Communities First Financial Corporation Earns $3.02 Million for 3Q20, up 35% from 3Q19; Earns $8.26 Million for First Nine Months of 2020

FRESNO, Calif., Oct. 20, 2020 (GLOBE NEWSWIRE) -- Communities First Financial Corporation (the “Company”) (OTCQX: CFST), the parent company of Fresno First Bank (the “Bank”), today reported net income increased 35% to $3.02 million, or $1.00 per diluted share for the third quarter of 2020 (3Q-2020), compared to $2.24 million, or $0.75 per diluted share, for the third quarter of 2019 (3Q-2019), and grew 1% from $2.98 million, or $0.98 per diluted share, for the second quarter of 2020 (2Q-2020). For the first nine months of 2020, net income increased 24% to $8.26 million, or $2.72 per diluted share, compared to $6.64 million, or $2.23 per diluted share, for the first nine months of 2019. All results are unaudited.

Highlights: As of, or for the quarter ended September 30, 2020, compared to quarter ended September 30, 2019:

  • Pre-tax, pre-provision income increased 34% to $4.11 million.
  • Net income increased 35% to $3.02 million or $1.00 per diluted share.
  • Return on average equity of 19.25%.
  • Return on average assets of 1.54%.
  • Revenue (net interest income, before the provision for loan losses, plus non-interest income) increased by 31% to $8.83 million from a year earlier.
  • Total assets increased 54% to $831.0 million.
  • Total loans (ex. HFS) increased 69% to $589.1 million.
  • Total deposits increased 55% to $753.1 million.
  • Shareholder equity increased 30% to $64.6 million.
  • Tangible shareholders’ equity to total assets decreased 16% to 7.77%.
  • Book value increased 27% to $21.49 per share.

“We are operating in unprecedented times, and I am proud of how our team came together and continues to help our customers and communities weather the Coronavirus pandemic,” said Steve Miller, President and Chief Executive Officer. “We delivered record earnings in the third quarter 2020, driven by an expanded balance sheet fueled by solid growth in total loans and deposits, strong revenue growth, and a significant reduction in delinquent loans. Although our credit metrics improved considerably during the current quarter, we proactively added $750,000 to reserves for loan losses in view of the increased risks associated with the Coronavirus pandemic’s impact on our local economies.”

“We are excited about our record number of new client relationships and thank our existing customers for their loyalty,” added Miller. “We look forward to assisting all of our customers as we continue to navigate through these uncertain times.”

COVID-19 Update

According to the California Department of Public Health, California has a new blueprint for reducing COVID-19 in the state with revised criteria for loosening and tightening restrictions on activities. Every county in California is assigned to a tier based on its test positivity and adjusted case rate. Additionally, a new health equity metric took effect on October 6, 2020. In order to advance to the next less restrictive tier, each county will need to meet an equity metric or demonstrate targeted investments to eliminate disparities in levels of COVID-19 transmission, depending on its size. The California Health Equity Metric is designed to help guide counties in their continuing efforts to reduce COVID-19 cases in all communities and requires more intensive efforts to prevent and mitigate the spread of COVID-19 among Californians who have been disproportionately impacted by this pandemic.
https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/COVID-19/CaliforniaHealthEquityMetric.aspx
https://calbudgetcenter.org/resources/covid19-industries-hit-hardest/
Fresno County, where the majority of the Bank’s customers reside, recently graduated from purple Tier 1 under California’s Blueprint for a Safer Economy, into the less restrictive red tier. The red tier is good news, allowing for additional re-openings and higher capacities for industries that have been impacted the most severely by the pandemic.

Credit Risk as a Result of the Pandemic

The Bank’s loan portfolio is very 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 Government stimulus money, state and federally encouraged payment deferrals, and the Small Business Administration (“SBA”) making payments for six months on SBA loans, 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 borrowing 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 more frequently to understand individual challenges and are obtaining more frequent data from borrowers, such 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, as of September 30, 2020, due to the effects of the pandemic. Exposure to higher risk industries comprises approximately 6.3%, or $21.3 million, of the Bank’s loan portfolio, net of government guarantees, and is spread over 83 loans.

