Communities First Financial Corporation Earns a Record $4.20 Million for 1Q-2021, up 86% from $2.26 Million for 1Q-2020

FRESNO, Calif., April 20, 2021 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of Fresno First Bank (the “Bank”), today reported net income increased 86% to $4.20 million, or $1.37 per diluted share for the first quarter of 2021 (1Q-2021), compared to $2.26 million, or $0.75 per diluted share, for the first quarter of 2020 (1Q-2020), and grew 29% compared to $3.25 million, or $1.07 per diluted share, for the fourth quarter of 2020 (4Q-2020). All results are unaudited.

First Quarter 2021 Highlights: As of, or for the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020:

• Pre-tax, pre-provision income increased 88% to $6.57 million.

• Net income increased 86% to $4.20 million or $1.37 per diluted share.

• Return on average equity of 24.37%.

• Return on average assets of 1.87%.

• Operating revenue (net interest income, before the provision for loan losses, plus non-interest income) increased by 51% to $11.02 million.

• Total assets increased 75% reaching $957.48 million.

• Total loans (ex. HFS) increased 82% to $691.97 million.

• Total deposits increased 78% to $836.31 million.

• Shareholder equity increased 25% to $70.92 million.

• Book value increased 22% to $23.12 per share.

“Continuing the momentum of achieving record profits for 2020, we generated record earnings for the first quarter of 2021, supported by significantly higher fee and interest income, primarily as a result of our participation in the Small Business Administration’s (‘SBA’) Paycheck Protection Program (‘PPP’),” said Steve Miller, President and Chief Executive Officer. “Our one non-accrual loan that had been consistently paying down for almost three years, was paid off in full and contributed $509,000 to interest income in the first quarter of 2021. Even without this one-time event, we would still have delivered record profits for the first quarter of 2021, as our substantial growth in earning assets over the last year outpaced our non-interest expense.” Nonperforming assets declined to $1.49 million from the linked quarter and there were no performing restructured loans at March 31, 2021.

“In addition to higher interest income, our continued loan and total deposit growth also contributed to the bottom line with noninterest-bearing deposits increasing 75%, and the total loan portfolio growing by 78%, year-over-year. Noninterest-bearing deposits represented over 61% of total deposits at March 31, 2021,” continued Miller. “We also sold approximately $7.0 million in certificates of deposit from our investment portfolio and realized $312,000 in gain on sale income which was recognized through our non-interest income.”

First Quarter 2021 non-recurring events that positively impacted earnings:

• The largest and only non-accrual loan relationship was paid off in full during the first quarter. As a result, the Company collected $509,000 in non-accrual interest as well as $5,000 in recovered collection expenses which reduced operating expenses.

• $7.0 million of investment holdings sold during the first quarter, resulting in a gain on sale of $312,000, increased non-interest income.

The result of these one-time events increased after-tax net income by $606,000, which impacted certain key financial ratios. The following table provides a more normalized run rate by adjusting out the non-recurring items:

Select Financial Information - Reconciliation of one-time events
Financial Metric	Income as reported		Non-accrued interest recovery	Gain on sale of securities	Normalized run rate
Net interest income	$ 9,239		-$ 509		$ 8,730
Provision for loan losses	$ 850				$ 850
Net interest income after provision	$ 8,389				$ 8,389
Non-interest income	$ 1,778			-$ 312	$ 1,466
Non-interest expense	$ 4,445		$ 5		$ 4,450
Net income before tax	$ 5,722		-$ 514	-$ 312	$ 4,896
Tax provision	$ 1,526		-$ 137	-$ 83	$ 1,306
Net income after tax	$ 4,196		-$ 377	-$ 229	$ 3,590
ROAA	1.87%		-0.17%	-0.10%	1.60%
ROAE	24.37%		-2.19%	-1.33%	20.85%
Net Interest Margin	4.49%		-0.17%	N/A	4.32%
Efficiency Ratio	41.52%		2.12%	N/A	43.64%

“The pandemic lingering into 2021 is not what most people expected in early 2020,” said Miller. “Like all essential businesses, our team has had little relief and is weary at times, but I continue to be impressed by their commitment to each other and to our customers. It is a clear reminder that all great organizations start with their people and the values they embrace. Although we are otherwise optimistic about an improving economic outlook, and perhaps a summer turnaround, we continue to take necessary precautions in view of the ongoing uncertainty of the pandemic.”

