pandemic. For the nine months ended September 30, 2021, the provision for loan loss expense was $975,000 compared to $1.4 million for the nine months ended September 30, 2020. As the economy began to improve in 2021, less provision expense was required. Net loan recoveries were $19,000 for the three months ended September 30, 2021, compared to $125,000 for the three months ended September 30, 2020. Net loan recoveries were $295,000 for the nine months ended September 30, 2021, compared to $177,00 for the nine months ended September 30, 2020.

Non-interest Income

For the three months ended September 30, 2021, noninterest income increased $225,000 to $771,000 compared to $546,000 for the three months ended September 30, 2020. This was a result of increases in service charges on deposits accounts, interchange income, and secondary market fee income. For the nine months ended September 30, 2021, noninterest income increased $508,000 to $2.1 million compared to $1.6 million the nine months ended September 30, 2020, due to income received from a bank-owned life insurance death benefit claim, an increase in service charges on deposits accounts, and gains on the sale of Bank owned properties.

Non-interest Expense

Operating expenses increased $275,000 to $5.0 million for the three months ended September 30, 2021, compared to $4.8 million for the three months ended September 30, 2020. We have strategically made additional hires to further enhance our business development efforts. Operating expenses decreased $817,000 to $15.6 million for the nine months ended September 30, 2021 compared to $16.4 million for the nine months ended September 30, 2020. We had an increase in salary and employee expense in 2020 due to the merger.

Income Tax Expense

We recorded income tax expense of $575,000 for each of the three months ended September 30, 2021 and 2020. We recorded income tax expense of $1.9 million for the nine months ending September 30, 2021 compared to $324,000 for the nine months ended September 30, 2020. The effective tax rate was 24.17% for the three months ended September 30, 2021 compared to 23.53% for the three months ended September 30, 2020. The effective tax rate was 23.26% for the nine months ended September 30, 2021 compared to 16.40% for the nine months ended September 30, 2020. The higher effective tax rate for the current year nine-month period was primarily due to higher net income before taxes in 2021.

Financial Condition

Total assets decreased by $60.7 million to $790.0 million at September 30, 2021, from $850.6 million at December 31, 2020. The decrease was due primarily to a decrease in cash and cash equivalents of $47.3 million due to our no longer using the Paycheck Protection Liquidity Facility (PPPLF) for funding as well as a decrease in net loans of $28.7 million. Cash and equivalents decreased $47.3 million, to $130.9 million at September 30, 2021, from $178.3 million at December 31, 2020, as the PPPLF was not used for funding at quarter end and excess cash from the stock offering was returned. Total investment securities available for sale increased by $20.0 million at September 30, 2021, as compared to December 31, 2020, as we deployed excess liquidity. Total loans decreased $27.4 million to $571.2 million at September 30, 2021 from $598.6 million at December 31, 2021, including PPP loans of $31.7 million and $101.8 million at September 30, 2021 and December 31, 2020, respectively. Deposits decreased by $24.9 million to $615.2 million at September 30, 2021 compared to $640.2 million at December 31, 2020, which reflected a decrease in certificate of deposits of $26.7 million, partly offset by an increase in non-interest-bearing deposits of $36.2 million. The loan-to-deposit ratio at September 30, 2021 was 91.6%, as compared to 92.5% at December 31, 2020. Interest-bearing checking accounts decreased $47.1 million as a result of the completion of the second step conversion. Stockholders' equity increased to $119.7 million at September 30, 2021, as compared to $80.8 million at December 31, 2020, primarily due to the completion of our mutual-to-stock conversion and related stock offering on January 20, 2021. We sold 3,701,509 shares of common stock at $10.00 per share and raised gross proceeds of $37.1 million in the offering.

Asset Quality

The Company's non-performing loans increased to $6.2 million at September 30, 2021, as compared to $4.9 million at December 31, 2020. The allowance for loan losses as a percentage of non-performing loans was 122.8% at September 30, 2021, as compared to 129.8% at December 31, 2020. The Company's allowance for loan losses was 1.33% of total loans at September 30, 2021, as compared to 1.06% at December 31, 2020. The allowance as a percentage of total loans increased due to the decrease in PPP loans.

About Affinity Bancshares, Inc.

The Company is a Maryland corporation based in Covington, Georgia. The Company's banking subsidiary, Affinity Bank, opened in 1928 and currently operates a full-service office in Atlanta, Georgia, two full-service offices in Covington, Georgia, and a loan production office serving the Alpharetta and Cumming, Georgia markets.