  
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 Sales36$9,924$6,523$3,4011.0%$2,452$5,8531.3% 
Entertainment & Recreation5 1,743 652 1,0910.3% 100 1,1910.3% 
Lodging & Travel10 15,539 2,290 13,2493.9% 550 13,7993.1% 
Restaurants & Bars32 5,961 2,400 3,5611.0% 2,372 5,9331.3% 
Total83$ 33,168$ 11,866$ 21,3026.3%$ 5,474$ 26,7766.0% 
          
          
Total Loan Portfolio1,492$ 617,377$ 277,852$ 339,525100.0%$ 109,078$ 448,603100.0% 
          

Many of these customers received Paycheck Protection Program (“PPP”) loans and some customers were granted payment deferrals. SBA loans originated prior to September 30, 2020, are eligible to receive six months of payments made by the SBA. As of September 30, 2020, the majority of the loans on deferral have returned to a regular payment schedule. By November 2020, the majority of the SBA loans will have received their six payments.

Requests for Deferral of Payments

“We originally granted payment deferrals on 57 individual loans covering 36 borrowers,” added Miller. “Subsequently four borrowers asked to be taken off deferral which we considered as a very positive trend leaving the list of 53 loans discussed below.”

The table(s) below reflect the loan deferrals granted by industry. 47% of deferral requests were for three months, while 8% and 45% were for four and six months respectively. 85% of deferrals were for traditional commercial loans while 15% were for SBA guaranteed loans. 72% of deferrals were secured by real estate and 28% were non-real estate secured. As of September 30, 2020, the deferral period had ended for approximately 54% of these loans.

Payment Deferrals Originally Provided by Industry 
IndustryCount Balance% of Balance 
Hotels / Motels3 $11,582,51245.3% 
Lessors of Nonresidential Buildings (except Miniwarehouses)5  2,463,8909.6% 
Full-Service Restaurants5  1,426,4255.6% 
Offices of Physicians (except Mental Health Specialists)3  1,375,7905.4% 
Lessors of Residential Buildings and Dwellings6  1,242,5304.9% 
Commercial Printing (except Screen and Books)5  1,146,2714.5% 
Gasoline Stations with Convenience Stores1  997,2263.9% 
Radio Stations1  887,9353.5% 
Breweries3  731,6712.9% 
Industrial Supplies Merchant Wholesalers2  653,0922.6% 
Used Car Dealers2  529,8412.1% 
Limited-Service Restaurants1  484,4771.9% 
Musical Instrument and Supplies Stores1  361,2241.4% 
Offices of Real Estate Agents and Brokers3  344,5711.3% 
Snack and Nonalcoholic Beverage Bars2  272,8811.1% 
General Freight Trucking, Long-Distance, Truckload2  249,1111.0% 
Individuals1  199,3560.8% 
Drinking Places (Alcoholic Beverages)1  147,3230.6% 
Recyclable Material Merchant Wholesalers1  141,2420.6% 
Confectionery and Nut Stores1  127,0880.5% 
Amusement and Theme Parks1  107,7860.4% 
Marketing Consulting Services1  102,2690.4% 
Wineries1  13,4260.1% 
Convention and Trade Show Organizers1  2,6200.0% 
Grand Total53 $25,590,556100.0% 
      
      
      
Original deferral breakdown - SBA vs. Non-SBACount Balance% of Balance 
Non SBA37 $21,663,22184.7% 
SBA16  3,927,33615.3% 
Grand Total53 $25,590,556100.0% 
      
      
Original deferral breakdown RE secured vs. Non-RE secured Count Balance% of Balance 
RE Secured21 $18,397,14171.9% 
Non-RE Secured32  7,193,41528.1% 
Grand Total53 $25,590,556100.0% 
      

Status of Loans Granted Payment Deferrals

The following tables break down the status of loans granted payment deferrals. At September 30, 2020, 12 loans totaling $11.2 million remain on payment deferral and one loan for $556,289 has subsequently been granted an additional 3-month deferral. All loans originally granted a deferral will return to a normal payment schedule during the fourth quarter unless they request, and are granted, a subsequent deferral.