“The Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act of 2020 is providing new COVID-19 stimulus relief, and it includes $284 billion allocated for another round of PPP lending, extending the program to May 31, 2021. We have participated heavily in both the first round of PPP in 2020 and now this new round of PPP in Q1-2021,” continued Miller “For the second round we funded 328 PPP loans totaling $70.8 million. At the same time, we saw a consistent flow of requests for forgiveness of PPP loans funded in the second quarter of 2020. At March 31, 2021, we have 384, or 58%, of the original PPP loans totaling $119.4 million (65% of our original dollars funded) remaining on our books. At March 31, 2021, between both rounds of PPP, we had $4.1 million in deferred fees remaining to be accreted into income. We expect the majority of the first round PPP participants to apply for, and be granted, forgiveness between now and the end of the third quarter. As a result, we expect to see much of the $119 million in the original PPP loan balances payoff over the next 6-9 months.”

COVID-19 Update

California aims to ‘fully reopen’ its economy by June 15, 2021, as long as COVID-19 vaccinations remain widely available and hospitalizations continues to be stable, the governor and public health officials said Tuesday, April 6, 2021. The lifting of restrictions in June will happen statewide rather than county by county.

The U.S. and California economies are expected to experience near-record growth in 2021 thanks to widespread vaccinations for COVID-19 and massive federal relief for struggling workers and businesses, UCLA forecasters predict.

Credit Risk as a Result of the Pandemic

The Bank’s loan portfolio is diverse, and management continues to monitor and evaluate the Bank’s exposure to potentially increased loan losses related to the COVID-19 pandemic in multiple ways. As a result of federal and state stimulus money, state and federally encouraged payment deferrals, together with the SBA making payments for many SBA loans, management continues to believe that normal metrics such as delinquencies may understate potential credit issues. Due to the potential distortion of traditional metrics, management and staff are actively monitoring other sources of data more frequently for early indications of distress within the portfolio such as average deposits, overdrafts, line of credit usage and guarantors’ credit history. Management has segmented the loan portfolio several ways and examines risk exposure based on quantitative and qualitative information. Management and staff actively communicate with borrowers and key deposit clients to understand and assess the health of, and the stress their business may be experiencing, as well as the pandemic’s effects on their customers and suppliers. In addition, management and staff are engaging with borrowers frequently to understand individual challenges and are obtaining regular data from borrowers, as well as updated financials.

The following is a recap of areas considered higher risk due to the pandemic and a status of customers with deferred loan payments.

Higher Risk Industries: Management has identified the following industry segments most at risk due to the effects of the pandemic, as of March 31, 2021. Exposure to higher risk industries comprises approximately 6.0%, or $24.01 million, of the Bank’s loan portfolio, net of government guarantees, and is spread over 84 loans. Many of these customers received PPP loans and some customers were granted payment deferrals.

Industry Segments Considered Higher Risk due to COVID
($ in thousands)
	# of Loans	Book Loan Balance		Govt. Guaranteed Balances		Net Exposure (Book - Govt. Gte.)		% of Total Loans less Govt. Gte.		Undisbursed		Exposure Including Undisbursed		% of Total Commitments less Govt. Gte.
Higher Risk
Retail Sales	39	$	15,676	$	4,621	$	11,055	2.8	%	$	2,259	$	13,314	2.5	%
Entertainment & Recreation	2		364		283		81	0.0	%		0		81	0.0	%
Lodging & Travel	8		11,431		618		10,813	2.7	%		162		10,975	2.1	%
Restaurants & Bars	35		7,450		5,385		2,065	0.5	%		4,456		6,521	1.2	%
Total	84	$	34,921	$	10,907	$	24,014	6.0	%	$	6,877	$	30,890	5.9	%
Total Loan Portfolio	1,671	$	691,966	$	292,868	$	399,098	100.0	%	$	126,312	$	525,369	100.0	%

Status of, and Requests for, Loan Payment Deferral

“We granted payment deferrals on 64 individual loans covering 41 borrowers,” added Miller. “Subsequently, several borrowers asked to be taken off deferral, 13 loans have paid off in full, and the majority have now returned to normal payment schedules.”

At March 31, 2021, three loans totaling $5.86 million remain on payment deferral. Of the three loans remaining on deferral, two loans totaling $5.19 million, or 87.25% of the deferred total, are real estate secured, and only one loan for $747,909 is in an industry considered COVID high risk. The increase from the prior quarter is primarily a result of one, long time, client with a $4 million RE secured loan who requested and was granted a six-month deferral.

