GrandSouth Bancorporation Announces 86% Increase in Year Over Year Net Income and Fourth Quarter 2021 Results - Form 8-K

GrandSouth Bancorporation Announces 86% Increase in Year Over Year Net Income and Fourth Quarter 2021 Results

GREENVILLE, SC, January 18, 2022

GrandSouth Bancorporation (GRRB:OTCQX) (the "Company" or "GrandSouth"), the holding company for GrandSouth Bank announced today that net income was $16.1 million and $4.7 million for the year and quarter ended December 31, 2021, respectively, representing a 86.40% and a 47.13% increase over the same periods in 2020.

The Board of Directors declared a quarterly cash dividend of $0.13 per common share ($0.1365 per Series A preferred share) payable on February 18, 2022 to shareholders of record on February 4, 2022.

Fourth Quarter 2021 Highlights - For and during the quarter ended December 31, 2021:

·	Net Income was $4.7 million, an increase of $1.5 million, or 47.13%, from the same quarter in 2020.

·	Basic and diluted earnings per share were $0.86 and $0.84, respectively.

·	A 30% increase in the quarterly cash dividend.

·	The annualized returns on average assets and average equity were 1.55% and 19.53%, respectively.

·	Total assets increased $1.1 million, or 0.09%, to $1.2 billion.

·	Gross loans excluding purchased student loans increased by $21.4 million, or an annualized rate of 9.29%, to $932.8 million.

·	Total deposits increased $7.3 million, or an annualized rate of 2.76%, to $1.1 billion.

·	Cost of funds decreased by 22 basis points, or 34.38%, from the same quarter in 2020.

·	Of gross loans excluding specialty floor plan and purchased student loans ("Core Bank loans"), 0.01% were 30 days past due as of December 31, 2021. The annualized net charge off ratio for the quarter was 0.10%.

·	The efficiency ratio was 55.45%, improving from 58.81% in the prior quarter and 63.69% in the same quarter in 2020.

JB Schwiers, the Company's President, said, "GrandSouth Bancorporation achieved record earnings of $16.1 million in 2021, which is an 86% increase over 2020. Our Board of Directors has approved a 30% increase in the quarterly cash dividend as a result of these exceptional earnings. This is our way of sharing our success with our investors. During the fourth quarter, we made the strategic decision to sell our student loan portfolio purchased in previous years. We also paid off our most costly FHLB advances (at a penalty) and sold investments in our portfolio that were below market rates and as a result in an unrealized loss position. The gain from the sale of purchased student loans allowed us to more than offset these prepayment penalties and investment security losses. We believe making these balance sheet changes will position us for better earnings in the future. We also made excellent progress in the forgiveness of PPP loans to our customers with $49 million forgiven during 2021. Excluding the PPP loans, the core bank loan portfolio grew at an annualized rate of 12%. Our credit quality metrics continue to be very strong. Nonperforming assets as a percentage of total assets ratio was 0.19% at the end of 2021. We carried two Core bank loans past due over 30 days in the amount of $103 thousand on a total loan portfolio that exceeds $933 million.

I am extremely proud of these results but not surprised. We began a journey in 2015 to rebuild our sales and credit culture. There has been a careful and well thought out investment in people and new markets. We avoided trying to be all things to all people and instead focused on what we do best. The three-legged stool approach of taking care of customers, employees, and shareholders has served us well. GrandSouth Bank is now known as a high performing community bank with a commercial focus that operates in the three major markets of our state. I believe we have an exceptional franchise because of the strength of our people, our commercial focus, an efficient branch network, and a strong specialty lending division in CarBucks."

COVID-19 Impact through December 31, 2021

Management continues to focus on the economic impact resulting from the COVID-19 pandemic. To assist small businesses in need, the Bank processed 367 Paycheck Protection Program ("PPP") loans for a total of $51.0 million in loans funded and $2.0 million in lender fees collected. As of December 31, 2021, 354 of these loans totaling $49.7 million have been forgiven and lender fee income totaling $2.0 million has been recognized, leaving a remaining loan balance of $1.3 million as of December 31, 2021.