Status of Loans given a deferral as of 9/30/2020Count Balance% of Balance 
No longer in deferment and paid current40 $13,784,33553.9% 
No longer in deferment - past due at 9/30 ***1  556,2892.2% 
Total no longer in deferment41  14,340,62456.0% 
      
In deferment12  11,249,93244.0% 
      
Grand Total53 $25,590,556100.0% 
      
*** The one past due loan was brought current after 9/30 with a 2nd 90 day deferment. 
      
      
      
Currently scheduled end of deferral periodCount Balance% of Balance 
Oct11 $11,050,57698.2% 
Nov1  199,3561.8% 
Grand Total12 $11,249,932100.0% 
      
      
      
SBA vs. Non-SBA breakdown of current deferredCount Balance% of Balance 
Non-SBA10 $11,059,72298.3% 
SBA2  190,2111.7% 
Grand Total12 $11,249,932100.0% 
      
      
      
RE secured vs. Non-RE breakdown of current deferredCount Balance% of Balance 
RE Secured4 $8,663,00277.0% 
Non-RE Secured8  2,586,93123.0% 
Grand Total12 $11,249,932100.0% 
      

Results of Operations

Operating revenue, consisting of net interest income and non-interest income, increased 33% to $8.83 million for the third quarter of 2020, compared to $6.63 million for the third quarter a year ago and was higher by 6% from $8.34 million for the second quarter of 2020. For the first nine months of 2020, operating revenue grew 31% to $24.45 million, compared to $18.71 million for the first nine months of 2019.

Net interest income, before the provision for loan losses, increased 25% to $7.09 million for the third quarter of 2020, compared to $5.69 million for the third quarter a year ago and increased 8% from $6.55 million for the second quarter of 2020. For the first nine months of 2020, net interest income increased 20% to $19.48 million from $16.22 million for the first nine months of 2019. Net interest income in the third quarter of 2020, and for the first nine months of 2020, benefitted primarily from larger loan and investment portfolios, helping offset the overall lower interest rate environment.

The net interest margin (“NIM”) contracted to 3.68% for the third quarter of 2020, from 4.73% for the third quarter of 2019, and 3.87% for the second quarter of 2020. “Our net interest margin continued to come under pressure as a result of the Federal Reserve rate cuts earlier in the year pushing the overall yield on earning assets down,” stated Steve Canfield, Chief Financial Officer. “The other factor compressing the NIM was the expansion of the balance sheet with lower yielding assets such as PPP loans. Although we increased interest income, the NIM ratio dropped due to falling yields on earning assets.” For the first nine months of 2020, the interest margin was 3.99% compared to 4.83% for the first nine months of 2019.

The yield on earning assets was 3.80% for the third quarter of 2020, compared to 4.97% for the third quarter a year ago, and 4.01% on a linked quarter basis. The cost of funds declined by almost 50% to 0.12% for the third quarter of 2020, compared to 0.24% for the third quarter a year ago. For the first nine months of 2020, the yield on earning assets was 4.15% compared to 5.05% for the first nine months of 2019. Year-to-date, the cost to fund earning assets decreased 29% to 0.16% compared to 0.22% for the first nine months of 2019.

Total non-interest income increased by 83% to $1.73 million, for third quarter of 2020, compared to $946,000 for the third quarter of 2019, primarily due to substantial growth in merchant services revenue as well as deposit fee income. Total non-interest income declined by 3% from $1.79 million for the second quarter of 2020, mainly due to the lower gain on sale of loans in the third quarter of 2020.

Merchant services revenue grew by 119% in the third quarter of 2020, as a result of strong customer growth from organic sources and through ISO partners, compared to the third quarter of 2019, and declined 5% on a linked quarter basis. Total deposit fee income increased by 54% for the third quarter of 2020, compared to the third quarter a year ago, and grew by 49% from the linked quarter. Debit/credit card interchange income grew by 16% year-over-year and increased by 20% from the second quarter of 2020. In the third quarter of 2020, gain on sale of loans increased by 68% from the third quarter a year earlier, and declined by 26% on a linked quarter basis.

