Suncrest Bank : April 26, 2021 – Suncrest Bank First Quarter Earnings Release

FOR IMMEDIATE RELEASE

April 26, 2021

Contacts: Mr. Ciaran McMullan, President/CEO or Ms. Jean Carandang, CFO. 559-802-1000

Suncrest Bank Reports First Quarter Earnings. EPS increase of 40% and annualized non-PPP loan growth of 11%.

SACRAMENTO, Calif. and VISALIA, Calif. Suncrest Bank (OTCQX: SBKK) today reported unaudited financial results for the first quarter of 2021.

"Our momentum coming out of 2020 has continued through Q1 and the bank has posted another outstanding quarter in both earnings and balance sheet growth," said Ciaran McMullan, President and CEO of Suncrest Bank.

"Earnings per share increased by 40% over the same quarter last year and our organic loan and deposit growth was extremely strong. Total loans, excluding PPP, increased at an annualized rate of 11% and total deposits increased by over 27% annualized," McMullan added.

"While these results reflect a general improvement in economic conditions they are also directly attributable to the investments we have made in recruitment especially within our lending and portfolio management teams. Over the last two years we have hired ten new loan officers, many with experience gained at large national and regional banks, while carefully managing expense growth and keeping key cost ratios at industry leading levels."

First Quarter 2021 Highlights

• Net income of $4.0 million, an increase of $1.1 million over Q1 2020
• Diluted EPS of $0.32, an increase of 39.1% over Q1 2020
• Total loan growth of $42.9 million or 5.23%
• Total loan growth (excluding PPP) of $19.8 million or 2.81% (11.2% annualized)
• New originations1 (excluding PPP) of $46.3 million
• Total deposits (excluding brokered) increased $70.8 million or 6.84% (27.37% annualized)
• Return on average tangible assets of 1.28%
• Return on average tangible equity of 12.62%
• Efficiency ratio of 52.14%
• Tangible book value per share of $10.02
• Tier 1 leverage ratio of 9.52%
• Paid Special Dividend of $0.25 cents
• Launched small business grant program for women-owned businesses
• Joined Greater Sacramento Region FinTech Consortium

Income Statement

Net income for the quarter was $4.0 million compared to $4.35 million for the linked quarter and $2.88 million for the same quarter last year. The decrease over the linked quarter is primarily due to gain on sale of correspondent bank stock of approximately $611,000 recorded in the linked quarter. This was partially offset by a reduction in provision for loan losses of $250,000. The increase over the first quarter of 2020 is mostly driven by an increase in net interest income and the reduction in provision for loan losses, partially offset by an increase in noninterest expense.

Interest income decreased to $11.5 million versus $11.8 million for the linked quarter and increased from $10.9 million compared to the first quarter of 2020. The decrease over the linked quarter is primarily a result of a reduction in the loan yield from 4.78% in the linked quarter to 4.62% for the quarter ended March 31, 2021.

1 Includes unfunded commitments

Interest expense declined to $518,000 as compared to $648,000 over the linked quarter due to a decline in our cost of funds to 19 basis points (bps) from 23 bps last quarter. In addition, the decrease in interest expense was $628,000 over the same quarter last year due to a decline in our cost of funds by 35 basis points.

Included in interest income are fees earned on Paycheck Protection Program ("PPP") Loans of approximately $509,000 in the first quarter and $628,000 in the linked quarter.

Net interest Margin (NIM) remained unchanged at 3.68% for the quarter. Our NIM would have been 3.81% in Q1 compared to 3.75% for the linked quarter, an improvement of 6 basis points if we exclude PPP loans. NIM declined over the same quarter last year primarily due to the decrease in yields on earning assets from declining rates during the year. Yield on loans declined to 4.62% in Q1 from 4.78% for the linked quarter. Our loan yield would have been 4.99% in Q1 compared to 5.11% for the linked quarter if we exclude PPP loans.

Noninterest income increased over the linked quarter by approximately $30,000, excluding the gain on sale of correspondent bank stock of $611,000 recorded in Q4 2020.

Total noninterest expense increased over the linked quarter by less than 0.5% or $26,000, and increased over the same quarter last year by approximately 7.6% or $421,000. The increase over the same quarter last year is predominantly a result of the recruitment of new employees in primarily customer facing roles. However, despite this level of recruitment we continue to maintain our key expense ratios at consistently low levels with efficiency ratio being 52.14% in Q1 while our burden ratio and noninterest expense to average assets were 1.71% and 1.85% respectively.

