The Community Financial Corporation Reports EPS of $1.10 and Annualized Loan Growth of 12.9% for the First Quarter 2022

First Quarter 2022 Highlights

• Net Income: Net income totaled $6.3 million for the quarter ended March 31, 2022, or $1.10 per diluted common share compared to net income of $6.3 million or $1.07 per diluted common share for the quarter ended March 31, 2021 and $6.8 million or $1.18 per diluted common share for the quarter ended December 31, 2021.
• Robust Portfolio Loan Growth: Total portfolio loans increased to $1,629.5 million, an increase of $50.7 million or 12.9% annualized, compared to the prior quarter, and $121.5 million or 8.1% from March 31, 2021. The loan pipeline at March 31, 2022 was $193.0 million compared to $160.0 million at December 31, 2021.
• Strong Non-Interest Bearing and Transaction Deposit Growth: Non-interest-bearing accounts increased $198.6 million to $644.4 million or 30.8% of deposits at March 31, 2022 from 21.7% of deposits at December 31, 2021. Transaction deposits increased $46.2 million, or 10.7% annualized, to $1,775.0 million in the first quarter of 2022.
• Positioned for Rising Rates: Portfolio loan end of period contractual rates increased by one basis point to 3.85% at March 31, 2021 compared to December 31, 2021. The loan portfolio is positioned for rising rates with $517.7 million or 32% of net loans scheduled to reprice monthly or in the next three months and an additional $50.0 million or 3% repricing in the following nine months. The Bank's effective duration on the loan portfolio was 2.1 years at March 31, 2022. In addition, increased non-interest bearing accounts as a percentage of deposits also better positions the Company for a rising rate environment.
• Profitability: Return on average assets ("ROAA") and return on average common equity ("ROACE")¹ and return on average tangible common equity ("ROATCE") were 1.08%, 12.30% and 13.22% for the three months ended March 31, 2022 compared to 1.22%, 12.53% and 13.56% for the three months ended March 31, 2021. ROAA, ROACE and ROATCE were 1.18%, 13.00% and 13.97% for the three months ended December 31, 2021, respectively.
  
  
  
  Pre-tax, pre-provision ("PTPP")¹ ROAA decreased to 1.53% and for the quarter ended March 31, 2022 compared to 1.68% for the quarter ended March 31, 2021 and 1.57% for the quarter ended December 31, 2021.

• Capital: During the first quarter of 2022, tangible common equity ("TCE")¹ decreased $14.9 million or 7.6% to $181.4 million at March 31, 2022. The decrease was primarily due to an increase of $17.0 million in accumulated other comprehensive losses ("AOCL") in the Bank's available for sale ("AFS") securities portfolio due to changes in interest rates.
• Asset Quality: Non-accrual loans, OREO and TDRs were $7.9 million or 0.34% of total assets at March 31, 2022 compared to $8.1 million or 0.35% of total assets at December 31, 2021. Classified assets decreased $0.5 million to $4.7 million at March 31, 2022 from $5.2 million at December 31, 2021.
• Common Dividend Increase: On November 30, 2021, the Company announced a 17% increase of its quarterly per share dividend from $0.15 to $0.175 for the fourth quarter dividend that was paid in the first quarter of 2022.

____________

¹  Total common equity decreased $15.0 million or 7.2% to $193.1 million at March 31, 2022. TCE is a Non-GAAP financial measure. See reconciliation of GAAP and NON-GAAP measures.

WALDORF, Md., April 28, 2022 (GLOBE NEWSWIRE) -- The Community Financial Corporation (NASDAQ:TCFC) (the "Company"), the holding company for Community Bank of the Chesapeake (the "Bank"), today reported net income for the three months ended March 31, 2022 of $6.3 million, or $1.10 per diluted common share. This compares to net income of $6.8 million, or $1.18 per diluted common share for the fourth quarter of 2021, and net income of $6.3 million or $1.07 per diluted common share for the quarter ended March 31, 2021.

Management Commentary

"Our work over the past few years to reposition the Bank continues to deliver on our commitments to our communities, our customers, and our shareholders," stated William J. Pasenelli, Chief Executive Officer. "We believe we are well-positioned for rising rates. We have considerable asset sensitivity with a large percentage of loans scheduled to reprice in the coming quarters. And our low-cost deposit franchise continues to improve with significant growth in non-interest bearing deposits. Continued cost discipline combined with a successful expansion strategy should deliver significant operating leverage for the remainder of the year."

"Our successful expansion into Virginia continues with plans to open a new branch in Fredericksburg and a new loan production office in Charlottesville in the second quarter," stated James M. Burke, President. "Loans in Virginia now account for almost 50% of our loan portfolio and have significantly contributed to our growth and profitability over the last several years. Our team in Virginia continues to drive the expansion forward by finding new ways to serve the financial needs of their communities."

Results of Operations

		(UNAUDITED)
		Three Months Ended March 31,
(dollars in thousands)		2022				2021			$ Change				% Change
Interest and dividend income		$	17,336			$	17,678		$	(342	)		(1.9	)%
Interest expense			867				1,169			(302	)		(25.8	)%
Net interest income			16,469				16,509			(40	)		(0.2	)%
Provision for credit losses			450				295			155			52.5	%
Provision (recovery) for unfunded commitments			(31	)			—			(31	)		0.0	%
Noninterest income			1,451				2,360			(909	)		(38.5	)%
Noninterest expense			9,080				10,148			(1,068	)		(10.5	)%
Income before income taxes			8,421				8,426			(36	)		(0.4	)%
Income tax expense			2,133				2,127			6			0.3	%
Net income		$	6,288			$	6,299		$	(42	)		(0.7	)%

Net Interest Income

The stability in net interest income resulted primarily from decreases in interest expense from lower funding costs partially offsetting lower interest income. Interest income decreased due to lower asset yields and lower U.S. SBA PPP income due to loan payoffs partially offset by increased interest income from larger average commercial real estate and residential rental loan portfolios and investment securities balance.

Net interest margin of 3.12% for the three months ended March 31, 2022 decreased 38 basis points from 3.50% for the three months ended March 31, 2021 and decreased 10 basis points from 3.22% for the three months ended December 31, 2021. Interest income from the Company's participation in the U.S. SBA PPP program was $0.5 million and $1.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively and $0.8 million for the three months ended December 31, 2021. For the three months ended March 31, 2022, net interest margin increased six basis points as a result of U.S. SBA PPP loan interest income compared to increasing 18 basis points and 10 basis points for the three months ended March 31, 2021 and December 31, 2021.