For the first nine months of 2020, non-interest income doubled to $4.97 million, compared to $2.49 million for the first nine months of 2019. Higher merchant service revenue, and to a lesser extent fees derived from deposit and transaction charges were the main influences of the increase.

Non-interest expense for the third quarter of 2020 was $3.96 million, a 19% increase over $3.33 million for the third quarter of 2019, and a15% increase from $3.46 million from the second quarter of 2020. The rise in non-interest expense from the preceding quarter was primarily a result of a special bonus paid to employees involved in generating PPP loans and on-boarding a record number of new clients during the second quarter.

For the first nine months of 2020, non-interest expense totaled $11.21 million, compared to $9.27 million for the first nine months of 2019. The rise in non-interest expense in the first nine months of 2020, compared to 2019, resulted from increased compensation from additional staff, and also included higher consulting fees associated with third party support related to the expansion of merchant services, additional marketing expense, and data processing expense related to automation and remote banking initiatives.

The efficiency ratio was 44.90% for the third quarter of 2020, compared to 50.21% for the third quarter a year ago, and 41.51% for the second quarter of 2020. Year-to-date, the efficiency ratio was 45.96% compared to 49.58% for the first nine months of 2019.

Balance Sheet Review

Total assets increased 54% to $831.00 million at September 30, 2020, from $538.73 million at September 30, 2019. Total assets grew 10% from $756.74 million at June 30, 2020, as a result of additional deposit inflows.

Total portfolio loans increased $240.53 million, or 69%, to $589.09 million at September 30, 2020, from $348.56 million a year ago, and grew $16.40 million, or 3%, from $572.70 million at June 30, 2020. Total loans at September 30, 2020, included $184.11 million of SBA PPP loans. Loans held for sale consist of multi-family loans originated by the SoCal team and totaled $28.29 million at quarter end, up 95% from the third quarter a year ago. “We continue to attract quality customers, and our loan officers continue to reach out and cultivate strong customer relationships. At the same time, we are beginning to broaden our geographic reach, primarily in the SBA area, through the use of digital marketing and tools that allow our customers to bank virtually,” said Miller.

The commercial and industrial (C&I) portfolio remained flat at $163.44 million year-over-year and when compared to the linked quarter. C&I represented 28% of total loans at September 30, 2020 and contained $66.94 million in government guaranteed loans. Commercial real estate loans grew 42% to $183.87 million and represented 31% of total loans. Agriculture loans grew 3% from the third quarter a year ago, and increased 6% from the preceding quarter to $32.10 million, representing 6% of total loans. Real estate construction and land development totaled $12.41 million, or 2% of loans, while residential RE 1-4 family loans totaled $13.14 million, or 2% of loans. SBA PPP loans represented 31% of the portfolio and there were $4.14 million in unamortized PPP fees capitalized on the balance sheet at quarter end. At September 30, 2020, the SBA, USDA or other government agencies, guaranteed $277.47 million, or 47% of the loan portfolio.

With additional liquidity and overnight rates available for investment near zero, the investment portfolio has increased $82.71 million, or 83%, to $182.17 million at September 30, 2020, from $99.46 million a year ago, and grew $42.48 million, or 30%, from $139.69 million at June 30, 2020.  

Total deposits increased 55% to $753.15 million at September 30, 2020, compared to $486.18 million from a year earlier, and grew 11% from $678.83 million at June 30, 2020. Linked quarter growth in deposits was primarily associated with new client acquisition and short term institutional deposits used for funding instead of traditional borrowing lines.

Noninterest-bearing demand deposits grew 47% to $445.95 million at September 30, 2020, compared to $302.44 million at September 30 2019, and increased 8% from $414.40 million at June 30, 2020. Noninterest-bearing demand deposits represented 59% of total deposits at quarter end. “The growth in noninterest-bearing deposits was primarily due to new client acquisition and secondarily as a result of seasonal increases we see from some of our Ag and professional clients,” added Canfield. “Overall liquidity remains solid; we continue to have over $160 million in secured and unsecured credit facilities currently available.”  

