GlobeNewswire Inc | Jan 26, 2022 08:00AM EST

January 26, 2022

ST. PETERSBURG, Fla., Jan. 26, 2022 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (f/k/a First Home Bancorp, Inc.) (NASDAQ: BAFN) (BayFirst or the Company), parent company of First Home Bank (First Home or the Bank) reported earnings for the fourth quarter of 2021 of $2.81 million, or $0.61 per diluted common share, driven by higher gain on sale of SBA guaranteed loans, which were partially offset by a reduction in interest and origination fee income from the SBAs Paycheck Protection Program (PPP) and lower residential loan fee income, compared to the previous quarter. In the third quarter of 2021, the Company reported net income of $1.28 million, or $0.26 per diluted common share, and in the fourth quarter of 2020 the Company earned $5.61 million, or $1.35 per diluted common share. The variability in financial metrics for the fourth quarter of 2021 compared to the year ago period is a direct reflection of the Banks participation in PPP over the course of the last two years. Fourth quarter earnings increased tangible book value to $21.75 per common share, a 35.80% increase from $16.02 a year ago. All per share data has been adjusted to reflect the 3-for-2 common stock split effective May 10, 2021.

Net income for the year 2021 increased 93.80% to a record $24.62 million, compared to $12.70 million in 2020. Earnings per common share increased to $5.74 per diluted common share in 2021, compared to $3.01 per diluted common share in 2020. Increases in PPP origination fees earned and lower provision for loan losses contributed to the increase in net income during 2021 compared to 2020.

We delivered strong earnings for the fourth quarter and record earnings for the full year in 2021, as we continue pivoting away from extraordinary pandemic-related activities, and refocus our efforts towards our strategic growth plan, stated Anthony N. Leo, Chief Executive Officer. As a rapidly growing financial institution, we are driven by our commitment to increase strategic opportunities and establish our reputation as one of the preeminent community banks. We are utilizing our significant capital base and taking advantage of the infrastructure we built throughout the nation, to expand market share while managing risk. In November, BayFirst registered with the SEC and began trading on the Nasdaq Capital Market, marking vital moments in our history. These milestones will aid greatly in our efforts to grow our banking franchise, increase our visibility among investors, provide additional liquidity to shareholders, and ultimately stake our claim as the bank of Tampa Bay.

We are proud to have been active participants in PPP, and our lending team clearly responded, with over $1.2 billion in PPP loans originated over the course of the program, continued Mr. Leo. The Companys SBA loan origination platform, CreditBench, which spent much of 2020 and the first half of 2021 generating these PPP loans, shifted resources back to traditional SBA lending over the last two quarters, reaching out to businesses in Tampa Bay and across the nation to provide fresh growth capital. As a result, CreditBench had one of its strongest quarters on record, bringing in over $60.77 million in new SBA loans during the fourth quarter of 2021. Additionally, we recently brought on an experienced national SBA lending team as part of our strategic plan for migration to national lending. We are leveraging our opportunities and see exceptional growth prospects with CreditBench in the year ahead.

Due to the hard work and continued efforts of our lending team to bring new customers into the Bank, we had another strong quarter with commercial, residential, consumer and SBA loan production. The success of our lending teams is fueling profitability and providing new market opportunities. Our asset-sensitive balance sheet produced strong growth, with total deposits increasing 29.15% in the past year, while total loans held for investment, ex. PPP, grew by 25.34% in that period. Due to improvements in economic forecasts and continued solid performance of the loan portfolio during the fourth quarter, we reduced the allowance for loan losses from the higher levels held during the early days of the pandemic. We feel that we are well-positioned for future growth, having established loan loss reserves to total loans (excluding PPP loans), of 2.67% at December 31, 2021, said Mr. Leo.

Fourth Quarter 2021 Highlights:

-- CreditBench, the Companys SBA loan origination platform, originated $60.77 million in new SBA loans during the fourth quarter of 2021, compared to $47.26 million in the third quarter of 2021, and $16.66 million of loans produced during the fourth quarter of 2020.

