2021 Annual Report

Note 5: Loans The following table presents the components of the loan portfolio at December 31, 2021 and 2020:

December 31, December 31,

(dollars in thousands) 2020 Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 360,169 $ 304,220 Paycheck Protection Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,162 138,454 Construction and Land Development . . . . . . . . . . . . . . . . . . . . . . . . 281,474 170,217 Real Estate Mortgage: 1-4 Family Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,317 294,479 Multifamily. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910,243 626,465 CRE Owner Occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,096 75,604 CRE Nonowner Occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 818,569 709,300 Total Real Estate Mortgage Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,145,225 1,705,848 Consumer and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,442 7,689 Total Loans, Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,819,472 2,326,428 Allowance for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,020) (34,841) Net Deferred Loan Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,535) (9,151) Total Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,769,917 $ 2,282,436 The following table presents the activity in the allowance for loan losses, by segment, for the years ended December 31, 2021, 2020 and 2019: 2021

Paycheck Construction

CRE

CRE

Protection

and Land 1-4 Family

Owner Nonowner Consumer

(dollars in thousands)

Commercial

Program Development Mortgage Multifamily Occupied — $ 2,451 $ 2,597 $ 4,644 $ 808 $ 5,872

Occupied and Other Unallocated

Total

Balance at January 1, 2019 . . . $ 2,898 $

65 $ 696 $ 20,031

Provision for Loan Losses . . .

312

— — — 70 — —

(250)

269 1,180

(16) 1,100

47

58 2,700

Loans Charged-off . . . . . . . . . (160)

—

(195)

— —

— —

— —

(33)

— —

(388)

1

168

6

183

Recoveries of Loans . . . . . . . .

8

Balance at December 31, 2019 . $ 3,058 $ Provision for Loan Losses . . . 2,984 Loans Charged-off . . . . . . . . . (346)

— $ 2,202 $ 2,839 $ 5,824 $ 792 $ 6,972

85 $ 754 $ 22,526

289 1,223 3,693

360 4,019

134

(22) 12,750

— —

(144)

— —

— 10

— —

(27)

— —

(517)

Recoveries of Loans . . . . . . . .

7

54

11

82

Balance at December 31, 2020 . $ 5,703 $

70 $ 2,491 $ 3,972 $ 9,517 $ 1,162 $ 10,991 $ 203 $ 732 $ 34,841

Provision for Loan Losses . . . Loans Charged-off . . . . . . . . . Recoveries of Loans . . . . . . . .

545

(57) 1,266

(236) 3,093

301

344

(24) (41)

(82) 5,150

— —

(5)

— —

— 32

— —

— —

(74)

(28)

— —

26

9

103

36

Balance at December 31, 2021 . $ 6,256 $

13 $ 3,757 $ 3,757 $ 12,610 $ 1,495 $ 11,335 $ 147 $ 650 $ 40,020

The following tables present the balance in the allowance for loan losses and the recorded investment in loans, by segment, based on impairment method as of December 31, 2021 and 2020:

Paycheck Construction

CRE

CRE

Protection

and Land 1-4 Family

Owner Nonowner Consumer

(dollars in thousands)

Commercial Program Development Mortgage Multifamily Occupied Occupied and Other Unallocated Total

Allowance for Loan Losses at December 31, 2021 Individually Evaluated for Impairment. . . . $ 607 $ — $ Collectively Evaluated for Impairment. . . . 5,649 — $ — $ — $ — $ — $ — $ 13 3,757 3,757 12,610 1,495 11,335 147 650 39,413 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,256 $ 13 $ 3,757 $ 3,757 $ 12,610 $ 1,495 $ 11,335 $ 147 $ 650 $ 40,020 — $ 607

Allowance for Loan Losses at December 31, 2020 Individually Evaluated for Impairment. . . . $ Collectively Evaluated for Impairment. . . . 5,666

37 $ — $ — $ — $ — $ — $ — $ 13 $ 70 2,491 3,972 9,517 1,162 10,991 190 732 34,791 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,703 $ 70 $ 2,491 $ 3,972 $ 9,517 $ 1,162 $ 10,991 $ 203 $ 732 $ 34,841 — $ 50

103