The Company's cost of funds was flat at 0.17% during the first quarter of 2022 compared to the prior quarter and decreased from 0.25% for the three months ended March 31, 2021. The Bank's interest rate asset sensitivity improved as average non-interest bearing deposit accounts increased to 29.6% of total average deposits for the first quarter of 2022 compared to 21.3% for the comparable period in 2021 and 22.2% for the previous quarter. Management is optimistic that improvements in the Bank's funding composition should benefit margins and profitability in an increasing interest-rate environment.

We expect U.S. SBA PPP loan forgiveness to modestly contribute to margins and net interest income in the second and third quarters of 2022 with the recognition of remaining net deferred fees. Excluding the acceleration of interest income with U.S. SBA PPP loan forgiveness, a stable to increasing net interest margin is possible during the balance of 2022 assuming interest-earning assets reprice faster than interest-bearing liabilities and the Bank maintains its current favorable funding mix.

Noninterest Income

The decrease in noninterest income in the current quarter was primarily due to gains on the sale of investment securities in the first quarter of 2021 and unrealized losses on securities invested in a Community Reinvestment Act mutual fund in the first quarter of 2022 due to changes in interest rates. In addition, there were small decreases in service charges and referral fee income. Also in the first quarter of 2021, the Bank sold non-accrual and classified commercial real estate and residential mortgage loans and recognized a loss on the sale of $191,000.

Noninterest income as a percentage of average assets was 0.25% and 0.46%, respectively, for the three months ended March 31, 2022 and 2021.

Noninterest Expense

Noninterest expense of $9.1 million for the three months ended March 31, 2022, decreased $1.1 million or 10.5%, compared to $10.1 million for the three months ended March 31, 2021. The decrease in noninterest expense for the comparable periods was primarily due to a fraud loss of $1.3 million in the first quarter of 2021. OREO expenses have moderated as the Bank has been successful at disposing foreclosed assets over the last two years, which have been reduced from $2.3 million at March 31, 2021 to $0.0 million OREO assets at March 31, 2022.

Noninterest expense in the first quarter of 2021 included a non-recurring expense and expenses associated with the origination phase of the SBA PPP program. First, during the first quarter of 2021, the Company incurred an expense of $1.3 million related to an isolated wire transfer fraud incident. Our investigation determined that no information systems of the Bank were compromised, and no employee fraud was involved. Any recovery of insurance proceeds would be recognized in the quarter received. Second, compensation and benefits decreased $250,000 as the Company recorded the deferred costs to underwrite U.S. SBA PPP loans. Deferred costs are being amortized as a component of interest income through the contractual maturity date of each individual U.S. SBA PPP loan. Excluding the impact of these two expenses, the Company's first quarter 2021 noninterest expense was $9.1 million.

Noninterest expense in the first quarter of 2022 at $9.1 million, was lower than anticipated due primarily to lower compensation and benefits and no credit-related costs for OREO. Lower than anticipated health care costs, a lower average full-time equivalent headcount and lower benefit and incentive accruals all contributed to a lower expense run rate. Management's projected quarterly expense run rate for the second quarter of 2022 is estimated between $9.4 million and $9.6 million and includes the base compensation increases given to select employee groups in January 2022 to address local wage competitive pressures.

The Company's efficiency ratio was 50.67% for the three months ended March 31, 2022 compared to 53.78% for the three months ended March 31, 2021. The Company's net operating expense ratio was 1.31% for the three months ended March 31, 2022 compared to 1.50% for the three months ended March 31, 2021. The efficiency and net operating expense ratios have improved (decreased) as the Company has been able to improve asset quality and generate more operating revenues while controlling expense growth.

Income Tax Expense

The effective tax rate for the three months ended March 31, 2022 was 25.33% compared to an effective tax rate of 25.24% for the three months ended March 31, 2021.

Balance Sheet

Assets

Total assets increased $24.6 million, or 1.1%, to $2.35 billion at March 31, 2022 compared to total assets of $2.33 billion at December 31, 2021. Cash decreased a net of $26.5 million and was used to fund net loan and investment growth of $36.6 million and $9.7 million, respectively. In addition, deferred tax assets increased $6.5 million to $15.5 million primarily due to the day one CECL adjustment and increases in unrealized losses of the Bank's AFS investment portfolio related to changes in interest rates. Other assets decreased $1.8 million due to a decrease in income tax receivables.

During the first quarter of 2022, total net loans, which include portfolio loans and U.S. SBA PPP loans, increased 9.2% annualized or $36.6 million from $1,586.8 million at December 31, 2021 to $1,623.4 million at March 31, 2022. Net portfolio loans increased 12.2% annualized or $47.8 million from $1,560.4 million at December 31, 2021 to $1,608.2 million at March 31, 2022. Portfolio loans include all loan portfolios except the U.S. SBA PPP loan portfolio. The Company's loan pipeline was $193.0 million at March 31, 2022.

Non-owner occupied commercial real estate as a percentage of risk-based capital at March 31, 2022 and December 31, 2021 were $872.3 million or 347% and $813.0 million or 331%, respectively. Construction loans as a percentage of risk-based capital at March 31, 2022 and December 31, 2021 were $138.0 million or 55% and $140.4 million or 57%, respectively.

Funding

Total deposits increased $38.9 million or 1.9% (7.6% annualized) at March 31, 2022 compared to December 31, 2021. The increase included a $46.2 million increase to transaction deposits offset by a $7.3 million decrease to time deposits. During the first quarter of 2022, non-interest-bearing demand deposits increased $198.6 million to $644.4 million at March 31, 2022, representing 30.8% of deposits, compared to 21.7% of deposits at December 31, 2021 as management efforts to optimize the deposit franchise achieved results.

Stockholders' Equity and Regulatory Capital

During the three months ended March 31, 2022, total stockholders' equity decreased $15.0 million. Equity increased due to net income of $6.3 million and net stock related activities in connection with stock-based compensation and ESOP activity of $0.2 million. The decrease in equity was primarily due to an increase of $17.0 million in AOCL in the Bank's AFS securities portfolio due to changes in market interest rates. In addition, equity decreased for common dividends paid of $0.9 million, stock repurchases of $1.6 million and $2.0 million for the adoption of the current expected credit loss ("CECL") accounting standard on January 1, 2022.

The Company's common equity to assets ratio decreased to 8.21% at March 31, 2022 from 8.94% at December 31, 2021. The Company's ratio of tangible common equity ("TCE") to tangible assets decreased to 7.75% at March 31, 2022 from 8.48% at December 31, 2021 (see Non-GAAP reconciliation schedules) due primarily to increases in AOCL. Regulatory capital was not impacted by the increase in AOCL and Tier 1 capital to average asset ratios at the Bank and the Company remained strong at 9.93% and 9.17% at March 31, 2022 compared to 9.95% and 9.23% at December 31, 2021.