Specialty floor plan loans finished the quarter ended December 31, 2021 at $98.3 million, up from $83.0 million at December 31, 2020. The average balances of such loans outstanding for the quarters ending December 31, 2021 and 2020 were $95.5 million and $79.2 million, respectively. The 2020 pandemic related negative trends have reversed and average outstanding balances increased by 20.65% in the fourth quarter of 2021 when compared to the fourth quarter of 2020. The losses due to specialty floor plan loan defaults remain low resulting in a 0.75% annualized net charge off rate in the fourth quarter of 2021, as compared to a 0.20% annualized net charge off rate in the third quarter of 2021 and a 0.17% annualized net recovery rate in the fourth quarter of 2020.

Net Interest Income

Net interest income was $12.9 million for the quarter ended December 31, 2021, up $1.3 million, or 10.87%, from the same period in 2020. For the year ended December 31, 2021, net interest income increased $8.2 million, or 19.60%, to $49.9 million from $41.7 million during 2020. These increases were primarily driven by an increase in interest and fees on loans and a decrease in deposit interest expense.

Noninterest Income

Noninterest income was $1.8 million for the fourth quarter of 2021, an increase of $1.2 million, or 205.41%, from the fourth quarter of 2020. For the year ended December 31, 2021, noninterest income increased $1.3 million, or 49.26% to $3.8 million from that in 2020. For both periods, these changes were primarily driven by a net gain of $1.2 million from the sale of the student loan portfolio and a net gain on the settlement of litigation of $0.8 million. These were partially offset by a loss on sale of investment securities available for sale in the amount of $0.8 million.

Noninterest Expense

Noninterest expense increased $0.4 million, or 4.71%, in the fourth quarter of 2021 when compared to the same period in 2020. The increase was primarily attributable to an increase in compensation expense. For the year ended December 31, 2021, noninterest expense increased $1.1 million, or 3.64%, over that in 2020. The increases were primarily attributable to increases in compensation and employee benefits, data processing and other noninterest expenses, partially offset by a decrease in professional and advisory expenses and the net costs of operation of other real estate owned.

Loan Portfolio

The Company's gross loans portfolio contracted by $3.6 million, or an annualized rate of 1.53%, during the fourth quarter of 2021 and grew by $54.9 million, or an annualized rate of 6.25%, for the year ended December 31, 2021. Specialty floor plan loans increased by $7.2 million, or an annualized rate of 31.31% for the quarter and $15.3 million, or an annualized rate of 18.42%, for the year ended December 31, 2021. Core Bank loans grew by $14.2 million, or an annualized rate of 6.85%, and $67.2 million, or an annualized rate of 8.75%, during the same periods, respectively. The growth of Core Bank loans was impacted by the forgiveness of $5.4 million of PPP loans during the fourth quarter of 2021 and by the forgiveness of $48.6 million offset by the origination of $12.0 million in PPP loans during the year ended December 31, 2021. Core Bank loans, excluding PPP loans, grew by $19.6 million, or an annualized rate of 9.57%, for the quarter ended December 31, 2021 and $88.4 million, or an annualized rate of 11.87%, for the year ended December 31, 2021.

During the quarter, $24.6 million of the purchased student loan portfolio was sold which, along with the continued paydowns, decreased the balance during the fourth quarter of 2021 by $25.0 million, and $27.5 million for the year ended December 31, 2021. As of December 31, 2021, the remaining balance was $0.7 million.

The composition of the loan portfolio consisted of the following on December 31, 2021, September 30, 2021 and December 31, 2020:

		December 31,			September 30,			December 31,
		2021			2021			2020
		(Dollars in thousands)
Commercial, financial and agricultural		$	135,438			$	127,934			$	138,149
Specialty floor plan loans			98,324				91,132				83,027
Commercial PPP loans			1,274				6,744				22,521
Real estate - construction, land development and other			114,100				107,613				99,124
Real estate - mortgage			577,083				571,246				500,285
Purchased student loans			651				25,623				28,195
Installment loans to individuals			6,605				6,801				7,244
Loans, gross			933,475				937,093				878,545
Allowance for loan losses			(13,723	)			(13,730	)			(12,572	)
Loans, net		$	919,752			$	923,363			$	865,973

Loan Loss Provision and Asset Quality

For the quarter ended December 31, 2021, the provision for loan losses was $0.2 million, a decrease of $0.3 million, or 58.02%, from the same quarter a year ago. For the year ended December 31, 2021, the provision for loan losses was $1.3 million, a decrease of $1.8 million, or 58.67%, over that in 2020. Net charge offs for the fourth quarter of 2021 were $0.2 million and net charge offs for the year ended December 31, 2021 were $0.1 million, as compared to net recoveries of less than $0.1 million and net charge offs of $0.8 million for the same periods in 2020, respectively.