-- The Residential Mortgage Division originated $477.48 million in loans during the fourth quarter of 2021 compared to $506.67 million during the third quarter of 2021 and $641.08 million of loans produced during the fourth quarter of 2020.

-- Loans held for investment, excluding PPP loans, increased modestly by $3.88 million during the fourth quarter of 2021 as production added during the quarter was partially offset by $44.85 million in sales of the guaranteed balances of SBA loans, and increased by 25.34% or $102.01 million over the past year to $504.53 million due to increases in both conventional community bank loans and SBA loans, partially offset by sales of the guaranteed and unguaranteed portions of select SBA loans.

-- During the fourth quarter, the Company sold $44.85 million in guaranteed SBA loans at a net 11.67% premium. The Company expects to continue with SBA loan sales depending on market conditions and will continue efforts to sell loans if the pricing for such loans remains favorable.

-- Deposits increased by 6.91% or $46.65 million during the fourth quarter of 2021, and by 29.15% or $162.90 million during the past year, to $721.69 million at December31, 2021, with the majority of the 12-month increase coming from increases in transaction accounts and savings deposits, partially offset by declines in time deposit balances.

-- Tangible book value per common share increased to $21.75 at the end of the fourth quarter from $21.30 at the end of the preceding quarter and $16.02 a year ago.

-- The Company paid a quarterly cash dividend of seven cents per common share, on December 15, 2021, to common shareholders of record as of November 15, 2021. The cash dividend marked the 22nd consecutive quarter in which BayFirst paid a cash dividend.

Results of Operations

Net Income and Performance Ratios

Net income was $2.81 million for the fourth quarter of 2021 compared to $1.28 million in the third quarter of 2021, and $5.61 million in the fourth quarter of 2020. The increase in net income for the fourth quarter of 2021 from the preceding quarter was primarily due to higher noninterest income from the gain on sale of SBA loans. For the year ended 2021, net income increased substantially to $24.62 million, from $12.70 million in 2020, reflecting higher PPP origination fee income and the gain on sale of SBA loans sold in 2021 and lower provision for loan losses.

BayFirsts return on average common equity and return on average assets returned to more realistic levels in the fourth quarter as contributions from the PPP loan program tapered off. Return on average common equity was 12.54% for the fourth quarter of 2021, and return on average assets was 1.22%. For the year ended 2021, return on average common equity was 32.37% and return on average assets was 1.90%.

Net Interest Income and Net Interest Margin

Net interest income was $6.69 million in the fourth quarter of 2021, a decrease of $1.32 million or 16.50% from $8.02 million in the third quarter of 2021, and a decrease of $4.88 million or 42.17% from the fourth quarter of 2020. The decrease during the fourth quarter of 2021 as compared to the prior quarter and the year ago quarter was mainly due to the decrease in net PPP origination fee income. For the year ended 2021, net interest income increased $6.79 million, or 20.30%, to $40.24 million, compared to $33.45 million in the same period a year ago.

Net interest margin was 3.07% for the fourth quarter of 2021 compared to 3.04% for the third quarter of 2021 and 3.13% for the fourth quarter of 2020. For the year ended 2021, net interest margin increased 35 basis points to 3.23% from 2.88% for the year ended 2020.

Noninterest Income

Noninterest income was $24.21 million for the fourth quarter of 2021, an increase of $2.22 million or 10.10% from $21.99 million in the third quarter of 2021, and a decrease of $7.16 million or 22.83% from $31.38 million in the fourth quarter of 2020. The increase in the fourth quarter of 2021 as compared to the prior quarter was primarily the result of the gain on sale of SBA loans partially offset by lower residential loan fee income. The decrease from a year ago quarter was primarily the result of a decrease in residential loan fee income partially offset by the gain on sale of SBA loans. For the year ended 2021, noninterest income increased $19.88 million, or 20.35%, to $117.58 million, compared to $97.70 million for the year ended 2020. The increase over the prior year was primarily due to higher residential loan fee income, and higher gain on sale of SBA loans during the current year.