On December 9, 2021, the Company announced its Board of Directors approved the resumption of repurchases allowed under the stock repurchase plan originally adopted in October 2020 (the "2020 Repurchase Plan"). The Company may repurchase the 99,450 shares remaining under the 2020 Repurchase Plan using up to $4.0 million in the aggregate and up to $1.5 million in the aggregate on a quarterly basis. During the first quarter of 2022, the Company repurchased 39,049 shares at an average price of $39.70 per share. At March 31, 2022 the Company had 51,664 shares available to be repurchased under the 2020 Repurchase Plan.

Asset Quality

Allowance for credit losses ("ACL") and provision for credit losses ("PCL"); Allowance for Loan Losses ("ALLL") and provision for loan losses ("PLL")²

On January 1, 2022, the Company adopted ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss methodology for determining our provision for credit losses and ACL with an expected loss methodology that is referred to as the current expected credit loss model ("CECL"). The measurement of expected credit losses under the CECL methodology applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. In addition, ASU 2016-13 made changes to the accounting for available-for-sale ("AFS") debt securities. Credit- related impairments on AFS debt securities are now recognized as an allowance for credit loss rather than a write-down of the securities amortized cost basis when management does not intend to sell or believes that it is not likely that they will be required to sell the securities prior to recovery of the securities amortized cost basis.

We adopted ASU 2016-13 using the modified retrospective method. Results for reporting periods beginning after January 1, 2022 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP. At adoption, the Company did not hold Held to Maturity ("HTM") investment debt securities.

The following table shows the impact of the Company's adoption of ASC 326:

		January 1, 2022
(dollars in thousands)		As Reported Under ASC 326				Pre-ASC 326 Adoption				Impact of ASC 326 Adoption
Portfolio Loans:
Commercial real estate		$	1,113,793			$	1,115,485				(1,692	)
Residential first mortgages			92,710				91,120				1,590
Residential rentals			194,911				195,035				(124	)
Construction and land development			35,502				35,590				(88	)
Home equity and second mortgages			25,661				25,638				23
Commercial loans			50,512				50,574				(62	)
Consumer loans			3,015				3,002				13
Commercial equipment			62,706				62,499				207
Total Portfolio Loans			1,578,810				1,578,943				(133	)
Adjustments:
Net deferred costs			—				(133	)			133
Allowance for credit losses			(20,913	)			(18,417	)			(2,496	)
Net Portfolio Loans			1,557,897				1,560,393				(2,496	)
U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans			26,398				27,276				(878	)
Net deferred fees			—				(878	)			878
Net U.S. SBA PPP Loans			26,398				26,398				—
Total Net Loans		$	1,584,295			$	1,586,791			$	(2,496	)
Liabilities: Reserve for Unfunded Commitments		$	268			$	51			$	217

ACL balances increased to 1.31% of portfolio loans at March 31, 2022 compared to ALLL of 1.17% of portfolio loans at December 31, 2021. At and for the three months ended March 31, 2022, the Company's allowance increased $3.0 million or 16.1% to $21.4 million at March 31, 2022 from $18.4 million at December 31, 2021.

The Company recorded a $0.5 million PCL for the three months ended March 31, 2022 compared to $0.3 million PLL for the three months ended March 31, 2021. There were no net charge-offs during the first quarter of 2022 compared to $1.5 million in net charge-offs for the three months ended March 31, 2021.

Management closely monitors previously COVID-19 deferred loans in reviews of credit quality indicators as part of individual loan and relationship reviews and changes classification ratings as needed. We believe these loans are more likely to default in the future and that the identification and resolution of problem credits could be delayed.

Management believes that the allowance is adequate at March 31, 2022.

_______________________

²  The Company implemented the CECL accounting standard effective January 1, 2022. The Company used an incurred loss methodology for all periods compared before March 31, 2022.

Classified and Non-Performing Assets

Classified assets decreased $0.5 million from $5.2 million at December 31, 2021 to $4.7 million at March 31, 2022. Management considers classified assets to be an important measure of asset quality. The Company's risk rating process for classified loans is an important factor in the Company's ACL qualitative framework. In addition, risk ratings are expected to be an important indicator in assessing ongoing credit risks of previously deferred COVID-19 deferred loans. Management remains committed to expeditiously resolving non-performing or substandard credits that are not likely to become performing or passing credits in a reasonable timeframe.

During 2021, classified assets decreased $17.1 million. Asset quality improved with the resolution of $16.9 million in non-accrual and impaired loans through loan sales and negotiated payoffs as well as the resolution of $3.1 million in OREO. The Company's sale of impaired loans decreased the specific reserve, improved asset quality, and improved several ALLL qualitative factors.

Non-accrual loans and OREO to total portfolio loans and OREO decreased two basis points from 0.48% at December 31, 2021 to 0.46% at March 31, 2022. Non-accrual loans, OREO and TDRs to total assets decreased one basis points from 0.35% at December 31, 2021 to 0.34% at March 31, 2022. 

Non-accrual loans decreased $0.2 million from $7.6 million at December 31, 2021 to $7.5 million at March 31, 2022. There were no OREO balances at March 31, 2022 and December 31, 2021.

About The Community Financial Corporation - Headquartered in Waldorf, MD, The Community Financial Corporation is the bank holding company for Community Bank of the Chesapeake, a full-service commercial bank with assets of approximately $2.4 billion. Through its branch offices and commercial lending centers, Community Bank of the Chesapeake offers a broad range of financial products and services to individuals and businesses. The Company's branches are located at its main office in Waldorf, Maryland, and branch offices in Bryans Road, Dunkirk, Leonardtown, La Plata, Charlotte Hall, Prince Frederick, Lusby and California, Maryland; and downtown Fredericksburg, Virginia. More information about Community Bank of the Chesapeake can be found at www.cbtc.com.

Use of non-GAAP Financial Measures - Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. The Company's management uses these non-GAAP financial measures, and believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

