EX-99.1 2 gnty-ex99_1.htm EX-99.1

Exhibit 99.1

Press Release

For Immediate Release

Guaranty Bancshares, Inc. Reports

Fourth Quarter and Year-End 2021 Financial Results

Addison, Texas – January 18, 2022 / Business Wire / – Guaranty Bancshares, Inc. (NASDAQ: GNTY), the parent company of Guaranty Bank & Trust, N.A. (the "Bank"), today reported financial results for the fiscal quarter and year ended December 31, 2021. The Company's net income available to common shareholders was $9.2 million, or $0.76 per basic share, for the quarter ended December 31, 2021, compared to $9.3 million, or $0.77 per basic share, for the quarter ended September 30, 2021 and $9.9 million, or $0.82 per basic share, for the quarter ended December 31, 2020. Return on average assets and average equity for the fourth quarter of 2021 were 1.20% and 12.06%, respectively, compared to 1.24% and 12.44%, respectively, for the third quarter of 2021 and 1.48% and 14.53%, respectively, for the fourth quarter of 2020. The decrease in earnings during the fourth quarter of 2021, compared to the third quarter of 2021, was primarily due to a reverse provision for credit losses of $700,000 recorded in the third quarter of 2021, while no provision reversal was recorded in the fourth quarter of 2021, as well as a decline in non-interest income during the fourth quarter of $411,000, which were offset by a lower tax provision of $256,000. Our net core earnings†, excluding provisions for credit losses, income taxes and PPP net income, as well as our core net interest margin, adjusted to exclude the effects of PPP loans, are described further in tables below.

"We had a very nice conclusion to 2021 in the fourth quarter and are extremely pleased not only with our record breaking $39.8 million in net earnings during 2021, but also in the resilience and strength of our employees and communities as they continue to manage the challenges from this pandemic. Our loan growth during the year rebounded as well. Excluding PPP and warehouse loans, the loan portfolio increased 10.8% in 2021. The Texas economy is vibrant and our pipeline continues to be strong with increased demand across most loan types and regions. Many of our small business customers who participated in the PPP have received loan forgiveness and only $49.3 million of the original $310.4 million loaned under the program remains on our books. Non-performing assets continue to remain at very low levels. Although we, like our peers, experienced declines in net interest margin during 2021, primarily resulting from record amounts of liquidity and the low interest rate environment, we've been able to minimize the declines compared to others through proactive lending practices such as loan floors and through aggressive cost of funds reductions. As evidenced by our financial results during the quarter and year, our Company has a strong earnings stream that we expect will hold and improve as rates start to normalize," commented Ty Abston, the Company's Chairman and Chief Executive Officer.

QUARTERLY AND ANNUAL HIGHLIGHTS


Solid Net Earnings and Core Earnings. Net earnings have remained solid for the past four quarters. Net core earnings†, which exclude provisions for credit losses, income tax and net PPP income, have also remained strong over the last four quarters, demonstrating our consistent core earnings stream.
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Net earnings for the year ended December 31, 2021 were $39.8 million, up from $27.4 million for the year ended December 31, 2020. Net core earnings† were $39.0 million for the year ended December 31, 2021, down only slightly from $40.3 million for 2020.
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Net core earnings† were $10.1 million for the fourth quarter, compared to $9.7 million for the third quarter of 2021, and $9.6 million during the fourth quarter of 2020.

Producing Loan Pipeline. During 2020 and early 2021, we added new loan producers throughout our footprint and continued to experience strong loan demand within our loan pipeline. Excluding PPP and warehouse loans, our loans decreased $10.0 million, or 0.6%, during the fourth quarter but have grown $176.2 million, or 10.8%, since December 31, 2020. Our loan growth is a result of internally generated sources and is not from loan purchases from other originators.

Strong Credit Quality. Non-performing assets as a percentage of total assets were 0.09% at December 31, 2021, compared to 0.11% at September 30, 2021 and 0.48% at December 31, 2020. Net charge-offs to average loans (annualized) were 0.04% for the quarter ended December 31, 2021, compared to 0.05% for the quarter ended September 30, 2021, and 0.03% for the quarter ended December 31, 2020. The decrease in non-performing assets during the fourth quarter of 2021 compared to the same period of 2020 resulted primarily from the resolution of three problem loans, made to two borrowers, with outstanding combined book balances of $8.7 million at December 31, 2020, that were acquired during the Westbound acquisition and which were fully reserved prior to the onset of COVID-19.

Paycheck Protection Program. As of December 31, 2021, there are outstanding PPP2 balances of $49.3 million to 348 borrowers, down from the $100.8 million to 1,349 borrowers originally extended loans under the PPP2 program during 2021. Those PPP2 loans have resulted in recognition of $4.5 million of net origination fees for the year ended December 31, 2021. The Bank also recognized $2.2 million in PPP1 deferred origination fees for the year ended December 31, 2021 through both amortization and forgiveness of the related PPP1 loans. As of December 31, 2021, there are outstanding PPP1 balances of $1.3 million to 45 borrowers, down from the $209.6 million to 1,944 borrowers that was originated under the PPP1 program during

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

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2020. Net deferred origination fees remaining as of December 31, 2021 are $3,000 and $1.2 million for PPP1 and PPP2, respectively.

RESULTS OF OPERATIONS

Participation in the PPP1 and PPP2 program, as well as large provisions for credit losses in the second quarter of 2020 resulting from the expected effects of COVID-19, have created temporary extraordinary results in the calculation of net earnings and related performance ratios. With some continued uncertainty as a result of COVID-19 and other economic factors, the following table illustrates net earnings and net core earnings results, which are pre-tax, pre-provision and pre-extraordinary PPP1/PPP2 income, as well as performance ratios for the prior five quarters:

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands, except per share data) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
Net earnings |  | $ | 9,159 |  |  | $ | 9,253 |  |  | $ | 10,432 |  |  | $ | 10,962 |  |  | $ | 9,915 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | — |  |  |  | (700 | ) |  |  | (1,000 | ) |  |  | — |  |  |  | — |
Income tax provision |  |  | 1,923 |  |  |  | 2,179 |  |  |  | 2,312 |  |  |  | 2,336 |  |  |  | 2,290 |
PPP loan interest and fees |  |  | (958 | ) |  |  | (1,005 | ) |  |  | (1,954 | ) |  |  | (3,905 | ) |  |  | (2,654 | )
Net core earnings† |  | $ | 10,124 |  |  | $ | 9,727 |  |  | $ | 9,790 |  |  | $ | 9,393 |  |  | $ | 9,551 |
Total average assets |  | $ | 3,021,079 |  |  | $ | 2,953,181 |  |  | $ | 2,938,944 |  |  | $ | 2,775,567 |  |  | $ | 2,659,725 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loans average balance |  |  | (61,062 | ) |  |  | (107,931 | ) |  |  | (155,417 | ) |  |  | (137,251 | ) |  |  | (179,240 | )
Total average assets, adjusted† |  | $ | 2,960,017 |  |  | $ | 2,845,250 |  |  | $ | 2,783,527 |  |  | $ | 2,638,316 |  |  | $ | 2,480,485 |
Total average equity |  | $ | 301,398 |  |  | $ | 295,076 |  |  | $ | 285,803 |  |  | $ | 277,612 |  |  | $ | 271,397 |
PERFORMANCE RATIOS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings to average assets (annualized) |  |  | 1.20 | % |  |  | 1.24 | % |  |  | 1.42 | % |  |  | 1.60 | % |  |  | 1.48 | %
Net earnings to average equity (annualized) |  |  | 12.06 |  |  |  | 12.44 |  |  |  | 14.64 |  |  |  | 16.01 |  |  |  | 14.53 |
Net core earnings to average assets, as adjusted (annualized)† |  |  | 1.36 |  |  |  | 1.36 |  |  |  | 1.41 |  |  |  | 1.44 |  |  |  | 1.53 |
Net core earnings to average equity (annualized)† |  |  | 13.33 |  |  |  | 13.08 |  |  |  | 13.74 |  |  |  | 13.72 |  |  |  | 14.00 |
PER COMMON SHARE DATA* |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted-average common shares outstanding, basic |  |  | 12,097,100 |  |  |  | 12,067,769 |  |  |  | 12,056,550 |  |  |  | 12,038,638 |  |  |  | 12,063,154 |
Earnings per common share, basic |  | $ | 0.76 |  |  | $ | 0.77 |  |  | $ | 0.87 |  |  | $ | 0.91 |  |  | $ | 0.82 |
Net core earnings per common share, basic† |  |  | 0.84 |  |  |  | 0.81 |  |  |  | 0.81 |  |  |  | 0.78 |  |  |  | 0.79 |
* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend. |
† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release. |

Net interest income in the fourth quarters of 2021 and 2020 was consistent at $24.0 million in both quarters, with only a slight increase of $68,000, or 0.3%. The increase was primarily due to a larger decrease in interest expense of $803,000, or 34.9%, compared to a decrease in interest income of $735,000, or 2.8%. The decrease in interest expense is primarily attributable to lower deposit-related interest expense of $671,000, or 35.7%, compared to the same quarter of the prior year.