Noninterest Expense

Noninterest expense was $30.22 million in the fourth quarter of 2021, which was a $1.01 million or 3.22% decrease from $31.23 million in the third quarter of 2021 and a decrease of $251 thousand compared to the fourth quarter of 2020. Year-to-date, noninterest expense was $128.84 million, compared to $98.47 million in the prior year, with the majority of the increase related to compensation and employee benefits expense.

Balance Sheet

Assets

Total assets decreased by $26.65 million or 2.82% during the fourth quarter of 2021 to $917.10 million, mainly due to the SBAs forgiveness of PPP loans, partially offset by higher residential loans held for sale and the purchase of additional bank owned life insurance.

Loans

Loans held for investment, excluding PPP loans, increased by $3.88 million during the fourth quarter of 2021 and by $102.01 million or 25.34% over the past year to $504.53 million due to increases in both community bank loans and SBA loans partially offset by SBA loan sales. PPP loans, net of deferred origination fees, decreased by $76.22 million or 48.97% in the third quarter of 2021 to $79.42 million due to PPP forgiveness payments. Deferred PPP origination fees, net, which will be recognized over the remaining average life of the PPP loans totaled $722 thousand as of December 31, 2021.

Deposits

Deposits increased by $46.65 million or 6.91% during the fourth quarter of 2021 and $162.90 million or 29.15% during the past year, ending the year at $721.69 million, with the majority of the quarterly and 12-month increase coming from savings and money market accounts and transaction accounts, partially offset by declines in time deposit balances.

Asset Quality

Asset quality improved throughout 2021, reflecting improving economic and business conditions in the markets we serve. We recognized significant provision expense in each quarter of 2020. As the financial impact of the COVID-19 pandemic becomes more predictable we continue to adjust our allowance for loan losses which resulted in a negative provision for the fourth quarter 2021 of $2.50 million and a negative provision of $3.50 million for the full year 2021.

The ratio of the allowance for loan losses to total loans, excluding government guaranteed loans, residential loans held for sale, and loans carried at fair value, was 4.16% at December31, 2021, 5.42% as of September30, 2021, and 7.48% as of December31, 2020.

Over the past five years, the Companys loan losses have been incurred primarily in its SBA unguaranteed loan portfolio, particularly loans originated under the SBA 7(a) Small Loan Program. The Small Loan Program represents loans of $350,000 or less and carry an SBA guaranty of 75% to 85% of the loan, depending on the original principal balance. The default rate on loans originated in the SBA 7(a) Small Loan Program has been higher than the Banks other loans.

Net charge-offs for the fourth quarter of 2021 were $664 thousand, a $517 thousand decrease from $1.18 million for the third quarter of 2021 and a $2.09 million decrease compared to $2.75 million in the fourth quarter of 2020. Annualized net charge-offs as a percentage of average loans, excluding PPP loans, were 0.51% for the fourth quarter of 2021, down from 1.01% in the third quarter of 2021 and 2.76% in the fourth quarter of 2020. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.43% as of December31, 2021, compared to 0.40% as of September30, 2021, and 0.22% as of December31, 2020.

The ratio of the allowance for loan losses to total loans, excluding government guaranteed loans, residential loans held for sale, and loans carried at fair value, was 4.16% at December31, 2021, 5.42% as of September30, 2021, and 7.48% as of December31, 2020.