Forward-looking Statements - This news release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate", "assume" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results. These forward-looking statements include, without limitation: (i) those relating to the Company's and the Bank's future growth and management's outlook or expectations for revenue, assets, asset quality, profitability, business prospects, net interest margin, non-interest revenue, allowance for loan losses, the level of credit losses from lending, liquidity levels, capital levels, or other future financial or business performance strategies or expectations; (ii) any statements of the plans and objectives of management for future operations products or services, including the expected benefits from, and/or the execution of integration plans relating to any acquisition we have undertaken or that we undertake in the future; (iii) plans and cost savings regarding branch closings or consolidation; (iv) projections related to certain financial metrics; (v) expected benefits of programs we introduce, including residential mortgage programs and retail and commercial credit card programs; and (vi) any statement of expectation or belief, and any assumptions underlying the foregoing. These forward-looking statements express management's current expectations or forecasts of future events, results and conditions, and by their nature are subject to and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. Factors that might cause actual results to differ materially from those made in such statements include, but are not limited to: (i) risks, uncertainties and other factors relating to the COVID-19 pandemic (including the length of time that the pandemic continues, the ability of states and local governments to successfully implement the lifting of restrictions on movement and the potential imposition of further restrictions on movement and travel in the future, the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; (ii) the remedial actions and stimulus measures adopted by federal, state and local governments, and the inability of employees to work due to illness, quarantine, or government mandates); (iii) the impacts related to or resulting from Russia's military action in Ukraine, including the broader impacts to financial markets and the global macroeconomic and geopolitical environments; (iv) assumptions that interest-earning assets will reprice faster than interest-bearing liabilities and the Bank's ability to maintain its current favorable funding mix; (v) the synergies and other expected financial benefits from any acquisition that we have undertaken or may undertake in the future may or may not be realized within the expected time frames; (vi) changes in the Company's or the Bank's strategy, costs or difficulties related to integration matters might be greater than expected; (vii) availability of and costs associated with obtaining adequate and timely sources of liquidity; (viii) the ability to maintain credit quality; (ix) general economic trends and conditions, including inflation and its impacts; (x) changes in interest rates; (xi) loss of deposits and loan demand to other financial institutions; (xii) substantial changes in financial markets; (xiii) changes in real estate value and the real estate market; (xiv) regulatory changes; (xv) the impact of government shutdowns or sequestration; (xvi) the possibility of unforeseen events affecting the industry generally; (xvii) the uncertainties associated with newly developed or acquired operations; (xviii) the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the future; (xix) market disruptions and other effects of terrorist activities; and (xx) the matters described in "Item 1A Risk Factors" in the Company's Annual Report on Form 10-K for the Year Ended December 31, 2021, and in its other Reports filed with the Securities and Exchange Commission (the "SEC"). The Company's forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC's Web site at www.sec.gov. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required under the rules and regulations of the SEC.

Data is unaudited as of March 31, 2022. This selected information should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

CONTACTS:

William J. Pasenelli, Chief Executive Officer

Todd L. Capitani, Chief Financial Officer

888.745.2265

SUPPLEMENTAL QUARTERLY FINANCIAL DATA

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

		Three Months Ended
(dollars in thousands)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Interest and Dividend Income
Loans, including fees		$	15,610			$	16,222			$	16,342			$	16,320			$	16,592
Interest and dividends on securities			1,666				1,531				1,296				1,101				1,064
Interest on deposits with banks			60				25				21				23				22
Total Interest and Dividend Income			17,336				17,778				17,659				17,444				17,678
Interest Expense
Deposits			513				565				594				640				802
Long-term debt			354				332				456				369				367
Total Interest Expense			867				897				1,050				1,009				1,169
Net Interest Income ("NII")			16,469				16,881				16,609				16,435				16,509
Provision for credit losses			450				—				—				291				295
Provision (recovery) for unfunded commitments			(31	)			—				—				—				—
NII After Provision For Credit Losses			16,050				16,881				16,609				16,144				16,214
Noninterest Income
Loan appraisal, credit, and misc. charges			176				257				29				44				198
Gain on sale of assets			—				—				—				68				—
Net gains on sale of investment securities			—				—				—				—				586
Unrealized (losses) gain on equity securities			(222	)			(45	)			(22	)			13				(85	)
Loss on premises and equipment held for sale			—				(5	)			(20	)			—				—
Income from bank owned life insurance			214				219				220				218				214
Service charges			926				1,235				987				892				1,187
Referral fee income			361				574				176				621				451
Net (losses) gain on sale of loans originated for sale			(4	)			55				30				—				—
Loss on sale of loans			—				—				—				—				(191	)
Total Noninterest Income			1,451				2,290				1,400				1,856				2,360
Noninterest Expense
Compensation and benefits			5,055				5,265				5,650				5,332				4,788
OREO valuation allowance and expenses			6				767				20				488				181
Sub Total			5,061				6,032				5,670				5,820				4,969
Operating Expenses
Occupancy expense			732				656				731				688				761
Advertising			64				128				145				148				79
Data processing expense			1,007				1,006				840				990				936
Professional fees			731				937				676				604				640
Depreciation of premises and equipment			149				139				137				135				147
FDIC Insurance			179				90				120				140				252
Core deposit intangible amortization			109				115				121				126				133
Fraud losses (recovery)			40				16				133				(218	)			1,329
Other expenses			1,008				1,060				874				945				902
Total Operating Expenses			4,019				4,147				3,777				3,558				5,179
Total Noninterest Expense			9,080				10,179				9,447				9,378				10,148
Income before income taxes			8,421				8,992				8,562				8,622				8,426
Income tax expense			2,133				2,241				2,158				2,190				2,127
Net Income		$	6,288			$	6,751			$	6,404			$	6,432			$	6,299

SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands, except per share amounts)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Assets
Cash and due from banks		$	80,702			$	108,990			$	112,314			$	40,881			$	126,834
Federal funds sold			—				—				—				79,404				43,614
Interest-bearing deposits with banks			32,460				30,664				34,929				18,626				17,390
Securities available for sale ("AFS"), at fair value			507,527				497,839				456,664				347,678				253,348
Equity securities carried at fair value through income			4,562				4,772				4,805				4,814				4,787
Non-marketable equity securities held in other financial institutions			207				207				207				207				207
Federal Home Loan Bank ("FHLB") stock - at cost			1,685				1,472				1,472				2,036				2,036
Loans held for sale			373				—				—				—				—
Net U.S. Small Business Administration ("SBA") Paycheck Protection ("PPP") Loans			15,279				26,398				54,807				86,482				112,485
Portfolio Loans Receivable net of allowance for credit losses of $21,382, $18,417, $18,579, $18,516, and $18,256			1,608,156				1,560,393				1,514,837				1,515,893				1,489,806
Net Loans			1,623,435				1,586,791				1,569,644				1,602,375				1,602,291
Goodwill			10,835				10,835				10,835				10,835				10,835
Premises and equipment, net			21,304				21,427				21,795				21,630				20,540
Other real estate owned ("OREO")			—				—				1,536				1,536				2,329
Accrued interest receivable			5,389				5,588				6,045				6,590				7,337
Investment in bank owned life insurance			39,145				38,932				38,713				38,493				38,275
Core deposit intangible			924				1,032				1,147				1,267				1,394
Net deferred tax assets			15,523				9,033				8,790				8,139				8,671
Right of use assets - operating leases			6,033				6,124				6,215				6,305				6,391
Other assets			1,819				3,600				3,581				4,243				3,252
Total Assets		$	2,351,923			$	2,327,306			$	2,278,692			$	2,195,059			$	2,149,531
Liabilities and Stockholders' Equity
Liabilities
Deposits
Non-interest-bearing deposits		$	644,385			$	445,778			$	432,606			$	423,165			$	406,319
Interest-bearing deposits			1,450,698				1,610,386				1,572,001				1,484,973				1,461,577
Total deposits			2,095,083				2,056,164				2,004,607				1,908,138				1,867,896
Long-term debt			12,213				12,231				12,249				27,267				27,285
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPs")			12,000				12,000				12,000				12,000				12,000
Subordinated notes - 4.75%			19,524				19,510				19,496				19,482				19,468
Lease liabilities - operating leases			6,266				6,343				6,418				6,512				6,614
Accrued expenses and other liabilities			13,697				12,925				19,794				17,698				15,509
Total Liabilities			2,158,783				2,119,173				2,074,564				1,991,097				1,948,772
Stockholders' Equity
Common stock			57				57				57				58				59
Additional paid in capital			97,189				96,896				96,649				96,411				96,181
Retained earnings			115,179				113,448				107,890				104,889				103,294
Accumulated other comprehensive (loss) income			(18,969	)			(1,952	)			(9	)			3,063				1,684
Unearned ESOP shares			(316	)			(316	)			(459	)			(459	)			(459	)
Total Stockholders' Equity			193,140				208,133				204,128				203,962				200,759
Total Liabilities and Stockholders' Equity		$	2,351,923			$	2,327,306			$	2,278,692			$	2,195,059			$	2,149,531
Common shares issued and outstanding			5,686,799				5,718,528				5,724,011				5,786,928				5,897,685

SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued

SELECTED FINANCIAL INFORMATION AND RATIOS (UNAUDITED)

		Three Months Ended
(dollars in thousands, except per share amounts)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
KEY OPERATING RATIOS
Return on average assets ("ROAA")			1.08	%			1.18	%			1.17	%			1.22	%			1.22	%
Pre-tax Pre-Provision ROAA**			1.53				1.57				1.57				1.68				1.68
Return on average common equity ("ROACE")			12.30				13.00				12.45				12.62				12.53
Pre-tax Pre-Provision ROACE**			17.35				17.31				16.65				17.49				17.34
Return on Average Tangible Common Equity ("ROATCE")**			13.22				13.97				13.41				13.62				13.56
Average total equity to average total assets			8.79				9.06				9.40				9.63				9.71
Interest rate spread			3.05				3.17				3.22				3.30				3.43
Net interest margin			3.12				3.22				3.28				3.37				3.50
Cost of funds			0.17				0.17				0.21				0.21				0.25
Cost of deposits			0.10				0.11				0.12				0.14				0.18
Cost of debt			3.24				3.04				3.19				2.51				2.50
Efficiency ratio			50.67				53.10				52.46				51.27				53.78
Non-interest expense to average assets			1.56				1.78				1.73				1.77				1.96
Net operating expense to average assets			1.31				1.38				1.47				1.42				1.50
Average interest-earning assets to average interest-bearing liabilities			141.56				129.68				132.54				131.36				128.84
Net charge-offs (recoveries) to average portfolio loans			0.00				0.04				(0.02	)			0.01				0.40
COMMON SHARE DATA
Basic net income per common share		$	1.11			$	1.18			$	1.12			$	1.10			$	1.07
Diluted net income per common share			1.10				1.18				1.12				1.10				1.07
Cash dividends paid per common share			0.175				0.150				0.150				0.15				0.13
Basic - weighted average common shares outstanding			5,688,221				5,711,746				5,709,814				5,845,009				5,888,250
Diluted - weighted average common shares outstanding			5,699,038				5,723,011				5,720,001				5,856,954				5,897,698
ASSET QUALITY
Total assets		$	2,351,923			$	2,327,306			$	2,278,692			$	2,195,059			$	2,149,531
Total portfolio loans (1)			1,629,538				1,578,810				1,533,416				1,534,409				1,508,062
Classified assets			4,745				5,211				6,663				14,918				16,145
Allowance for credit losses			21,382				18,417				18,579				18,516				18,256
Past due loans - 31 to 89 days			386				568				189				101				1,373
Past due loans >=90 days			1,233				961				1,400				5,836				5,453
Total past due loans (2) (3)			1,619				1,529				1,589				5,937				6,826
Non-accrual loans (4)			7,465				7,631				5,160				13,802				13,623
Accruing troubled debt restructures ("TDRs")			442				447				455				503				504
Other real estate owned ("OREO")			—				—				1,536				1,536				2,329
Non-accrual loans, OREO and TDRs		$	7,907			$	8,078			$	7,151			$	15,841			$	16,456

** Non-GAAP financial measure. See reconciliation of GAAP and NON-GAAP measures.

____________________________________

(1)   Portfolio loans include all loan portfolios except the U.S. SBA PPP loan portfolio. Asset quality ratios for loans exclude U.S. SBA PPP loans. December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021 reported balance are shown net of deferred costs and fees to conform with the current period's presentation.

(2)   Delinquency excludes Purchase Credit Impaired ("PCI") loans.

(3)   There were no COVID-19 deferred loans in process as of April 28, 2022 that were reported as delinquent as of March 31, 2022.

(4)   Non-accrual loans include all loans that are 90 days or more delinquent and loans that are non-accrual due to the operating results or cash flows of a customer. Non-accrual loans can include loans that are current with all loan payments. At March 31, 2022 and December 31, 2021, the Company had current non-accrual loans of $6.0 million and $6.7 million, respectively.

SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued

SELECTED FINANCIAL INFORMATION AND RATIOS (UNAUDITED)

		Three Months Ended
(dollars in thousands, except per share amounts)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
ASSET QUALITY RATIOS (1)
Classified assets to total assets			0.20	%			0.22	%			0.29	%			0.68	%			0.75	%
Classified assets to risk-based capital			1.87				2.10				2.75				6.24				6.81
Allowance for credit losses to total portfolio loans			1.31				1.17				1.21				1.21				1.21
Allowance for credit losses to non-accrual loans			286.43				241.34				360.06				134.15				134.01
Past due loans - 31 to 89 days to total portfolio loans			0.02				0.04				0.01				0.01				0.09
Past due loans >=90 days to total portfolio loans			0.08				0.06				0.09				0.38				0.36
Total past due (delinquency) to total portfolio loans			0.10				0.10				0.10				0.39				0.45
Non-accrual loans to total portfolio loans			0.46				0.48				0.34				0.90				0.90
Non-accrual loans and TDRs to total portfolio loans			0.49				0.51				0.37				0.93				0.94
Non-accrual loans and OREO to total portfolio assets			0.32				0.33				0.29				0.70				0.74
Non-accrual loans and OREO to total portfolio loans and OREO			0.46				0.48				0.44				1.00				1.06
Non-accrual loans, OREO and TDRs to total assets			0.34				0.35				0.31				0.72				0.77
COMMON SHARE DATA
Book value per common share		$	33.96			$	36.40			$	35.66			$	35.25			$	34.04
Tangible book value per common share**			31.90				34.32				33.57				33.15				31.97
Common shares outstanding at end of period			5,686,799				5,718,528				5,724,011				5,786,928				5,897,685
OTHER DATA
Full-time equivalent employees			191				186				196				189				192
Branches			11				11				11				11				11
Loan Production Offices			4				4				4				4				4
CAPITAL RATIOS
Tier 1 capital to average assets			9.17	%			9.23	%			9.41	%			9.57	%			9.70	%
Tier 1 common capital to risk-weighted assets			11.58				11.92				11.89				11.56				11.72
Tier 1 capital to risk-weighted assets			12.28				12.64				12.64				12.30				12.47
Total risk-based capital to risk-weighted assets			14.65				14.92				14.99				14.62				14.83
Common equity to assets			8.21				8.94				8.96				9.29				9.34
Tangible common equity to tangible assets **			7.75				8.48				8.48				8.79				8.82