The following table(s) break down the status of loans granted payment deferrals.

Trend of Loan Deferrals
	Number of Loans on Deferral	Loan Balances ($ in thousands)
June 2020	57	$25,845
Sept. 2020	12	$11,250
Dec. 2020	8	$2,444
Mar. 2021	3	$5,866

Status of Loans given a deferral as of 3/31/2021	Count		Balance ($ in thousands)		% of balance of all loans given a deferral
No longer in deferment and paid current	43		$20,490		74.9	%
Loan provided a deferment - now paid off	13		$0		0.0	%
No longer in deferment - past due at 3/31/2021	5		$995		3.6	%
Total no longer in deferment	61		$21,485		89.6	%
Remaining in deferment	0		$0		0.0	%
New deferment	2		$5,667		96.6	%
2nd deferment	1		$199		3.4	%
Total in deferment as of 3/31/2021	3		$5,866		10.4	%
Grand Total	64			27,351	100.0	%
Currently scheduled end of deferral period	Count		Balance ($ in thousands)		% of balance loans remaining on deferral
Apr.	2		$947		16.1	%
May	0		$0		0.0	%
Jun.	0		$0		0.0	%
Beyond Jun.	1		$4,919		83.9	%
Grand Total	3		$5,866		100.0	%
SBA vs. Non-SBA breakdown of current deferred	Count		Balance ($ in thousands)		% of balance loans remaining on deferral
Non-SBA	3		$5,866		100.0	%
SBA	0		$0		0.0	%
Grand Total	3		$5,866		100.0	%
RE secured vs. Non-RE breakdown of current deferred	Count		Balance ($ in thousands)		% of balance loans remaining on deferral
RE Secured	2		$5,119		87.3	%
Non-RE Secured	1		$748		12.7	%
Grand Total	3		$5,866		100.0	%

Results of Operations

Operating revenue, consisting of net interest income and non-interest income, increased 51% to $11.02 million for the first quarter of 2021, compared to $7.29 million for the first quarter a year ago, and was higher by 9% from $10.07 million for the fourth quarter of 2020.

Net interest income, before the provision for loan losses, increased 58% to $9.24 million for the first quarter of 2021, compared to $5.84 million for the first quarter a year ago and increased 16% from $7.97 million for the fourth quarter of 2020. “The substantial growth in net interest income this last year was a result of the significant loan and investment growth that more than offset lower net interest margins caused by the current low interest rate environment,” said Steve Canfield, Chief Financial Officer. “During the current quarter, we also benefitted from the pay-off of a non-accrual loan that has been on the books for the last three years, which allowed us to recapture $509,000 of interest income.”

The Bank’s net interest margin (“NIM”), which excludes interest expense on holding company sub-debt, remained solid at a tax-equivalent yield of 4.49% for the first quarter of 2021, compared to 4.61% for the first quarter of 2020, and expanded 54-basis points from 3.95% for the fourth quarter of 2020. “We maintained a high NIM in spite of the contraction from a year ago, primarily due to the low cost to fund earning assets and changes in the mix of our earning assets. The improvement of 54-basis points on a linked quarter basis was the result of PPP loan payoffs and the immediate recognition of outstanding deferred fees, together with the recapture of non-accrued interest as mentioned above,” stated Canfield. “Excluding the one-time non-accrued interest event and the impact from PPP, our NIM would have been 4.19% for the quarter”

The yield on earning assets was 4.60% for the first quarter of 2021, compared to 4.85% for the first quarter a year ago, and 4.06% on a linked quarter basis. The cost to fund earning assets remained low at 0.10% for the first quarter of 2021, compared to 0.24% for the first quarter of 2020, and 0.11% on a linked quarter basis.

Total non-interest income increased by 23% to $1.78 million for the first quarter of 2021, compared to $1.45 million for the first quarter of 2020, primarily due to increased deposit fees and merchant services income. Non-interest income declined by 15%, from $2.10 million on a linked quarter basis, as a result of a 97%, or $570,000, decline in gain on sale of loan income. “We made a decision to hold loans on our balance sheet that we were previously originating and selling to absorb liquidity and maximize earnings over the year,” stated Canfield. “We expect to begin selling loans again in the second quarter, but we will use the option of holding loans from time to time to manage liquidity and improve earnings.” The Company also sold approximately $7.0 million in CDs in their investment portfolio in the first quarter of 2021, which also favorably impacted non-interest income by $312,000.

