2021 Annual Report

In July of 2021, the Company repurchased $11.3 million of the 2027 Notes. The repurchase of the 2027 Notes was recorded as a loss on the extinguishment of subordinated debt, included in noninterest expense, in the amount of $582,000, consisting of $532,000 in prepayment penalties and $50,000 in unamortized issuance costs. Note 12: Related-Party Transactions In the ordinary course of business, the Company has granted loans to executive officers, directors, principal shareholders, and their affiliates (related parties). The following table presents the activity associated with loans made between related parties for the years ended December 31, 2021 and 2020: (dollars in thousands) 2020 Beginning Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,130 $ 37,483 New Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,407 8,076 Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,573) (11,429) Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,964 $ 34,130 Deposits from related parties held by the Company at December 31, 2021 and 2020 were $37.7 million and $7.9 million, respectively. The Company has a related party lease which is disclosed in Note 6. Note 13: Income Taxes The following table presents the allocation of federal and state income taxes between current and deferred portions as of December 31, 2021, 2020 and 2019: 2019 Current Tax Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,408 $11,062 $ 7,670 Deferred Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,522) (2,590) (747) Total Income Tax Provision . . . . . . . . . . . . . . . . . . . . . . . . . . $15,886 $ 8,472 $ 6,923 The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows as of December 31, 2021, 2020 and 2019: Amount Percent Amount of Statutory Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,930 21.0 %$7,489 21.0 % $ 8,048 21.0 % State Income Taxes (Net of Federal Income Tax Benefit) . . . . . . 4,647 7.6 3,014 8.5 2,711 7.1 Interest on Investment Securities and Loans Exempt From Federal Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (657) (1.1) (702) (2.0) (734) (1.9) Tax Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (540) (0.9) (770) (2.1) (2,781) (7.3) Other Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (494) (0.8) (559) (1.6) (321) (0.8) Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,886 25.8 %$8,472 23.8 % $ 6,923 18.1 % The Company’s effective tax rate may fluctuate as it is impacted by the level and timing of the Company’s utilization of historic tax credits, low-income housing tax credits, the level of tax-exempt investments and loans, and the overall level of pre-tax income. 2021 (dollars in thousands) 2021 2020 2021 2020 2019 (dollars in thousands) Amount Percent Amount Percent

114