Net shareholder’s equity increased 30% to $64.58 million at September 30, 2020, compared to $49.63 million a year ago and grew 6% from $60.78 million at June 30, 2020. Book value per common share grew 27% to $21.49 at September 30, 2020, compared to $16.87 at September 30, 2019, and 6% compared to $20.23 at June 30, 2020.

Asset Quality

Nonperforming assets (“NPAs”) declined to $1.07 million, or 0.13% of total assets, at September 30, 2020, from $1.08 million, or 0.14% of total assets at June 30, 2020. NPAs were higher compared to $765, 000, or 0.14% of total assets, at September 30, 2019. There were no charge-offs in the third quarter of 2020 and $47,000 in recoveries year-to-date. Performing restructured loans decreased to $469,000 at September 30, 2020. This one loan continues to perform under a restructured arrangement that is being closely monitored.  

Past due loans 30-60 days decreased to $829,000 at September 30, 2020, from $1.771 million at June 30, 2020. Past due loans from 60-90 days and over fell to zero at September 30, 2020, down from $3.0 million at June 30, 2020.   

The provision for loan losses was $750,000 for the third quarter of 2020, compared to $800,000 recorded in the second quarter of 2020. “Our asset quality remained strong at quarter end; however, we proactively added to reserves for loan losses in response to the weak economy resulting from the Coronavirus pandemic,” said Miller. The ratio of allowance for loan losses to total portfolio held for investment loans was 1.11%, at September 30, 2020, compared to 1.18% a year earlier and 1.01% at June 30, 2020. Year-to-date, the provision for loan losses was $1.95 million, compared to $235,000 for the first nine months of 2019.

“A large portion of our portfolio consists of loans guaranteed by the US 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 2.10% as of September 30, 2020,” 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. 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.

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


SELECT FINANCIAL INFORMATION AND RATIOS (unaudited)For the Quarter Ended: Percentage Change From: Year to Date as of: 
Sept. 30,
2020
June 30,
2020
Sept. 30,
2019

  June 30,
2020
Sept. 30,
2019
 Sept. 30,
2020
Sept. 30,
2019
Percent
Change
 
BALANCE SHEET DATA - PERIOD END BALANCES:         
 Total assets$831,003 $756,739 $538,725 10% 54%     
 Total Loans 589,090  572,695  348,556 3% 69%     
 Investment securities 182,168  139,688  99,456 30% 83%     
 Total deposits 753,145  678,830  486,183 11% 55%     
 Shareholders equity, net 64,576  60,775  49,628 6% 30%     
             
SELECT INCOME STATEMENT DATA:           
 Gross revenue$8,826 $8,338 $6,631 6% 33% $24,448$18,70531% 
 Operating expense 3,963  3,461  3,330 15% 19%  11,208 9,27221% 
 Pre-tax, pre-provision income 4,863  4,877  3,301 0% 47%  13,240 9,43340% 
 Net income after tax$3,022 $2,978 $2,238 1% 35% $8,261$6,63724% 
             
SHARE DATA:          
 Basic earnings per share$1.01 $0.99 $0.76 1% 32% $2.76$2.2722% 
 Fully diluted earnings per share$1.00 $0.98 $0.75 1% 33% $2.72$2.2322% 
 Book value per common share$21.49 $20.23 $16.87 6% 27%     
 Common shares outstanding 3,004,331  3,004,331  2,940,996 0% 2%     
 Fully diluted shares 3,034,214  3,033,308  2,989,742 0% 1%     
 CFST - Stock price$23.50 $23.00 $24.75 2% -5%     
             
RATIOS:           
 Return on average assets 1.54%  1.71%  1.78% -10% -14%  1.65% 1.88%-13% 
 Return on average equity 19.25%  20.63%  18.41% -7% 5%  19.01% 19.56%-3% 
 Efficiency ratio 44.90%  41.51%  50.21% 8% -11%  45.96% 49.58%-7% 
 Yield on earning assets 3.80%  4.01%  4.97% -5% -23%  4.15% 5.05%-18% 
 Cost to fund earning assets 0.12%  0.14%  0.24% -13% -49%  0.16% 0.22%-29% 
 Net Interest Margin 3.68%  3.87%  4.73% -5% -22%  3.99% 4.83%-17% 
 Equity to assets 7.77%  8.03%  9.21% -3% -16%     
 Loan to deposits ratio 78.22%  84.37%  71.69% -7% 9%     
 Full time equivalent employees 61  59  50 4% 22%     
             