The allowance for loan losses as a percentage of total gross loans was 1.47% at December 31, 2021, consistent with the ratio at September 30, 2021 of 1.47% and up from 1.43% at December 31, 2020. The Company's management believes the allowance is adequate to absorb losses that are inherent in the loan portfolio as of December 31, 2021 and will continue to closely monitor credit ratios and activity.

Other real estate owned fell to $0.8 million at December 31, 2021, a decrease of $0.6 million, or 39.64%, from September 30, 2021 and a decrease of $1.1 million, or 56.42%, from $1.9 million at December 31, 2020. Nonaccrual loans increased to $1.3 million at December 31, 2021 from $1.2 million at September 30, 2021 and $0.5 million at December 31, 2020.

Securities Portfolio

Investment securities available-for-sale were $112.0 million at December 31, 2021, down $15.3 million, or 12.02%, from $127.3 million at September 30, 2021, and up $1.3 million, or 1.13%, from $110.7 million at December 31, 2020.

Securities in the investment portfolio as of December 31, 2021 were as follows:

·	asset backed securities totaling $2.6 million;

·	residential government-sponsored mortgage-backed securities totaling $33.5 million;

·	collateralized mortgage obligations totaling $27.4 million;

·	taxable municipal bonds totaling $14.1 million;

·	nontaxable municipal bonds totaling $12.6 million;

·	corporate debt securities totaling $12.4 million; and

·	treasury securities totaling $9.4 million.

During the fourth quarter of 2021, 18 securities totaling $19.4 million were purchased and 10 securities totaling $28.2 million were sold.

Deposits

Total deposits increased $7.3 million, or an annualized rate of 2.76%, during the fourth quarter of 2021 and $112.6 million, or an annualized rate of 11.89%, for the year ended December 31, 2021 to $1.1 billion at quarter end. Noninterest bearing deposits increased $11.8 million, or an annualized rate of 17.42%, during the quarter and $77.2 million, or an annualized rate of 37.92%, for the year ended December 31, 2021 to $280.7 million as of December 31, 2021 compared to December 31, 2020. During the quarter, combined demand deposit, money market, and savings accounts grew by $20.4 million, or an annualized rate of 9.76%, to $850.1 million. This growth offset the decrease during the same period in certificate of deposit, IRAs and CDARS of $13.1 million, or an annualized rate of 23.41%, to $208.9 million.

Borrowings

As of December 31, 2021, the Company had $5.0 million of Federal Home Loan Bank advances and $35.9 million of junior subordinated notes outstanding. During the fourth quarter, four Federal Home Loan Bank advances totaling $11.0 million were paid off. The Bank incurred a $0.1 million expense associated with the prepayment.

Shareholders' Equity

Shareholders' equity was $97.4 million at December 31, 2021, an increase of $4.7 million, or 5.05%, for the quarter and $10.9 million, or 12.57%, for the year ended December 31, 2021. The balance was increased by the normal retention of earnings, changes in the fair value of investments, exercise of stock options and expense of stock option grants. Offsetting the increase was payment of dividends and repurchases of common and preferred shares.

Tier 1 Risk Based Capital Ratios were 10.29% and 12.24% for the Company and the Bank, respectively, at December 31, 2021.

About GrandSouth Bancorporation

GrandSouth Bancorporation is a bank holding company with assets of $1.2 billion at December 31, 2021. GrandSouth Bank provides a range of financial services to individuals and small and medium sized businesses. GrandSouth Bank has eight branches in South Carolina, located in Greenville, Fountain Inn, Anderson, Greer, Columbia, Orangeburg and Charleston.

