COMMUNITY FIRST BANCORPORATION ANNOUNCES 2021 FINANCIAL RESULTS

WALHALLA, S.C., Feb. 8, 2022 /PRNewswire/ -- Community First Bancorporation, Inc. (OTC: CFOK), parent company for Community First Bank, Inc. (the "Bank") and SeaTrust Mortgage Company ("STM"), announced its unaudited financial results for the year 2021. Highlights of the results include:

• Earnings increased 101% in 2021 from 2020.
• Earnings per common share increased 111% in 2021 from 2020.
• Total consolidated earnings were $3,620,000 for the year ended December 31, 2021 and $939,000 for the fourth quarter.
• Net interest income grew by 22.5% in 2021 compared to 2020.
• Noninterest income for 2021 increased 97.6% over the level reported in 2020.
• Total assets as of December 31, 2021, were $672,963,000, an increase of 23.7% compared to total assets of $543,988,000 as of December 31, 2020.
• Total gross loans held for investment at December 31, 2021 were $458,753,000, an increase of 14.0% from total gross loans held for investment as of December 31, 2020.
• Loans held for sale totaled $19,150,000 as of December 31, 2021. The volume of secondary market loan sales was approximately $255,000,000 for the twelve months ended December 31, 2021, compared to $82,000,000 for 2020.
• Total deposits as of December 31, 2021 were $563,511,000 compared to $442,868,000 as of December 31, 2020, an increase of 27.2%.

Total consolidated earnings of $3,620,000 were recorded for the year ended December 31, 2021, which represented a 101% increase over total consolidated earnings for the year ended December 31, 2020. Earnings per common share ("EPS") were $0.63, an increase of 111% over an EPS of $0.30 per common share for the year 2020. The increase was primarily the result of the Company's growth. The Company expanded its customer base within its existing markets in the Carolinas and added the new market of eastern Tennessee with the acquisition of Security Federal Bank in March 2021.

The Company's total consolidated earnings were $939,000 for the fourth quarter of 2021 compared to $1,758,000 recorded for the third quarter of 2021, and $494,000 for the fourth quarter of 2020. EPS for the fourth quarter of 2021 totaled $0.16 compared to third quarter 2021 EPS of $0.31 and $0.08 for the fourth quarter of 2020. Expanded activity in the Bank's mortgage business and SBA portfolio generated significant increases in noninterest income in the second half of 2021. The Bank expanded its mortgage business via a new line of Freddie Mac products in addition to the volume generated through STM.

Net interest income grew by 22.5% in 2021 compared to 2020. The increase was driven by the solid loan growth as well as declines in the weighted average cost of deposits.  Net loans held for investment grew $55,596,000 or 14.0% in 2021 compared to 2020. Total remaining PPP loans were $132,000 as of December 31, 2021. Overall loan yields for 2021 were 4.69% compared to 4.87% in 2020.  The yield on investments was 1.71% in 2021 compared to 1.83% in 2020. The Company increased its investment portfolio in order to employ some of the excess liquidity experienced because of the economic changes brought on by the pandemic.

Noninterest income for 2021 totaled $13,388,000 compared to $6,774,000 in 2020. The increase was primarily due to loans originated and sold by STM, which began these activities late in the first quarter of 2020. The Bank also increased origination and servicing of loans sold in the secondary market following the acquisition of Security Federal Bank in March 2021. Noninterest income from mortgage banking activities totaled approximately $9.7 million in 2021 compared to $4.0 million in 2020. An additional positive factor was an increase in gains on sales of SBA loans in 2021 compared to 2020. SBA loan sales generated $485,000 of noninterest income in 2021 compared to $215,000 in 2020. Increases in interchange income, service charges on deposits and other income contributed to the overall increase in noninterest income.

Noninterest expense increased to $28,147,000 in 2021 from $19,270,000 in 2020 due to several factors, including commissions and other costs of mortgage banking activities and merger-related expenses. A majority of the increase in 2021 was related to STM compensation, which increased as STM's loan volumes increased. Loan related costs also increased resulting from STM's increased loan volumes. Expenses related to the acquisition of Security Federal Bank totaled $934,000 in 2021 and $123,000 in 2020. Data processing and software expenses increased by $762,000 in 2021 compared to 2020.

President and CEO Richard D. Burleson commented: "2021 was a highly successful year for Community First Bancorporation. Our associates managed to increase profitability substantially, even while managing an acquisition and navigating unchartered territory caused by the pandemic. I am extremely proud of our team and what we were able to accomplish this past year."

Mr. Burleson commented further," With net income of $3,620,000 in 2021, we were able to post the Company's highest core earnings year since 2005. We experienced significant loan growth across all lines of business with the retail, commercial and SBA teams all exceeding their goals. Our sales finance team had another solid year. However, we didn't see the growth in this segment of our loan portfolio in 2021 as we did elsewhere, due primarily to pandemic-related inventory shortages."