Net interest margin, on a fully tax equivalent basis ("FTE"), for the fourth quarter of 2021 and 2020 was 3.39% and 3.85%, respectively. Net interest margin FTE decreased 47 basis points due mainly to a decrease in loan yield from 4.93% in the fourth quarter of 2020 to 4.71% in the fourth quarter of 2021, a change of 22 basis points, despite decreases in the cost of interest-bearing deposits from 0.51% to 0.30% during the same period, a change of 21 basis points, and the average cost of funds decreasing from 0.33% in the fourth quarter of 2020 to 0.18% for the same quarter of 2021. The decrease in net interest margin FTE was also due to a 22 basis point decrease in the yield on total securities, from 2.22% in the fourth quarter of 2020 to 2.00% in the same quarter of 2021. Additionally, there was a decrease in the average yield on interest-bearing deposits in other banks, which consists of fed funds sold, from 0.14% in the fourth quarter of 2020 to 0.10% in the current quarter, while the average balance increased 141.5% from the prior year average balance.

The decrease in loan yield was primarily due to a 6.0% increase in average loan balance and only a 2.5% corresponding increase in loan income, net of PPP effects. Loan yield, excluding the effect of PPP loans, was 4.66% in the fourth quarter of 2021, compared to 4.83% in the same quarter of the prior year, a decrease of 17 basis points. The decrease in average deposit rate was primarily due to continued reductions in interest rates for interest-bearing deposits as market conditions have allowed.

Net interest income in the third quarter of 2021 was $23.6 million, resulting in an increase of $450,000, or 1.9%, from the prior quarter through the current quarter. The increase resulted primarily from an increase in interest income of $283,000, or 1.1%, and a decrease in interest expense of $167,000, or 10.0% during the quarter.

Net interest margin, FTE, decreased slightly from 3.40% for the third quarter of 2021 to 3.39% for the fourth quarter of 2021. Loan yield increased from 4.67% in the third quarter of 2021 to 4.71% in the fourth quarter of 2021, a change of four basis points. Loan yield, excluding the effect of PPP loans, decreased seven basis points from 4.73% in the third quarter of 2021 to 4.66% in the most recent

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quarter. The cost of interest-bearing deposits decreased from 0.33% to 0.30% during the same period, a change of three basis points. Similarly, the average cost of funds decreased three basis points, from 0.21% in the prior quarter.

The Bank’s continued participation in the PPP program has created temporary extraordinary results in the calculation of net interest margin. To illustrate the impact of the PPP program on net interest margin, the table below excludes PPP1 and PPP2 loans and their associated fees and costs for the three months and year ended December 31, 2021:

|  | For the Three Months Ended December 31, 2021 |  |  | For the Year Ended December 31, 2021 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
Total loans |  | $ | 1,925,046 |  |  | $ | 22,833 |  |  |  | 4.71 | % |  | $ | 1,911,540 |  |  | $ | 92,497 |  |  |  | 4.84 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP1 loans average balance and net fees(1) |  |  | (1,846 | ) |  |  | (50 | ) |  |  | 10.75 |  |  |  | (43,906 | ) |  |  | (2,614 | ) |  |  | 5.95 |
PPP2 loans average balance and net fees(2) |  |  | (59,216 | ) |  |  | (908 | ) |  |  | 6.08 |  |  |  | (71,496 | ) |  |  | (4,609 | ) |  |  | 6.45 |
Total PPP loans(3) |  | $ | (61,062 | ) |  | $ | (958 | ) |  |  | 6.22 | % |  | $ | (115,402 | ) |  | $ | (7,223 | ) |  |  | 6.26 | %
Total loans, excluding PPP† |  | $ | 1,863,984 |  |  | $ | 21,875 |  |  |  | 4.66 | % |  | $ | 1,796,138 |  |  | $ | 85,274 |  |  |  | 4.75 | %
Total interest-earning assets |  |  | 2,844,147 |  |  |  | 25,518 |  |  |  | 3.56 |  |  |  | 2,751,370 |  |  |  | 102,550 |  |  |  | 3.73 |
Total interest-earning assets, net of PPP effects† |  | $ | 2,783,085 |  |  | $ | 24,560 |  |  |  | 3.50 | % |  | $ | 2,635,968 |  |  | $ | 95,327 |  |  |  | 3.62 | %
Net interest income |  |  |  |  | $ | 24,020 |  |  |  |  |  |  |  |  | $ | 95,558 |  |  |  |
Net interest margin(4) |  |  |  |  |  |  |  |  | 3.35 | % |  |  |  |  |  |  |  |  | 3.47 | %
Net interest margin, FTE(5) |  |  |  |  |  |  |  |  | 3.39 |  |  |  |  |  |  |  |  |  | 3.51 |
Net interest income, net of PPP effects† |  |  |  |  |  | 23,062 |  |  |  |  |  |  |  |  |  | 88,335 |  |  |  |
Net interest margin, net of PPP effects†(6) |  |  |  |  |  |  |  |  | 3.29 |  |  |  |  |  |  |  |  |  | 3.35 |
Net interest margin, FTE, net of PPP effects†(7) |  |  |  |  |  |  |  |  | 3.33 |  |  |  |  |  |  |  |  |  | 3.39 |
Efficiency ratio(8) |  |  |  |  |  |  |  |  | 63.13 |  |  |  |  |  |  |  |  |  | 61.00 |
Efficiency ratio, net of PPP effects†(9) |  |  |  |  |  |  |  |  | 65.21 |  |  |  |  |  |  |  |  |  | 65.43 |
† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release. |
(1) Interest earned on PPP1 loans consists of interest income of $6,000 and $430,000, and net origination fees recognized in earnings of $44,000 and $2.2 million for the three months and year ended December 31, 2021. |
(2) Interest earned on PPP2 loans consists of interest income of $148,000 and $714,000, and net origination fees recognized in earnings of $760,000 and $3.9 million for the three months and year ended December 31, 2021. |
(3) Interest earned consists of interest income of $154,000 and $1.1 million, and net origination fees recognized in earnings of $804,000 and $6.1 million for the three months and year ended December 31, 2021. |
(4) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized. Taxes are not a part of this calculation. |
(5) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%. |
(6) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation. |
(7) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%. |
(8) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation. |
(9) The efficiency ratio was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation. |

During the year ended December 31, 2020, a total allowance for credit losses provision of $13.2 million was recorded primarily to account for the estimated impact of COVID-19 on credit quality and resulted largely from changes to individual loan risk ratings, as well as COVID-specific qualitative factors. During 2021, we recorded no provision in the first and the fourth quarters, a $1.0 million reverse provision in the second quarter and a $700,000 reverse provision in the third quarter of 2021, for a total reverse provision during the year of $1.7 million. While the provision reversals captured improvements that have occurred to macro-economic factors evaluated at the onset of the pandemic, as well as risk rating upgrades for certain loans, management remains cautious about the recent surge in COVID-19 cases and the conclusion of various government stimulus programs. As such, management remains conservative in releasing COVID related provisions prior to gaining a good understanding of the residual effects of the pandemic and government relief efforts. Management understands that the economic effects of the pandemic may continue through at least the first half of 2022.

Noninterest income decreased $388,000, or 6.0%, in the fourth quarter of 2021 to $6.0 million, compared to $6.4 million for the fourth quarter of 2020. The decrease from the same quarter in 2020 was primarily due to decreases in the net gain on sale of loans of $896,000, or 44.3%, in warehouse lending fees of $98,000, or 37.4%, and in mortgage related fees of $64,000, or 32.5%, compared to the same quarter of the prior year. These decreases were partially offset by increases in merchant and debit card fees of $273,000, or 19.6%, and in service charges of $217,000, or 25.0%.

Noninterest expense increased $803,000, or 4.4%, in the fourth quarter of 2021 to $19.0 million, compared to the fourth quarter of 2020. The increase in noninterest expense in the fourth quarter of 2021 was driven primarily by a $989,000, or 9.7%, increase in employee

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compensation and benefits due to increased salaries and higher employee health insurance claims. Additionally, there was a $114,000, or 32.0%, increase in advertising and promotions expense and a $98,000, or 18.0%, increase in ATM and debit card expense compared to the fourth quarter of 2020.

Noninterest income in the fourth quarter of 2021 decreased by $411,000, or 6.4%, from $6.4 million in the third quarter of 2021 due primarily to a decrease in gains on sales of loans of $632,000, or 35.9%, and was partially offset by an increase in service charges of $82,000, or 8.2%. Additionally, there was a $49,000 increase in the gain on sale of assets and other real estate, an increase of $32,000 in rental income and a $16,000 positive fair value adjustment to our SBA servicing asset during the fourth quarter of 2021 compared to the prior quarter.

