Dogwood State Bank Reports Third Quarter 2024 Results and Successful Integration of Community First

RALEIGH, N.C., Oct. 23, 2024 /PRNewswire/ — Dogwood State Bank DSBX (“Dogwood” or the “Bank”) announced today its financial results for the three and nine months ended September 30, 2024.

Third Quarter 2024 Financial Highlights

The acquisition of Community First Bancorporation (“Community First”) was completed on August 1, 2024.
Adjusted net income (non-GAAP) improved to $6.4 million in Q3 2024, compared to $3.1 million in Q2 2024 and $2.9 million in Q3 2023.
Adjusted EPS (non-GAAP) increased to $0.36 per diluted share in Q3 2024, compared to $0.20 per share in Q2 2024 and $0.20 per share in Q3 2023.
Net interest margin expanded to 3.93% in Q3 2024, compared to 3.53% in Q2 2024 and 3.43% in Q3 2023.
SBA lending income rose to $2.8 million in Q3 2024, compared to $2.7 million in Q2 2024 and $2.4 million in Q3 2023. Dogwood was ranked 3^rd largest North Carolina SBA lender and 29^th largest in the nation in the SBA’s most recent fiscal year.
Adjusted efficiency ratio (non-GAAP) improved to 60.8% in Q3 2024, compared to 62.1% in Q2 2024 and 65.1% in Q3 2023.

“Dogwood’s third quarter 2024 results demonstrate our strong organic growth and operating momentum as well as enhanced earnings power from the Community First acquisition,” commented Steve Jones, Chief Executive Officer. “The combination of these factors contributed to a 106% increase in adjusted net income compared to last quarter and a 79% growth in adjusted EPS over the same periods. I am also pleased to announce the successful conversion of Community First’s customers and systems onto Dogwood’s platform this past weekend, officially completing the merger integration process. Thanks to the hard work and dedication of our employees, we were able to ensure a smooth transition for our customers. Their commitment has been crucial in making this conversion a success, and we look forward to delivering even greater value as a unified company.”

Community First Acquisition

On August 1, 2024, Dogwood completed the acquisition of Community First in an all-stock transaction. A total of 3.4 million shares of Dogwood voting common stock were issued in the transaction, which equated to total consideration paid of $54.3 million. Dogwood added $682.8 million in total assets, $474.1 million in gross loans, $572.1 million in total deposits, and $53.6 million in shareholders’ equity to its balance sheet in the acquisition. As part of the purchase price allocation, $4.6 million in goodwill was recognized at acquisition.

Q3 2024 Earnings Performance

Dogwood reported a GAAP net loss in Q3 2024 of ($4.8) million, or ($0.28) per diluted share, compared to net income of $2.9 million, or $0.20 per diluted share, in Q3 2023. Current quarter GAAP earnings were negatively impacted by merger & acquisition expenses and a one-time provision charge on acquired non-purchased credit deteriorated (“PCD”) loans, both of which were related to the acquisition of Community First.

Adjusted net income (non-GAAP) in Q3 2024, which excludes the impact of merger & acquisition expenses as well as the provision charge on acquired non-PCD loans, increased to $6.4 million, or $0.36 per diluted share, from $2.9 million, or $0.20 per diluted share, in Q3 2023. Adjusted pre-tax, pre-provision net revenue (non-GAAP) in Q3 2024 was $8.8 million, an increase from $4.9 million in Q3 2023.

Net Interest Income

Net interest income was $18.2 million in Q3 2024, an increase from $11.0 million in Q3 2023. The increase was primarily due to significant growth in interest-earning assets over the past year, including an increase in assets from the Community First acquisition, and an expansion in net interest margin.

Total average interest-earning assets increased to $1.96 billion in Q3 2024 from $1.34 billion in Q3 2023. Average loans increased by $562.6 million. Average investment securities balances increased by $19.7 million.

Net interest margin expanded to 3.93% in Q3 2024 from 3.43% in Q3 2023. While cost of funds increased by 0.24% over the periods under comparison, higher yields on interest-earning assets coupled with a more favorable mix of those assets contributed to the improved net interest margin.

Provision for Credit Losses and Asset Quality

Provision for credit losses was $5.9 million in Q3 2024, an increase from $1.1 million in Q3 2023. This increase was primarily due to a one-time provision charge of $5.3 million on acquired non-PCD loans. The allowance for credit losses to total loans was 1.09% as of September 30, 2024, compared to 1.08% as of June 30, 2024 and 1.10% as of September 30, 2023.

