8-K
Affinity Bancshares, Inc. (AFBI)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): October 26, 2022 |
|---|
Affinity Bancshares, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-39914 | 86-1339773 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 3175 HIGHWAY 278 | ||
| COVINGTON, Georgia | 30014 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: 770 786-7088 | ||
| --- | ||
| Not Applicable | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | AFBI | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 26, 2022, Affinity Bancshares, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2022. The press release is attached to this Current Report as Exhibit 99.1. This Current Report and the press release are being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for any purpose.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Exhibit
99.1
[Press Release dated October 26, 2022](afbi-ex99_1.htm)
99.2
[Supplemental Financial Information dated October 26,2022](afbi-ex99_2.htm)
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AFFINITY BANCSHARES, INC. | |||
|---|---|---|---|
| Date: | October 26, 2022 | By: | /s/ Brandi Pajot |
| Brandi Pajot<br>Senior Vice President and Chief Financial Officer |
EX-99.1
Affinity Bancshares, Inc.
Announces Third Quarter 2022
Financial Results
Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $1.9 million for the three months ended September 30, 2022, as compared to $1.8 million for the three months ended September 30, 2021. For the nine months ended September 30, 2022, net income was $5.4 million, as compared to $6.3 million for the nine months ended September 30, 2021.
| At or for the three months ended, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performance Ratios: | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | ||||||||||
| Net income (in thousands) | $ | 1,861 | $ | 1,783 | $ | 1,791 | $ | 1,318 | $ | 1,805 | |||||
| Diluted earnings per share | 0.27 | 0.27 | 0.26 | 0.20 | 0.26 | ||||||||||
| Common book value per share | 17.37 | 17.51 | 17.58 | 17.60 | 17.42 | ||||||||||
| Tangible book value per share (1) | 14.57 | 14.68 | 14.75 | 14.87 | 14.69 | ||||||||||
| Total assets (in thousands) | 776,390 | 766,679 | 760,208 | 788,088 | 789,965 | ||||||||||
| Return on average assets | 0.95 | % | 0.95 | % | 0.97 | % | 0.66 | % | 0.91 | % | |||||
| Return on average equity | 6.30 | % | 6.13 | % | 5.97 | % | 4.36 | % | 6.00 | % | |||||
| Equity to assets | 14.84 | % | 15.05 | % | 15.31 | % | 15.35 | % | 15.15 | % | |||||
| Tangible equity to tangible assets (1) | 12.75 | % | 12.93 | % | 13.17 | % | 13.29 | % | 13.08 | % | |||||
| Net interest margin | 4.12 | % | 4.06 | % | 4.47 | % | 3.60 | % | 3.74 | % | |||||
| Efficiency ratio | 67.62 | % | 67.23 | % | 69.00 | % | 74.29 | % | 65.87 | % | |||||
| (1) Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and reconciliation to GAAP. |
Net Income
• Net income was $1.9 million for the three months ended September 30, 2022, as compared to $1.8 million for the three months ended September 30, 2021, as a result of a decrease in Payroll Protection Program (PPP) loan-related interest and fee income, partially offset by a decrease in interest expense.
• Net income was $5.4 million for the nine months ended September 30, 2022, as compared to $6.3 million for the nine months ended September 30, 2021, as a result of lower interest and fee income on PPP loans, partially offset by a decrease in interest expense primarily related to the recognition of remaining discounts upon the payoff of acquired Federal Home Loan Bank advances.
Results of Operations
• Net interest income was $7.5 million for the three months ended September 30, 2022 compared to $6.9 million for the three months ended September 30, 2021 due to an increase in loan interest, partially offset by a decrease in PPP loan-related interest and fee income. Net interest income was $22.4 million for the nine months ended September 30, 2022 compared to $22.6 million for the nine months ended September 30, 2021. The decrease for the nine months ended September 30, 2022 compared to the same period in 2021 was a result of a decrease in PPP loan-related interest and fee income, partially offset by a decrease in interest expense primarily related to the recognition of remaining discounts upon the payoff of acquired Federal Home Loan Bank advances.
