SOUTHERN COMMUNITY

BANCSHARES, INC.

AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2020

SOUTHERN COMMUNITY BANCSHARES, INC.

AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2020

TABLE OF CONTENTS

Page

INDEPENDENT AUDITOR'S REPORT............................................................................................................................

1-2

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets ..............................................................................................................................................

3

Consolidated statements of income ...................................................................................................................................

4

Consolidated statements of comprehensive income.........................................................................................................

5

Consolidated statements of stockholders' equity.............................................................................................................

6

Consolidated statements of cash flows..............................................................................................................................

7

Notes to consolidated financial statements ..................................................................................................................

8-31

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors

Southern Community Bancshares, Inc.

Cullman, Alabama

We have audited the accompanying consolidated financial statements of Southern Community Bancshares, Inc. and Subsidiary, which comprise the consolidated balance sheet as of December 31, 2020, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southern Community Bancshares, Inc. and Subsidiary as of December 31, 2020, and the results of their operations and their cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

2000 SOUTHBRIDGE PARKWAY, SUITE 501 • BIRMINGHAM, AL 35209 • 205-445-2880 • 888-277-0020 • FAX 205-445-2940 • www.mjcpa.com

Members of The American Institute of Certified Public Accountants

Other Matters

Prior Year Financial Statements

The financial statements of Southern Community Bancshares, Inc. and Subsidiary, as of December 31, 2019 and for the year then ended, were audited by other auditors whose report dated February 25, 2020 expressed an unmodified opinion on those statements.

Birmingham, Alabama

February 26, 2021

2

SOUTHERN COMMUNITY BANCSHARES, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

Assets

2020

2019

Cash and due from banks

$

947,274

$

997,183

Interest-bearing deposits in banks

17,586,525

9,770,453

Cash and cash equivalents

18,533,799

10,767,636

Investment securities available for sale

1,320,614

4,460,300

Other investment securities

753,500

870,300

Loans held for sale

215,119

-

Loans

95,634,475

103,747,010

Less allowance for loan losses

1,567,684

1,183,923

Loans, net

94,066,791

102,563,087

Property and equipment, net

5,114,610

5,130,253

Accrued interest receivable

416,614

427,536

Other real estate

-

181,825

Bank-owned life insurance

2,273,042

2,209,950

Other assets

603,301

364,250

Total assets

$

123,297,390

$

126,975,137

Liabilities and Stockholders' Equity

Liabilities:

Deposits:

$

15,414,887

Noninterest-bearing

$

11,289,594

Interest-bearing

82,936,779

86,418,978

Total deposits

98,351,666

97,708,572

Other borrowings

13,000,000

18,000,000

Accrued interest payable

90,262

126,624

Other liabilities

343,658

446,055

Total liabilities

111,785,586

116,281,251

Stockholders' equity

Preferred stock, $.01 par value; 100,000 shares authorized; no shares issued

-

-

Common stock, $.01 par value; 2,845,568 shares authorized; 982,918 shares

issued and 486,996 and 488,296 shares outstanding

at December 31, 2020 and 2019, respectively

9,830

9,830

Additional paid-in capital

9,188,905

9,203,905

Retained earnings

8,640,105

7,834,267

Unearned compensation

(59,775)

(92,775)

Treasury stock, at cost; 495,922 and 494,622 shares held at

December 31, 2020 and 2019, respectively

(6,284,474)

(6,273,074)

Accumulated other comprehensive income

17,213

11,733

Total stockholders' equity

11,511,804

10,693,886

Total liabilities and stockholders' equity

$

123,297,390

$

126,975,137

See Notes to Consolidated Financial Statements.

3

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