Press contact: JB Schwiers 864-770-1000

Website: www.grandsouth.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of the Company. Forward-looking statements are not guarantees of performance or results. These forward-looking statements are based on the current beliefs and expectations of the Company's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond management's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed or implied in these forward-looking statements because of numerous possible uncertainties. Words like "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and similar expressions, should be considered as identifying forward-looking statements, although other phrasing may be used. Such forward-looking statements involve risks and uncertainties beyond the Company's control and may not be realized due to a variety of factors. 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: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations may be different than expected, including, but not limited to, due to the continuing negative impacts and disruptions resulting from the novel coronavirus, or COVID-19, on the economies and communities the Company serves, which may have an adverse impact on the Company's business, operations and performance, and could have a negative impact on the Company's credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act"; (5) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company; (6) changes in interest rates, which may affect the Company's net income, prepayment penalty income, and other future cash flows, or the market value of the Company's assets, including its investment securities; and (7) changes in accounting principles, policies, practices, or guidelines. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed by the Company with the SEC and available at the SEC's internet site (https://www.sec.gov). You should consider such factors and not place undue reliance on such forward-looking statements. No obligation is undertaken by the Company to update such forward-looking statements to reflect events or circumstances occurring after the issuance of this press release.

Non-GAAP Measures

This release includes financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). This financial information includes certain operating performance measures. Such measures include: "Tangible book value per common share, outstanding," "Tangible book value per share, adjusted for the conversion of Series A preferred stock", "Tangible book value, adjusted for the conversion of Series A preferred stock", and "Common tangible book value."

Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating the Company's underlying performance trends. Further, management uses these measures in managing and evaluating the Company's business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

GrandSouth Bancorporation and Subsidiary

Greenville, SC

Condensed Consolidated Balance Sheets

		(Unaudited)			(Unaudited)			(Audited)
		December 31,			September 30,			December 31,
		2021			2021			2020
		(Dollars in thousands)
Assets
Cash and due from banks		$	2,522			$	5,853			$	6,216
Interest-earning deposits			120,602				95,018				51,137
Federal funds sold			977				1,215				5,672
Cash and cash equivalents			124,101				102,086				63,025
Investments - available for sale			111,962				127,252				110,707
Other investments, at cost			2,984				3,476				6,252
Loans receivable, net of deferred fees and costs			933,475				937,093				878,545
Allowance for loan losses			(13,723	)			(13,730	)			(12,572	)
Loans, net of allowance for loan losses			919,752				923,363				865,973
Premises and equipment, net			17,783				17,504				16,680
Other real estate owned			842				1,395				1,932
Accrued interest receivable			4,808				5,822				5,704
Bank owned life insurance			14,778				14,694				14,861
Net deferred tax asset			2,968				2,811				2,501
Goodwill			737				737				737
Other assets			3,007				3,527				1,407
Total assets		$	1,203,722			$	1,202,667			$	1,089,779
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	280,665			$	268,858			$	203,502
Interest-bearing			778,376				782,879				742,978
Total deposits			1,059,041				1,051,737				946,480
Federal Home Loan Bank advances			5,000				16,000				16,000
Junior subordinated notes			35,864				35,834				35,744
Accrued interest payable			383				629				336
Accrued expenses and other liabilities			6,029				5,748				4,694
Total liabilities			1,106,317				1,109,948				1,003,254
Shareholders' equity
Preferred stock - Series A - no par value			-				-				-
Common stock - no par value			-				-				-
Additional paid in capital			44,570				44,206				46,645
Retained earnings			51,649				47,471				37,721
Accumulated other comprehensive income			1,186				1,042				2,159
Total shareholders' equity			97,405				92,719				86,525
Total liabilities and shareholders' equity		$	1,203,722			$	1,202,667			$	1,089,779

NOTE: Certain amounts in the prior year's financial statements may have been reclassified to conform to the current year's presentation. The reclassifications had no effect on results of operations or financial condition as previously reported.

GrandSouth Bancorporation and Subsidiary

Greenville, SC

Condensed Consolidated Statements of Income (Unaudited)