Noninterest expense decreased $311,000, or 1.6%, in the fourth quarter of 2021, from $19.3 million in the quarter ended September 30, 2021. The decrease was primarily due to a one-time expense of $434,000, included in other non-interest expense in the third quarter of 2021, to terminate two swap agreements associated with our trust preferred securities. This was partially offset by an $86,000, or 40.2%, increase in FDIC insurance assessment fees in the fourth quarter of 2021.

The company’s efficiency ratio in the fourth quarter of 2021 was 63.13%, compared to 64.25% in the prior quarter and 59.82% in the third quarter of 2020. Adjusted to remove the effects of PPP-related transactions, the company’s efficiency ratio† for the fourth quarter of 2021 was 65.21%, was 66.47% for the third quarter of 2021 and was 65.55% for the fourth quarter of 2020.

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

FINANCIAL CONDITION

Consolidated assets for the company totaled $3.09 billion at December 31, 2021, compared to $2.97 billion at September 30, 2021 and $2.74 billion at December 31, 2020.

Gross loans decreased 3.2%, or $62.8 million, to $1.91 billion at December 31, 2021, compared to loans of $1.97 billion at September 30, 2021. The decrease in gross loans from the third to the fourth quarter of 2021 is primarily due to lower net loan originations and advances, as well as continued forgiveness of PPP loans, which decreased $24.7 million during the quarter. Excluding PPP loans and warehouse loans, gross loans decreased $10.0 million, or 0.6%, from the prior quarter.

Gross loans increased 2.2%, or $41.2 million, from $1.87 billion at December 31, 2020. The increase in gross loans during the fourth quarter of 2021 compared to the fourth quarter of 2020 resulted primarily from organic loan growth and was partially offset by a $89.2 million reduction in PPP loan balances during the period. Excluding PPP loans and warehouse loans, gross loans increased $176.2 million, or 10.8%, from the same quarter of the prior year.

Total deposits increased by 4.2%, or $107.8 million, to $2.67 billion at December 31, 2021, compared to $2.56 billion at September 30, 2021, and increased 16.8%, or $384.4 million, from $2.29 billion at December 31, 2020. Changes in deposits during these periods were heavily impacted by the deposit of PPP loan proceeds and COVID-related government stimulus payments into demand accounts at the Bank, as well as apparent changes in depositor spending habits in these periods resulting from economic and other uncertainties due to COVID-19.

Shareholders' equity totaled $302.2 million as of December 31, 2021, compared to $297.4 million at September 30, 2021 and $272.6 million at December 31, 2020. The increase from the previous quarter resulted primarily from net earnings of $9.2 million, offset by the payment of dividends of $2.4 million and a decrease in other comprehensive income of $3.1 million during the fourth quarter of 2021 resulting from unrealized holding losses on securities available-for-sale during the period. The $29.6 million increase from the prior year resulted from net earnings of $39.8 million, offset by the payment of dividends of $9.7 million.

Nonperforming assets as a percentage of total assets were 0.09% at December 31, 2021 compared to 0.11% at September 30, 2021, and 0.48% at December 31, 2020. The Bank’s nonperforming assets consist primarily of nonaccrual loans. During 2020, nonperforming assets included three SBA 7(a), partially guaranteed (75%) loans that were acquired in the June 2018 acquisition of Westbound Bank, with combined book balances of $8.7 million as of December 31, 2020. During the first quarter of 2021, one of these loans was resolved when the underlying collateral, a hotel, was sold to a third party. The bank charged off $475,000 in connection with the sale, all of which had previously been specifically reserved within the allowance for credit losses, or ACL. The other two loans, both to one borrower and collateralized by the same hotel, were resolved through a bankruptcy judgement during the first quarter of 2021 that allows the borrower to adequately service their debt coverage. The bankruptcy order resulted in a charge-off of $270,000, which had previously been fully reserved in the ACL. These loans were internally identified as problem assets prior to COVID-19 and were properly reserved.

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|  | As of |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 42,979 |  |  | $ | 34,741 |  |  | $ | 37,611 |  |  | $ | 38,534 |  |  | $ | 47,836 |
Federal funds sold |  |  | 431,975 |  |  |  | 346,500 |  |  |  | 385,075 |  |  |  | 356,750 |  |  |  | 218,825 |
Interest-bearing deposits |  |  | 24,651 |  |  |  | 27,634 |  |  |  | 24,532 |  |  |  | 28,188 |  |  |  | 85,130 |
Total cash and cash equivalents |  |  | 499,605 |  |  |  | 408,875 |  |  |  | 447,218 |  |  |  | 423,472 |  |  |  | 351,791 |
Securities available for sale |  |  | 342,206 |  |  |  | 269,070 |  |  |  | 446,636 |  |  |  | 407,736 |  |  |  | 380,795 |
Securities held to maturity |  |  | 184,263 |  |  |  | 173,676 |  |  |  | — |  |  |  | — |  |  |  | — |
Loans held for sale |  |  | 4,129 |  |  |  | 1,903 |  |  |  | 5,088 |  |  |  | 4,663 |  |  |  | 5,542 |
Loans, net |  |  | 1,876,076 |  |  |  | 1,938,268 |  |  |  | 1,856,277 |  |  |  | 1,876,985 |  |  |  | 1,831,737 |
Accrued interest receivable |  |  | 8,901 |  |  |  | 7,673 |  |  |  | 8,801 |  |  |  | 8,064 |  |  |  | 9,834 |
Premises and equipment, net |  |  | 53,470 |  |  |  | 53,834 |  |  |  | 54,405 |  |  |  | 54,903 |  |  |  | 55,212 |
Other real estate owned |  |  | — |  |  |  | 40 |  |  |  | 227 |  |  |  | 312 |  |  |  | 404 |
Cash surrender value of life insurance |  |  | 37,141 |  |  |  | 36,582 |  |  |  | 36,367 |  |  |  | 35,836 |  |  |  | 35,510 |
Core deposit intangible, net |  |  | 2,313 |  |  |  | 2,426 |  |  |  | 2,573 |  |  |  | 2,786 |  |  |  | 2,999 |
Goodwill |  |  | 32,160 |  |  |  | 32,160 |  |  |  | 32,160 |  |  |  | 32,160 |  |  |  | 32,160 |
Other assets |  |  | 45,806 |  |  |  | 43,761 |  |  |  | 43,207 |  |  |  | 44,383 |  |  |  | 34,848 |
Total assets |  | $ | 3,086,070 |  |  | $ | 2,968,268 |  |  | $ | 2,932,959 |  |  | $ | 2,891,300 |  |  | $ | 2,740,832 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 1,014,518 |  |  | $ | 972,854 |  |  | $ | 928,416 |  |  | $ | 878,883 |  |  | $ | 779,740 |
Interest-bearing |  |  | 1,656,309 |  |  |  | 1,590,217 |  |  |  | 1,604,610 |  |  |  | 1,596,327 |  |  |  | 1,506,650 |
Total deposits |  |  | 2,670,827 |  |  |  | 2,563,071 |  |  |  | 2,533,026 |  |  |  | 2,475,210 |  |  |  | 2,286,390 |
Securities sold under agreements to repurchase |  |  | 14,151 |  |  |  | 11,195 |  |  |  | 15,336 |  |  |  | 24,007 |  |  |  | 15,631 |
Accrued interest and other liabilities |  |  | 26,568 |  |  |  | 26,284 |  |  |  | 28,058 |  |  |  | 28,080 |  |  |  | 25,257 |
Line of credit |  |  | 5,000 |  |  |  | 3,000 |  |  |  | — |  |  |  | 15,000 |  |  |  | 12,000 |
Federal Home Loan Bank advances |  |  | 47,500 |  |  |  | 47,500 |  |  |  | 49,000 |  |  |  | 49,096 |  |  |  | 109,101 |
Subordinated debentures |  |  | 19,810 |  |  |  | 19,810 |  |  |  | 19,810 |  |  |  | 19,810 |  |  |  | 19,810 |
Total liabilities |  |  | 2,783,856 |  |  |  | 2,670,860 |  |  |  | 2,645,230 |  |  |  | 2,611,203 |  |  |  | 2,468,189 |
Total shareholders' equity |  |  | 302,214 |  |  |  | 297,408 |  |  |  | 287,729 |  |  |  | 280,097 |  |  |  | 272,643 |
Total liabilities and shareholders' equity |  | $ | 3,086,070 |  |  | $ | 2,968,268 |  |  | $ | 2,932,959 |  |  | $ | 2,891,300 |  |  | $ | 2,740,832 |