• The Company’s net interest margin increased to 4.12% from 3.78% for the three months ended September 30, 2022 and 2021. Net interest margin for the nine months ended September 30, 2022 increased slightly to 4.24% from 4.17% for the nine months ended September 30, 2021.
• Noninterest income was $593 thousand for the three months ended September 30, 2022 and $771 thousand for the three months ended September 30, 2021. For the nine months ended September 30, 2022, noninterest income was $1.8 million compared to $2.1 million for the nine months ended September 30, 2021. The decreases were a result of the Company recognizing gains on sale of other real estate and death benefits received from bank owned life insurance in previous periods.
• Non-interest expense was $5.5 million and $5.0 million for the three months ended September 30, 2022 and 2021. Non-interest expense was $16.5 million and $15.6 million for the nine months ended September 30, 2022 and 2021. The increases were due in part to the increases in salaries and employee benefits as a result of the Company’s strategic initiative to attract and retain talent.
Financial Condition
• Total assets decreased $11.7 million to $776.4 million at September 30, 2022 from $788.1 million at December 31, 2021.
• Total net loans increased $65.3 million to $641.1 million at September 30, 2022 from $575.8 million at December 31, 2021 due primarily to strategic lending staff hires made to diversify our loan portfolio.
• Deposits increased by $31.2 million to $646.0 million at September 30, 2022 compared to $614.8 million at December 31, 2021.
• Borrowings decreased by $39.0 million to $10.0 million at September 30, 2022 compared to $49.0 million at December 31, 2021 as we repaid Federal Home Loan Bank borrowings.
Asset Quality
• Non-performing loans remained unchanged at $7.0 million at September 30, 2022 and December 31, 2021.
• The allowance for loan losses as a percentage of non-performing loans was 132.8% at September 30, 2022, as compared to 122.1% at December 31, 2021.
• Allowance for loan losses was 1.43% of total loans at September 30, 2022, as compared to 1.46% of total loans at December 31, 2021.
• Net loan recoveries were $108,000 for the nine months ended September 30, 2022, as compared to $295,000 for the nine months ended September 30, 2021.
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.
Forward-Looking Statements
In addition to historical information, this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which describe the future plans, strategies and expectations of the Company. Forward-looking statements can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. Forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, you should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report. Factors which
could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in general economic conditions, interest rates and inflation; changes in asset quality; our ability to access cost-effective funding; fluctuations in real estate values; changes in laws or regulations; changes in technology; failures or breaches of our IT security systems; our ability to introduce new products and services and capitalize on growth opportunities; our ability to successfully integrate acquired operations or assets; changes in accounting policies and practices; our ability to retain key employees; the impact of the COVID-19 pandemic; and the effects of natural disasters and geopolitical events, including terrorism, conflict and acts of war. These risks and other uncertainties are further discussed in the reports that the Company files with the Securities and Exchange Commission.
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, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | ||||||||||||||
| Average<br>Outstanding<br>Balance | Interest | Average<br>Yield/Rate | Average<br>Outstanding<br>Balance | Interest | Average<br>Yield/Rate | ||||||||||