		For the three months ended December 31,			For the twelve months ended December 31,
		2021			2020			2021			2020
		(Dollars in thousands)			(Dollars in thousands)
Interest income		$	14,078			$	13,212			$	55,009			$	50,331
Interest expense			1,164				1,564				5,119				8,617
Net interest income			12,914				11,648				49,890				41,714
Provision for loan losses			225				536				1,270				3,073
Net interest income after provision for loan losses			12,689				11,112				48,620				38,641
Noninterest income
Service charges on deposit accounts			334				264				1,244				983
Gain (loss) on sale of investment securities available for sale			(819	)			-				(819	)			392
Bank owned life insurance			83				102				344				414
Net gain (loss) on sale of premises and equipment			(63	)			(1	)			26				14
Net gain on sale of loan portfolio			1,227				-				1,227				-
Net gain on settlement of litigation			828				-				828				-
Other			218				227				959				749
Total noninterest income			1,808				592				3,809				2,552
Noninterest expenses
Compensation and employee benefits			5,703				5,231				21,131				20,371
Net occupancy			577				531				2,309				2,186
Net cost of operation of other real estate owned			(50	)			78				90				371
Data processing			485				502				2,021				1,880
Other expenses			1,448				1,454				5,590				5,238
Total noninterest expenses			8,163				7,796				31,141				30,046
Income before income taxes			6,334				3,908				21,288				11,147
Income tax provision			1,611				698				5,174				2,502
Net income			4,723				3,210				16,114				8,645
Deductions for amounts not available to common shareholders:
Dividends declared or accumulated on perferred stock			(30	)			(24	)			(120	)			(97	)
Net income available to common shareholders		$	4,693			$	3,186			$	15,994			$	8,548
Per common share
Earnings per common share, basic		$	0.86			$	0.58			$	2.95			$	1.57
Earnings per common share, diluted		$	0.84			$	0.57			$	2.88			$	1.55

NOTE: Certain amounts in the prior year's financial statements may have been reclassified to conform to the current year's presentation. The reclassifications had no effect on results of operations or financial condition as previously reported.

GrandSouth Bancorporation and Subsidiary

Greenville, SC

Net Interest Margin Analysis (Unaudited)

		For the three months ended
		December 31, 2021			December 31, 2020
		Average						Average			Average						Average
		balance			Interest			Yield			balance			Interest			Yield
		(Dollars in thousands)
Interest earning assets
Investments
Certificates of deposit			1,504				6				1.69	%			4,243				23				2.23	%
US agency securities and treasuries			9,434				31				1.33	%			-				-				0.00	%
Mortgage backed securities			41,472				95				0.91	%			28,294				27				0.38	%
CMO and asset backed securities			48,148				97				0.80	%			56,094				167				1.19	%
Municipals (a)			23,082				147				2.54	%			17,541				121				2.75	%
Corporate debt security			10,254				109				4.24	%			3,534				50				5.63	%
Federal Home Loan Bank stock			1,048				11				4.28	%			1,680				17				3.99	%
Other investments			725				1				0.77	%			747				1				0.74	%
Subtotal, investments			135,667				497				1.47	%			112,133				406				1.45	%
Cash equivalents
Due from banks and fed funds sold			99,723				39				0.15	%			44,359				11				0.09	%
Subtotal, cash equivalents			99,723				39				0.15	%			44,359				11				0.09	%
Total investments and cash equivalents			235,390				536				0.91	%			156,492				417				1.06	%
Loans
Consumer single pay, installment, revolving term and line of credit loans			6,619				60				3.59	%			7,834				70				3.58	%
Consumer FFELP student loans			15,364				193				5.00	%			28,505				323				4.51	%
Consumer residential and equity loans			72,789				710				3.87	%			70,097				734				4.16	%
Commercial single pay, installment and revolving term loans			115,930				1,219				4.17	%			109,338				1,155				4.20	%
Commercial real estate loans			624,233				6,314				4.01	%			537,032				5,599				4.15	%
Commercial specialty floor plan loans			95,520				4,816				20.00	%			79,173				4,257				21.39	%
Commercial SBA loans			4,657				249				21.20	%			32,168				675				8.35	%
Total loans			935,112				13,561				5.75	%			864,147				12,813				5.90	%
Total interest earning assets			1,170,502				14,097				4.78	%			1,020,639				13,230				5.15	%
Interest bearing funds
Interest-bearing deposits
Interest-bearing transaction accounts			60,792				38				0.25	%			47,911				31				0.26	%
Money market accounts			487,422				486				0.40	%			364,588				453				0.49	%
Regular savings accounts			15,608				4				0.10	%			9,344				2				0.10	%
Certificates of deposit, IRAs and CDARS			214,583				180				0.33	%			291,944				702				0.96	%
Total interest bearing deposits			778,405				708				0.36	%			713,787				1,188				0.66	%
Other interest bearing liabilities
Other borrowings			12,055				25				0.82	%			20,761				43				0.82	%
Junior subordinated debentures			35,846				431				4.77	%			27,502				333				4.81	%
Total other interest bearing liabilities			47,901				456				3.78	%			48,263				376				3.09	%
Total interest bearing funds			826,306				1,164				0.56	%			762,050				1,564				0.82	%
Tax-equivalent net interest rate spread									4.22	%									4.33	%
Non-interest bearing funds
Demand deposit accounts			280,388											204,051
Total funds and cost of funds			1,106,694				1,164				0.42	%			966,101				1,564				0.64	%
Tax-equivalent net interest rate spread on funds									4.36	%									4.51	%
Tax-equivalent net interest margin						12,933				4.38	%						11,666				4.55	%