Balance Sheet

Total assets at March 31, 2021 increased to $1.34 billion as compared to $1.25 billion for the linked quarter. The increase was $91.8 million or 7.4% as a result of an increase in total loans of $42.9 million and Federal Funds Sold of $37.0 million. Total assets increased $292.1 million or 27.9% over the same quarter last year as a result of an increase in loans of $183.4 million. Investment Securities increased $110.6 million over the same quarter last year and were funded by an increase in deposits.

Total deposits (excluding brokered deposits) at March 31, 2021 were $1.106 billion, an increase of $70.8 million or 6.84% over the linked quarter. Total deposits (excluding brokered deposits) increased year over year by $222.1 million or 25.12%.

At March 31, 2021 the bank acquired $60.0 million in low cost brokered deposits to partially fund PPP loans and pay down advances from the Federal Home Loan Bank.

Total loans at March 31, 2021 were $863.3 million, an increase of $42.9 million or 5.23% over the linked quarter. Total loans (excluding PPP loans) increased by $19.8 million or 2.81% over the linked quarter. Total PPP loans were $141.0 million at March 31, 2021 compared to $117.9 million at December 31, 2020.

PPP Loan Forgiveness and PPP Round Two

We have continued assisting our PPP borrowers through the loan forgiveness application. To date, over 75% of our PPP Round One customers have started the forgiveness process and $25.2 million has been forgiven. We are also participating in PPP Round Two and to date have funded $40.0 million and received applications for just over $58.0 million including 80 first draw customers and 204 second draw customers. We expect to generate approximately $2.1 million in fee income through the PPP Round Two program which will be earned over the expected life of the loans.

We have continued to track new business generated as a result of the approximately 190 new customers acquired through both PPP Round One and Round Two. To date, approximately 35% of these customers have established additional non-PPP related business with the bank, including over $20 million in new deposits (exclusive of PPP funds) and approximately $18.0 million in new loan commitments together with an additional $21.4 million in the pipeline.

Small Business Grant Program

As part of the bank's ongoing commitment to encourage and foster greater economic inclusion, during the quarter we provided over $10,000 in grants to five women-owned businesses throughout the Greater Sacramento region. Grant recipients were identified and selected through our "Kickstart Program" created in partnership with Sacramento Republic FC who were awarded the nation's latest MLS franchise in 2019. The community at-large nominated more than 40 businesses and provided over 3,000 votes in selecting the top five grant recipients, with the announcement of the winners coinciding with the end of Women's History Month. This is the third round of our Kickstart Program which began in early 2020 as a response to the needs of small businesses facing pandemic-related challenges. Previous rounds have awarded grants to Black-owned businesses and LatinX- owned businesses. For more information visit link

Greater Sacramento Region FinTech Consortium

The Greater Sacramento region is home to over 50 FinTech companies in various stages of evolution, across multiple verticals including; lending, wealth management, digital payments, blockchain and cryptocurrency. In partnership with the Greater Sacramento Economic Council (GSEC), Suncrest Bank together with a number of other local community banks and financial institutions (FI's) established the Greater Sacramento FinTech Consortium. The mission of the consortium is broadly twofold; (1) to provide member banks and FI's early access to emerging financial technology solutions together with the opportunity to influence solution development and,

1. to help achieve GSEC's overarching economic goal of creating high value "tradable2" job sectors and positioning the region as a world-class market for FinTech and other hi-tech organizations. For more information visit link

Asset Quality

Non-performing assets increased to $4.9 million or 0.37% of total assets at March 31, 2021 compared to 0.31% at December 31, 2020.

Based on our analysis of various portfolio trends and further improvement in the economic conditions of our primary industries, we determined a provision for loan losses was not required for the quarter. As a result, our allowance as a percentage of total loans (excluding both PPP and acquired loans) declined slightly to 1.49% at March 31, 2021 compared to 1.55% at December 31, 2020.

During the quarter our loan payment deferral program expanded slightly to four loans in the total amount of $5.5 million. It is expected that all clients will be able to resume payments upon the end of their respective deferral period.

Per the table below, classified loans as a percentage of total declined further to 1.50%. Non-accrual loans increased by $1.0 million primarily due to the reclassification of one relationship in the retail sector as the client experienced further financial deterioration. This relationship was downgraded to classified status in Q2 of 2020 as a result of the negative economic impacts of the pandemic.