Mr. Burleson noted, "The Bank continues to have and to meet high asset quality standards. Our nonperforming assets, comprising nonperforming loans and foreclosed assets, decreased slightly to $971,000 as of December 31, 2021 from $976,000 at December 31, 2020. At year end, we had three loans totaling approximately $88,000 in our foreclosure pipeline and our past due percentage remained below .30% during the quarter. On December 31, 2021, our Allowance for Loan and Lease Losses ("ALLL") totaled $5,368,000 or 1.17% of loans held for investment. The Bank provided $306,000 to the ALLL in 2021 and $1,100,000 in 2020. The slight decline in the ratio of the ALLL as a percentage of total gross loans held for investment was a result of changes in the subjective factors used previously in anticipation of the potential effects of the pandemic. Net recoveries for 2021 totaled $250,000, and we did not experience significant long-term deterioration in credit quality tied specifically to the pandemic."

Mr. Burleson repeated that "the Company's Tier 1 Leverage Capital Ratio was 7.7% as of December 31, 2021.  The Bank's Tier 1 Leverage Capital Ratio was 8.8% as of December 31, 2021 and 2020. Liquidity levels also remained satisfactory."

Community First Bank has 12 full-service financial centers in North and South Carolina and Tennessee, with two each in Seneca and Anderson and single locations in Greenville, Williamston, Walhalla and Westminster, South Carolina, locations in Dallas and Charlotte, North Carolina, and two locations in Elizabethton, Tennessee. The Company operates loan production offices in Waynesville, North Carolina and Kingsport, Tennessee. In addition, its SeaTrust Mortgage subsidiary operates offices in North Carolina, South Carolina, Florida and Tennessee.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This News Release contains forward-looking statements, which can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "plan," "seek," "expect," "will," "may" and words of similar meaning. These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business and strategic plans, prospects, growth and operating strategies; statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The Company is under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this News Release.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• The ultimate impact of the current pandemic is unknown and could adversely impact the Company in various areas including but not limited to credit risk, liquidity risk, and risk to earnings;
• We may not be able to implement aspects of our growth strategy;
• Future expansion involves risks;
• New bank office facilities and other facilities may not be profitable;
• Acquisition of assets and assumption of liabilities may expose us to intangible asset risk, which could impact our results of operations and financial condition;
• The success of our growth strategy depends on our ability to identify and retain individuals with experience and relationships in the markets in which we intend to expand;
• We may need additional access to capital, which we may be unable to obtain on attractive terms or at all;
• Our estimate for losses in our loan portfolio may be inadequate, which would cause our results of operations and financial condition to be adversely affected;
• Our commercial real estate loans generally carry greater credit risk than one-to-four family residential mortgage loans;
• Construction financing may expose us to a greater risk of loss and hurt our earnings and profitability;
• Repayment of our commercial business loans is primarily dependent on the cash flows of the borrowers, which may be unpredictable, and the collateral securing these loans may fluctuate in value;
• We continue to hold other real estate, which has led to operating expenses and vulnerability to additional declines in real property values;
• A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business;
• Future changes in interest rates could reduce our profits;
• Strong competition within our market areas may limit our growth and profitability;
• Our stock-based incentive compensation plan will increase our costs, which will reduce our income;
• The implementation of our stock-based incentive compensation plan may dilute shareholder ownership interest;
• We are subject to extensive regulation and oversight, and, depending upon the findings and determinations of our regulatory authorities, we may be required to make adjustments to our business, operations or financial position and could become subject to formal or informal regulatory action;
• We are subject to stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends or repurchasing shares;
• We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services;
• The value of our deferred tax asset could be impacted if corporate tax rates in the U.S. decline or as a result of other changes in the U.S. corporate tax system;
• We may not be able to utilize all of our deferred tax asset;
• The fair value of our investments could decline;
• Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, results of operations and cash flows;
• Changes in accounting standards could affect reported earnings;
• A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers or other third parties, including as a result of cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs, and cause losses;
• Our stock price may be volatile, which could result in losses to our shareholders and litigation against us;
• The trading volume in our common stock is lower than that of other larger companies; future sales of our stock by our shareholders or the perception that those sales could occur may cause our stock price to decline;
• There may be future sales of additional common stock or preferred stock or other dilution of our equity, which may adversely affect the market price of our common stock;
• We may issue additional debt and equity securities or securities convertible into equity securities, any of which may be senior to our common stock as to distributions and in the event of liquidation, which could negatively affect the value of our common stock;
• Negative public opinion surrounding our Company and the financial institutions industry generally could damage our reputation and adversely impact our earnings.

Contact:  Richard D. Burleson, Jr. – President and CEO
                Jennifer M. Champagne – Executive Vice President and CFO
                864-886-0206

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SOURCE Community First Bank