Revenue from merchant services increased 37% for the first quarter of 2021, compared to the first quarter a year ago, primarily as a result of continued strong organic customer growth and through our ISO partners. “Although merchant services revenue declined 5% on a linked quarter basis, our new ISO relationships will come online during the second quarter of 2021, and we forecast strong top-line revenue for the remainder of the year,” stated Canfield.

Total deposit fee income increased by 120%, or $147,000, to $270,000 for the first quarter of 2021, compared to $123,000 for the first quarter of 2020. “The increase in fee income was a result of taking on certain clients considered higher risk in the industry that are less price sensitive,” said Canfield. On a linked quarter basis, deposit fee income increased 23% from $219,000.

“We are pleased that non-interest income was up 23% from a year earlier, in spite of the slight dip in non-interest income on a linked quarter basis,” said Miller. “For the remainder of the year we expect merchant services revenue to increase as a result of growth in our own customer portfolio, but also from new strategic alliances with ISO partners who are now running significant volumes under our sponsorship. Our multi-family loan production from our Southern California team has been very strong, and we will begin to sell loans again to improve the gain on sale of loan line in the coming quarters.”

Non-interest expense for the first quarter of 2021 was $4.45 million, a 17% increase over $3.79 million for the first quarter of 2020 and increased 3% from $4.30 million for the fourth quarter of 2020. The increase in non-interest expense year-over-year reflects our growing staff and as a result higher employee compensation expense to support growth, and investments made in enhancing the Company’s digital technology. “The decline in employee benefits on a linked quarter basis was primarily due to two factors,” explained Canfield. “During the first quarter, compensation expense was reduced by $164,000 related to loan origination expense for the 328 PPP loans booked. This benefit is not projected to be as high going forward. In addition, commission expense for certain types of loans was very low in the first quarter of 2021 and will likely increase going forward.”

The efficiency ratio improved to 41.52% for the first quarter of 2021, compared to 52.39% for the first quarter a year ago, and 42.70% the fourth quarter of 2020. “We view the efficiency ratio as a key metric for long term success,” stated Canfield. “While non-interest expense increased 17% compared to the year ago quarter, total revenue was up 51% year-over-year. Growth of the balance sheet, revenue, and greater efficiency are all positives for generating shareholder value.”

Balance Sheet Review

Total assets increased 75% to $957.48 million, at March 31, 2021, from $548.32 million at March 31, 2020, and grew 10% from $871.35 million, at December 31, 2020.

Total portfolio loans increased 82%, or $310.87 million, to $691.97 million at March 31, 2021, from $381.09 million a year ago, and increased 11%, or $71.20 million, from $620.77 million at December 31, 2020. Total loans at March 31, 2021, included $189.49 million of SBA PPP loans. “During the fourth quarter of 2020, we sold the portfolio of loans held for sale consisting of multi-family loans originated by the SoCal team,” explained Canfield. “In the first quarter of 2021, we decided to hold new multi-family loan production on the balance sheet to generate interest income and absorb liquidity. We will likely begin selling loans in the coming quarters or as needed to manage concentrations.”

The commercial and industrial (C&I) portfolio increased 6% to $176.79 million from $166.18 million recorded a year ago and grew 2% when compared to the linked quarter. C&I loans represented 26% of total loans at March 31, 2021. Commercial real estate loans grew 68% to $250.71 million from the fourth quarter of 2020, and increased 11% on a linked quarter basis, representing 36% of total loans at March 31, 2021. Agriculture loans increased 19% to $37.48 million from a year ago and grew 13% from the fourth quarter of 2020, representing 5% of the loan portfolio, at March 31, 2021. Real estate construction and land development totaled $20.63 million, or 3% of loans, while residential RE 1-4 family loans totaled $16.65 million, or 2% of loans. SBA PPP loans represented 27% of the portfolio and there were $4.12 million in unamortized PPP fees capitalized on the balance sheet at quarter end. At March 31, 2021, the SBA, USDA, or other government agencies, guaranteed loans totaled $279.29 million, or 40% of the loan portfolio.

The investment portfolio increased by $113.40 million, or 94%, to $233.43 million at March 31, 2021, from $120.04 million at March 31, 2020, and by $10.63 million, or 5%, from $222.81 million at December 31, 2020. The growth in the investment securities was primarily a result of the significant deposit gathering during the year resulting in tremendous liquidity coupled with overnight rates available for investment falling to near zero.