Nonperforming loans were 0.18% of total loans as of September 30, 2024, compared to 0.17% as of June 30, 2024, and 0.16% as of September 30, 2023. Annualized net charge offs were 0.17% of average loans in Q3 2024, which was lower than 0.30% in Q3 2023. The vast majority of charge offs recognized in Q3 2024 were related to unguaranteed portions of U.S. Small Business Administration (“SBA”) loans.

Non-Interest Income

Non-interest income was $4.2 million in Q3 2024, an increase from $3.0 million in Q3 2023. This increase was primarily related to SBA lending income as well as service charges and debit card income.

SBA lending income rose by $439 thousand due to higher secondary market premiums on sales of guaranteed loans sold in the quarter and higher servicing fee income. The weighted average net premium on SBA loans sold in Q3 2024 was 9.64%, an increase from 7.72% in Q3 2023. Guaranteed balances of SBA loans sold totaled $29.3 million in Q3 2024, which was a decrease from $35.2 million in Q3 2023.

Service charges and debit card income increased by $466 thousand, which was primarily due to the Community First acquisition.

Non-Interest Expense

Non-interest expense was $22.7 million in Q3 2024, an increase from $9.1 million in Q3 2023. Merger & acquisition expenses of $9.1 million were incurred in Q3 2024 to complete the Community First acquisition. These one-time expenses included placement agent fees, professional fees, executive change in control payments, vendor termination payments, and other merger-related costs. Further, amortization of the Community First core deposit intangible which was recognized in the acquisition added $408 thousand to expense in the quarter.

Also contributing to the increase in non-interest expense, compensation and benefits grew by $2.6 million due partially to the increased headcount from the Community First acquisition as well as other investments that have been made in human capital across the Bank to support its organic growth, including entering new markets.

Increases in expense items such as occupancy and equipment, software, data processing, and FDIC insurance were primarily due to the Community First acquisition.

Income Taxes

Dogwood generated a tax benefit of $1.4 million in Q3 2024, compared to tax expense of $902 thousand in Q3 2023. The effective tax benefit rate was 23.2% in Q3 2024, which was slightly lower than the effective tax rate of 23.5% in Q3 2023.

Year-to-Date 2024 Earnings Performance

Dogwood reported a GAAP net loss in the first nine months of 2024 (“YTD 2024”) of ($288) thousand, or ($0.02) per diluted share, compared to net income of $7.7 million, or $0.52 per diluted share, in the first nine months of 2023 (“YTD 2023”). YTD 2024 GAAP earnings were negatively impacted by merger & acquisition expenses and a one-time provision charge on acquired PCD loans, both of which were related to the acquisition of Community First.

Adjusted net income (non-GAAP) in Q3 2024, which excludes the impact of merger & acquisition expenses as well as the provision charge on acquired non-PCD loans, increased to $12.0 million, or $0.75 per diluted share, from $7.7 million, or $0.52 per diluted share, in YTD 2023. Adjusted pre-tax, pre-provision net revenue (non-GAAP) in YTD 2024 was $19.1 million, an increase from $13.4 million in YTD 2023.

Net Interest Income

Net interest income was $42.0 million in YTD 2024, an increase from $30.9 million in YTD 2023. The increase was due to significant growth in interest-earning assets over the past year, including an increase in assets from the Community First acquisition, and an expansion in net interest margin.

Total average interest-earning assets increased to $1.53 billion in YTD 2024 from $1.16 billion in YTD 2023. Average loans increased by $346.2 million. Average investment securities balances increased by $18.2 million, and average interest-earning cash balances increased $10.2 million.

Net interest margin expanded to 3.66% in YTD 2024 from 3.56% in YTD 2023. While cost of funds increased by 0.67% over the periods under comparison, higher yields on interest-earning assets coupled with a more favorable mix of those assets contributed to the improved net interest margin.

Provision for Credit Losses and Asset Quality

Provision for credit losses was $8.8 million in YTD 2024, an increase from $3.5 million in YTD 2023. The increase in provision expense was primarily due to a one-time provision charge of $5.3 million on acquired non-PCD loans.