In addition to the above metrics, past due PPP loans increased during the third and fourth quarters of 2021 as certain PPP loan customers did not apply for forgiveness nor make required payments. As such, as of December 31, 2021, the Company reported $11.09 million of PPP loans past due greater than 30 days past due and accruing, representing approximately 0.92% of PPP loans originated. Although customers may default on their PPP loans, PPP loans are 100% guaranteed by the SBA and the Company expects to receive all principal and accrued interest related to these loans upon repurchase of the loan by the SBA. Under SBA program rules, the Company is required to wait until a PPP loan is 60 days past due before submitting the loan to the SBA for purposes of honoring the SBA guarantee. Based on the timing of the PPP loan program and the requirements of the SBA liquidation process, the Company expects past due PPP loans to skew past due ratios over at least the next two quarters.

Capital

The Banks Tier 1 leverage ratio was 12.22% as of December 31, 2021, a decrease from 12.64% as of September 30, 2021, and an increase from 11.75% at December 31, 2020. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 19.88% as of December 31, 2021 a decrease from 21.21% as of September 30, 2021, and a substantial increase from 15.72% as of December 31, 2020. The total capital to risk-weighted assets ratio was 21.15% as of December 31, 2021, a slight decrease from 22.50% as of September 30, 2021, and a substantial increase from 17.02% as of December 31, 2020.

During the fourth quarter of 2021, no shares of Series B Preferred Stock were issued, 1,100 shares of Series B Preferred Stock were converted to common shares, and $250 thousand of common stock was issued under private placement and employee stock programs.

Recent Events

Application to Convert to a National Bank:On January 3, 2022, BayFirst Financial Corp.s operating subsidiary, First Home Bank submitted an application to the Office of the Comptroller of the Currency to convert to a national banking association under the name BayFirst National Bank.

Approved for Listing on Nasdaq Capital Market Under Ticker Symbol BAFN: On November 30, 2021, BayFirst Financial Corp. began trading on the Nasdaq Capital Market under the symbol BAFN, becoming the only Nasdaq-listed bank holding company headquartered on the west coast of Florida and one of only eight in the state.

Securities Act Registration Statement Declared Effective by SEC: On November 15, 2021, BayFirst announced that the SEC declared the Companys Securities Act registration statement effective, and that the Company is now subject to Exchange Act reporting requirements. These rules require the Company to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC on an ongoing basis. The Company chose not to issue new securities under the registration statement.

Branch Expansion: In November 2021, the Company celebrated the ongoing expansion of its banking centers with the opening of a seventh location in Belleair Bluffs, Florida and the groundbreaking of an eighth location in Sarasota, Florida, slated to open in late 2022.

About BayFirst Financial Corp.

BayFirst Financial Corp. (f/k/a First Home Bancorp, Inc.) is a registered bank holding company which commenced operations on September 1, 2000. Its primary source of income is from its wholly owned subsidiary, First Home Bank, which commenced business operations on February 12, 1999. First Home Bank is a Federal Reserve member and a state-chartered banking institution. The Bank operates seven full-service office locations, 23 mortgage loan production offices, and is in the top 15 by dollar volume and by number of units originated nationwide through the first quarter of SBAs 2022 fiscal year ended December 31, 2021.

BayFirst Financial Corp., through the Bank, offers a broad range of commercial and consumer banking services including various types of deposit accounts and loans for businesses and individuals. As of December31, 2021, BayFirst Financial Corp. had $917.10 million in total assets.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as may, could, should, would, believe, anticipate, estimate, expect, intend, plan, project, is confident that and similar expressions are intended to identify these forward-looking statements. These forward-looking statements involve risk and uncertainty and a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. BayFirst Financial Corp. does not have a policy of updating or revising forward-looking statements except as otherwise required by law, and silence by management over time should not be construed to mean that actual events are occurring as estimated in such forward-looking statements.