Total deposits increased 78% to $836.31 million at March 31, 2021, compared to $470.53 million from a year earlier, and grew 15% from $726.25 million at December 31, 2020. Noninterest-bearing demand deposits increased by 75% to $511.50 million at March 31, 2021, compared to $292.45 million at March 31, 2020, and increased 14% from $446.92 million at December 31, 2020. Noninterest-bearing demand deposits represented over 61% of total deposits at March 31, 2021.

“With the holding company sub-debt raise last year we have a strong capital base to support our growth and allow us to further expand our payments business and/or pursue further opportunities as they might arise,” added Miller. “In February 2021, the Bank received approval from Visa to support High Brand Risk processing for ourselves, and our partners, which is expected to enhance revenue opportunities in several key payment verticals.” A key requirement by Visa was for the Bank to have $100 million in Tier-1 capital, which was a key strategy for the sub-debt raised in 2020. Tier-1 capital at the Bank was $106.41million at quarter end, or 11.51% of assets.

Net shareholders’ equity increased 25% to $70.92 million at March 31, 2021, compared to $56.80 million a year ago, and grew 3% from $68.55 million at December 31, 2020. Book value per common share increased 22% to $23.12 at March 31, 2021, compared to $19.00 at March 31, 2020, and 1% compared to $22.82 at December 31, 2020.

Asset Quality

Nonperforming assets were $1.49 million, 0.16% of total assets at March 31, 2021, compared to $1.15 million, or 0.21% of total assets at March 31, 2020. Performing restructured loans dropped to zero at quarter end, as the one non-accrual loan that had been on the books for almost three years was paid in full during the quarter.

Past due loans 30-60 days totaled $5.82 million at March 31, 2021, compared to $1.14 million at March 31, 2020. The majority of past due loans are SBA loans eligible for payments to be made by the SBA. The Bank has requested payment from the SBA and was awaiting receipt at March 31, 2021. Past due loans from 60-90 days were $1.67 million at March 31, 2021, compared to $1.15 million a year earlier; there were no past due loans 90+ days at quarter end. The $1.67 million past due loan consists of a matured, participated construction loan for which the Bank was awaiting documentation from the lead bank. The Bank has a direct relationship with the same customer who is current on their other loans.

The provision for loan losses was $850,000 for the first quarter of 2021, compared to $400,000 recorded in the first quarter of 2020. “Although our asset quality remains strong, we prudently added to reserves for loan losses in view of the uncertain economy, due to the pandemic, and as a result of the growth of our loan portfolio,” said Miller.

The ratio of allowance for loan losses to total portfolio held for investment loans was 1.26% at March 31, 2021, compared to 1.30% a year earlier and 1.26% at March 31, 2020. “A large portion of our portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, the PPP loans, as well as organic SBA and USDA loans the bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for loan losses to the total, non-guaranteed, loan portfolio was 2.11%, as of March 31, 2021,” added Miller.

About Communities First Financial Corporation

Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of Fresno First Bank, founded in 2005 in Fresno, California. Fresno First Bank is a leading SBA Lender in California’s Central Valley and has expanded into Southern California. The Bank is also a direct acquiring bank with VISA and MasterCard and processes payments for merchants across the country directly and through partners. In March 2021, S&P Global ranked the Bank the #20 best performing community bank under $3 billion in assets for 2020, and #1 in California. Named to the 2019 OTCQX Best 50 and ranked one of the top performing OTCQX companies in the country, based on total return and growth in average daily dollar volume for 2018. The Bank was named to the Inc. 5000 Fastest Growing Companies list in 2017 and to Forbes Best 25 Small Businesses in America for 2016. Additional information is available from the Company’s website at www.fresnofirstbank.com or by calling 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