5

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands, except per share data) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
STATEMENTS OF EARNINGS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | $ | 25,518 |  |  | $ | 25,235 |  |  | $ | 25,284 |  |  | $ | 26,513 |  |  | $ | 26,253 |
Interest expense |  |  | 1,498 |  |  |  | 1,665 |  |  |  | 1,807 |  |  |  | 2,022 |  |  |  | 2,301 |
Net interest income |  |  | 24,020 |  |  |  | 23,570 |  |  |  | 23,477 |  |  |  | 24,491 |  |  |  | 23,952 |
Provision for credit losses |  |  | — |  |  |  | (700 | ) |  |  | (1,000 | ) |  |  | — |  |  |  | — |
Net interest income after provision for credit losses |  |  | 24,020 |  |  |  | 24,270 |  |  |  | 24,477 |  |  |  | 24,491 |  |  |  | 23,952 |
Noninterest income |  |  | 6,038 |  |  |  | 6,449 |  |  |  | 5,970 |  |  |  | 6,119 |  |  |  | 6,426 |
Noninterest expense |  |  | 18,976 |  |  |  | 19,287 |  |  |  | 17,703 |  |  |  | 17,312 |  |  |  | 18,173 |
Income before income taxes |  |  | 11,082 |  |  |  | 11,432 |  |  |  | 12,744 |  |  |  | 13,298 |  |  |  | 12,205 |
Income tax provision |  |  | 1,923 |  |  |  | 2,179 |  |  |  | 2,312 |  |  |  | 2,336 |  |  |  | 2,290 |
Net earnings |  | $ | 9,159 |  |  | $ | 9,253 |  |  | $ | 10,432 |  |  | $ | 10,962 |  |  | $ | 9,915 |
PER COMMON SHARE DATA* |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings per common share, basic |  | $ | 0.76 |  |  | $ | 0.77 |  |  | $ | 0.87 |  |  | $ | 0.91 |  |  | $ | 0.82 |
Earnings per common share, diluted |  |  | 0.75 |  |  |  | 0.76 |  |  |  | 0.85 |  |  |  | 0.90 |  |  |  | 0.82 |
Cash dividends per common share |  |  | 0.20 |  |  |  | 0.20 |  |  |  | 0.20 |  |  |  | 0.20 |  |  |  | 0.18 |
Book value per common share - end of quarter |  |  | 24.93 |  |  |  | 24.62 |  |  |  | 23.86 |  |  |  | 23.24 |  |  |  | 22.67 |
Tangible book value per common share - end of quarter(1) |  |  | 22.09 |  |  |  | 21.75 |  |  |  | 20.98 |  |  |  | 20.34 |  |  |  | 19.74 |
Common shares outstanding - end of quarter |  |  | 12,122,717 |  |  |  | 12,081,477 |  |  |  | 12,057,937 |  |  |  | 12,053,597 |  |  |  | 12,028,957 |
Weighted-average common shares outstanding, basic |  |  | 12,097,100 |  |  |  | 12,067,769 |  |  |  | 12,056,550 |  |  |  | 12,038,638 |  |  |  | 12,063,154 |
Weighted-average common shares outstanding, diluted |  |  | 12,263,252 |  |  |  | 12,211,389 |  |  |  | 12,251,587 |  |  |  | 12,177,776 |  |  |  | 12,121,221 |
PERFORMANCE RATIOS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average assets (annualized) |  |  | 1.20 | % |  |  | 1.24 | % |  |  | 1.42 | % |  |  | 1.60 | % |  |  | 1.48 | %
Return on average equity (annualized) |  |  | 12.06 |  |  |  | 12.44 |  |  |  | 14.64 |  |  |  | 16.01 |  |  |  | 14.53 |
Net interest margin, fully taxable equivalent (annualized)(2) |  |  | 3.39 |  |  |  | 3.40 |  |  |  | 3.44 |  |  |  | 3.85 |  |  |  | 3.85 |
Efficiency ratio(3) |  |  | 63.13 |  |  |  | 64.25 |  |  |  | 60.12 |  |  |  | 56.56 |  |  |  | 59.82 |
* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend. |
(1) See Reconciliation of non-GAAP Financial Measures table. |
(2) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%. |
(3) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation. |

6

|  | For the Years Ended |  |  |  |  |  |  |
|  | December 31, |  |  |  |  |  |  |
(dollars in thousands, except per share data) |  | 2021 |  |  | 2020 |  |  |  |  |  |  |
INCOME STATEMENTS |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | $ | 102,550 |  |  | $ | 103,042 |  |  |  |  |  |  |
Interest expense |  |  | 6,992 |  |  |  | 13,060 |  |  |  |  |  |  |
Net interest income |  |  | 95,558 |  |  |  | 89,982 |  |  |  |  |  |  |
Provision for loan losses |  |  | (1,700 | ) |  |  | 13,200 |  |  |  |  |  |  |
Net interest income after provision for loan losses |  |  | 97,258 |  |  |  | 76,782 |  |  |  |  |  |  |
Noninterest income |  |  | 24,576 |  |  |  | 23,037 |  |  |  |  |  |  |
Noninterest expense |  |  | 73,278 |  |  |  | 66,522 |  |  |  |  |  |  |
Income before income taxes |  |  | 48,556 |  |  |  | 33,297 |  |  |  |  |  |  |
Income tax provision |  |  | 8,750 |  |  |  | 5,895 |  |  |  |  |  |  |
Net earnings |  | $ | 39,806 |  |  | $ | 27,402 |  |  |  |  |  |  |
PER COMMON SHARE DATA* |  |  |  |  |  |  |  |  |  |  |  |
Earnings per common share, basic |  | $ | 3.30 |  |  | $ | 2.25 |  |  |  |  |  |  |
Earnings per common share, diluted |  |  | 3.26 |  |  |  | 2.24 |  |  |  |  |  |  |
Cash dividends per common share |  |  | 0.80 |  |  |  | 0.71 |  |  |  |  |  |  |
Book value per common share - end of period |  |  | 24.93 |  |  |  | 22.67 |  |  |  |  |  |  |
Tangible book value per common share - end of period† |  |  | 22.09 |  |  |  | 19.74 |  |  |  |  |  |  |
Common shares outstanding - end of period |  |  | 12,122,717 |  |  |  | 12,028,957 |  |  |  |  |  |  |
Weighted-average common shares outstanding, basic |  |  | 12,065,182 |  |  |  | 12,219,420 |  |  |  |  |  |  |
Weighted-average common shares outstanding, diluted |  |  | 12,211,758 |  |  |  | 12,255,480 |  |  |  |  |  |  |
PERFORMANCE RATIOS |  |  |  |  |  |  |  |  |  |  |  |
Return on average assets |  |  | 1.36 | % |  |  | 1.07 | % |  |  |  |  |  |
Return on average equity |  |  | 13.72 |  |  |  | 10.39 |  |  |  |  |  |  |
Net interest margin, fully taxable equivalent(1) |  |  | 3.51 |  |  |  | 3.77 |  |  |  |  |  |  |
Efficiency ratio(2) |  |  | 61.00 |  |  |  | 58.86 |  |  |  |  |  |  |
† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.
* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend.
(1) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.
(2) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