		Q1 2021	Q4 2020	Q3 2020	Q2 2020
	Total Classified Loans (a)	$12,928,681	$12,928,632	$14,370,053	$14,399,989
	Classified - Accrual Loans	$8,166,865	$9,176,720	$10,111,838	$10,102,519
	Classified - Non-Accrual Loans	$4,761,816	$3,751,912	$4,258,215	$4,297,470
	Total Classified / Total Loans	1.50%	1.58%	1.78%	1.79%
	Total Classified / Total Loans	1.79%	1.84%	2.12%	2.13%
	(excluding PPP)
(a) Includes classified accrual loans and non-accrual loans

2 Per Enrico Moretti, UC Berkeley, "tradable" sector jobs can create 5 high wage jobs to every 1 job in the market. Whereas non-tradable jobs create 1 low wage job for every 5 in the market.

Capital

Suncrest Bank remained well capitalized at March 31, 2021. All of the bank's capital ratios are above minimum regulatory standards for "well capitalized" institutions.

During the quarter the bank issued a $0.25 special dividend.

At March 31, 2021 tangible book value per common share was $10.02 with common shares issued of 12,244,500 as of the same date.

About Suncrest Bank

Suncrest Bank, member FDIC, offers a full range of commercial, small business and agribusiness loans, cash management services and personal deposit products throughout the Central Valley of California and the Greater Sacramento Region. It is regularly rated Five Stars by Bauer Financial as one of the nation's strongest financial institutions, and in 2017 and 2018 was named to the OTCQX® Best 50, a ranking of top performing companies traded on the OTCQX Best Market. It is a Preferred Lender with the Small Business Administration and its stock can be purchased on the open market, trading on the OTCQX under the ticker symbol SBKK. For all other information, visit www.suncrestbank.com

Forward Looking Statements

Except for the historical information in this news release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, results of examinations by our banking regulators, our ability to maintain adequate levels of capital and liquidity, our ability to manage loan delinquency rates, our ability to price deposits to retain existing customers and achieve low-cost deposit growth, manage expenses and lower the efficiency ratio, expand or maintain the net interest margin, mitigate interest rate risk for changes in the interest rate environment, competitive pressures in the banking industry, access to available sources of credit to manage liquidity, the local and national economic environment, and other risks and uncertainties. Accordingly, undue reliance should not be placed on forward- looking statements. These forward-looking statements speak only as of the date of this release. Suncrest Bank undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the Suncrest Bank annual reports which are available on our website.

Suncrest Bank

Statements of Financial Condition (Unaudited)

			March 31,			December 31,			March 31,
			2021			2020			2020
ASSETS
Cash and Due from Banks	$	24,078,595	$	20,862,501	$	46,172,365
Federal Funds Sold		36,984,000			-			16,252,000
TOTAL CASH AND CASH EQUIVALENTS		61,062,595			20,862,501			62,424,365
Investment Securities Available for Sale (AFS)		348,379,719			340,755,773			237,736,303
Loans:
Total Loans		863,343,343			820,473,565			679,894,288
Allowance for Loan Losses	(	8,503,654)	(	8,503,324)	(	6,061,137)
NET LOANS		854,839,689			811,970,241			673,833,151
Federal Home Loan Bank and Other Bank Stock, at Cost		4,907,984			4,907,984			5,471,141
Premises and Equipment		6,071,861			6,204,548			6,618,505
Other Real Estate Owned		129,644			129,644			130,195
Bank Owned Life Insurance		8,779,315			8,723,607			8,552,906
Goodwill		38,989,566			38,989,566			38,989,566
Core Deposit Intangible		2,378,513			2,530,229			3,015,551
Accrued Interest and Other Assets		12,676,878			11,294,581			9,334,350
		$	1,338,215,764	$	1,246,368,674	$	1,046,106,033
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing Demand	$	433,948,436	$	398,406,475	$	308,415,544
Savings, NOW and Money Market Accounts		602,331,876			565,956,832			494,175,027
Time Deposits - Retail		70,117,424			71,187,653			81,681,922
Time Deposits - Wholesale		60,000,000			-			-
TOTAL DEPOSITS		1,166,397,736			1,035,550,960			884,272,493
Accrued Interest and Other Liabilities		7,762,743			8,470,511			7,091,754
Other Borrowings		-			33,437,000			-
TOTAL LIABILITIES		1,174,160,479			1,077,458,471			891,364,247
Shareholders' Equity:
Common Stock - No par value		118,164,166			118,132,166			119,816,864
Additional Paid-in Capital		3,584,198			3,428,068			3,061,394
Retained Earnings		38,137,566			37,194,084			26,946,491
Accumulated Other Comprehensive Income - Net
Unrealized Gain on Securities AFS		4,169,355			10,155,885			4,917,037
TOTAL SHAREHOLDERS' EQUITY		164,055,285			168,910,203			154,741,786
		$	1,338,215,764	$	1,246,368,674	$	1,046,106,033