(a)	Tax exempt investments are calculated giving effect to a 21% federal tax rate.

NOTE: Certain amounts in the prior year's financial statements may have been reclassified to conform to the current year's presentation. The reclassifications had no effect on results of operations or financial condition as previously reported.

GrandSouth Bancorporation and Subsidiary

Greenville, SC

Net Interest Margin Analysis (Unaudited)

		For the twelve months ended
		December 31, 2021			December 31, 2020
		Average						Average			Average						Average
		balance			Interest			Yield			balance			Interest			Yield
		(Dollars in thousands)
Interest earning assets
Investments
Certificates of deposit			2,665				53				1.98	%			6,176				137				2.21	%
US agency securities and treasuries			5,826				76				1.30	%			874				18				2.00	%
Mortgage backed securities			39,100				314				0.80	%			28,100				277				0.99	%
CMO and asset backed securities			53,504				481				0.90	%			44,419				717				1.62	%
Municipals (a)			21,382				554				2.59	%			13,374				378				2.83	%
Corporate debt security			7,234				333				4.60	%			1,526				85				5.59	%
Federal Home Loan Bank stock			1,247				50				3.98	%			1,541				74				4.83	%
Other investments			742				5				0.74	%			747				6				0.75	%
Subtotal, investments			131,700				1,866				1.42	%			96,757				1,692				1.75	%
Cash equivalents
Due from banks and fed funds sold			78,747				107				0.14	%			38,781				113				0.29	%
Subtotal, cash equivalents			78,747				107				0.14	%			38,781				113				0.29	%
Total investments and cash equivalents			210,447				1,973				0.94	%			135,538				1,805				1.33	%
Loans
Consumer single pay, installment, revolving term and line of credit loans			6,823				237				3.48	%			8,388				296				3.53	%
Consumer FFELP student loans			24,199				1,094				4.52	%			29,985				1,377				4.59	%
Consumer residential and equity loans			69,965				2,846				4.07	%			62,872				2,781				4.42	%
Commercial single pay, installment and revolving term loans			116,664				4,900				4.20	%			110,673				4,982				4.50	%
Commercial real estate loans			594,945				24,122				4.05	%			497,129				21,419				4.31	%
Commercial specialty floor plan loans			89,694				18,695				20.84	%			75,876				16,555				21.82	%
Commercial SBA loans			12,305				1,216				9.88	%			25,002				1,169				4.68	%
Total loans			914,595				53,110				5.81	%			809,925				48,579				6.00	%
Total interest earning assets			1,125,042				55,083				4.90	%			945,463				50,384				5.33	%
Interest bearing funds
Interest-bearing deposits
Interest-bearing transaction accounts			65,176				167				0.26	%			33,643				75				0.22	%
Money market accounts			442,451				1,888				0.43	%			306,694				1,915				0.62	%
Regular savings accounts			13,135				13				0.10	%			8,179				8				0.10	%
Certificates of deposit, IRAs and CDARS			243,066				1,192				0.49	%			332,453				5,416				1.63	%
Total interest bearing deposits			763,828				3,260				0.43	%			680,969				7,414				1.09	%
Other interest bearing liabilities
Other borrowings			15,106				132				0.87	%			17,146				168				0.98	%
Junior subordinated debentures			35,802				1,727				4.82	%			20,465				1,035				5.06	%
Total other interest bearing liabilities			50,908				1,859				3.65	%			37,611				1,203				3.20	%
Total interest bearing funds			814,736				5,119				0.63	%			718,580				8,617				1.20	%
Tax-equivalent net interest rate spread											4.27	%											4.13	%
Non-interest bearing funds
Demand deposit accounts			251,295												175,871
Total funds and cost of funds			1,066,031				5,119				0.48	%			894,451				8,617				0.96	%
Tax-equivalent net interest rate spread on funds											4.42	%											4.37	%
Tax-equivalent net interest margin							49,964				4.44	%							41,767				4.42	%

(a)	Tax exempt investments are calculated giving effect to a 21% federal tax rate.