Non-Interest Income

Non-interest income was $10.5 million in YTD 2024, an increase from $8.4 million in YTD 2023. This increase was primarily related to SBA lending income as well as service charges and debit card income.

SBA lending income rose by $1.1 million due to higher secondary market premiums on sales of guaranteed loans sold YTD and higher servicing fee income. The weighted average net premium on SBA loans sold in YTD 2024 was 9.52%, an increase from 8.14% in YTD 2023. Guaranteed balances of SBA loans sold totaled $79.5 million in YTD 2024, which was relatively consistent with $79.7 million in YTD 2023.

Service charges and debit card income increased by $446 thousand, which was primarily due to the Community First acquisition.

Non-Interest Expense

Non-interest expense was $44.0 million in YTD 2024, an increase from $25.9 million in YTD 2023. Merger & acquisition expenses of $10.7 million were incurred in YTD 2024 to complete the Community First acquisition. These one-time expenses included placement agent fees, professional fees, executive change in control payments, vendor termination payments, and other merger-related costs. Further, amortization of the Community First core deposit intangible which was recognized in the acquisition added $408 thousand to expense.

Also contributing to the increase in non-interest expense, compensation and benefits grew by $4.6 million due partially to the increased headcount from the Community First acquisition as well as other investments that have been made in human capital across the Bank to support its organic growth, including entering new markets.

Increases in expense items such as occupancy and equipment, software, data processing, and FDIC insurance were primarily due to the Community First acquisition.

Income Taxes

Dogwood generated a tax benefit of $46 thousand in YTD 2024, compared to tax expense of $2.2 million in YTD 2023. The effective tax benefit rate was 13.8% in YTD 2024, compared to the effective tax rate of 21.9% in YTD 2023.

About Dogwood State Bank

Dogwood State Bank is a state-chartered community bank headquartered in Raleigh, North Carolina, with approximately $2.2 billion in total assets. Dogwood provides a wide range of banking products and services through its online offerings and twenty branch offices in North Carolina, South Carolina, and Eastern Tennessee. Dogwood also specializes in providing lending services to small businesses through its Dogwood State Bank Small Business Lending division. Dogwood is focused on becoming the bank for businesses, business owners, professionals, and their employees and redefining what it means to Bank Local. By leveraging leadership, investing in technology, and committing to personalized, superior customer service, Dogwood is changing the landscape of community banking.

Forward-Looking Statements

Statements made in this press release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this press release and are based on current expectations and involve a number of assumptions. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the Bank’s operations and future prospects include but are not limited to: the expected growth opportunities or cost savings from the proposed merger (the “merger”) of Community First and Community First Bank, Inc. with and into the Bank may not be fully realized or may take longer to realize than expected; the businesses of the Bank and Community First may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger may not be obtained; changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of the Bank’s loan and securities portfolios; demand for loan products and other financial services in our market areas; inflation; deposit flows; competition; our implementation of new technologies and ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; and changes in accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with United States generally accepted accounting principles (“GAAP”). The Bank uses the non-GAAP financial measures discussed herein in its analysis of the Bank’s performance. The Bank’s management believes that these non-GAAP financial measures enhance comparability of results of operations with prior periods by excluding the impact of items or events that may obscure trends in the Bank’s performance. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to the Non-GAAP Reconciliation table for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Quarterly Financial Tables

Dogwood State Bank
Income Statements
			Quarter Ended					Nine Months Ended
(Dollars in thousands, except per share data)			Sep 30 2024	Jun 30 2024	Mar 31 2024	Dec 31 2023	Sept 30 2023	Sep 30 2024	Sep 30 2023