7

|  | As of |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
LOAN PORTFOLIO COMPOSITION |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 280,569 |  |  | $ | 308,647 |  |  | $ | 352,042 |  |  | $ | 373,678 |  |  | $ | 356,291 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and development |  |  | 307,797 |  |  |  | 309,746 |  |  |  | 264,002 |  |  |  | 257,886 |  |  |  | 270,407 |
Commercial real estate |  |  | 622,842 |  |  |  | 633,353 |  |  |  | 608,464 |  |  |  | 630,479 |  |  |  | 594,216 |
Farmland |  |  | 145,501 |  |  |  | 135,413 |  |  |  | 94,525 |  |  |  | 76,867 |  |  |  | 78,508 |
1-4 family residential |  |  | 410,673 |  |  |  | 403,403 |  |  |  | 389,616 |  |  |  | 389,542 |  |  |  | 389,096 |
Multi-family residential |  |  | 30,971 |  |  |  | 40,810 |  |  |  | 42,086 |  |  |  | 32,090 |  |  |  | 21,701 |
Consumer |  |  | 50,965 |  |  |  | 52,992 |  |  |  | 51,795 |  |  |  | 49,780 |  |  |  | 51,044 |
Agricultural |  |  | 14,639 |  |  |  | 14,199 |  |  |  | 14,608 |  |  |  | 14,905 |  |  |  | 15,734 |
Warehouse lending |  |  | 43,720 |  |  |  | 71,823 |  |  |  | 72,582 |  |  |  | 86,813 |  |  |  | 89,480 |
Overdrafts |  |  | 363 |  |  |  | 495 |  |  |  | 444 |  |  |  | 327 |  |  |  | 342 |
Total loans(1)(2) |  | $ | 1,908,040 |  |  | $ | 1,970,881 |  |  | $ | 1,890,164 |  |  | $ | 1,912,367 |  |  | $ | 1,866,819 |
|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
ALLOWANCE FOR CREDIT LOSSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 30,621 |  |  | $ | 31,548 |  |  | $ | 32,770 |  |  | $ | 33,619 |  |  | $ | 33,757 |
Loans charged-off |  |  | (239 | ) |  |  | (244 | ) |  |  | (283 | ) |  |  | (875 | ) |  |  | (159 | )
Recoveries |  |  | 51 |  |  |  | 17 |  |  |  | 61 |  |  |  | 26 |  |  |  | 21 |
Provision for credit loss expense |  |  | — |  |  |  | (700 | ) |  |  | (1,000 | ) |  |  | — |  |  |  | — |
Balance at end of period |  | $ | 30,433 |  |  | $ | 30,621 |  |  | $ | 31,548 |  |  | $ | 32,770 |  |  | $ | 33,619 |
Allowance for credit losses / period-end loans |  |  | 1.59 | % |  |  | 1.55 | % |  |  | 1.67 | % |  |  | 1.71 | % |  |  | 1.80 | %
Allowance for credit losses / nonperforming loans |  |  | 1,075.0 |  |  |  | 976.7 |  |  |  | 878.0 |  |  |  | 968.7 |  |  |  | 264.6 |
Net charge-offs / average loans (annualized) |  |  | 0.04 |  |  |  | 0.05 |  |  |  | 0.05 |  |  |  | 0.18 |  |  |  | 0.03 |
NON-PERFORMING ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-accrual loans(3) |  | $ | 2,831 |  |  | $ | 3,135 |  |  | $ | 3,593 |  |  | $ | 3,383 |  |  | $ | 12,705 |
Other real estate owned |  |  | — |  |  |  | 40 |  |  |  | 227 |  |  |  | 312 |  |  |  | 404 |
Repossessed assets owned |  |  | 14 |  |  |  | 63 |  |  |  | 9 |  |  |  | 4 |  |  |  | 6 |
Total non-performing assets |  | $ | 2,845 |  |  | $ | 3,238 |  |  | $ | 3,829 |  |  | $ | 3,699 |  |  | $ | 13,115 |
Non-performing assets as a percentage of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total loans(1)(2) |  |  | 0.15 | % |  |  | 0.16 | % |  |  | 0.20 | % |  |  | 0.19 | % |  |  | 0.70 | %
Total loans, excluding PPP(1)(2) |  |  | 0.15 |  |  |  | 0.17 |  |  |  | 0.22 |  |  |  | 0.21 |  |  |  | 0.76 |
Total assets |  |  | 0.09 |  |  |  | 0.11 |  |  |  | 0.13 |  |  |  | 0.13 |  |  |  | 0.48 |
TDR loans - nonaccrual |  | $ | 103 |  |  | $ | 84 |  |  | $ | 86 |  |  | $ | 87 |  |  | $ | 90 |
TDR loans - accruing |  |  | 9,466 |  |  |  | 9,522 |  |  |  | 9,535 |  |  |  | 9,598 |  |  |  | 9,626 |
(1) Excludes outstanding balances of loans held for sale of $4.1 million, $1.9 million, $5.1 million, $4.7 million, and $5.5 million as of December 31, September 30, June 30 and March 31, 2021, and December 31, 2020, respectively. |
(2) Excludes deferred loan fees of $1.5 million, $2.0 million, $2.3 million, $2.6 million, and $1.5 million as of December 31, September 30, June 30 and March 31, 2021, and December 31, 2020, respectively. |
(3) TDR loans - nonaccrual are included in nonaccrual loans, which are a component of nonperforming loans. |

8

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
NONINTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service charges |  | $ | 1,085 |  |  | $ | 1,003 |  |  | $ | 855 |  |  | $ | 829 |  |  | $ | 868 |
Net realized gain on sale of loans |  |  | 1,127 |  |  |  | 1,759 |  |  |  | 1,244 |  |  |  | 1,398 |  |  |  | 2,023 |
Fiduciary and custodial income |  |  | 615 |  |  |  | 599 |  |  |  | 570 |  |  |  | 549 |  |  |  | 513 |
Bank-owned life insurance income |  |  | 207 |  |  |  | 215 |  |  |  | 206 |  |  |  | 212 |  |  |  | 205 |
Merchant and debit card fees |  |  | 1,669 |  |  |  | 1,620 |  |  |  | 1,922 |  |  |  | 1,506 |  |  |  | 1,396 |
Loan processing fee income |  |  | 188 |  |  |  | 164 |  |  |  | 164 |  |  |  | 153 |  |  |  | 167 |
Warehouse lending fees |  |  | 164 |  |  |  | 196 |  |  |  | 211 |  |  |  | 241 |  |  |  | 262 |
Mortgage fee income |  |  | 133 |  |  |  | 145 |  |  |  | 157 |  |  |  | 177 |  |  |  | 197 |
Other noninterest income |  |  | 850 |  |  |  | 748 |  |  |  | 641 |  |  |  | 1,054 |  |  |  | 795 |
Total noninterest income |  | $ | 6,038 |  |  | $ | 6,449 |  |  | $ | 5,970 |  |  | $ | 6,119 |  |  | $ | 6,426 |
NONINTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee compensation and benefits |  | $ | 11,200 |  |  | $ | 10,998 |  |  | $ | 10,204 |  |  | $ | 9,943 |  |  | $ | 10,211 |
Occupancy expenses |  |  | 2,686 |  |  |  | 2,738 |  |  |  | 2,833 |  |  |  | 2,687 |  |  |  | 2,596 |
Legal and professional fees |  |  | 604 |  |  |  | 644 |  |  |  | 747 |  |  |  | 604 |  |  |  | 968 |
Software and technology |  |  | 1,167 |  |  |  | 1,258 |  |  |  | 1,055 |  |  |  | 1,114 |  |  |  | 1,127 |
Amortization |  |  | 222 |  |  |  | 253 |  |  |  | 336 |  |  |  | 343 |  |  |  | 340 |
Director and committee fees |  |  | 204 |  |  |  | 197 |  |  |  | 167 |  |  |  | 255 |  |  |  | 251 |
Advertising and promotions |  |  | 470 |  |  |  | 495 |  |  |  | 338 |  |  |  | 455 |  |  |  | 356 |
ATM and debit card expense |  |  | 643 |  |  |  | 646 |  |  |  | 616 |  |  |  | 540 |  |  |  | 545 |
Telecommunication expense |  |  | 196 |  |  |  | 197 |  |  |  | 180 |  |  |  | 234 |  |  |  | 244 |
FDIC insurance assessment fees |  |  | 300 |  |  |  | 214 |  |  |  | 168 |  |  |  | 169 |  |  |  | 252 |
Other noninterest expense |  |  | 1,284 |  |  |  | 1,647 |  |  |  | 1,059 |  |  |  | 968 |  |  |  | 1,283 |
Total noninterest expense |  | $ | 18,976 |  |  | $ | 19,287 |  |  | $ | 17,703 |  |  | $ | 17,312 |  |  | $ | 18,173 |

