2021 Annual Report

The following table presents information regarding the average balances and interest income recognized on impaired loans by loan segment for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31, Year Ended December 31, Year Ended December 31, 2021 2020 2019 Average Interest Average Interest Average Interest Investment Recognized Investment Recognized Investment Recognized

(dollars in thousands)

Loans With No Related Allowance for Loan Losses: Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,008 $ 268 $

145 $

10 $

188 $

13 —

Construction and Land Development . . . . Real Estate Mortgage: HELOC and 1-4 Family Junior Mortgage. . 1st REM - Rentals. . . . . . . . . . . . . . . . . . . . .

141

—

165

—

189

933 468

47 24

824 624 891

42 29 15

326 789 240

9

41 12 — 75

CRE Owner Occupied . . . . . . . . . . . . . . . . . 2,471 CRE Nonowner Occupied . . . . . . . . . . . . . . 4,247 Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,268 Loans With An Allowance for Loan Losses: Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . 13,761 Consumer and Other . . . . . . . . . . . . . . . . . . — Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,761

106

215 12,334 660 14,983

690

—

786 1,732

755

122

2 1 3

109

1 2 3

—

13

44

755

135

153

Grand Totals . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,029 $ 1,415 $ 15,118 $

789 $ 1,885 $

78

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The process of analyzing loans for changes in risk ratings is ongoing through routine monitoring of the portfolio and annual internal credit reviews for credits meeting certain thresholds. The following tables present the risk category of loans by loan segment as of December 31, 2021 and 2020, based on the most recent analysis performed by management: Total Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 336,939 $ 8,718 $ 14,512 $ 360,169 Paycheck Protection Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,162 — — 26,162 Construction and Land Development . . . . . . . . . . . . . . . . . . . . . . 281,344 — 130 281,474 Real Estate Mortgage: HELOC and 1-4 Family Junior Mortgage. . . . . . . . . . . . . . . . . . . . 30,327 — 933 31,260 1st REM - 1-4 Family. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,024 689 — 48,713 LOCs and 2nd REM - Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,625 16 — 21,641 1st REM - Rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,246 — 457 203,703 Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910,243 — — 910,243 CRE Owner Occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,675 — 2,421 111,096 CRE Nonowner Occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774,474 39,907 4,188 818,569 Consumer and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,442 — — 6,442 Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,747,501 $ 49,330 $ 22,641 $ 2,819,472 December 31, 2021 (dollars in thousands) Pass Watch Substandard

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