Contacts: Anthony N. Leo Jeffrey M. HuntChief Executive Officer Chief Strategy Officer727.399.5678 727.399.5687

BayFirst Financial Corp.Selected Financial Data (Unaudited)Dollars in Thousands, Except for Share Data

At or for the three months ended 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020Balance sheet data:Average loansheld forinvestment, $ 518,697 $ 467,283 $ 481,424 $ 422,130 $ 399,098 excluding PPPloansAverage total 923,485 1,086,377 1,541,287 1,636,171 1,513,403 assetsAveragecommon 83,056 81,989 68,525 57,944 53,035 shareholders?equityTotal loansheld for 583,948 656,294 895,194 1,388,533 1,228,322 investmentTotal loansheld forinvestment, 504,525 500,647 465,470 421,258 402,520 excluding PPPloansTotal loansheld forinvestment, 323,363 306,723 304,364 288,889 283,060 excl gov?tgtd loanbalancesAllowance for 13,452 16,616 20,797 22,017 21,162 loan lossesTotal assets 917,095 943,743 1,198,229 1,716,831 1,544,691 Commonshareholders? 86,685 83,593 81,838 66,046 55,914 equityShare data: ^ (1)Basicearnings per $ 0.66 $ 0.27 $ 3.34 $ 2.05 $ 1.53 common shareDilutedearnings per 0.61 0.26 2.98 1.85 1.35 common shareDividends per 0.070 0.070 0.070 0.067 0.067 common shareBook valueper common 21.77 21.32 21.16 17.95 16.04 shareTangible bookvalue per 21.75 21.30 21.14 17.93 16.02 common share^(2)Performanceand capital ratios:Return onaverage 1.22 % 0.47 % 3.38 % 1.84 % 1.48 %assetsReturn onaverage 12.54 % 5.12 % 74.61 % 49.56 % 39.97 %common equityNet interest 3.07 % 3.04 % 3.46 % 3.21 % 3.13 %marginDividend 10.65 % 26.09 % 2.10 % 3.27 % 4.38 %payout ratioAsset quality ratios:Net $ 664 $ 1,181 $ 1,221 $ 1,145 $ 2,751 charge-offsNetcharge-offs/avg loans 0.51 % 1.01 % 1.01 % 1.09 % 2.76 %held forinvestmentexcl PPPNonperforming $ 11,909 $ 10,495 $ 9,885 $ 9,741 $ 9,586 loansNonperformingloans(excluding $ 3,967 $ 3,756 $ 3,577 $ 3,242 $ 3,327 gov?t gtdbalance)Nonperformingloans/totalloans held 2.04 % 1.60 % 1.10 % 0.70 % 0.78 %forinvestmentNonperformingloans (exclgov?t gtdbalance)/ 0.68 % 0.57 % 0.40 % 0.23 % 0.27 %total loansheld forinvestmentALLL/Totalloans held 2.30 % 2.53 % 2.32 % 1.59 % 1.72 %forinvestmentALLL/Totalloans heldfor 2.67 % 3.32 % 4.47 % 5.23 % 5.26 %investment,excl PPPloansOther Data: Full-timeequivalent 637 651 671 649 529 employeesBankingcenter 7 6 6 6 6 officesLoanproduction 23 22 26 22 29 offices^(1) Adjusted for the three-for-two stock split, effective May 10, 2021.^(2) Non-GAAP financial measure calculated as total shareholders? equity minuspreferred stock liquidation preference minus goodwill, divided by common sharesoutstanding.

BayFirst Financial Corp.CONSOLIDATED BALANCE SHEETS (Unaudited)Dollars in Thousands