Net interest income			$ 18,157	$ 12,521	$ 11,312	$ 11,900	$ 11,005	$ 41,990	$ 30,884
	Provision for credit losses		5,857	2,017	921	1,638	1,063	8,795	3,526
		Net interest income after provision	12,300	10,504	10,391	10,262	9,942	33,195	27,358
Non-interest income
	SBA lending		2,801	2,717	2,197	1,838	2,362	7,715	6,583
	Service charges and debit card income		811	340	351	343	345	1,502	1,056
	Bank-owned life insurance		301	219	211	201	187	733	550
	Securities gains (losses), net		(8)	(6)	6	5	94	(8)	72
	Gain on payoff of FHLB advances		–	–	–	1,230	–	–	–
	Other		293	161	85	93	49	537	158
		Total non-interest income	4,198	3,431	2,850	3,710	3,037	10,479	8,419
Non-interest expense
	Compensation and benefits		8,598	6,683	6,506	6,910	6,003	21,787	17,229
	Occupancy and equipment		1,025	707	719	634	590	2,451	1,769
	Software		497	344	346	343	346	1,187	1,032
	Loan related costs		182	314	290	254	305	786	660
	Data processing		648	315	261	245	263	1,224	765
	Professional fees		208	235	225	242	250	668	729
	FDIC insurance		287	204	240	239	222	731	495
	Merger and acquisition expenses		9,139	562	958	14	–	10,659	–
	Amortization of other intangible assets		408	4	11	18	24	423	93
	Other		1,731	1,102	1,259	1,274	1,137	4,092	3,132
		Total non-interest expense	22,723	10,470	10,815	10,173	9,140	44,008	25,904
		Net income (loss) before income taxes	(6,225)	3,465	2,426	3,799	3,839	(334)	9,873
Income tax expense (benefit)			(1,445)	811	588	865	902	(46)	2,159
		Net income (loss)	$ (4,780)	$ 2,654	$ 1,838	$ 2,934	$ 2,937	$ (288)	$ 7,714

Pre-Tax, Pre-Provision Net Revenue (PPNR)⁽¹⁾			$ (368)	$ 5,482	$ 3,347	$ 5,437	$ 4,902	$ 8,461	$ 13,399
Adjusted PPNR⁽¹⁾			8,771	6,044	4,305	5,451	4,902	19,120	13,399

Per Share Data:
	Earnings per share (EPS) – basic		$ (0.28)	$ 0.18	$ 0.13	$ 0.20	$ 0.20	$ (0.02)	$ 0.55
	Adjusted EPS – basic⁽¹⁾		0.37	0.21	0.18	0.21	0.20	0.77	0.55
	Earnings per share – diluted		(0.28)	0.17	0.12	0.20	0.20	(0.02)	0.52
	Adjusted EPS – diluted⁽¹⁾		0.36	0.20	0.17	0.20	0.20	0.75	0.52

Performance Ratios:
	Return on average assets (ROA)		-0.97 %	0.71 %	0.53 %	0.80 %	0.87 %	-0.02 %	0.84 %
	Adjusted ROA⁽¹⁾		1.30 %	0.83 %	0.74 %	0.81 %	0.87 %	0.99 %	0.84 %
	Return on average equity (ROE)		-9.07 %	6.16 %	4.44 %	7.15 %	7.32 %	-0.21 %	6.77 %
	Adjusted ROE⁽¹⁾		12.09 %	7.16 %	6.22 %	7.18 %	7.32 %	8.77 %	6.77 %
	Return on tangible common equity (ROTCE)⁽¹⁾		-9.93 %	6.42 %	4.63 %	7.48 %	7.66 %	-0.22 %	7.10 %
	Adjusted ROTCE⁽¹⁾		13.24 %	7.46 %	6.50 %	7.51 %	7.66 %	9.32 %	7.10 %
	Net interest margin		3.93 %	3.53 %	3.41 %	3.42 %	3.43 %	3.66 %	3.57 %
	Efficiency ratio		101.65 %	65.63 %	76.37 %	65.17 %	65.09 %	83.87 %	65.91 %
	Adjusted efficiency ratio⁽¹⁾		60.76 %	62.11 %	69.60 %	65.08 %	65.09 %	63.56 %	65.91 %

⁽¹⁾ Denotes a non-GAAP measure. Refer to the non-GAAP reconciliation subsequently included in these materials for a reconciliation to the most directly
comparable GAAP measure. “Adjusted” items exclude the impact of merger and acquisition expenses.

