2021 Annual Report

(1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. (2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. (3) Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period. Interest Rates and Operating Interest Differential Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following table presents the changes in the volume and rate of interest bearing assets and liabilities for the year ended December 31, 2021, compared to the year ended December 31, 2020, and for the year ended December 31, 2020, compared to the year ended December 31, 2019. Interest Earning Assets: Cash Investments . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78 $ (49) $ 29 $ 72 $ (657) $ (585) Investment Securities: Taxable Investment Securities . . . . . . . . . . . . . . . . 1,833 (530) 1,303 2,065 (707) 1,358 Tax Exempt Investment Securities . . . . . . . . . . . . (528) (37) (565) (583) 63 (520) Total Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,305 (567) 738 1,482 (644) 838 Loans: Paycheck Protection Program Loans. . . . . . . . . . . (1,192) 3,490 2,298 4,143 — 4,143 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,395 (9,277) 11,118 12,293 (5,676) 6,617 Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,203 (5,787) 13,416 16,436 (5,676) 10,760 Federal Home Loan Bank Stock . . . . . . . . . . . . . . (153) (32) (185) 47 (1) 46 Total Interest Earning Assets. . . . . . . . . . . . . . . . $ 20,433 $ (6,435) $ 13,998 $ 18,037 $ (6,978) $ 11,059 Interest Bearing Liabilities: Interest Bearing Transaction Deposits. . . . . . . . . . $ 680 $ (254) $ 426 $ 395 $ (403) $ (8) Savings and Money Market Deposits . . . . . . . . . . 1,206 (2,818) (1,612) 780 (3,186) (2,406) Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (640) (3,067) (3,707) 523 (1,096) (573) Brokered Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 572 (1,650) (1,078) 1,261 (2,457) (1,196) Total Interest Bearing Deposits . . . . . . . . . . . . . . 1,818 (7,789) (5,971) 2,959 (7,142) (4,183) Federal Funds Purchased . . . . . . . . . . . . . . . . . . . . (11) (94) (105) (3) (72) (75) Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (369) (9) (378) (73) 11 (62) FHLB Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,486) (1,073) (2,559) 332 (349) (17) Subordinated Debentures . . . . . . . . . . . . . . . . . . . . 1,783 (262) 1,521 1,603 (50) 1,553 Total Interest Bearing Liabilities. . . . . . . . . . . . . 1,735 (9,227) (7,492) 4,818 (7,602) (2,784) Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,698 $ 2,792 $ 21,490 $ 13,219 $ 624 $ 13,843 Year Ended December 31, 2021 Year Ended December 31, 2020 Compared with Compared with Year Ended December 31, 2020 Change Due To: Interest Year Ended December 31, 2019 Change Due To: Interest (dollars in thousands) Volume Rate Variance Volume Rate Variance

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