** Non-GAAP financial measure. See reconciliation of GAAP and NON-GAAP measures.

____________________________________

(1)   Asset quality ratios are calculated using total portfolio loans. Portfolio loans include all loan portfolios except the U.S. SBA PPP loan portfolio.

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

Reconciliation of US GAAP total assets, common equity, common equity to assets and book value to Non-GAAP tangible assets, tangible common equity, tangible common equity to tangible assets and tangible book value.

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain performance measures, which exclude intangible assets. These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.

(dollars in thousands, except per share amounts)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Total assets		$	2,351,923			$	2,327,306			$	2,278,692			$	2,195,059			$	2,149,531
Less: intangible assets
Goodwill			10,835				10,835				10,835				10,835				10,835
Core deposit intangible			924				1,032				1,147				1,267				1,394
Total intangible assets			11,759				11,867				11,982				12,102				12,229
Tangible assets		$	2,340,164			$	2,315,439			$	2,266,710			$	2,182,957			$	2,137,302
Total common equity		$	193,140			$	208,133			$	204,128			$	203,962			$	200,759
Less: intangible assets			11,759				11,867				11,982				12,102				12,229
Tangible common equity		$	181,381			$	196,266			$	192,146			$	191,860			$	188,530
Common shares outstanding at end of period			5,686,799				5,718,528				5,724,011				5,786,928				5,897,685
Common equity to assets			8.21	%			8.94	%			8.96	%			9.29	%			9.34	%
Tangible common equity to tangible assets			7.75	%			8.48	%			8.48	%			8.79	%			8.82	%
Common book value per share		$	33.96			$	36.40			$	35.66			$	35.25			$	34.04
Tangible common book value per share		$	31.90			$	34.32			$	33.57			$	33.15			$	31.97

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

Pre-Tax Pre-Provision ("PTPP") Income, PTPP Return on Average Assets ("ROAA"), PTPP Return on Average Common Equity ("ROACE"), and Return on Average Tangible Common Equity ("ROATCE")

Management believes that PTPP income, which reflects the Company's profitability before income taxes and loan loss provisions, allows investors to better assess the Company's operating income and expenses in relation to the Company's core operating revenue by removing the volatility that is associated with credit provisions and different state income tax rates for comparable institutions. ROATCE is computed by dividing net earnings applicable to common shareholders by average tangible common shareholders' equity. Management believes that ROATCE is meaningful because it measures the performance of a business consistently, whether acquired or internally developed. ROATCE is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. Management also believes that during a crisis such as the COVID-19 pandemic, this information is useful as the impact of the pandemic on the loan loss provisions of various institutions will likely vary based on the geography of the communities served by a particular institution.

		Three Months Ended
(dollars in thousands)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Net income (as reported)		$	6,288			$	6,751			$	6,404			$	6,432			$	6,299
Provision for credit losses			450				—				—				291				295
Income tax expenses			2,133				2,241				2,158				2,190				2,127
Non-GAAP PTPP income		$	8,871			$	8,992			$	8,562			$	8,913			$	8,721
ROAA			1.08	%			1.18	%			1.17	%			1.22	%			1.22	%
Pre-tax Pre-Provision ROAA			1.53	%			1.57	%			1.57	%			1.68	%			1.68	%
ROACE			12.30	%			13.00	%			12.45	%			12.62	%			12.53	%
Pre-tax Pre-Provision ROACE			17.35	%			17.31	%			16.65	%			17.49	%			17.34	%
Average assets		$	2,325,992			$	2,293,264			$	2,187,989			$	2,116,939			$	2,070,575
Average equity		$	204,554			$	207,745			$	205,723			$	203,893			$	201,124

		Three Months Ended
(dollars in thousands)		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Net income (as reported)		$	6,288			$	6,751			$	6,404			$	6,432			$	6,299
Core deposit intangible amortization (net of tax)			81				86				91				94				99
Net earnings applicable to common shareholders		$	6,369			$	6,837			$	6,495			$	6,526			$	6,398
ROATCE			13.22	%			13.97	%			13.41	%			13.62	%			13.56	%
Average tangible common equity		$	192,725			$	195,803			$	193,662			$	191,708			$	188,808

AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME (UNAUDITED)