Dogwood State Bank
Balance Sheets
				Ending Balance
(In thousands, except per share data)				Sep 30 2024	Jun 30 2024	Mar 31 2024	Dec 31 2023	Sept 30 2023
Assets
Cash and due from banks				$ 7,622	$ 2,514	$ 2,353	$ 5,191	$ 5,261
Interest-earning deposits with banks				146,732	59,073	91,365	123,474	220,206
	Total cash and cash equivalents			154,354	61,587	93,718	128,665	225,467
Investment securities available for sale				95,290	58,989	55,984	49,244	40,887
Investment securities held to maturity				73,144	74,404	76,119	77,557	78,614
Marketable equity securities				335	329	336	329	324
	Total investment securities			168,769	133,722	132,439	127,130	119,825
Loans held for sale				7,924	11,030	8,146	15,274	20,329
Loans				1,757,828	1,236,722	1,148,899	1,095,339	1,036,636
Less allowance for credit losses				(19,143)	(13,349)	(12,344)	(11,943)	(11,385)
	Loans, net			1,738,685	1,223,373	1,136,555	1,083,396	1,025,251
Bank-owned life insurance				44,743	27,888	27,669	27,458	27,257
Premises and equipment, net				35,378	19,713	18,838	18,707	19,522
SBA servicing asset				5,026	4,568	4,373	3,967	3,913
Goodwill				11,603	7,016	7,016	7,016	7,016
Other intangible assets, net				11,972	–	4	15	33
Other assets				36,274	21,854	19,750	20,060	19,845
		Total assets		$ 2,214,728	$ 1,510,751	$ 1,448,508	$ 1,431,688	$ 1,468,458
Liabilities and Shareholders’ Equity
Deposits:
	Noninterest-bearing			$ 483,908	$ 379,465	$ 302,705	$ 291,910	$ 390,018
	Interest-bearing			1,357,439	872,430	913,914	902,369	844,914
			Total deposits	1,841,347	1,251,895	1,216,619	1,194,279	1,234,932
FHLB advances				101,686	60,000	40,000	50,000	50,000
Subordinated debt				9,627	–	–	–	–
Lease obligations				10,491	10,726	10,959	11,187	11,416
Other liabilities				26,503	13,162	11,459	11,719	12,012
		Total liabilities		1,989,654	1,335,783	1,279,037	1,267,185	1,308,360
Shareholders’ equity
	Common stock ($1 par value)			18,980	15,541	15,020	14,710	14,695
	Additional paid-in capital			187,813	137,431	135,077	132,373	132,113
	Retained earnings			22,118	26,897	24,244	22,406	19,473
	Accumulated other comprehensive loss			(3,837)	(4,901)	(4,870)	(4,986)	(6,183)
		Total shareholders’ equity		225,074	174,968	169,471	164,503	160,098
		Total liabilities and shareholders’ equity		$ 2,214,728	$ 1,510,751	$ 1,448,508	$ 1,431,688	$ 1,468,458

Per Share Information:
	Shares outstanding			18,980	15,541	15,020	14,710	14,695
	Book value per share			$ 11.86	$ 11.26	$ 11.28	$ 11.18	$ 10.89
	Tangible book value per share⁽¹⁾			$ 10.62	$ 10.81	$ 10.82	$ 10.71	$ 10.42

Capital Ratios:
	Tier 1 leverage			10.56 %	12.14 %	11.75 %	11.05 %	11.72 %
	Common equity Tier 1 capital			10.66 %	12.64 %	13.12 %	13.47 %	13.97 %
	Tier 1 risk-based capital			10.66 %	12.64 %	13.12 %	13.47 %	13.97 %
	Total risk-based capital			12.30 %	13.81 %	14.29 %	14.65 %	15.08 %
	Tangible common equity⁽¹⁾			9.20 %	11.17 %	11.27 %	11.05 %	10.47 %

⁽¹⁾ Denotes a non-GAAP measure. Refer to the non-GAAP reconciliation subsequently included in these materials for a reconciliation to the most directly comparable GAAP measure.

Dogwood State Bank
Asset Quality Measures
			Quarter Ended
(Dollars in thousands)			Sep 30 2024	Jun 30 2024	Mar 31 2024	Dec 31 2023	Sept 30 2023
Nonperforming Assets:
	Non-accrual loans		$ 3,234	$ 2,069	$ 1,938	$ 1,670	$ 1,684
	Loans 90 days or more past due and accruing		–	–	–	–	–
	Other real estate owned		104	–	–	–	–
		Total nonperforming assets	$ 3,338	$ 2,069	$ 1,938	$ 1,670	$ 1,684

Asset Quality Ratios:
	Nonperforming loans/loans		0.18 %	0.17 %	0.17 %	0.15 %	0.16 %
	Nonperforming assets/total assets		0.15 %	0.14 %	0.13 %	0.12 %	0.11 %
	Nonperforming assets/loans and other real estate owned		0.19 %	0.17 %	0.17 %	0.15 %	0.16 %
	Loans 30 days or more past due/loans (excludes non-accruals)		0.30 %	0.21 %	0.41 %	0.23 %	0.05 %