9

|  | For the Three Months Ended December 31, |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total loans(1) |  | $ | 1,925,046 |  |  | $ | 22,833 |  |  |  | 4.71 | % |  | $ | 1,937,556 |  |  | $ | 23,998 |  |  |  | 4.93 | %
Securities available for sale |  |  | 307,345 |  |  |  | 1,358 |  |  |  | 1.75 |  |  |  | 374,362 |  |  |  | 2,087 |  |  |  | 2.22 |
Securities held to maturity |  |  | 178,131 |  |  |  | 1,087 |  |  |  | 2.42 |  |  |  | — |  |  |  | — |  |  |  | — |
Nonmarketable equity securities |  |  | 10,044 |  |  |  | 128 |  |  |  | 5.06 |  |  |  | 9,617 |  |  |  | 106 |  |  |  | 4.38 |
Interest-bearing deposits in other banks |  |  | 423,581 |  |  |  | 112 |  |  |  | 0.10 |  |  |  | 175,410 |  |  |  | 62 |  |  |  | 0.14 |
Total interest-earning assets |  |  | 2,844,147 |  |  |  | 25,518 |  |  |  | 3.56 |  |  |  | 2,496,945 |  |  |  | 26,253 |  |  |  | 4.18 |
Allowance for credit losses |  |  | (30,552 | ) |  |  |  |  |  |  |  |  | (33,712 | ) |  |  |  |  |  |
Noninterest-earning assets |  |  | 207,484 |  |  |  |  |  |  |  |  |  | 196,492 |  |  |  |  |  |  |
Total assets |  | $ | 3,021,079 |  |  |  |  |  |  |  |  | $ | 2,659,725 |  |  |  |  |  |  |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits |  | $ | 1,622,607 |  |  | $ | 1,207 |  |  |  | 0.30 | % |  | $ | 1,469,890 |  |  | $ | 1,878 |  |  |  | 0.51 | %
Advances from FHLB and fed funds purchased |  |  | 47,500 |  |  |  | 105 |  |  |  | 0.88 |  |  |  | 66,331 |  |  |  | 124 |  |  |  | 0.74 |
Line of credit |  |  | 4,761 |  |  |  | 42 |  |  |  | 3.50 |  |  |  | 10,696 |  |  |  | 94 |  |  |  | 3.50 |
Subordinated debentures |  |  | 19,810 |  |  |  | 142 |  |  |  | 2.84 |  |  |  | 19,989 |  |  |  | 191 |  |  |  | 3.80 |
Securities sold under agreements to repurchase |  |  | 11,156 |  |  |  | 2 |  |  |  | 0.07 |  |  |  | 20,902 |  |  |  | 14 |  |  |  | 0.27 |
Total interest-bearing liabilities |  |  | 1,705,834 |  |  |  | 1,498 |  |  |  | 0.35 |  |  |  | 1,587,808 |  |  |  | 2,301 |  |  |  | 0.58 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits |  |  | 988,676 |  |  |  |  |  |  |  |  |  | 772,422 |  |  |  |  |  |  |
Accrued interest and other liabilities |  |  | 25,171 |  |  |  |  |  |  |  |  |  | 28,098 |  |  |  |  |  |  |
Total noninterest-bearing liabilities |  |  | 1,013,847 |  |  |  |  |  |  |  |  |  | 800,520 |  |  |  |  |  |  |
Shareholders’ equity |  |  | 301,398 |  |  |  |  |  |  |  |  |  | 271,397 |  |  |  |  |  |  |
Total liabilities and shareholders’ equity |  | $ | 3,021,079 |  |  |  |  |  |  |  |  | $ | 2,659,725 |  |  |  |  |  |  |
Net interest rate spread(2) |  |  |  |  |  |  |  |  | 3.21 | % |  |  |  |  |  |  |  |  | 3.60 | %
Net interest income |  |  |  |  | $ | 24,020 |  |  |  |  |  |  |  |  | $ | 23,952 |  |  |  |
Net interest margin(3) |  |  |  |  |  |  |  |  | 3.35 | % |  |  |  |  |  |  |  |  | 3.82 | %
Net interest margin, fully taxable equivalent(4) |  |  |  |  |  |  |  |  | 3.39 | % |  |  |  |  |  |  |  |  | 3.85 | %
(1) Includes average outstanding balances of loans held for sale of $2.7 million and $5.8 million for the three months ended December 31, 2021 and 2020, respectively. |
(2) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. |
(3) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized. |
(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%. |

10

|  | For The Years Ended December 31, |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total loans(1) |  | $ | 1,911,540 |  |  | $ | 92,497 |  |  |  | 4.84 | % |  | $ | 1,872,914 |  |  | $ | 93,335 |  |  |  | 4.98 | %
Securities available for sale |  |  | 356,232 |  |  |  | 6,839 |  |  |  | 1.92 |  |  |  | 338,510 |  |  |  | 7,798 |  |  |  | 2.30 |
Securities held to maturity |  |  | 74,270 |  |  |  | 2,141 |  |  |  | 2.88 |  |  |  | 35,935 |  |  |  | 956 |  |  |  | 2.66 |
Nonmarketable equity securities |  |  | 10,043 |  |  |  | 740 |  |  |  | 7.37 |  |  |  | 10,761 |  |  |  | 439 |  |  |  | 4.08 |
Interest-bearing deposits in other banks |  |  | 399,285 |  |  |  | 333 |  |  |  | 0.08 |  |  |  | 146,659 |  |  |  | 514 |  |  |  | 0.35 |
Total interest-earning assets |  |  | 2,751,370 |  |  |  | 102,550 |  |  |  | 3.73 |  |  |  | 2,404,779 |  |  |  | 103,042 |  |  |  | 4.28 |
Allowance for credit losses |  |  | (31,888 | ) |  |  |  |  |  |  |  |  | (29,100 | ) |  |  |  |  |  |
Noninterest-earning assets |  |  | 203,468 |  |  |  |  |  |  |  |  |  | 195,324 |  |  |  |  |  |  |
Total assets |  | $ | 2,922,950 |  |  |  |  |  |  |  |  | $ | 2,571,003 |  |  |  |  |  |  |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits |  | $ | 1,601,375 |  |  | $ | 5,651 |  |  |  | 0.35 | % |  | $ | 1,468,353 |  |  | $ | 11,624 |  |  |  | 0.79 | %
Advances from FHLB and fed funds purchased |  |  | 49,056 |  |  |  | 413 |  |  |  | 0.84 |  |  |  | 75,940 |  |  |  | 470 |  |  |  | 0.62 |
Line of credit |  |  | 6,066 |  |  |  | 216 |  |  |  | 3.56 |  |  |  | 6,727 |  |  |  | 213 |  |  |  | 3.17 |
Subordinated debentures |  |  | 19,810 |  |  |  | 700 |  |  |  | 3.53 |  |  |  | 17,198 |  |  |  | 702 |  |  |  | 4.08 |
Securities sold under agreements to repurchase |  |  | 14,812 |  |  |  | 12 |  |  |  | 0.08 |  |  |  | 18,115 |  |  |  | 51 |  |  |  | 0.28 |
Total interest-bearing liabilities |  |  | 1,691,119 |  |  |  | 6,992 |  |  |  | 0.41 |  |  |  | 1,586,333 |  |  |  | 13,060 |  |  |  | 0.82 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits |  |  | 916,562 |  |  |  |  |  |  |  |  |  | 696,454 |  |  |  |  |  |  |
Accrued interest and other liabilities |  |  | 25,218 |  |  |  |  |  |  |  |  |  | 24,450 |  |  |  |  |  |  |
Total noninterest-bearing liabilities |  |  | 941,780 |  |  |  |  |  |  |  |  |  | 720,904 |  |  |  |  |  |  |
Shareholders’ equity |  |  | 290,051 |  |  |  |  |  |  |  |  |  | 263,766 |  |  |  |  |  |  |
Total liabilities and shareholders’ equity |  | $ | 2,922,950 |  |  |  |  |  |  |  |  | $ | 2,571,003 |  |  |  |  |  |  |
Net interest rate spread(2) |  |  |  |  |  |  |  |  | 3.32 | % |  |  |  |  |  |  |  |  | 3.46 | %
Net interest income |  |  |  |  | $ | 95,558 |  |  |  |  |  |  |  |  | $ | 89,982 |  |  |  |
Net interest margin(3) |  |  |  |  |  |  |  |  | 3.47 | % |  |  |  |  |  |  |  |  | 3.74 | %
Net interest margin, fully taxable equivalent(4) |  |  |  |  |  |  |  |  | 3.51 | % |  |  |  |  |  |  |  |  | 3.77 | %
(1) Includes average outstanding balances of loans held for sale of $3.4 million and $6.0 million for the years ended December 31, 2021 and 2020, respectively. |
(2) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. |
(3) Net interest margin is equal to net interest income divided by average interest-earning assets. |
(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, using a marginal tax rate of 21%. |

11

NON-GAAP RECONCILING TABLES

Tangible Book Value per Common Share

|  | As of |
|  | 2021 |  |  | 2020 |
(dollars in thousands, except per share data) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
Total shareholders’ equity |  | $ | 302,214 |  |  | $ | 297,408 |  |  | $ | 287,729 |  |  | $ | 280,097 |  |  | $ | 272,643 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | (32,160 | ) |  |  | (32,160 | ) |  |  | (32,160 | ) |  |  | (32,160 | ) |  |  | (32,160 | )
Core deposit intangible, net |  |  | (2,313 | ) |  |  | (2,426 | ) |  |  | (2,573 | ) |  |  | (2,786 | ) |  |  | (2,999 | )
Total tangible common equity |  | $ | 267,741 |  |  | $ | 262,822 |  |  | $ | 252,996 |  |  | $ | 245,151 |  |  | $ | 237,484 |
Common shares outstanding - end of quarter*(1) |  |  | 12,122,717 |  |  |  | 12,081,477 |  |  |  | 12,057,937 |  |  |  | 12,053,597 |  |  |  | 12,028,957 |
Book value per common share |  | $ | 24.93 |  |  | $ | 24.62 |  |  | $ | 23.86 |  |  | $ | 23.24 |  |  | $ | 22.67 |
Tangible book value per common share |  |  | 22.09 |  |  |  | 21.75 |  |  |  | 20.98 |  |  |  | 20.34 |  |  |  | 19.74 |

* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend.