NOTE: Certain amounts in the prior year's financial statements may have been reclassified to conform to the current year's presentation. The reclassifications had no effect on results of operations or financial condition as previously reported.

GrandSouth Bancorporation and Subsidiary

Greenville, SC

Financial Highlights (Unaudited)

		For the three months ended December 31,			For the twelve months ended December 31,
		2021			2020			2021			2020
		(Dollars in thousands, except per share)
Per share data:
Book value per common share		$	18.61			$	16.17			$	18.61			$	16.17
Tangible book value per common share, outstanding (non-GAAP) (a)		$	18.47			$	16.03			$	18.47			$	16.03
Tangible book value per share, adjusted for the conversion of Series A preferred stock (non-GAAP) (b)		$	17.73			$	15.43			$	17.73			$	15.43
Weighted average common shares oustanding, basic			5,155,018				5,230,419				5,157,858				5,215,182
Weighted average common shares outstanding, diluted			5,328,843				5,278,586				5,287,413				5,273,350
Common shares outstanding at end of period			5,168,681				5,271,971				5,168,681				5,271,971
Common shares outstanding at end of period, adjusted for conversion of Series A preferred stock			5,451,509				5,559,866				5,451,509				5,559,866
Selected performance ratios and other data:
Annualized return on average assets			1.55	%			1.21	%			1.39	%			0.88	%
Annualized return on average equity			19.53	%			15.09	%			17.78	%			10.59	%
Annualized net interest margin			4.38	%			4.55	%			4.44	%			4.42	%
Efficiency ratio			55.45	%			63.69	%			57.99	%			67.88	%
Annualized charge-offs (recoveries), net to average loans			0.10	%			-0.02	%			0.01	%			0.10	%
Book value (GAAP)		$	97,405			$	86,525			$	97,405			$	86,525
Series A preferred stock APIC			(1,204	)			(1,298	)			(1,204	)			(1,298	)
Book value excluding Series A preferred stock			96,201				85,227				96,201				85,227
Goodwill			(737	)			(737	)			(737	)			(737	)
Common tangible book value (non-GAAP) (c)		$	95,464			$	84,490			$	95,464			$	84,490
Book value (GAAP)		$	97,405			$	86,525			$	97,405			$	86,525
Goodwill			(737	)			(737	)			(737	)			(737	)
Tangible book value, adjusted for the conversion of Series A preferred stock (non-GAAP) (d)		$	96,668			$	85,788			$	96,668			$	85,788

		As of
		December 31,			December 31,
		2021			2020
		(Dollars in thousands)
Shareholders' equity to total assets			8.09	%			7.94	%
Tier 1 risk-based capital ratio			10.29	%			10.17	%
Other real estate owned		$	842			$	1,932
Nonaccrual loans			1,349				533
Loans past due 90 days and accruing interest (e)			55				53
Total nonperforming assets		$	2,246			$	2,518
Allowance for loan losses to loans, gross			1.47	%			1.43	%

(a)	Calculated by dividing the common tangible book value by the number of common shares outstanding at the end of the period.

(b)	Calculated by dividing the tangible book value, adjusted for the conversion of Series A preferred stock on a one for one basis, by the number of common shares outstanding at the end of the period, adjusted for conversion of the Series A preferred stock.

(c)	Calculated by subtracting Series A preferred stock APIC and goodwill from book value.

(d)	Calculated by subtracting goodwill from book value.

(e)	Amount represents the net of the loans wholly or partially guaranteed by the US Government.

NOTE: Certain amounts in the prior year's financial statements may have been reclassified to conform to the current year's presentation. The reclassifications had no effect on results of operations or financial condition as previously reported.

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