Allowance for Credit Losses (ACL):
	ACL on Loans:
	Balance, beginning of period		$ 13,349	$ 12,344	$ 11,943	$ 11,385	$ 11,204
	Reclass of Day 1 ACL from loan fair value discount on acquired PCD loans		658	–	–	–	–
	Loans charged off		(738)	(987)	(288)	(81)	(792)
	Recoveries of loans previously charged off		79	11	9	40	29
		Net loans charged off	(659)	(976)	(279)	(41)	(763)
	Provision for credit losses		5,795	1,981	680	599	944
	Balance, end of period		$ 19,143	$ 13,349	$ 12,344	$ 11,943	$ 11,385

	ACL on Off-Balance Sheet Credit Exposures:
	Balance, beginning of period		$ 2,336	$ 2,300	$ 2,059	$ 1,020	$ 901
	Reserve on acquired unfunded loan commitments		197	–	–	–	–
	Provision for credit losses		62	36	241	1,039	119
	Balance, end of period		$ 2,595	$ 2,336	$ 2,300	$ 2,059	$ 1,020

Allowance for Credit Losses Ratios:
	Allowance for credit losses/loans		1.09 %	1.08 %	1.07 %	1.09 %	1.10 %
	Allowance for credit losses/nonperforming loans		591.93 %	645.19 %	636.95 %	715.15 %	676.07 %
	Net charge-offs/average loans (annualized)		0.17 %	0.33 %	0.10 %	0.02 %	0.30 %

Dogwood State Bank
Net Interest Margin Analysis

			Quarter Ended
			September 30, 2024			June 30, 2024			September 30, 2023
(Dollars in thousands)			Average Balance	Income/ Expense	Yield/ Rate	Average Balance	Income/ Expense	Yield/ Rate	Average Balance	Income/ Expense	Yield/ Rate
Interest-Earning Assets:
	Loans		$ 1,585,101	$ 27,589	6.92 %	$ 1,192,611	$ 19,547	6.59 %	$ 1,022,537	$ 15,959	6.19 %
	Investment securities		152,851	1,361	3.54 %	133,164	1,066	3.22 %	119,534	840	2.79 %
	Interest-earning deposits with banks		100,616	1,272	5.03 %	99,729	1,259	5.08 %	131,977	1,710	5.14 %
		Total interest-earning assets	1,838,568	30,222	6.54 %	1,425,504	21,872	6.17 %	1,274,048	18,509	5.76 %
Non interest-earning assets			116,334			68,849			65,619
		Total assets	$ 1,954,902			$ 1,494,353			$ 1,339,667

Interest-Bearing Liabilities:
	Interest-bearing demand		$ 165,104	$ 531	1.28 %	$ 117,889	$ 285	0.97 %	$ 109,731	$ 254	0.92 %
	Savings and money market		696,594	6,502	3.71 %	606,729	6,239	4.14 %	448,059	4,199	3.72 %
	Time		319,104	3,846	4.79 %	187,206	2,206	4.74 %	225,987	2,489	4.37 %
		Total interest-bearing deposits	1,180,802	10,879	3.67 %	911,824	8,730	3.85 %	783,777	6,942	3.51 %
	FHLB advances		76,176	979	5.11 %	41,099	552	5.40 %	50,435	505	3.97 %
	Subordinated debt		6,630	139	8.34 %	–	–	0.00 %	–	–	0.00 %
	Lease obligations		10,353	68	2.61 %	10,851	69	2.56 %	10,606	59	2.21 %
		Total interest-bearing liabilities	1,273,961	12,065	3.77 %	963,774	9,351	3.90 %	844,818	7,506	3.52 %
Non-interest bearing deposits			451,987			343,732			326,827
Other liabilities			19,280			13,491			8,813
Shareholders’ equity			209,674			173,356			159,209
		Total liabilities and shareholders’ equity	$ 1,954,902			$ 1,494,353			$ 1,339,667
Net interest income and interest rate spread				$ 18,157	2.77 %		$ 12,521	2.27 %		$ 11,005	2.24 %
Net interest margin					3.93 %			3.53 %			3.43 %

Cost of funds					2.78 %			2.88 %			2.54 %
Cost of deposits					2.65 %			2.80 %			2.48 %