(1) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

Net Core Earnings and Net Core Earnings per Common Share

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands, except per share data) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
Net earnings |  | $ | 9,159 |  |  | $ | 9,253 |  |  | $ | 10,432 |  |  | $ | 10,962 |  |  | $ | 9,915 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | — |  |  |  | (700 | ) |  |  | (1,000 | ) |  |  | — |  |  |  | — |
Income tax provision |  |  | 1,923 |  |  |  | 2,179 |  |  |  | 2,312 |  |  |  | 2,336 |  |  |  | 2,290 |
PPP loans, including fees |  |  | (958 | ) |  |  | (1,005 | ) |  |  | (1,954 | ) |  |  | (3,905 | ) |  |  | (2,654 | )
Net core earnings |  | $ | 10,124 |  |  | $ | 9,727 |  |  | $ | 9,790 |  |  | $ | 9,393 |  |  | $ | 9,551 |
Weighted-average common shares outstanding, basic* |  |  | 12,097,100 |  |  |  | 12,067,769 |  |  |  | 12,056,550 |  |  |  | 12,038,638 |  |  |  | 12,063,154 |
Earnings per common share, basic* |  | $ | 0.76 |  |  | $ | 0.77 |  |  | $ | 0.87 |  |  | $ | 0.91 |  |  | $ | 0.82 |
Net core earnings per common share, basic* |  |  | 0.84 |  |  |  | 0.81 |  |  |  | 0.81 |  |  |  | 0.78 |  |  |  | 0.79 |
* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend. |

|  | Year Ended December 31, |
(dollars in thousands, except per share data) |  | 2021 |  |  | 2020 |
Net earnings |  | $ | 39,806 |  |  | $ | 27,402 |
Adjustments: |  |  |  |  |  |
Provision for credit losses |  |  | (1,700 | ) |  |  | 13,200 |
Income tax provision |  |  | 8,750 |  |  |  | 5,895 |
PPP loans, including fees |  |  | (7,822 | ) |  |  | (6,270 | )
Net interest expense on PPP-related borrowings |  |  | — |  |  |  | 34 |
Net core earnings |  | $ | 39,034 |  |  | $ | 40,261 |
Weighted-average common shares outstanding, basic* |  |  | 12,065,182 |  |  |  | 12,219,420 |
Earnings per common share, basic* |  | $ | 3.30 |  |  | $ | 2.25 |
Net core earnings per common share, basic* |  |  | 3.24 |  |  |  | 3.29 |
* Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend. |

12

NON-GAAP RECONCILING TABLES

Net Core Earnings to Average Assets, as Adjusted, and Average Equity

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
Net core earnings |  | $ | 10,124 |  |  | $ | 9,727 |  |  | $ | 9,790 |  |  | $ | 9,393 |  |  | $ | 9,551 |
Total average assets |  | $ | 3,021,079 |  |  | $ | 2,953,181 |  |  | $ | 2,938,944 |  |  | $ | 2,775,567 |  |  | $ | 2,659,725 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loan average balance |  |  | (61,062 | ) |  |  | (107,931 | ) |  |  | (155,417 | ) |  |  | (137,251 | ) |  |  | (179,240 | )
Total average assets, adjusted |  | $ | 2,960,017 |  |  | $ | 2,845,250 |  |  | $ | 2,783,527 |  |  | $ | 2,638,316 |  |  | $ | 2,480,485 |
Net core earnings to average assets, as adjusted (annualized) |  |  | 1.36 | % |  |  | 1.36 | % |  |  | 1.41 | % |  |  | 1.44 | % |  |  | 1.53 | %
Total average equity |  | $ | 301,398 |  |  | $ | 295,076 |  |  | $ | 285,803 |  |  | $ | 277,612 |  |  | $ | 271,397 |
Net core earnings to average equity (annualized) |  |  | 13.33 | % |  |  | 13.08 | % |  |  | 13.74 | % |  |  | 13.72 | % |  |  | 14.00 | %

Total Non-Performing Assets to Total Loans, Excluding PPP

|  | Quarter Ended |
|  | 2021 |  |  | 2020 |
(dollars in thousands) |  | December 31 |  |  | September 30 |  |  | June 30 |  |  | March 31 |  |  | December 31 |
Total loans(1)(2) |  | $ | 1,908,040 |  |  | $ | 1,970,881 |  |  | $ | 1,890,164 |  |  | $ | 1,912,367 |  |  | $ | 1,866,819 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loans balance |  |  | (50,611 | ) |  |  | (75,304 | ) |  |  | (127,390 | ) |  |  | (158,236 | ) |  |  | (139,808 | )
Total loans, excluding PPP(1)(2) |  | $ | 1,857,429 |  |  | $ | 1,895,577 |  |  | $ | 1,762,774 |  |  | $ | 1,754,131 |  |  | $ | 1,727,011 |
Total non-performing assets |  | $ | 2,845 |  |  | $ | 3,238 |  |  | $ | 3,829 |  |  | $ | 3,699 |  |  | $ | 13,115 |
Non-performing assets as a percentage of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total loans(1)(2) |  |  | 0.15 | % |  |  | 0.16 | % |  |  | 0.20 | % |  |  | 0.19 | % |  |  | 0.70 | %
Total loans, excluding PPP(1)(2) |  |  | 0.15 |  |  |  | 0.17 |  |  |  | 0.22 |  |  |  | 0.21 |  |  |  | 0.76 |
(1) Excludes outstanding balances of loans held for sale of $4.1 million, $1.9 million, $5.1 million, $4.7 million, and $5.5 million as of December 31, September 30, June 30 and March 31, 2021, and December 31, 2020, respectively. |
(2) Excludes deferred loan fees of $1.5 million, $2.0 million, $2.3 million, $2.6 million, and $1.5 million as of December 31, September 30, June 30 and March 31, 2021, and December 31, 2020, respectively. |

Total Interest-Earning Assets, Net of PPP Effects

|  | For the Three Months Ended December 31, 2021 |  |  | For the Year Ended December 31, 2021 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
Total interest-earning assets |  | $ | 2,844,147 |  |  | $ | 25,518 |  |  |  | 3.56 | % |  | $ | 2,751,370 |  |  | $ | 102,550 |  |  |  | 3.73 | %
Total loans |  |  | 1,925,046 |  |  |  | 22,833 |  |  |  | 4.71 |  |  |  | 1,911,540 |  |  |  | 92,497 |  |  |  | 4.84 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loan average balance and net fees(1) |  |  | (61,062 | ) |  |  | (958 | ) |  |  | 6.22 |  |  |  | (115,402 | ) |  |  | (7,223 | ) |  |  | 6.26 |
Total loans, net of PPP effects |  |  | 1,863,984 |  |  |  | 21,875 |  |  |  | 4.66 |  |  |  | 1,796,138 |  |  |  | 85,274 |  |  |  | 4.75 |
Total interest-earning assets, net of PPP effects |  | $ | 2,783,085 |  |  | $ | 24,560 |  |  |  | 3.50 | % |  | $ | 2,635,968 |  |  | $ | 95,327 |  |  |  | 3.62 | %
(1) Interest earned consists of interest income of $154,000 and $1.1 million, and net origination fees recognized in earnings of $804,000 and $6.1 million for the three months and year ended December 31, 2021. |

13

NON-GAAP RECONCILING TABLES

Net Interest Income and Net Interest Margin, Net of PPP Effects

(dollars in thousands) |  | Three Months Ended December 31, 2021 |  |  | Year Ended December 31, 2021 |  |  | Three Months Ended September 30, 2021 |  |  | Three Months Ended December 31, 2020 |
Net interest income |  | $ | 24,020 |  |  | $ | 95,558 |  |  | $ | 23,570 |  |  | $ | 23,952 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |
PPP-related interest income |  |  | (154 | ) |  |  | (1,144 | ) |  |  | (270 | ) |  |  | (470 | )
PPP-related net origination fees |  |  | (804 | ) |  |  | (6,079 | ) |  |  | (735 | ) |  |  | (2,184 | )
Net interest income, net of PPP effects |  | $ | 23,062 |  |  | $ | 88,335 |  |  | $ | 22,565 |  |  | $ | 21,298 |
Total average interest-earning assets |  | $ | 2,844,147 |  |  | $ | 2,751,370 |  |  | $ | 2,780,081 |  |  | $ | 2,496,945 |
Total average interest-earning assets, net of PPP effects |  |  | 2,783,085 |  |  |  | 2,635,968 |  |  |  | 2,672,150 |  |  |  | 2,317,705 |
Net interest margin(1) |  |  | 3.35 | % |  |  | 3.47 | % |  |  | 3.36 | % |  |  | 3.82 | %
Net interest margin, net of PPP effects(2) |  |  | 3.29 |  |  |  | 3.35 |  |  |  | 3.35 |  |  |  | 3.66 |
Net interest income |  | $ | 24,020 |  |  | $ | 95,558 |  |  | $ | 23,570 |  |  | $ | 23,952 |
Interest income tax adjustments |  |  | 277 |  |  |  | 1,076 |  |  |  | 278 |  |  |  | 241 |
Net interest income, fully taxable equivalent ("FTE") |  | $ | 24,297 |  |  | $ | 96,634 |  |  | $ | 23,848 |  |  | $ | 24,193 |
Net interest income, FTE, net of PPP effects |  |  | 23,339 |  |  |  | 89,411 |  |  |  | 22,843 |  |  |  | 21,539 |
Net interest margin, FTE(3) |  |  | 3.39 | % |  |  | 3.51 | % |  |  | 3.40 | % |  |  | 3.85 | %
Net interest margin, FTE, net of PPP effects(4) |  |  | 3.33 |  |  |  | 3.39 |  |  |  | 3.39 |  |  |  | 3.70 |
(1) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized. |
(2) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation. |
(3) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%. |
(4) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%. |