| (Dollars in thousands) | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans | $ | 639,115 | $ | 7,734 | 4.80 | % | $ | 568,442 | $ | 7,332 | 5.12 | % | |||
| Securities | 44,690 | 289 | 2.56 | % | 40,569 | 216 | 2.13 | % | |||||||
| Interest-earning deposits | 39,384 | 189 | 1.91 | % | 115,330 | 53 | 0.18 | % | |||||||
| Other investments | 1,163 | 12 | 4.19 | % | 2,476 | 21 | 3.37 | % | |||||||
| Total interest-earning assets | 724,352 | 8,224 | 4.50 | % | 726,817 | 7,622 | 4.19 | % | |||||||
| Non-interest-earning assets | 49,770 | 64,408 | |||||||||||||
| Total assets | $ | 774,122 | $ | 791,225 | |||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Interest-bearing checking accounts | $ | 98,473 | $ | 47 | 0.19 | % | $ | 83,519 | $ | 43 | 0.21 | % | |||
| Market rate checking accounts | 159,478 | 100 | 0.25 | % | 136,984 | 117 | 0.34 | % | |||||||
| Savings accounts | 83,484 | 187 | 0.89 | % | 93,717 | 100 | 0.43 | % | |||||||
| Certificates of deposit | 89,871 | 291 | 1.28 | % | 105,285 | 369 | 1.40 | % | |||||||
| Total interest-bearing deposits | 431,306 | 625 | 0.57 | % | 419,505 | 629 | 0.60 | % | |||||||
| FHLB advances | 13,696 | 73 | 2.12 | % | 49,039 | 132 | 1.07 | % | |||||||
| Total interest-bearing liabilities | 445,002 | 698 | 0.62 | % | 468,544 | 761 | 0.65 | % | |||||||
| Non-interest-bearing liabilities | 211,986 | 203,336 | |||||||||||||
| Total liabilities | 656,988 | 671,880 | |||||||||||||
| Total stockholders' equity | 117,134 | 119,345 | |||||||||||||
| Total liabilities and stockholders' equity | $ | 774,122 | $ | 791,225 | |||||||||||
| Net interest rate spread | 3.88 | % | 3.54 | % | |||||||||||
| Net interest income | $ | 7,526 | $ | 6,861 | |||||||||||
| Net interest-earning assets | $ | 279,350 | $ | 258,273 | |||||||||||
| Net interest margin | 4.12 | % | 3.78 | % | |||||||||||
| For the Nine Months Ended September 30, | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | ||||||||||||||
| Average<br>Outstanding<br>Balance | Interest | Average<br>Yield/Rate | Average<br>Outstanding<br>Balance | Interest | Average<br>Yield/Rate | ||||||||||
| (Dollars in thousands) | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans | $ | 616,141 | $ | 22,013 | 4.78 | % | $ | 596,024 | $ | 24,424 | 5.48 | % | |||
| Securities | 46,585 | 827 | 2.37 | % | 31,374 | 472 | 2.01 | % | |||||||
| Interest-earning deposits | 43,125 | 286 | 0.89 | % | 92,880 | 134 | 0.19 | % | |||||||
| Other investments | 1,117 | 30 | 3.57 | % | 2,273 | 57 | 3.32 | % | |||||||
| Total interest-earning assets | 706,968 | 23,156 | 4.38 | % | 722,551 | 25,087 | 4.63 | % | |||||||
| Non-interest-earning assets | 51,687 | 63,028 | |||||||||||||
| Total assets | $ | 758,655 | $ | 785,579 | |||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Interest-bearing checking accounts | $ | 97,463 | $ | 134 | 0.18 | % | $ | 88,154 | $ | 138 | 0.21 | % | |||
| Market rate checking accounts | 151,654 | 282 | 0.25 | % | 130,933 | 378 | 0.39 | % | |||||||
| Savings accounts | 84,042 | 356 | 0.57 | % | 93,823 | 310 | 0.44 | % | |||||||
| Certificates of deposit | 91,493 | 840 | 1.23 | % | 114,623 | 1,284 | 1.49 | % | |||||||
| Total interest-bearing deposits | 424,652 | 1,612 | 0.51 | % | 427,533 | 2,110 | 0.66 | % | |||||||
| FHLB advances | 12,304 | (875 | ) | (9.50 | )% | 41,471 | 350 | 1.13 | % | ||||||
| Other borrowings | 46 | 1 | 3.43 | % | 1,927 | 15 | 1.01 | % | |||||||
| Total interest-bearing liabilities | 437,002 | 738 | 0.23 | % | 470,931 | 2,475 | 0.69 | % | |||||||
| Non-interest-bearing liabilities | 203,164 | 199,971 | |||||||||||||
| Total liabilities | 640,166 | 670,902 | |||||||||||||
| Total stockholders' equity | 118,489 | 114,677 | |||||||||||||
| Total liabilities and stockholders' equity | $ | 758,655 | $ | 785,579 | |||||||||||
| Net interest rate spread | 4.15 | % | 3.94 | % | |||||||||||
| Net interest income | $ | 22,418 | $ | 22,612 | |||||||||||
| Net interest margin | 4.24 | % | 4.17 | % |
AFFINITY BANCSHARES, INC.