Average Balance Sheets

The following tables set forth average balance sheets, average annualized yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are monthly average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

For the Three Months Ended September 30,

2021 2020

Average Average Average Average Outstanding Interest Yield/ Outstanding Interest Yield/ Balance Rate Balance Rate

(Dollars in thousands)

Interest-earning assets:

Loans excluding PPP $ 520,273 $ 6,470 4.97 % $ 500,615 $ 6,418 5.13 %loans

PPP loans 48,169 862 7.16 % 130,352 2,108 6.47 %

Securities 40,569 216 2.13 % 20,619 80 1.55 %

Interest-earning 115,330 53 0.18 % 107,029 36 0.13 %deposits

Other investments 2,476 21 3.37 % 2,722 29 4.26 %

Totalinterest-earning 726,817 7,622 4.19 % 761,338 8,671 4.56 %assets

Non-interest-earning 64,408 67,455 assets

Total assets $ 791,225 $ 828,793



Interest-bearing liabilities:

Savings accounts $ 93,717 100 0.43 % $ 100,335 206 0.82 %

Interest-bearing 83,519 43 0.21 % 71,374 69 0.38 %checking accounts

Market rate checking 136,984 117 0.34 % 121,118 227 0.75 %accounts

Certificates of 105,285 369 1.40 % 157,911 661 1.68 %deposit

Totalinterest-bearing 419,505 629 0.60 % 450,738 1,163 1.03 %deposits

FHLB advances 49,039 132 1.07 % 46,362 159 1.37 %

PPPLF borrowings - - - 59,118 52 0.35 %

Other borrowings - - - 10,717 46 1.72 %

Totalinterest-bearing 468,544 761 0.65 % 566,935 1,420 1.00 %liabilities

Non-interest-bearing 203,336 183,275 liabilities

Total liabilities 671,880 750,210

Total stockholders' 119,345 78,583 equity

Total liabilitiesand stockholders' $ 791,225 $ 828,793 equity

Net interest income $ 6,861 $ 7,251

Net interest rate 3.55 % 3.56 %spread (1)

Net interest-earning $ 258,273 $ 194,403 assets (2)

Net interest margin 3.78 % 3.81 %(3)

Averageinterest-earningassets to 155.12 % 134.29 % interest-bearingliabilities

____________________________

(1)

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

(2)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)

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

____________________________

Net interest rate spread represents the difference between the weighted(1) average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

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

For the Nine Months Ended September 30,

2021

2020

Average Outstanding Balance

Interest

Average Yield/Rate

Average Outstanding Balance

Interest

Average Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans excluding PPP loans

$

503,373

$

18,985

5.03

%

$

497,271

$

19,497

5.23

%

PPP loans

92,651

5,439

7.83

%

67,871

2,549

5.01

%

Securities

31,374

472

2.01

%

18,871

304

2.15

%

Interest-earning deposits

92,880

134

0.19

%

69,617

185

0.35

%

Federal Home Loan Bank of Atlanta stock

2,273

57

3.32

%

2,692

88

4.36

%

Total interest-earning assets

722,551

25,087

4.63

%

656,322

22,623

4.60

%

Non-interest-earning assets

63,028

60,721

Total assets

$

785,579

$

717,043

Interest-bearing liabilities:

Savings accounts

$

93,823

310

0.44

%

$

85,261

725

1.13

%

Interest-bearing checking accounts

88,154

138

0.21

%

65,285

214

0.44

%

Market rate checking accounts

130,933

378

0.39

%

108,383

794

0.98

%

Certificates of deposit

114,623

1,284

1.49

%

159,240

2,056

1.72

%

Total interest-bearing deposits

427,533

2,110

0.66

%

418,169

3,790

1.21

%

FHLB advances

41,471

350

1.13

%

49,770

531

1.42

%

PPPLF borrowings

1,368

4

0.35

%

24,255

63

0.35

%

Other borrowings

559

11

2.58

%

8,054

55

0.92

%

Total interest-bearing liabilities

470,931

2,475

0.69

%

500,248

4,439

1.18

%

Non-interest-bearing liabilities

199,971

139,728

Total liabilities

670,902

639,976

Total stockholders' equity

114,677

77,066

Total liabilities and stockholders' equity

$

785,579

$

717,042

Net interest income

$

22,612

$

18,184

Net interest rate spread (1)