SELECT FINANCIAL INFORMATION AND RATIOS (unaudited)		For the Quarter Ended:										Percentage Change From:
		Mar. 31, 2021			Dec. 31, 2020			Mar. 31, 2020				Dec. 31, 2020		Mar. 31, 2020
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	957,479		$	871,347		$	548,322			10	%	75	%
	Total Loans		691,966			620,766			381,092			11	%	82	%
	Investment securities		233,433			222,808			120,037			5	%	94	%
	Total deposits		836,309			726,254			470,528			15	%	78	%
	Shareholders equity, net	$	70,915		$	68,546		$	56,804			3	%	25	%
SELECT INCOME STATEMENT DATA:
	Gross revenue	$	11,017		$	10,069		$	7,285			9	%	51	%
	Operating expense		4,445			4,299			3,785			3	%	17	%
	Pre-tax, pre-provision income		6,572			5,770			3,500			14	%	88	%
	Net income after tax	$	4,196		$	3,253		$	2,261			29	%	86	%
SHARE DATA:
	Basic earnings per share	$	1.37		$	1.08		$	0.76			26	%	81	%
	Fully diluted earnings per share	$	1.35		$	1.07		$	0.75			27	%	82	%
	Book value per common share	$	23.12		$	22.82		$	19.00			1	%	22	%
	Common shares outstanding		3,067,907			3,004,331			2,989,524			2	%	3	%
	Fully diluted shares		3,097,834			3,038,743			3,033,809			2	%	2	%
	CFST - Stock price	$	41.00		$	31.01		$	23.00			32	%	78	%
RATIOS:
	Return on average assets		1.87	%		1.50	%		1.72	%		25	%	9	%
	Return on average equity		24.37	%		19.73	%		16.98	%		24	%	44	%
	Efficiency ratio		41.52	%		42.70	%		52.39	%		-3	%	-21	%
	Bank Yield on earning assets		4.60	%		4.06	%		4.85	%		13	%	-5	%
	Bank Cost to fund earning assets		0.10	%		0.11	%		0.24	%		-3	%	-56	%
	Bank Net Interest Margin		4.49	%		3.95	%		4.61	%		14	%	-3	%
	Equity to assets		7.41	%		7.87	%		10.36	%		-6	%	-29	%
	Loan to deposits ratio		82.74	%		85.48	%		80.99	%		-3	%	2	%
	Full time equivalent employees		62			58			55			7	%	13	%
BALANCE SHEET DATA - AVERAGES:
	Total assets	$	910,728		$	862,478		$	529,257			6	%	72	%
	Total loans		653,894			595,544			369,888			10	%	77	%
	Investment securities		224,899			198,824			108,744			13	%	107	%
	Deposits		789,777			758,302			464,401			4	%	70	%
	Shareholders equity, net	$	69,843		$	65,570		$	53,563			7	%	30	%
ASSET QUALITY:
	Total delinquent accruing loans	$	7,493		$	1,031		$	2,291			627	%	227	%
	Nonperforming assets	$	1,491		$	1,689		$	1,146			-12	%	30	%
	Non Accrual / Total Loans		.22	%		.27	%		.30	%		-21	%	-28	%
	Nonperforming assets to total assets		.16	%		.19	%		.21	%		-20	%	-26	%
	LLR / Total loans		1.26	%		1.26	%		1.30	%		-1	%	-3	%

STATEMENT OF INCOME ($ in thousands)		For the Quarter Ended:							Percentage Change From:
(unaudited)		Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020			Dec. 31, 2020		Mar. 31, 2020
Interest Income
	Loan interest income	$	8,349	$	7,098	$	5,318		18	%	57	%
	Investment income		1,508		1,276		695		18	%	117	%
	Int. on fed funds & CDs in other banks		51		81		94		-37	%	-46	%
	Dividends from non-marketable equity		24		34		33		-29	%	-27	%
	Interest income		9,932		8,489		6,140		17	%	62	%
	Int. on deposits		228		229		273		0	%	-16	%
	Int. on short-term borrowings		1		0		27		0	%	-96	%
	Int. on long-term debt		464		295		0		57	%	0	%
	Interest expense		693		524		300		32	%	131	%
	Net interest income		9,239		7,965		5,840		16	%	58	%
	Provision for loan losses		850		1,350		400		-37	%	113	%
	Net interest income after provision		8,389		6,615		5,440		27	%	54	%
Non-Interest Income:
	Total deposit fee income		270		219		123		23	%	120	%
	Debit / credit card interchange income		101		90		66		12	%	53	%
	Merchant services income		961		1,009		699		-5	%	37	%
	Gain on sale of loans		17		587		295		-97	%	-94	%
	Other operating income		429		199		262		116	%	64	%
	Non-interest income		1,778		2,104		1,445		-15	%	23	%
Non-Interest Expense:
	Salaries & employee benefits		2,606		2,928		2,255		-11	%	16	%
	Occupancy expense		210		193		215		9	%	-2	%
	Other operating expense		1,629		1,178		1,315		38	%	24	%
	Non-interest expense		4,445		4,299		3,785		3	%	17	%
	Net income before tax		5,722		4,420		3,100		29	%	85	%
	Tax provision		1,526		1,167		839		31	%	82	%
	Net income after tax	$	4,196	$	3,253	$	2,261		29	%	86	%