Consolidated Balance Sheets
| December 31, 2021 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Cash and due from bank | 6,887 | $ | 16,239 | ||
| Interest-earning deposits in other depository institutions | 33,619 | 95,537 | |||
| Cash and cash equivalents | 40,506 | 111,776 | |||
| Investment securities available-for-sale | 41,878 | 48,557 | |||
| Other investments | 1,025 | 2,476 | |||
| Loans, net | 641,062 | 575,825 | |||
| Other real estate owned | 3,538 | 3,538 | |||
| Premises and equipment, net | 4,069 | 3,783 | |||
| Bank owned life insurance | 15,637 | 15,377 | |||
| Intangible assets | 18,606 | 18,749 | |||
| Other assets | 10,069 | 8,007 | |||
| Total assets | 776,390 | $ | 788,088 | ||
| Liabilities and Stockholders' Equity | |||||
| Liabilities: | |||||
| Non-interest-bearing checking | 204,781 | $ | 193,940 | ||
| Interest-bearing checking | 93,235 | 91,387 | |||
| Market rate checking | 160,377 | 145,969 | |||
| Savings accounts | 88,840 | 86,745 | |||
| Certificates of deposit | 98,784 | 96,758 | |||
| Total deposits | 646,017 | 614,799 | |||
| Federal Home Loan Bank advances | 10,000 | 48,988 | |||
| Accrued interest payable and other liabilities | 5,152 | 3,333 | |||
| Total liabilities | 661,169 | 667,120 | |||
| Stockholders' equity: | |||||
| Preferred stock (10,000,000 shares authorized, no shares outstanding at September 30, 2022 and December 31, 2021) | — | — | |||
| Common stock (par value 0.01 per share, 40,000,000 shares authorized; 6,634,885 issued and outstanding at September 30, 2022 and 6,872,634 issued and outstanding at December 31, 2021) | 65 | 69 | |||
| Additional paid in capital | 63,289 | 68,038 | |||
| Unearned ESOP shares | (4,847 | ) | (5,004 | ) | |
| Retained earnings | 63,658 | 58,223 | |||
| Accumulated other comprehensive loss | (6,944 | ) | (358 | ) | |
| Total stockholders' equity | 115,221 | 120,968 | |||
| Total liabilities and stockholders' equity | 776,390 | $ | 788,088 |
All values are in US Dollars.
AFFINITY BANCSHARES, INC.
Consolidated Statements of Income
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | ||||||
| (In thousands) | |||||||||
| Interest income: | |||||||||
| Loans, including fees | $ | 7,734 | $ | 7,332 | $ | 22,013 | $ | 24,424 | |
| Investment securities | 301 | 237 | 857 | 529 | |||||
| Interest-earning deposits | 189 | 53 | 286 | 134 | |||||
| Total interest income | 8,224 | 7,622 | 23,156 | 25,087 | |||||
| Interest expense: | |||||||||
| Deposits | 625 | 629 | 1,612 | 2,110 | |||||
| Borrowings | 73 | 132 | (874 | ) | 365 | ||||
| Total interest expense | 698 | 761 | 738 | 2,475 | |||||
| Net interest income before provision for loan losses | 7,526 | 6,861 | 22,418 | 22,612 | |||||
| Provision for loan losses | 187 | 225 | 654 | 975 | |||||
| Net interest income after provision for loan losses | 7,339 | 6,636 | 21,764 | 21,637 | |||||
| Noninterest income: | |||||||||
| Service charges on deposit accounts | 420 | 416 | 1,205 | 1,126 | |||||
| Other | 173 | 355 | 631 | 980 | |||||
| Total noninterest income | 593 | 771 | 1,836 | 2,106 | |||||
| Noninterest expenses: | |||||||||
| Salaries and employee benefits | 3,187 | 2,777 | 9,219 | 7,797 | |||||
| Occupancy | 675 | 633 | 1,798 | 2,329 | |||||
| Advertising | 128 | 116 | 326 | 296 | |||||
| Data processing | 486 | 520 | 1,476 | 1,518 | |||||
| Writedown of premises and equipment | — | 14 | — | 888 | |||||
| FHLB prepayment penalties | — | — | 647 | — | |||||
| Other | 1,014 | 967 | 3,019 | 2,764 | |||||
| Total noninterest expenses | 5,490 | 5,027 | 16,485 | 15,592 | |||||
| Income before income taxes | 2,442 | 2,380 | 7,115 | 8,151 | |||||
| Income tax expense | 581 | 575 | 1,680 | 1,896 | |||||
| Net income | $ | 1,861 | $ | 1,805 | $ | 5,435 | $ | 6,255 | |
| Weighted average common shares outstanding | |||||||||
| Basic | |||||||||
| Diluted | |||||||||
| Basic earnings per share | $ | 0.28 | $ | 0.26 | $ | 0.81 | $ | 0.90 | |
| Diluted earnings per share | $ | 0.27 | $ | 0.26 | $ | 0.80 | $ | 0.89 |
Explanation of Certain Unaudited Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. Additionally, the Company believes this information is utilized by regulators and 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. Refer to the Non-GAAP Reconciliation table below for details on the earnings impact of these items.