3.94

%

3.42

%

Net interest-earning assets (2)

$

251,620

$

156,074

Net interest margin (3)

4.17

%

3.69

%

Average interest-earning assets to interest-bearing liabilities

153.43

%

131.20

%

For the Nine Months Ended September 30,

2021 2020

Average Average Average Average Outstanding Interest Yield/ Outstanding Interest Yield/ Balance Rate Balance Rate

(Dollars in thousands)

Interest-earning assets:

Loans excluding PPP $ 503,373 $ 18,985 5.03 % $ 497,271 $ 19,497 5.23 %loans

PPP loans 92,651 5,439 7.83 % 67,871 2,549 5.01 %

Securities 31,374 472 2.01 % 18,871 304 2.15 %

Interest-earning 92,880 134 0.19 % 69,617 185 0.35 %deposits

Federal Home LoanBank of Atlanta 2,273 57 3.32 % 2,692 88 4.36 %stock

Totalinterest-earning 722,551 25,087 4.63 % 656,322 22,623 4.60 %assets

Non-interest-earning 63,028 60,721 assets

Total assets $ 785,579 $ 717,043



Interest-bearing liabilities:

Savings accounts $ 93,823 310 0.44 % $ 85,261 725 1.13 %

Interest-bearing 88,154 138 0.21 % 65,285 214 0.44 %checking accounts

Market rate checking 130,933 378 0.39 % 108,383 794 0.98 %accounts

Certificates of 114,623 1,284 1.49 % 159,240 2,056 1.72 %deposit

Totalinterest-bearing 427,533 2,110 0.66 % 418,169 3,790 1.21 %deposits

FHLB advances 41,471 350 1.13 % 49,770 531 1.42 %

PPPLF borrowings 1,368 4 0.35 % 24,255 63 0.35 %

Other borrowings 559 11 2.58 % 8,054 55 0.92 %

Totalinterest-bearing 470,931 2,475 0.69 % 500,248 4,439 1.18 %liabilities

Non-interest-bearing 199,971 139,728 liabilities

Total liabilities 670,902 639,976

Total stockholders' 114,677 77,066 equity

Total liabilitiesand stockholders' $ 785,579 $ 717,042 equity

Net interest income $ 22,612 $ 18,184

Net interest rate 3.94 % 3.42 %spread (1)

Net interest-earning $ 251,620 $ 156,074 assets (2)

Net interest margin 4.17 % 3.69 %(3)

Averageinterest-earningassets to 153.43 % 131.20 % interest-bearingliabilities

____________________________

(1)

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

(2)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)

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

____________________________

Net interest rate spread represents the difference between the weighted(1) average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

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

AFFINITY BANCSHARES, INC. Consolidated Balance Sheets

September 30, 2021

December 31, 2020

(unaudited)

(In thousands)

Assets

Cash and due from banks, including reserve requirement of $0 at September 30, 2021 and December 31, 2020

$

17,321

$

5,552

Interest-earning deposits in other depository institutions

113,589

172,701

Cash and cash equivalents

130,910

178,253

Investment securities available-for-sale

44,071

24,005

Other investments

2,476

1,596

Loans, net

563,539

592,254

Other real estate owned

-

1,292

Premises and equipment, net

7,425

8,617

Bank owned life insurance

15,285

15,311

Intangible assets

18,797

18,940

Accrued interest receivable and other assets

7,462

10,360

Total assets

$

789,965

$

850,628

Liabilities and Stockholders' Equity

Liabilities:

Savings accounts

$

92,003

$

96,591

Interest-bearing checking

82,750

129,813

Market rate checking

138,592

121,317

Non-interest-bearing checking

196,990

160,819

Certificate of deposits

104,896

131,625

Total deposits

615,231

640,165

Federal Home Loan Bank advances

49,020

19,117

Paycheck Protection Program Liquidity Facility (PPPLF) borrowings

-

100,813

Other borrowings

-

5,000

Accrued interest payable and other liabilities

6,011

4,748

Total liabilities

670,262

769,843

Stockholders' equity:

Common stock (par value $0.01 per share, 40,000,000 shares authorized, 6,872,634 issued and outstanding at September 30, 2021 and 19,000,000 shares authorized, 6,968,469 issued and 6,865,653 outstanding at December 31, 2020) (1)

