2021 Annual Report

Note Payable. In 2016, the Company entered into a note payable with an unaffiliated financial institution that was secured by 100% of the issued and outstanding stock of the Bank. Interest accrued at a variable rate equal to 1- month LIBOR plus 2.40%. The unpaid principal balance as of December 31, 2020 was $11.0 million. The note payable matured in February 2021 and was paid in full, leaving no outstanding balances as of December 31, 2021. Line of Credit. In 2021, the Company entered into a Loan and Security Agreement and related revolving note with an unaffiliated financial institution that was secured by 100% of the issued and outstanding stock of the Bank. The note contains customary representations, warranties, and covenants, including certain financial covenants and capital ratio requirements. As of December 31, 2021, the Company believes it was in compliance with all covenants. The following table presents the revolving line of credit at December 31, 2021:

Total Debt Outstanding

Interest Rate at December 31, 2021

Name

Maturity Date

Coupon Structure

Revolving Credit Facility (1) . . . . . . . . .

February 28, 2023 $

—

3.85 % Variable with Floor (2)

(1) The borrowing capacity on the revolving credit facility is $25.0 million. (2) The variable interest rate is equal to the greater of the Wall Street Journal Prime Rate in effect or a floor rate of 3.85%.

Note 11: Subordinated Debentures The following presents a summary of the Company’s subordinated debentures as of December 31, 2021:

Total Debt Outstanding

Total Debt Outstanding

Date

First

Maturity

Interest

Name

Established Redemption Date

Date

December 31, 2021 December 31, 2020 Rate Coupon Structure

(dollars in thousands) 2027 Notes . . . . . . . . . . July 12, 2017 July 15, 2022 July 15, 2027 $ 2031 Notes . . . . . . . . . . July 8, 2021 July 15, 2026 July 15, 2031 Subordinated Debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt Issuance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subordinated Debentures, Net of Issuance Costs . . . . . . . . . . . . . . . . . . . . $ 2030 Notes . . . . . . . . . . June 19, 2020 July 1, 2025 July 1, 2030

13,750 $

25,000 50,000 75,000 (1,261) 73,739 -

5.88 % Fixed-to-Floating (1) 5.25 % Fixed-to-Floating (2) 3.25 % Fixed-to-Floating (3)

50,000 30,000 93,750 (1,511)

92,239 $

(1) Migrates to three month LIBOR + 3.88% beginning July 15, 2022 until either the early redemption date or the maturity date. (2) Migrates to three month term SOFR + 5.13% beginning July 1, 2025 until either the early redemption date or the maturity date. (3) Migrates to three month term SOFR + 2.52% beginning July 15, 2026 until either the early redemption date or the maturity date. On July 8, 2021, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers pursuant to which the Company sold and issued $30.0 million in aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2031 Notes”). The 2031 Notes were issued by the Company to purchasers at a price equal to 100% of their face amount. Issuance costs were $665,000 and have been netted against subordinated debt on the consolidated balance sheets. These costs are being amortized over five years, which represents the period from issuance to the first optional redemption date of July 15, 2026. Total amortization expense for the year ended December 31, 2021 was $41,000, with $624,000 remaining to be amortized as of December 31, 2021. The 2031 Notes mature on July 15, 2031, with a fixed rate of 3.25% payable semi-annually for five years to, but excluding July 15, 2026. Thereafter, the interest rate converts to a variable rate, reset quarterly, equal to the three- month term Secured Overnight Financing Rate, or SOFR, plus 252 basis points quarterly in arrears until either the early redemption date or the maturity date. The 2031 Notes are redeemable by the Company, in whole or in part, on or after July 15, 2026, and at any time upon the occurrence of certain events. Any redemption by the Company would be at a redemption price equal to 100% of the outstanding amount of the 2031 Notes being redeemed, including any accrued and unpaid interest thereon.

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