BALANCE SHEET ($ in thousands )		End of Period:										Percentage Change From:
(unaudited)		Mar. 31, 2021			Dec. 31, 2020			Mar. 31, 2020				Dec. 31, 2020		Mar. 31, 2020
ASSETS
	Cash and due from banks	$	16,765		$	9,788		$	8,331			71	%	101	%
	Fed funds sold and deposits in banks		1,345			618			719			118	%	87	%
	CDs in other banks		2,237			9,175			9,914			-76	%	-77	%
	Investment securities		233,433			222,808			120,037			5	%	94	%
	Loans held for sale		0			0			17,534			0	%	-100	%
	Portfolio loans outstanding:
	RE constr & land development		20,631			15,754			20,070			31	%	3	%
	Residential RE 1-4 Family		16,646			13,507			13,709			23	%	21	%
	Commercial Real Estate		250,713			226,246			148,945			11	%	68	%
	Agriculture		37,484			33,026			31,419			13	%	19	%
	Commercial and Industrial		176,788			172,624			166,178			2	%	6	%
	SBA PPP Loans		189,485			159,491			0			19	%	0	%
	Consumer and Other		219			118			771			86	%	-72	%
	Total Portfolio Loans		691,966			620,766			381,092			11	%	82	%
	Deferred fees & discounts		(4,930	)		(3,728	)		4			32	%	Inf
	Allowance for loan losses		(8,698	)		(7,848	)		(4,945	)		11	%	76	%
	Loans, net		678,338			609,190			376,151			11	%	80	%
	Non-marketable equity investments		3,062			3,059			2,647			0	%	16	%
	Cash value of life insurance		8,247			8,198			8,043			1	%	3	%
	Accrued interest and other assets		14,052			8,511			4,946			65	%	184	%
	Total assets	$	957,479		$	871,347		$	548,322			10	%	75	%
LIABILITIES AND EQUITY
	Non-interest bearing deposits	$	511,497		$	446,920		$	292,449			14	%	75	%
	Interest checking		37,071			19,543			14,780			90	%	151	%
	Savings		91,282			56,949			43,910			60	%	108	%
	Money market		126,797			131,904			84,926			-4	%	49	%
	Certificates of deposits		69,662			70,938			34,463			-2	%	102	%
	Total deposits		836,309			726,254			470,528			15	%	78	%
	Short-term borrowings		5,000			31,000			17,000			-84	%	-71	%
	Long-term debt		39,165			39,126			0			0	%	0	%
	Other liabilities		6,090			6,421			3,990			-5	%	53	%
	Total liabilities		886,564			802,801			491,518			10	%	80	%
	Common stock & paid in capital		31,753			30,997			30,571			2	%	4	%
	Retained earnings		37,618			33,421			24,170			13	%	56	%
	Total equity		69,371			64,418			54,741			8	%	27	%
	Accumulated other comprehensive income		1,544			4,128			2,063			-63	%	-25	%
	Shareholders equity, net		70,915			68,546			56,804			3	%	25	%
	Total Liabilities and shareholders' equity	$	957,479		$	871,347		$	548,322			10	%	75	%