						Nine Months Ended
						September 30, 2024			September 30, 2023
(Dollars in thousands)						Average Balance	Income/ Expense	Yield/ Rate	Average Balance	Income/ Expense	Yield/ Rate
Interest-Earning Assets:
	Loans					$ 1,302,139	$ 65,251	6.69 %	$ 955,929	$ 42,691	5.97 %
	Investment securities					139,138	3,456	3.32 %	120,923	2,468	2.73 %
	Interest-earning deposits with banks					93,078	3,507	5.03 %	82,880	2,980	4.81 %
		Total interest-earning assets				1,534,355	72,214	6.29 %	1,159,732	48,139	5.55 %
Non interest-earning assets						84,036			63,575
		Total assets				$ 1,618,391			$ 1,223,307

Interest-Bearing Liabilities:
	Interest-bearing demand					$ 135,874	$ 1,108	1.09 %	$ 107,793	$ 644	0.80 %
	Savings and money market					635,106	18,852	3.96 %	392,687	9,079	3.09 %
	Time					226,099	8,019	4.74 %	204,047	5,820	3.81 %
		Total interest-bearing deposits				997,079	27,979	3.75 %	704,527	15,543	2.95 %
	FHLB advances					48,278	1,899	5.25 %	46,667	1,540	4.41 %
	Subordinated debt					2,137	139	8.69 %	–	–	–
	Lease obligation					10,851	207	2.55 %	9,904	172	2.32 %
		Total interest-bearing liabilities				1,058,345	30,224	3.81 %	761,098	17,255	3.03 %
Non-interest bearing deposits						361,743			302,112
Other liabilities						15,018			7,709
Shareholders’ equity						183,285			152,388
		Total liabilities and shareholders’ equity				$ 1,618,391			$ 1,223,307
Net interest income and interest rate spread							$ 41,990	2.47 %		$ 30,884	2.52 %
Net interest margin								3.66 %			3.56 %

Cost of funds								2.84 %			2.17 %
Cost of deposits								3.69 %			2.06 %

Dogwood State Bank
Non-GAAP Reconciliation
			Quarter Ended					Nine Months Ended
(In thousands, except per share data)			Sep 30 2024	Jun 30 2024	Mar 31 2024	Dec 31 2023	Sept 30 2023	Sep 30 2024	Sep 30 2023

Net income and EPS:
	Net income (loss) (GAAP)		$ (4,780)	$ 2,654	$ 1,838	$ 2,934	$ 2,937	$ (288)	$ 7,714
		Adjust for provision on acquired non-PCD loans, net of tax	4,111	–	–	–	–	4,111	–
		Adjust for merger and acquisition expenses, net of tax	7,039	433	738	11	–	8,210	–
	Adjusted net income (non-GAAP)		$ 6,369	$ 3,087	$ 2,576	$ 2,945	$ 2,937	$ 12,032	$ 7,714

	Weighted average common shares outstanding
		Basic	17,301	14,905	14,377	14,329	14,329	15,529	14,092
		Diluted	17,810	15,480	15,075	15,039	15,026	16,094	14,783

	EPS (GAAP)
		Basic	$ (0.28)	$ 0.18	$ 0.13	$ 0.20	$ 0.20	$ (0.02)	$ 0.55
		Diluted	(0.28)	0.17	0.12	0.20	0.20	(0.02)	0.52

	Adjusted EPS (non-GAAP)
		Basic	$ 0.37	$ 0.21	$ 0.18	$ 0.21	$ 0.20	$ 0.77	$ 0.55
		Diluted	0.36	0.20	0.17	0.20	0.20	0.75	0.52

PPNR:
	Net income (loss) (GAAP)		$ (4,780)	$ 2,654	$ 1,838	$ 2,934	$ 2,937	$ (288)	$ 7,714
	Add:
		Provision for credit losses	5,857	2,017	921	1,638	1,063	8,795	3,526
		Income tax expense (benefit)	(1,445)	811	588	865	902	(46)	2,159
	PPNR (non-GAAP)		(368)	5,482	3,347	5,437	4,902	8,461	13,399
		Add: merger and acquisition expenses	9,139	562	958	14	–	10,659	–
	Adjusted PPNR (non-GAAP)		$ 8,771	$ 6,044	$ 4,305	$ 5,451	$ 4,902	$ 19,120	$ 13,399