Cost of Funds

(dollars in thousands) |  | Three Months Ended December 31, 2021 |  |  | Three Months Ended September 30, 2021 |  |  | Three Months Ended December 31, 2020 |  |  | Year Ended December 31, 2021 |  |  | Year Ended December 31, 2020 |
Total average interest-bearing deposits |  | $ | 1,622,607 |  |  | $ | 1,599,012 |  |  | $ | 1,469,890 |  |  | $ | 1,601,375 |  |  | $ | 1,468,353 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits |  |  | 988,676 |  |  |  | 950,574 |  |  |  | 772,422 |  |  |  | 916,562 |  |  |  | 696,454 |
Total average deposits |  | $ | 2,611,283 |  |  | $ | 2,549,586 |  |  | $ | 2,242,312 |  |  | $ | 2,517,937 |  |  | $ | 2,164,807 |
Total deposit-related interest expense |  | $ | 1,207 |  |  | $ | 1,348 |  |  | $ | 1,878 |  |  | $ | 5,651 |  |  | $ | 11,624 |
Average cost of interest-bearing deposits |  |  | 0.30 | % |  |  | 0.33 | % |  |  | 0.51 | % |  |  | 0.35 | % |  |  | 0.79 | %
Average cost of total deposits (cost of funds) |  |  | 0.18 |  |  |  | 0.21 |  |  |  | 0.33 |  |  |  | 0.22 |  |  |  | 0.54 |

14

NON-GAAP RECONCILING TABLES

Efficiency Ratio, Net of PPP Effects

(dollars in thousands) |  | Three Months Ended December 31, 2021 |  |  | Year Ended December 31, 2021 |  |  | Three Months Ended September 30, 2021 |  |  | Three Months Ended December 31, 2020 |
Total noninterest expense |  | $ | 18,976 |  |  | $ | 73,278 |  |  | $ | 19,287 |  |  | $ | 18,173 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |
PPP-related deferred costs |  |  | — |  |  |  | 599 |  |  |  | — |  |  |  | — |
Total noninterest expense, net of PPP effects |  | $ | 18,976 |  |  | $ | 73,877 |  |  | $ | 19,287 |  |  | $ | 18,173 |
Net interest income |  |  | 24,020 |  |  |  | 95,558 |  |  |  | 23,570 |  |  |  | 23,952 |
Net interest income, net of PPP effects |  |  | 23,062 |  |  |  | 88,335 |  |  |  | 22,565 |  |  |  | 21,298 |
Total noninterest income |  | $ | 6,038 |  |  | $ | 24,576 |  |  | $ | 6,449 |  |  | $ | 6,426 |
Efficiency ratio(1) |  |  | 63.13 | % |  |  | 61.00 | % |  |  | 64.25 | % |  |  | 59.82 | %
Efficiency ratio, net of PPP effects(2) |  |  | 65.21 |  |  |  | 65.43 |  |  |  | 66.47 |  |  |  | 65.55 |
(1) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation. |
(2) The efficiency ratio, net of PPP effects, was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation. |

Loan Yield, Net of PPP Effects

|  | Three Months Ended December 31, 2021 |  |  | Three Months Ended September 30, 2021 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
Total loans |  | $ | 1,925,046 |  |  | $ | 22,833 |  |  |  | 4.71 | % |  | $ | 1,921,005 |  |  | $ | 22,605 |  |  |  | 4.67 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loans average balance and net fees |  |  | (61,062 | ) |  |  | (958 | ) |  |  | 6.22 |  |  |  | (107,931 | ) |  |  | (1,005 | ) |  |  | 3.69 |
Total loans, net of PPP effects |  | $ | 1,863,984 |  |  | $ | 21,875 |  |  |  | 4.66 | % |  | $ | 1,813,074 |  |  | $ | 21,600 |  |  |  | 4.73 | %
Effect of removing PPP loans on loan yield |  |  |  |  |  |  |  |  | -0.05 | % |  |  |  |  |  |  |  |  | 0.06 | %

|  | Three Months Ended December 31, 2021 |  |  | Three Months Ended December 31, 2020 |
(dollars in thousands) |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |  |  | Average Outstanding Balance |  |  | Interest Earned/ Interest Paid |  |  | Average Yield/ Rate |
Total loans |  | $ | 1,925,046 |  |  | $ | 22,833 |  |  |  | 4.71 | % |  | $ | 1,937,556 |  |  | $ | 23,998 |  |  |  | 4.93 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PPP loans average balance and net fees |  |  | (61,062 | ) |  |  | (958 | ) |  |  | 6.22 |  |  |  | (179,240 | ) |  |  | (2,654 | ) |  |  | 5.89 |
Total loans, net of PPP effects |  | $ | 1,863,984 |  |  | $ | 21,875 |  |  |  | 4.66 | % |  | $ | 1,758,316 |  |  | $ | 21,344 |  |  |  | 4.83 | %
Effect of removing PPP loans on loan yield |  |  |  |  |  |  |  |  | -0.05 | % |  |  |  |  |  |  |  |  | -0.10 | %

ACL to Total Loans, Excluding PPP

(dollars in thousands) |  | As of December 31, 2021 |  |  | As of September 30, 2021 |  |  | As of December 31, 2020 |
Total loans |  | $ | 1,908,040 |  |  | $ | 1,970,881 |  |  | $ | 1,866,819 |
Adjustments: |  |  |  |  |  |  |  |  |
PPP loans |  |  | (50,611 | ) |  |  | (75,304 | ) |  |  | (139,808 | )
Total loans, excluding PPP |  | $ | 1,857,429 |  |  | $ | 1,895,577 |  |  | $ | 1,727,011 |
Allowance for credit losses |  | $ | 30,433 |  |  | $ | 30,621 |  |  | $ | 33,619 |
Allowance for credit losses / period-end loans |  |  | 1.59 | % |  |  | 1.55 | % |  |  | 1.80 | %
Allowance for credit losses / period-end loans. excluding PPP |  |  | 1.64 |  |  |  | 1.62 |  |  |  | 1.95 |

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About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible book value per share”, “net core earnings,” “core net interest margin,” and PPP-adjusted metrics are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

Conference Call Information

The Company will hold a conference call to discuss fourth quarter and year-end 2021 financial results on Monday, January 18, 2022 at 10:00 am Central time. The conference call will be hosted by Ty Abston, Chairman and CEO, Cappy Payne, SEVP and CFO, and Shalene Jacobson, EVP and CRO. All conference attendees must register before the call at gnty.com/register. The conference materials will be available by accessing the Investor Relations page on our website, gnty.com. A recording of the conference call will be available by 1:00 pm Central time the day of the call and remain available through January 31, 2022 on our Investor Relations webpage.

About Guaranty Bancshares, Inc.

Guaranty Bancshares, Inc. is a bank holding company that conducts commercial banking activities through its wholly-owned subsidiary, Guaranty Bank & Trust, N.A. As one of the oldest regional community banks in Texas, Guaranty Bank & Trust provides its customers with a full array of relationship-driven commercial and consumer banking products and services, as well as mortgage, trust, and wealth management services. Guaranty Bank & Trust has 32 banking locations across 26 Texas communities located within the East Texas, Dallas/Fort Worth, greater Houston and Central Texas regions of the state. As of December 31, 2021, Guaranty Bancshares, Inc. had total assets of $3.09 billion, total loans of $1.91 billion and total deposits of $2.67 billion. Visit gnty.com for more information.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Actual results may also be significantly impacted by the effects of the ongoing COVID-19 pandemic, including, among other effects: the impact of the public health crisis; the operation of financial markets; global supply chain disruption; employment levels; market liquidity; the impact of various actions taken in response by the U.S. federal government, the Federal Reserve, other banking regulators, state and local governments; and the impact that all of these factors have on our borrowers, other customers, vendors and counterparties. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, other risks and uncertainties listed from time to time in our reports and documents filed with the Securities and Exchange Commission ("SEC"). We can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and we do not intend, and assume no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

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Contact Information:
Cappy Payne Senior Executive Vice President and Chief Financial Officer Guaranty Bancshares, Inc. (888) 572-9881
investors@gnty.com

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