ASSET QUALITY ($ in thousands)	Period Ended:
(unaudited)	Mar. 31, 2021			Dec. 31, 2020			Mar. 31, 2020
Delinquent accruing loans 30-60 days	$	5,824		$	1,021		$	1,138
Delinquent accruing loans 60-90 days	$	1,669		$	10		$	1,153
Delinquent accruing loans 90+ days	$	0		$	0		$	0
Total delinquent accruing loans	$	7,493		$	1,031		$	2,291
Loans on non accrual	$	1,491		$	1,689		$	1,146
Other real estate owned	$	0		$	0		$	0
Nonperforming assets	$	1,491		$	1,689		$	1,146
Performing restructured loans	$	0		$	430		$	547
Delq 30-60 / Total Loans		.84	%		.16	%		.30	%
Delq 60-90 / Total Loans		.24	%		.00	%		.30	%
Delq 90+ / Total Loans		.00	%		.00	%		.00	%
Delinquent Loans / Total Loans		1.08	%		.17	%		.60	%
Non Accrual / Total Loans		.22	%		.27	%		.30	%
Nonperforming assets to total assets		.16	%		.19	%		.21	%
Year-to-date charge-off activity
Charge-offs	$	0		$	40		$	0
Recoveries	$	0		$	47		$	3
Net charge-offs	$	0		$	(7	)	$	(3	)
Annualized net loan losses (recoveries) to average loans		.00	%		-.00	%		-.00	%
LOAN LOSS RESERVE RATIOS:
Reserve for loan losses	$	8,698		$	7,848		$	4,945
Total loans	$	691,966		$	620,766		$	381,092
Purchased govt. guaranteed loans	$	43,931		$	46,567		$	55,707
Originated govt. guaranteed loans	$	235,360		$	200,083		$	37,099
LLR / Total loans		1.26	%		1.26	%		1.30	%
LLR / Loans less 100% govt. gte. loans (PPP and purchased)		1.90	%		1.89	%		1.52	%
LLR / Loans less all govt. guaranteed loans		2.11	%		2.10	%		1.72	%
LLR / Total assets		.91	%		.90	%		.90	%

SELECT FINANCIAL TREND INFORMATION (unaudited)		For the Quarter Ended:
		Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
BALANCE SHEET DATA - PERIOD END BALANCES:
	Total assets	$	957,479	$	871,347	$	831,003	$	756,739	$	548,322
	Loans held for sale		0		0		28,294		18,306		17,534
	Loans held for investment ex. PPP		502,481		461,275		404,980		388,544		381,092
	PPP Loans		189,485		159,491		184,110		184,151		0
	Investment securities		233,433		222,808		182,168		139,688		120,037
	Non-interest bearing deposits		511,497		446,920		445,952		414,395		292,449
	Interest bearing deposits		324,812		279,334		307,193		264,435		178,079
	Total deposits		836,309		726,254		753,145		678,830		470,528
	Short-term borrowings		5,000		31,000		10,000		11,761		17,000
	Long-term debt		39,165		39,126		0		0		0
	Total equity		69,371		64,418		61,028		57,863		54,741
	Accumulated other comprehensive income		1,544		4,128		3,548		2,912		2,063
	Shareholders equity, net	$	70,915	$	68,546	$	64,576	$	60,775	$	56,804
INCOME STATEMENT - QUARTERLY VALUES:
	Interest income	$	9,932	$	8,489	$	7,325	$	6,781	$	6,140
	Int. on dep. & short-term borrowings		229		229		232		234		300
	Int. on long-term debt		464		295		0		0		0
	Interest expense		693		524		232		234		300
	Net interest income		9,239		7,965		7,093		6,547		5,840
	Non-interest income		1,778		2,104		1,733		1,791		1,445
	Gross revenue		11,017		10,069		8,826		8,338		7,285
	Provision for loan losses		850		1,350		750		800		400
	Non-interest expense		4,445		4,299		3,963		3,461		3,785
	Net income before tax		5,722		4,420		4,113		4,077		3,100
	Tax provision		1,526		1,167		1,091		1,099		839
	Net income after tax	$	4,196	$	3,253	$	3,022	$	2,978	$	2,261
BALANCE SHEET DATA - QUARTERLY AVERAGES:
	Total assets	$	910,728	$	862,478	$	781,339	$	697,443	$	529,257
	Loans held for sale		0		9,934		23,677		17,213		14,902
	Loans held for investment ex. PPP		473,185		422,505		386,819		380,025		369,888
	PPP Loans		180,709		173,039		184,151		137,750		0
	Investment securities		224,899		198,824		156,249		129,574		108,744
	Non-interest bearing deposits		467,690		463,311		430,149		402,777		280,235
	Interest bearing deposits		322,087		294,991		275,184		219,504		184,166
	Total deposits		789,777		758,302		705,333		622,281		464,401
	Short-term borrowings		6,182		8,223		10,277		13,566		8,193
	Long-term debt		39,147		25,121		0		0		0
	Total equity		66,429		62,258		58,927		54,812		52,878
	Accumulated other comprehensive income		3,414		3,311		3,515		2,229		685
	Shareholders equity, net	$	69,843	$	65,570	$	62,441	$	57,042	$	53,563

Contact:		Steve Miller – President & CEO Steve Canfield – Executive Vice President & CFO (559) 439-0200