Assets 12/31/2021 9/30/2021 12/31/2020Cash and due from banks $ 2,869 $ 2,715 $ 2,790 Interest-bearing deposits in banks 106,858 104,382 52,589 Cash and cash equivalents 109,727 107,097 55,379 Time deposits in banks 2,381 2,381 2,381 Investment securities available for sale 30,893 32,535 ? Investment securities held to maturity 2 3 41 Restricted equity securities, at cost 2,827 2,827 2,362 Residential loans held for sale 114,131 91,243 208,704 SBA loans held for sale 1,460 ? ? SBA loans held for investment, at fair 9,614 9,805 9,264 valueLoans held for investment, at amortizedcost net of allowance for loan losses of 560,882 629,873 1,197,896 $13,452, $16,616, and $21,162Accrued interest receivable 3,564 4,292 7,300 Premises and equipment, net 29,671 24,622 18,115 Loan servicing rights 6,619 6,155 8,160 Deferred income taxes 454 1,263 3,808 Right-of-useoperating lease assets 4,543 4,345 3,737 Bank owned life insurance 24,547 12,434 12,183 Other assets 15,780 14,868 15,361 Total assets $ 917,095 $ 943,743 $ 1,544,691 Liabilities: Noninterest-bearing deposits $ 83,638 $ 87,625 $ 62,650 Interest-bearing transaction accounts 163,495 157,304 140,265 Savings and money market deposits 423,864 377,452 286,744 Time deposits 50,688 52,653 69,125 Total deposits 721,685 675,034 558,784 Subordinated debentures 5,985 5,983 5,948 Notes payable 3,299 3,413 3,754 PPP Liquidity Facility 69,654 144,601 881,262 Accrued interest payable 326 562 1,999 Operating lease liabilities 4,747 4,545 3,925 Accrued expenses and other liabilities 15,109 15,307 17,950 Total liabilities 820,805 849,445 1,473,622 Shareholders? equity: Preferred stock, Series A; no par value,10,000 shares authorized, 6,395 sharesissued and outstanding at December31, 6,161 6,161 6,161 2021, September30, 2021, andDecember31, 2020; aggregate liquidationpreference of $6,395Preferred stock, Series B; no par value,20,000 shares authorized, 3,210, 4,310,and 8,760 shares issued and outstandingat December31, 2021, September30, 2021, 3,123 4,193 8,516 and December31, 2020; aggregateliquidation preference of $3,210, $4,310,and $8,760, respectivelyCommon stock andadditionalpaid-incapital; no par value,15,000,000 shares authorized, 3,981,117,3,919,977, and 3,867,414 shares issued 51,496 50,546 43,043 and outstanding at December31, 2021,September30, 2021, and December31,2020, respectivelyAccumulated other comprehensive income (420 ) (201 ) ? (loss), netUnearned compensation (17 ) (23 ) (41 )Retained earnings 35,947 33,622 13,390 Total shareholders? equity 96,290 94,298 71,069 Total liabilities and shareholders? $ 917,095 $ 943,743 $ 1,544,691 equity

BayFirst Financial Corp.Consolidated Statements of Income (Unaudited)Dollars in Thousands

For the Quarter Ended Year-to-Date 12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/ 2020Interest income: Loans, other than PPP $ 7,320 $ 7,009 $ 6,355 $ 27,681 $ 23,986PPP loan interest income 258 692 2,244 5,009 5,685PPP origination fee income 381 1,656 5,244 14,283 13,419Interest-bearing deposits 150 188 70 570 641in banks and otherTotal interest income 8,109 9,545 13,913 47,543 43,731Interest expense: Deposits 1,219 1,152 1,379 4,885 7,490PPPLF borrowings 381 278 783 1,791 1,968Other (184 ) 99 178 624 820Total interest expense 1,416 1,529 2,340 7,300 10,278Net interest income 6,693 8,016 11,573 40,243 33,453Provision for loan losses (2,500 ) (3,000 ) 5,000 (3,500 ) 16,900Net interest income after 9,193 11,016 6,573 43,743 16,553provision for loan lossesNoninterest income: Residential loan fee income 18,601 21,323 30,790 95,305 92,678Loan servicing income, net 429 417 271 1,875 2,024Gain (loss) on sale of SBA 4,564 (338 ) (80 ) 18,024 1,652loans, netService charges and fees 298 261 269 1,028 933SBA loan fair value gain 33 72 (48 ) 184 1Othernoninterestincome 289 257 175 1,161 407Total noninterest income 24,214 21,992 31,377 117,577 97,695Noninterest Expense: Salaries and benefits 12,603 12,851 11,906 51,569 36,403Bonus, commissions, and 8,319 8,536 10,185 37,946 34,072incentivesMortgage banking 1,024 1,440 1,647 5,731 5,292Occupancy and equipment 1,329 1,278 1,139 5,236 4,453Data processing 1,323 1,347 1,332 6,532 4,418Marketing and business 2,176 1,924 1,303 7,620 3,553developmentProfessional services 1,493 1,428 1,190 4,688 3,533Loan origination and 168 683 269 2,452 2,040collectionEmployee recruiting and 914 809 634 3,345 1,769developmentRegulatory assessments 102 138 26 442 444Othernoninterestexpense 773 795 844 3,281 2,493Total noninterest expense 30,224 31,229 30,475 128,842 98,470Income before taxes 3,183 1,779 7,475 32,478 15,778Income tax expense 372 499 1,869 7,860 3,075Net income 2,811 1,280 5,606 24,618 12,703Preferred dividends 208 230 306 1,005 863Net income available to $ 2,603 $ 1,050 $ 5,300 $ 23,613 $ 11,840common shareholdersBasic earnings per common $ 0.66 $ 0.27 $ 1.53 $ 6.21 $ 3.45shareDiluted earnings per common $ 0.61 $ 0.26 $ 1.35 $ 5.74 $ 3.01share