		For the Three Months Ended March 31,																				For the Three Months Ended
		2022										2021										March 31, 2022										December 31, 2021
(dollars in thousands)		Average Balance				Interest			Average Yield/Cost			Average Balance				Interest			Average Yield/Cost			Average Balance				Interest			Average Yield/Cost			Average Balance				Interest			Average Yield/Cost
Assets
Interest-earning assets:
Commercial real estate		$	1,112,108			$	10,737		3.86	%		$	1,059,803			$	10,696		4.04	%		$	1,112,108			$	10,737		3.86	%		$	1,099,088			$	10,911		3.97	%
Residential first mortgages			86,805				713		3.29	%			124,984				914		2.93	%			86,805				713		3.29	%			93,997				756		3.22	%
Residential rentals			197,312				1,831		3.71	%			139,220				1,445		4.15	%			197,312				1,831		3.71	%			173,238				1,760		4.06	%
Construction and land development			33,669				407		4.84	%			36,091				402		4.46	%			33,669				407		4.84	%			38,345				431		4.50	%
Home equity and second mortgages			25,946				245		3.78	%			29,272				248		3.39	%			25,946				245		3.78	%			26,160				232		3.55	%
Commercial loans			46,668				550		4.71	%			44,740				551		4.93	%			46,668				550		4.71	%			52,765				626		4.75	%
Commercial equipment loans			61,715				642		4.16	%			60,544				519		3.43	%			61,715				642		4.16	%			61,851				634		4.10	%
U.S. SBA PPP loans			20,444				452		8.84	%			116,003				1,802		6.21	%			20,444				452		8.84	%			40,376				847		8.39	%
Consumer loans			3,213				33		4.11	%			1,320				15		4.55	%			3,213				33		4.11	%			2,629				25		3.80	%
Allowance for credit losses			(21,043	)			—		0.00	%			(19,614	)			—		0.00	%			(21,043	)			—		0.00	%			(18,434	)			—		0.00	%
Loan portfolio (1)		$	1,566,837			$	15,610		3.99	%		$	1,592,363			$	16,592		4.17	%		$	1,566,837			$	15,610		3.99	%		$	1,570,015			$	16,222		4.13	%
Taxable investment securities			484,157				1,572		1.30	%			229,810				951		1.66	%			484,157				1,572		1.30	%			465,771				1,441		1.24	%
Nontaxable investment securities			17,513				94		2.15	%			20,841				114		2.19	%			17,513				94		2.15	%			17,509				90		2.06	%
Interest-bearing deposits in other banks			42,608				60		0.56	%			25,064				14		0.22	%			42,608				60		0.56	%			41,736				25		0.24	%
Federal funds sold			—				—		0.00	%			18,721				7		0.15	%			—				—		0.00	%			—				—		0.00	%
Total Interest-Earning Assets			2,111,115				17,336		3.28	%			1,886,799				17,678		3.75	%			2,111,115				17,336		3.28	%			2,095,031				17,778		3.39	%
Cash and cash equivalents			116,560										82,669										116,560										100,480
Goodwill			10,835										10,835										10,835										10,835
Core deposit intangible			994										1,481										994										1,107
Other assets			86,488										88,791										86,488										85,811
Total Assets		$	2,325,992									$	2,070,575									$	2,325,992									$	2,293,264
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits		$	609,945			$	—		0.00	%		$	381,059			$	—		0.00	%		$	609,945			$	—		0.00	%		$	449,272			$	—		0.00	%
Interest-bearing deposits
Savings			121,236				15		0.05	%			101,782				13		0.05	%			121,236				15		0.05	%			114,123				14		0.05	%
Demand deposits			625,241				103		0.07	%			602,836				97		0.06	%			625,241				103		0.07	%			754,656				87		0.05	%
Money market deposits			378,781				100		0.11	%			349,718				98		0.11	%			378,781				100		0.11	%									0.11	%
Certificates of deposit			322,346				295		0.37	%			351,365				594		0.68	%			322,346				295		0.37	%			333,658				364		0.44	%
Total interest-bearing deposits			1,447,604				513		0.14	%			1,405,701				802		0.23	%			1,447,604				513		0.14	%			1,571,851				565		0.14	%
Total Deposits			2,057,549				513		0.10	%			1,786,760				802		0.18	%			2,057,549				513		0.10	%			2,021,123				565		0.11	%
Long-term debt			12,219				25		0.82	%			27,291				41		0.60	%			12,219				25		0.82	%			12,237				6		0.20	%
Subordinated Notes			19,515				251		5.14	%			19,490				251		5.15	%			19,515				251		5.14	%			19,501				252		5.17	%
Guaranteed preferred beneficial interest in junior subordinated debentures			12,000				78		2.60	%			12,000				75		2.50	%			12,000				78		2.60	%			12,000				74		2.47	%
Total Debt			43,734				354		3.24	%			58,781				367		2.50	%			43,734				354		3.24	%			43,738				332		3.04	%
Interest-Bearing Liabilities			1,491,338				867		0.23	%			1,464,482				1,169		0.32	%			1,491,338				867		0.23	%			1,615,589				897		0.22	%
Total Funds			2,101,283				867		0.17	%			1,845,541				1,169		0.25	%			2,101,283				867		0.17	%			2,064,861				897		0.17	%
Other liabilities			20,155										23,910										20,155										20,658
Stockholders' equity			204,554										201,124										204,554										207,745
Total Liabilities and Stockholders' Equity		$	2,325,992									$	2,070,575									$	2,325,992									$	2,293,264
Net interest income						$	16,469									$	16,509									$	16,469									$	16,881
Interest rate spread									3.05	%									3.43	%									3.05	%									3.17	%
Net yield on interest-earning assets									3.12	%									3.50	%									3.12	%									3.22	%
Average interest-earning assets to average interest-bearing liabilities									141.56	%									128.84	%									141.56	%									129.68	%
Average loans to average deposits									76.15	%									89.12	%									76.15	%									77.68	%
Average transaction deposits to total average deposits **									84.33	%									80.34	%									84.33	%									83.49	%
Cost of funds									0.17	%									0.25	%									0.17	%									0.17	%
Cost of deposits									0.10	%									0.18	%									0.10	%									0.11	%
Cost of debt									3.24	%									2.50	%									3.24	%									3.04	%

(1) Loan average balance includes non-accrual loans. There are no tax equivalency adjustments. There was $50,000, $90,000 and $161,000 of accretion interest for the three months ended March 31, 2022 and 2021, and December 31, 2021, respectively.

** Transaction deposits exclude time deposits.

SUMMARY OF LOAN PORTFOLIO (UNAUDITED)

(dollars in thousands)

Portfolio loans, net of deferred costs and fees, are summarized by type as follows:

BY LOAN TYPE		March 31, 2022				%			December 31, 2021*				%			September 30, 2021*				%			June 30, 2021*				%			March 31, 2021*				%
Portfolio Loans:
Commercial real estate		$	1,177,761			72.28	%		$	1,113,793			70.54	%		$	1,087,102			70.89	%		$	1,110,011			72.34	%		$	1,079,561			71.60	%
Residential first mortgages			86,416			5.30				92,710			5.87				98,590			6.43				107,435			7.00				117,977			7.82
Residential rentals			191,065			11.73				194,911			12.35				172,073			11.22				142,252			9.27				137,573			9.12
Construction and land development			30,649			1.88				35,502			2.25				37,070			2.42				36,839			2.40				38,377			2.54
Home equity and second mortgages			26,445			1.62				25,661			1.63				26,542			1.73				28,751			1.87				29,387			1.95
Commercial loans			48,948			3.00				50,512			3.20				48,287			3.15				47,530			3.10				42,698			2.83
Consumer loans			3,592			0.22				3,015			0.19				2,183			0.14				1,459			0.10				1,432			0.09
Commercial equipment			64,662			3.97				62,706			3.97				61,569			4.02				60,132			3.92				61,057			4.05
Total portfolio loans			1,629,538			100.00	%			1,578,810			100.00	%			1,533,416			100.00	%			1,534,409			100.00	%			1,508,062			100.00	%
Less: Allowance for Credit Losses			(21,382	)		(1.31	)			(18,417	)		(1.17	)			(18,579	)		(1.21	)			(18,516	)		(1.21	)			(18,256	)		(1.21	)
Total net portfolio loans			1,608,156							1,560,393							1,514,837							1,515,893							1,489,806
U.S. SBA PPP loans			15,279							26,398							54,807							86,482							112,485
Total net loans		$	1,623,435						$	1,586,791						$	1,569,644						$	1,602,375						$	1,602,291

* December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021 reported balance are shown net of deferred costs and fees to conform with the current period's presentation.