BALANCE SHEET DATA - AVERAGES:         
 Total assets$781,339 $698,446 $498,526 12% 57% $670,088$471,13342% 
 Total loans 570,970  517,775  320,729 10% 78%  486,520 309,34257% 
 Investment securities 156,249  129,574  94,860 21% 65%  131,613 94,63239% 
 Deposits 705,333  622,281  447,486 13% 58%  597,733 423,22741% 
 Shareholders equity, net$62,441 $58,044 $48,246 8% 29% $58,032$45,38628% 
             
ASSET QUALITY:           
 Total delinquent accruing loans$829 $4,768 $433 -83% 91%     
 Nonperforming assets$1,070 $1,083 $765 -1% 40%     
 Non Accrual / Total Loans .18%  .19%  .22% -4% -17%     
 Nonperforming assets to total assets .13%  .14%  .14% -10% -9%     
 LLR / Total loans 1.11%  1.01%  1.18% 10% -6%     
             


STATEMENT OF INCOME ($ in thousands)For the Quarter Ended: Percentage Change From: For the Year Ended
(unaudited)Sept. 30,
2020
June 30,
2020
Sept. 30,
2019
 June 30,
2020
Sept. 30,
2019
 Sept. 30,
2020
Sept. 30,
2019
Percent
Change
Interest Income         
 Loan interest income$6,297$5,949$4,999 6%26% 17,56314,21024%
 Investment income 927 726 647 28%43% 2,3481,96619%
 Int. on fed funds & CDs in other banks 77 78 295 -1%-74% 249696-64%
 Dividends from non-marketable equity 24 28 27 -14%-11% 8592-8%
 Interest income 7,325 6,781 5,968 8%23% 20,24516,96419%
 Total interest expense 232 234 283 -1%-18% 7677453%
 Net interest income 7,093 6,547 5,685 8%25% 19,47816,21920%
 Provision for loan losses 750 800 235 -6%219% 1,950235730%
 Net interest income after provision 6,343 5,747 5,450 10%16% 17,52815,98410%
            
Non-Interest Income:          
 Total deposit fee income 176 118 114 49%54% 41831831%
 Debit / credit card interchange income 79 66 68 20%16% 21217918%
 Merchant services income 1,096 1,155 501 -5%119% 2,950843250%
 Gain on sale of loans 259 351 154 -26%68% 90478116%
 Other operating income 123 101 109 22%13% 48636533%
 Non-interest income 1,733 1,791 946 -3%83% 4,9702,486100%
           
Non-Interest Expense:         
 Salaries & employee benefits 2,605 1,908 1,990 37%31% 6,7675,73118%
 Occupancy expense 211 204 207 3%2% 6306005%
 Other operating expense 1,147 1,349 1,133 -15%1% 3,8112,94130%
 Non-interest expense 3,963 3,461 3,330 15%19% 11,2089,27221%
           
 Net income before tax 4,113 4,077 3,066 1%34% 11,2909,19823%
 Tax provision 1,091 1,099 828 -1%32% 3,0292,56118%
 Net income after tax$3,022$2,978$2,238 1%35% 8,2616,63724%
            



BALANCE SHEET ($ in thousands )  End of Period: Percentage Change From: 
        
(unaudited)Sept. 30,
2020
June 30,
2020
Sept. 30,
2019
 June 30,
2020
Sept. 30,
2019
 