69

77

Preferred stock (10,000,000 shares authorized, no shares outstanding at September 30, 2021 and 1,000,000 shares authorized, no shares outstanding at December 31, 2020)

-

-

Additional paid in capital

67,899

33,620

Treasury stock, 102,816 shares at December 31, 2020, at cost (1)

-

(1,268

)

Unearned ESOP shares

(5,056

)

(2,453

)

Retained earnings

56,905

50,650

Accumulated other comprehensive (loss) income

(114

)

159

Total stockholders' equity

119,703

80,785

Total liabilities and stockholders' equity

$

789,965

$

850,628

AFFINITY BANCSHARES, INC.Consolidated Balance Sheets

September December 30, 2021 31, 2020

(unaudited)

(In thousands)

Assets



Cash and due from banks, including reserverequirement of $0 at September 30, 2021 $ 17,321 $ 5,552 and December 31, 2020

Interest-earning deposits in other depository 113,589 172,701 institutions

Cash and cash equivalents 130,910 178,253

Investment securities available-for-sale 44,071 24,005

Other investments 2,476 1,596

Loans, net 563,539 592,254

Other real estate owned - 1,292

Premises and equipment, net 7,425 8,617

Bank owned life insurance 15,285 15,311

Intangible assets 18,797 18,940

Accrued interest receivable and other assets 7,462 10,360

Total assets $ 789,965 $ 850,628



Liabilities and Stockholders' Equity



Liabilities:

Savings accounts $ 92,003 $ 96,591

Interest-bearing checking 82,750 129,813

Market rate checking 138,592 121,317

Non-interest-bearing checking 196,990 160,819

Certificate of deposits 104,896 131,625

Total deposits 615,231 640,165

Federal Home Loan Bank advances 49,020 19,117

Paycheck Protection Program Liquidity Facility - 100,813 (PPPLF) borrowings

Other borrowings - 5,000

Accrued interest payable and other liabilities 6,011 4,748

Total liabilities 670,262 769,843



Stockholders' equity:

Common stock (par value $0.01 per share, 40,000,000shares authorized,6,872,634 issued and outstanding at September 30, 69 77 2021 and 19,000,000shares authorized, 6,968,469 issued and 6,865,653outstanding at December 31, 2020) (1)

Preferred stock (10,000,000 shares authorized, noshares outstanding at September 30, - - 2021 and 1,000,000 shares authorized, no sharesoutstanding at December 31, 2020)

Additional paid in capital 67,899 33,620

Treasury stock, 102,816 shares at December 31, - (1,268 )2020, at cost (1)

Unearned ESOP shares (5,056 ) (2,453 )

Retained earnings 56,905 50,650

Accumulated other comprehensive (loss) income (114 ) 159

Total stockholders' equity 119,703 80,785

Total liabilities and stockholders' equity $ 789,965 $ 850,628

(1)

Amounts related to periods prior to the date of Conversion (January 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686) (see Note 1). See accompanying notes to unaudited consolidated financial statements.

Amounts related to periods prior to the date of Conversion (January 20,(1) 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686) (see Note 1). See accompanying notes to unaudited consolidated financial statements.

AFFINITY BANCSHARES, INC.Consolidated Statements of Operations(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(In thousands)

Interest income:

Loans, including fees

$

7,332

$

8,526

$

24,424

$

22,046

Investment securities, including dividends

237

109

529

392

Interest-earning deposits

53

36

134

185

Total interest income

7,622

8,671

25,087

22,623

Interest expense:

Deposits

629

1,163

2,110

3,789

Borrowings

132

257

365

649

Total interest expense

761

1,420

2,475

4,438

Net interest income before provision for loan losses

6,861

7,251

22,612

18,185

Provision for loan losses

225

600

975

1,400

Net interest income after provision for loan losses

6,636

6,651

21,637

16,785

Noninterest income:

Service charges on deposit accounts

416

351

1,126

1,009

Gain on sales of investment securities available-for-sale

-

-

-

20

Other

355

195

980

569

Total noninterest income

771

546

2,106

1,598

Noninterest expenses:

Salaries and employee benefits

2,715

2,415

7,609

8,767

Deferred compensation

62

70

188

211

Occupancy

633

734

2,329

2,071

Advertising

116

40

296

173

Data processing

520

523

1,518

1,773

Other real estate owned

-

9

19

11

Net (gain) loss on sale of other real estate owned

-

159

(127

)