Loan Composition

December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020Real estate: Residential $ 87,235 $ 79,889 $ 75,618 $ 70,059 $ 64,724 Commercial 163,477 151,122 143,388 123,374 114,884 Construction 18,632 17,848 14,293 12,685 15,113 and landCommercialand 217,155 232,416 215,359 198,876 193,927 industrialCommercialand 80,158 156,783 432,469 987,185 838,847 industrial -PPPConsumer and 3,581 4,910 3,489 3,624 2,896 otherLoans heldforinvestment, 570,238 642,968 884,616 1,395,803 1,230,391 at amortizedcost, grossDeferredloan costs 7,975 7,298 4,968 (12,702 ) (5,819 )(fees), netDiscount onSBA 7(a) (3,866 ) (3,753 ) (4,420 ) (4,961 ) (5,417 )loans soldDiscount onPPP loans (13 ) (24 ) (40 ) (82 ) (97 )purchasedAllowancefor loan (13,452 ) (16,616 ) (20,797 ) (22,017 ) (21,162 )lossesLoans heldforinvestment, $ 560,882 $ 629,873 $ 864,327 $ 1,356,041 $ 1,197,896 at amortizedcost

Nonperforming Assets

December September June 30, March 31, December 31, 30, 2021 2021 31, 2021 2021 2020Nonperformingloans(government $ 7,942 $ 6,739 $ 6.308 $ 6.499 $ 6,259 guaranteedbalances)Nonperformingloans 3,967 3,756 3.577 3.242 3,327 (unguaranteedbalances)Totalnonperforming 11,909 10,495 9.885 9.741 9,586 loansOREO 3 3 ? ? ? Totalnonperforming $ 11,912 $ 10,498 $ 9.885 $ 9.741 $ 9,586 assetsNonperformingloans as apercentage of 2.04 % 1.60 % 1.10 % 0.70 % 0.78 %total loans heldfor investmentNonperformingloans (excludinggovernmentguaranteed 0.68 % 0.57 % 0.40 % 0.23 % 0.27 %balances) tototal loans heldfor investmentNonperformingassets as a 1.30 % 1.11 % 0.82 % 0.57 % 0.62 %percentage oftotal assetsNonperformingassets(excludinggovernment 0.43 % 0.40 % 0.30 % 0.19 % 0.22 %guaranteedbalances) tototal assetsALLL tononperforming 112.96 % 158.32 % 210.39 % 226.03 % 220.83 %loansALLL tononperformingloans (excluding 339.10 % 442.39 % 581.39 % 679.13 % 636.28 %governmentguaranteedbalances)