| Non-GAAP Reconciliation | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tangible book value per common share reconciliation | |||||||||||||||
| Book Value per common share (GAAP) | $ | 17.37 | $ | 17.51 | $ | 17.58 | $ | 17.60 | $ | 17.42 | |||||
| Effect of goodwill and other intangibles | (2.80 | ) | (2.83 | ) | (2.83 | ) | (2.73 | ) | (2.73 | ) | |||||
| Tangible book value per common share | $ | 14.57 | $ | 14.68 | $ | 14.75 | $ | 14.87 | $ | 14.69 | |||||
| Tangible equity to tangible assets reconciliation | |||||||||||||||
| Equity to assets (GAAP) | 14.84 | % | 15.05 | % | 15.31 | % | 15.35 | % | 15.15 | % | |||||
| Effect of goodwill and other intangibles | (2.09 | )% | (2.12 | )% | (2.14 | )% | (2.06 | )% | (2.07 | )% | |||||
| Tangible equity to tangible assets | 12.75 | % | 12.93 | % | 13.17 | % | 13.29 | % | 13.08 | % |
AFBI Share Information Stock Price
AFBI Share Information Stock Price to Tangible Book Value * Tangible book value per share equals book value per share minus intangible assets (goodwill and core deposit intangible).
AFBI Share Information Book Value Per Share
AFBI Share Information Tangible Book Value Per Share * Tangible book value per share equals book value per share minus intangible assets (goodwill and core deposit intangible).
AFBI Selected Data ($ in thousands) Earnings * Non-GAAP measure – See Non-GAAP Reconciliation
AFBI Selected Data Gross Loans ($ in thousands) * Non-GAAP measure – See Non-GAAP Reconciliation
AFBI Selected Data Loan Composition
AFBI Selected Data Deposit Composition
AFBI Selected Data Non-GAAP Reconciliation 30-Sep-22 30-Jun-22 31-Mar-22 31-Dec-21 30-Sep-21 (In thousands) (In thousands) Non-GAAP Reconciliation Total Loans $650,382 $623,359 $601,693 $584,384 $571,170 Plus: Fair Value Marks 1,089 1,157 1,239 1,350 1,422 Deferred Loan fees 800 873 958 958 1,077 Less: Payroll Protection Program Loans 27 916 7,146 18,124 32,204 Indirect Auto Dealer Reserve 2,694 2,386 2,058 1,846 1,724 Other Loan Adjustments 190 82 69 224 102 Gross Loans $649,360 $622,005 $594,617 $566,498 $539,639 Non-GAAP Reconciliation Net Income $1,861 $1,783 $1,791 $1,318 $1,805 Less: PPP Interest Income 1 9 30 59 121 PPP Fee Income 6 62 174 271 741 Plus: Tax Effect 2 17 47 84 208 Non-GAAP Net Income $1,856 $1,729 $1,634 $1,072 $1,151 Explanation of Certain Unaudited Non-GAAP Financial Measures Reported amounts are presented in accordance with GAAP. Additionally, the Company believes this information is utilized by regulators and 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.