188

Legal and accounting

153

230

555

1,196

Organizational dues and subscriptions

105

70

266

238

Director compensation

50

51

150

153

Federal deposit insurance premiums

61

51

201

304

Writedown of premises and equipment

14

-

888

-

Other

598

400

1,700

1,324

Total noninterest expenses

5,027

4,752

15,592

16,409

Income before income taxes

2,380

2,445

8,151

1,974

Income tax expense

575

575

1,896

324

Net income (loss)

$

1,805

$

1,870

$

6,255

$

1,650

Basic earnings per share (1)

$

0.26

$

0.25

$

0.90

$

0.22

Diluted earnings per share (1)

$

0.26

$

0.25

$

0.89

$

0.22

AFFINITY BANCSHARES, INC.Consolidated Statements of Operations(unaudited)

Three Months Nine Months Ended Ended September 30, September 30,

2021 2020 2021 2020

(In thousands)

Interest income:

Loans, including fees $ 7,332 $ 8,526 $ 24,424 $ 22,046

Investment securities, including 237 109 529 392dividends

Interest-earning deposits 53 36 134 185

Total interest income 7,622 8,671 25,087 22,623

Interest expense:

Deposits 629 1,163 2,110 3,789

Borrowings 132 257 365 649

Total interest expense 761 1,420 2,475 4,438

Net interest income before provision 6,861 7,251 22,612 18,185for loan losses

Provision for loan losses 225 600 975 1,400

Net interest income after provision 6,636 6,651 21,637 16,785for loan losses

Noninterest income:

Service charges on deposit accounts 416 351 1,126 1,009

Gain on sales of investment - - - 20securities available-for-sale

Other 355 195 980 569

Total noninterest income 771 546 2,106 1,598

Noninterest expenses:

Salaries and employee benefits 2,715 2,415 7,609 8,767

Deferred compensation 62 70 188 211

Occupancy 633 734 2,329 2,071

Advertising 116 40 296 173

Data processing 520 523 1,518 1,773

Other real estate owned - 9 19 11

Net (gain) loss on sale of other real - 159 (127 ) 188estate owned

Legal and accounting 153 230 555 1,196

Organizational dues and subscriptions 105 70 266 238

Director compensation 50 51 150 153

Federal deposit insurance premiums 61 51 201 304

Writedown of premises and equipment 14 - 888 -

Other 598 400 1,700 1,324

Total noninterest expenses 5,027 4,752 15,592 16,409

Income before income taxes 2,380 2,445 8,151 1,974

Income tax expense 575 575 1,896 324

Net income (loss) $ 1,805 $ 1,870 $ 6,255 $ 1,650

Basic earnings per share (1) $ 0.26 $ 0.25 $ 0.90 $ 0.22

Diluted earnings per share (1) $ 0.26 $ 0.25 $ 0.89 $ 0.22

(1)

Amounts related to periods prior to the date of the Conversion (January 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686-to-one) (see Note 1).

Non-GAAP Reconciliation

Reported amounts for total loans are presented in accordance with GAAP. The Company's management believes that the following supplemental non-GAAP information, which consists of total loans excluding PPP loans, deferred loan fees and other loan adjustments (consisting of loans in process), provides a better comparison of the amount of the Company's loan portfolio. Additionally, the Company believes this information is utilized by market analysts to evaluate a company's financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Amounts related to periods prior to the date of the Conversion (January(1) 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686-to-one) (see Note 1).

Non-GAAP Reconciliation

Reported amounts for total loans are presented in accordance with GAAP. The Company's management believes that the following supplemental non-GAAP information, which consists of total loans excluding PPP loans, deferred loan fees and other loan adjustments (consisting of loans in process), provides a better comparison of the amount of the Company's loan portfolio. Additionally, the Company believes this information is utilized by market analysts to evaluate a company's financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

September 30, June 30, March 31, December 31, 2021 2021 2021 2020

(In thousands)

Non-GAAP Reconciliation

Total Loans $ 571,170 $ 590,011 $ 626,096 $ 598,615

Plus:

Fair Value Marks 1,423 1,497 1,607 1,773

Less:

Payroll Protection Program 31,715 71,862 123,996 100,142loans

Deferred loan fees 1,136 987 878 795

Other Loan Adjustments 103 415 16 591

Gross Loans $ 539,639 $ 18,244 $ 502,813 $ 498,860

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027006210/en/

CONTACT: Edward J. Cooney Chief Executive Officer (678) 742-9990