COMMUNITY FIRST BANCORPORATION ANNOUNCES FIRST QUARTER 2024 FINANCIAL RESULTS

WALHALLA, S.C., April 26, 2024 /PRNewswire/ -- Community First Bancorporation, Inc. (OTC: CFOK, the "Company"), parent company for Community First Bank, Inc. (the "Bank"), announced its unaudited consolidated financial results for the first quarter of 2024. Highlights of the results include:

• The Company announced a merger with Dogwood State Bank on February 1, 2024, subject to shareholder and regulatory approval. The merger, if approved, is expected to close in the third quarter.
• The net interest margin for the first quarter of 2024 was 3.04%.
• The Company earned $1,007,000 for the first quarter or $.18 per common share.
• Book value per common share increased to $9.06 as of March 31, 2024 compared to $8.36 as of March 31, 2023 and $8.97 as of December 31, 2023.

Total consolidated earnings of $1,007,000 were recorded for the first quarter of 2024 compared to $1,035,000 for the first quarter of 2023. Earnings per common share totaled $.18 for the first quarter of 2024 and the first quarter of 2023. Net income was impacted by higher interest rates on the Company's sources of funding. Benefits for credit losses and income taxes and lower overall expenses contributed to partially offset the lower net interest income for the quarter.

Net interest income declined year over year for the first quarter of 2024, due to higher overall funding costs. The average yield for the quarter on interest-earning assets increased to 5.18% in the first 2024 quarter compared to 4.73% in the first quarter of 2023. Average balances of loans were higher by 3.4% in the first quarter of 2024 than in the first quarter of 2023. Rates paid on money market and time deposits increased significantly year over year. The average rate paid on interest bearing funding was 2.89% compared to 1.30% in the first quarter of 2023. The net interest margin for the first quarter was 3.04% on an annualized basis.     

The Bank recognized a credit to the provision for credit losses of $22,000 during the first quarter of 2024, compared to a net expense of $122,000 for the first quarter of 2023. The credit is reflective of lower outstanding commitments to lend as of the end of the quarter.  

Noninterest income totaled $909,000 for the first quarter of 2024 compared to the $934,000 for the first quarter of 2023. The Company did not sell any SBA loans in the first quarter of 2024, resulting in a decline in gains on the sale of SBA loans of $108,000. The Company continues to focus on increasing its pipeline of SBA loans, some of which will be sold in future quarters.  Referral fees on interest rate swaps offset the decrease in non-interest income and totaled $30,000 in the first quarter of 2024 compared to $11,000 in the first quarter of 2023.

Noninterest expense decreased 1.3% in 2024, a continuation of the decline of 28.8% in 2023 compared to 2022. In 2024 the decrease related to lower salaries and benefits, occupancy expenses, miscellaneous loan expenses, marketing costs and foreclosed property expense. Professional fees and other expenses increased to include certain merger-related costs. Legal fees and investment banking fees were the primary merger-related costs in the first 2024 quarter.

President and CEO Richard D. Burleson commented: "Over the past year interest rates on funding have continued to increase more quickly than asset yields have risen. To offset the higher funding costs, we are committed to continuing our efforts to be more efficient while still offering high levels of local service and secure technology."

The proposed merger with Dogwood State Bank was announced February 1, 2024. Mr. Burleson continued: "We are very excited about our proposed merger with Dogwood State Bank. This partnership will allow us to offer expanded products and services to our customers and move towards greater economies of scale. We believe these steps are necessary to increase our value to both our customers and shareholders."

 At March 31, 2024, total gross loans held for investment were $508,679,000 compared to $501,046,000, as of March 31, 2023, an increase of 1.5%. The Bank is being very cautious with loan growth at this stage of the economic cycle. Total deposits on March 31, 2024 were $578,786,000 compared to deposits as of March 31, 2023 of $581,307,000. The Company estimates that approximately 11.1% of deposits are uninsured at March 31, 2024.

Burleson further reported that "the Bank continues to have high asset quality. Our nonperforming assets, comprising nonperforming loans and foreclosed assets, totaled $624,000 at March 31, 2024, compared to $658,000 at December 31, 2023. As of March 31, 2024, we had one loan with an outstanding balance of $68,000 in our foreclosure pipeline and our past due percentages remained well below our peers at .09%.  On March 31, 2024, our Allowance for Credit Losses ("ACL") totaled $6,080,000 or 1.20% of total loans outstanding." The Company experienced a net recovery to the ACL during the first quarter of 2024.

The Bank's Tier 1 Leverage Capital Ratio was 10.4% on March 31, 2024, and liquidity levels remain satisfactory. Book value per common share as of March 31, 2024 was $9.06.

Community First Bank has twelve full-service financial centers in North Carolina, South Carolina and Tennessee, with two in Seneca and single locations in each of Anderson, Greenville, Williamston, Walhalla and Westminster, South Carolina, Dallas, Charlotte and Franklin, North Carolina, and Elizabethton and Johnson City, 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:

• 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.

SOURCE Community First Bancorporation

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