ROA:
	Net income (loss) (GAAP)		$ (4,780)	$ 2,654	$ 1,838	$ 2,934	$ 2,937	$ (288)	$ 7,714
	Adjusted net income (non-GAAP)		6,369	3,087	2,576	2,945	2,937	12,032	7,714

	Average assets		1,954,902	1,494,353	1,402,220	1,448,929	1,339,667	1,618,391	1,223,307

	ROA		-0.97 %	0.71 %	0.53 %	0.80 %	0.87 %	-0.02 %	0.84 %
	Adjusted ROA (non-GAAP)		1.30 %	0.83 %	0.74 %	0.81 %	0.87 %	0.99 %	0.84 %

ROE and ROTCE:
	Net income (loss) (GAAP)		$ (4,780)	$ 2,654	$ 1,838	$ 2,934	$ 2,937	$ (288)	$ 7,714
	Adjusted net income (non-GAAP)		6,369	3,087	2,576	2,945	2,937	12,032	7,714

	Average shareholders’ equity (GAAP)		209,674	173,356	166,534	162,703	159,209	183,285	152,388
		Less: average goodwill and other intangible assets, net	18,234	7,018	7,027	7,041	7,063	10,786	7,093
	Average tangible common equity (non-GAAP)		191,440	166,338	159,507	155,662	152,146	172,499	145,295

	ROE		-9.07 %	6.16 %	4.44 %	7.15 %	7.32 %	-0.21 %	6.77 %
	Adjusted ROE (non-GAAP)		12.09 %	7.16 %	6.22 %	7.18 %	7.32 %	8.77 %	6.77 %
	ROTCE (non-GAAP)		-9.93 %	6.42 %	4.63 %	7.48 %	7.66 %	-0.22 %	7.10 %
	Adjusted ROTCE (non-GAAP)		13.24 %	7.46 %	6.50 %	7.51 %	7.66 %	9.32 %	7.10 %

Efficiency Ratio:
	Non-interest expense (GAAP)		$ 22,723	$ 10,470	$ 10,815	$ 10,173	$ 9,140	$ 44,008	$ 25,904
		Less: merger and acquisition expenses	9,139	562	958	14	–	10,659	–
	Adjusted non-interest expense (non-GAAP)		13,584	9,908	9,857	10,159	9,140	33,349	25,904

	Net interest income		18,157	12,521	11,312	11,900	11,005	41,990	30,884
	Non-interest income		4,198	3,431	2,850	3,710	3,037	10,479	8,419
	Total revenue		22,355	15,952	14,162	15,610	14,042	52,469	39,303

	Efficiency ratio (non-interest expense / total revenue)		101.65 %	65.63 %	76.37 %	65.17 %	65.09 %	83.87 %	65.91 %
	Adjusted efficiency ratio (non-GAAP)		60.76 %	62.11 %	69.60 %	65.08 %	65.09 %	63.56 %	65.91 %

Tangible Book Value per Share and Tangible Common Equity Ratio:
	Shareholders’ equity (GAAP)		$ 225,074	$ 174,968	$ 169,471	$ 164,503	$ 160,098	$ 225,074	$ 160,098
		Less: goodwill and other intangible assets, net	23,575	7,016	7,020	7,031	7,049	23,575	7,049
	Tangible common equity (non-GAAP)		201,499	167,952	162,451	157,472	153,049	201,499	153,049

	Common shares outstanding		18,980	15,541	15,020	14,710	14,695	18,980	14,695

	Book value per share		$ 11.86	$ 11.26	$ 11.28	$ 11.18	$ 10.89	$ 11.86	$ 10.89
	Tangible book value per share (non-GAAP)		10.62	10.81	10.82	10.71	10.42	10.62	10.42

	Total assets (GAAP)		$ 2,214,728	$ 1,510,751	$ 1,448,508	$ 1,431,688	$ 1,468,458	$ 2,214,728	$ 1,468,458
		Less: goodwill and other intangible assets, net	23,575	7,016	7,020	7,031	7,049	23,575	7,049
	Tangible assets (non-GAAP)		2,191,153	1,503,735	1,441,488	1,424,657	1,461,409	2,191,153	1,461,409

	Tangible common equity to tangible assets (non-GAAP)		9.20 %	11.17 %	11.27 %	11.05 %	10.47 %	9.20 %	10.47 %