ASSETS       
 Cash and due from banks$15,615 $9,965 $16,191  57%-4% 
               
 Fed funds sold and deposits in banks 698  606  38,603  15%-98 
 CDs in other banks 9,669  9,914  10,409  -2%-7% 
 Investment securities 182,168  139,688  99,456  30%83% 
 Loans held for sale 28,294  18,306  14,511  55%95% 
 Portfolio loans outstanding:      
 RE constr & land development 12,414  22,545  15,341  -45%-19% 
 Residential RE 1-4 Family 13,135  13,890  10,003  -5%31% 
 Commercial Real Estate 183,869  157,894  129,089  16%42% 
 Agriculture 32,103  30,367  31,106  6%3% 
 Commercial and Industrial 163,444  163,805  162,992  -0%0% 
 SBA PPP Loans 184,110  184,151  -  -0%0% 
 Consumer and Other 15  43  25  -65%-40% 
 Total Portfolio Loans 589,090  572,695  348,556  3%69% 
 Deferred fees & discounts (4,570) (4,881) (144) -6%3074% 
 Allowance for loan losses (6,538) (5,788) (4,130) 13%58% 
 Loans, net 577,982  562,026  344,282  3%68% 
 Non-marketable equity investments 3,019  3,019  2,572  0%17% 
 Cash value of life insurance 8,147  8,095  7,938  1%3% 
 Accrued interest and other assets 5,411  5,120  4,763  6%14% 
 Total assets$831,003 $756,739 $538,725  10%54% 
        
LIABILITIES AND EQUITY       
 Non-interest bearing deposits$445,952 $414,395 $302,435  8%47% 
 Interest checking 76,476  24,417  13,800  213%454% 
 Savings 54,261  55,550  37,098  -2%46% 
 Money market 129,025  130,356  90,440  -1%43% 
 Certificates of deposits 47,431  54,112  42,410  -12%12% 
 Total deposits 753,145  678,830  486,183  11%55% 
 Borrowings 10,000  11,761  -  -15%0% 
 Other liabilities 3,282  5,373  2,914  -39%13% 
 Total liabilities 766,427  695,964  489,097  10%57% 
        
 Common stock & paid in capital 30,858  30,715  29,763  0%4% 
 Retained earnings 30,170  27,148  19,346  11%56% 
 Total equity 61,028  57,863  49,109  5%24% 
 Accumulated other comprehensive income 3,548  2,912  519  22%584% 
 Shareholders equity, net 64,576  60,775  49,628  6%30% 
 Total Liabilities and shareholders' equity$831,003 $756,739 $538,725  10%54% 
         



ASSET QUALITY ($ in thousands)Period Ended: 
(unaudited)Sept. 30, 2020June 30, 2020Sept. 30, 2019 
Delinquent accruing loans 30-60 days$829$1,771$431 
Delinquent accruing loans 60-90 days 0$1,880 0 
Delinquent accruing loans 90+ days 0$1,117$2 
Total delinquent accruing loans$829$4,768$433 
     
Loans on non accrual$1,070$1,083$765 
Other real estate owned 0 0.0 0 
Nonperforming assets$1,070$1,083$765 
     
Performing restructured loans$469$508$529 
     
     
Delq 30-60 / Total Loans.14%.31%.12% 
Delq 60-90 / Total Loans.00%.33%.00% 
Delq 90+ / Total Loans.00%.19%.00% 
Delinquent Loans / Total Loans.14%.83%.12% 
Non Accrual / Total Loans.18%.19%.22% 
Nonperforming assets to total assets.13%.14%.14% 
     
     
Year-to-date charge-off activity    
Charge-offs 0 0$163 
Recoveries$47$47$9 
Net charge-offs$(47)$(47)$154 
Annualized net loan losses (recoveries) to average loans-.01%-.02%.07% 
     
LOAN LOSS RESERVE RATIOS:    
Reserve for loan losses$6,538$5,788$4,130 
     
Total loans$589,089$572,695$348,556 
Purchased govt. guaranteed loans$52,072$53,690$58,421 
Originated govt. guaranteed loans$225,780$223,788$34,661 
     
LLR / Total loans 1.11% 1.01% 1.18% 
LLR / Loans less 100% govt. gte. loans (PPP and purchased) 1.85% 1.73% 1.42% 
LLR / Loans less all govt. guaranteed loans 2.10% 1.96% 1.62% 
LLR / Total assets.79%.76%.77% 
     

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