END OF PERIOD CONTRACTUAL RATES (UNAUDITED)

The following table is based on contractual interest rates and does not include the amortization of deferred costs and fees or assumptions regarding non-accrual interest: 

		March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
(dollars in thousands)		EOP Contractual Interest rate			EOP Contractual Interest rate			EOP Contractual Interest rate			EOP Contractual Interest rate			EOP Contractual Interest rate
Commercial real estate		3.79	%		3.79	%		3.91	%		3.96	%		4.02	%
Residential first mortgages		3.80	%		3.80	%		3.84	%		3.87	%		3.87	%
Residential rentals		3.78	%		3.81	%		3.97	%		4.11	%		4.20	%
Construction and land development		4.36	%		4.38	%		4.32	%		4.31	%		4.32	%
Home equity and second mortgages		3.50	%		3.51	%		3.51	%		3.50	%		3.52	%
Commercial loans		4.47	%		4.48	%		4.48	%		4.44	%		4.63	%
Consumer loans		4.33	%		4.37	%		5.26	%		5.65	%		5.75	%
Commercial equipment		4.29	%		4.32	%		4.39	%		4.42	%		4.40	%
U.S. SBA PPP loans		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Total Loans		3.81	%		3.80	%		3.85	%		3.84	%		3.84	%
Yields without U.S. SBA PPP Loans		3.85	%		3.84	%		3.95	%		4.00	%		4.06	%

ALLOWANCE FOR CREDIT LOSSES AND ALLOWANCE FOR LOAN LOSSES (UNAUDITED)

(dollars in thousands)		For the Three Months Ended**
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Beginning of period		$	18,417			$	18,579			$	18,516			$	18,256			$	19,424
Impact of ASC 326 Adoption			2,496				—				—				—				—
Charge-offs			—				(181	)			(491	)			(61	)			(1,485	)
Recoveries			19				19				554				30				22
Net charge-offs			19				(162	)			63				(31	)			(1,463	)
Provision for credit losses			450				—				—				291				295
End of period		$	21,382			$	18,417			$	18,579			$	18,516			$	18,256
Net charge-offs to average portfolio loans (annualized)2			—	%		(0.04		)%			0.02	%		(0.01		)%		(0.40		)%
Breakdown of general and specific allowance as a percentage of total portfolio loans3
General allowance		$	21,087			$	18,151			$	18,204			$	17,686			$	17,365
Specific allowance			295				266				323				778				891
		$	21,382			$	18,417			$	18,527			$	18,464			$	18,256
General allowance			1.29	%			1.15	%			1.19	%			1.15	%			1.15	%
Specific allowance			0.02	%			0.02	%			0.02	%			0.05	%			0.06	%
Allowance to total portfolio loans			1.31	%			1.17	%			1.21	%			1.20	%			1.21	%
Allowance to non-acquired loans		n/a (1)					1.20	%			1.25	%			1.25	%			1.26	%
Allowance + Non-PCI FV Mark		n/a (1)				$	18,815			$	19,070			$	19,090			$	18,939
Allowance + Non-PCI FV Mark to total portfolio loans		n/a (1)					1.19	%			1.24	%			1.24	%			1.26	%

* The Company implemented the CECL accounting standard effective January 1, 2022. The Company used an incurred loss methodology for quarters displayed before March 31, 2022.

(1)   Allowance to non-acquired loans and Non-PCI FV Mark are no longer relevant as all the ACL considers all loan portfolios.

________________

³  Portfolio loans include all loan portfolios except the U.S. SBA PPP loan portfolio.

CLASSIFIED AND SPECIAL MENTION ASSETS (UNAUDITED)

The following is a breakdown of the Company's classified and special mention assets at March 31, 2022 and December 31, 2021, 2020, 2019, and 2018, respectively: 

		As of
(dollars in thousands)		3/31/20224				12/31/2021				12/31/2020				12/31/2019				12/31/2018
Classified loans
Substandard		$	4,745			$	5,211			$	19,249			$	26,863			$	32,226
Doubtful			—				—				—				—				—
Total classified loans			4,745				5,211				19,249				26,863				32,226
Special mention loans			—				—				7,672				—				—
Total classified and special mention loans		$	4,745			$	5,211			$	26,921			$	26,863			$	32,226
Classified loans		$	4,745			$	5,211			$	19,249			$	26,863			$	32,226
Classified securities			—				—				—				—				482
Other real estate owned			—				—				3,109				7,773				8,111
Total classified assets		$	4,745			$	5,211			$	22,358			$	34,636			$	40,819
Total classified assets as a percentage of total assets			0.20	%			0.22	%			1.10	%			1.93	%			2.42	%
Total classified assets as a percentage of Risk Based Capital			1.87	%			2.10	%			9.61	%			16.21	%			21.54	%

___________________

⁴  Classified loans are not net of deferred costs and fees before the quarter ended March 31, 2022.

SUMMARY OF DEPOSITS (UNAUDITED)

		March 31, 2022						December 31, 2021						September 30, 2021						June 30, 2021						March 31, 2021
(dollars in thousands)		Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
Noninterest-bearing demand		$	644,385		30.75	%		$	445,778		21.68	%		$	432,606		21.58	%		$	423,165		22.18	%		$	406,319		21.75	%
Interest-bearing:
Demand deposits			618,869		29.54	%			790,481		38.45	%			764,482		38.14	%			685,023		35.90	%			651,639		34.89	%
Money market deposits			387,700		18.51	%			372,717		18.13	%			355,582		17.74	%			351,262		18.41	%			355,680		19.04	%
Savings			124,038		5.92	%			119,767		5.82	%			112,282		5.60	%			107,288		5.62	%			105,590		5.65	%
Certificates of deposit			320,091		15.28	%			327,421		15.92	%			339,655		16.94	%			341,400		17.89	%			348,668		18.67	%
Total interest-bearing			1,450,698		69.25	%			1,610,386		78.32	%			1,572,001		78.42	%			1,484,973		77.82	%			1,461,577		78.25	%
Total Deposits		$	2,095,083		100.00	%		$	2,056,164		100.00	%		$	2,004,607		100.00	%		$	1,908,138		100.00	%		$	1,867,896		100.00	%
Transaction accounts		$	1,774,992		84.72	%		$	1,728,743		84.08	%		$	1,664,952		83.06	%		$	1,566,738		82.11	%		$	1,519,228		81.33	%