Kish Bancorp : 2021 Fourth Quarter Financial Statement

To our

shareholders

Consistent with previous 2021 quarterly reports, Kish Bancorp's sustained performance across all business units has produced strong financial results (unaudited) for the full year ending December 31, 2021. Highlights of 2021 are as follows:

• Strong year-over-year net income expansion of 22.9%
• Deposit and balance sheet growth of 14.2% and 11.4%, respectively, compared to December 31, 2020
• Sustained residential mortgage lending at the exceptionally strong levels achieved in 2020, with revenue from the sale of mortgage loans holding steady
• Strong internal capital formation, up 10.2% from the prior year, while achieving excellent return on shareholders' equity of 14.1%, compared to 12.9% in 2020
• Healthy credit quality metrics that have remained positive throughout the pandemic
• Continued expansion into contiguous Pennsylvania counties
• Excellent results from the northeastern Ohio lending group
• Strong ROI from investments in operating technology, with data processing expense down 12.7% from the prior year

BALANCE SHEET

The Corporation's total assets ended the period at $1.233 billion, an increase of $126.2 million, or 11.40%, compared to total assets of $1.107 billion as of December 31, 2020. Total loans outstanding grew year over year by $113 million to $878.7 million, or 14.75%. Loans originated in 2021 to businesses in our communities as part of the third round of PPP totaled $35 million, although this was more than offset by forgiveness of PPP loans in the amount of $67.8 million during the year. The strongest contributor to loan growth in 2021 was the northeastern Ohio lending team, who generated over $77 million in new loans outstanding. Investment securities increased to $191.2 million, a $50 million increase over the balance a year earlier. Total deposits grew by $124.8 million to $1.003 billion, an increase of 14.22% from $877.8 million a year ago, with a continued notable expansion in core deposits created by new customer acquisition and the liquidity generated by government stimulus programs.

NET INCOME

Net income for the twelve months ended December 31, 2021, was $9.88 million, an increase of $1.84 million, or 22.91%,

compared to $8.04 million for the same period in 2020. The increase reflects expansion in both net interest income, up 13.45% over the prior year, and noninterest income, which increased 12.08% overall. The expansion in net interest income benefitted from the continued decline in interest expense on deposits. The sharp increase in noninterest income is attributable to market value increases in the equity portfolio of $262 thousand, compared to losses of $313 thousand in 2020, and to the addition of insurance agency revenue resulting from the acquisition of the Sausman Insurance Agency of Mifflintown. Net income was also positively impacted by gains on sales of residential mortgage loans and the decline in the contribution to the loan loss reserve as overall credit quality metrics remain at excellent levels.

Year over year, noninterest expense increased by $3.13 million, or 10.59%, to $32.67 million as of December 31, 2021, compared to $29.5 million the prior year. In part, the increase reflects higher salaries and employee benefits associated with additions to the team, as well as occupancy expense related to the opening of the new Kish Innovation Center. Data processing expense for 2021 decreased to $1.9 million from $2.2 million in 2020, an improvement of 12.74%. These lower costs are the result of a core conversion that was completed during the second quarter of 2020.

All other expense categories were well controlled when compared to the prior year.

DIVIDEND

The Board of Directors has declared an increased quarterly dividend in the amount of $0.32 per share, payable January 31, 2022, to shareholders of record as of January 14, 2022. This is a 10.3% increase compared to $0.29 per share the prior quarter. Return on shareholders' equity continued to be strong as it rose to 14.08%, compared to 12.86% the year earlier. We were also pleased to take advantage of favorable market conditions with the issuance of $20 million of subordinated debt during the second quarter. This issuance enabled the redemption of higher cost debt and provides additional capital flexibility at the holding company to support future growth.

While the challenges created by the ongoing COVID-19 pandemic continue, we have remained vigilant while maintaining a steady focus on the Corporation's long-term strategic priorities. As always, your ownership stake in Kish Bancorp is greatly appreciated.

Sincerely,

William P. Hayes

Chairman and CEO

CONSOLIDATED BALANCE SHEET

(Unaudited; in thousands)

	Dec. 31, 2021		Dec. 31, 2020
ASSETS
$	7,006	$	12,443
Cash and due from banks
Interest-bearing deposits with		86,755			117,223
other institutions
Cash and cash equivalents		93,761			129,666
Certificates of deposit in other
financial institutions		245			490
Investment securities available
for sale		178,747			128,038
Equity securities		2,694			2,132
Investment securities held to		9,778			11,023
maturity
Loans held for sale		3,255			5,667
Loans		878,713			765,731
Less allowance for loan losses		10,560			9,771
Net Loans		868,153			755,960
Premises and equipment		25,578			24,269
Goodwill		3,561			3,561
Regulatory stock		5,969			6,875
Bank-owned life insurance		23,780			16,237
Accrued interest and other assets		17,257			22,691
TOTAL ASSETS	$	1,232,778	$	1,106,609
LIABILITIES
Noninterest-bearing deposits	$	177,080	$	135,622
Interest-bearing deposits		825,565			742,174
Total Deposits		1,002,645			877,796
Short-term borrowings		67,434			69,360
Other borrowings		67,185			64,657
Accrued interest and other		18,415			24,834
liabilities
TOTAL LIABILITIES		1,155,679			1,036,647
STOCKHOLDERS' EQUITY
Common stock, $0.50 par value;
8,000,000 shares authorized,
2,697,500 shares issued		1,349			1,349
Additional paid-in capital		3,987			3,826
Retained earnings		76,432			69,538
Accumulated other		(1,573)			(1,009)
comprehensive income
Treasury stock, at cost (66,818		(3,096)			(3,742)
and 94,460 shares)
TOTAL STOCKHOLDERS' EQUITY		77,099			69,962
TOTAL LIABILITIES AND	$		$
STOCKHOLDERS' EQUITY	1,232,778	1,106,609

CONSOLIDATED STATEMENT OF INCOME

(Unaudited; in thousands)

		Twelve Months Ended
	Dec. 31, 2021		Dec. 31, 2020
INTEREST AND DIVIDEND
INCOME
Interest and fees on loans:
Taxable	$	34,194	$	33,849
Exempt from federal income tax		1,272			1,312
Investment securities:
Taxable		3,122			2,881
Exempt from federal income tax		266			437
Interest-bearing deposits with		117			206
other institutions
Other dividend income		631			769
TOTAL INTEREST AND DIVIDEND
INCOME		39,602			39,454
INTEREST EXPENSE

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; in thousands, except for per share data)

		Twelve Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Net Income	$	9,881	$	8,039
Total Assets	$	1,232,778	$	1,106,609
Loans Outstanding	$	878,713	$	765,731
Total Deposits	$	1,002,645	$	877,796
ROA (annual)		0.85%		0.79%
ROE (annual)		14.08%		12.86%
Earnings per Share	$	3.77	$	3.09
Dividends per Share	$	1.14	$	1.08

2 0 2 1 F O U R T H F I N A N C I A L

Q U A RT E R R E P O R T

Deposits		2,862			5,322
Short-term borrowings		26			85
Other borrowings		3,380			3,085
TOTAL INTEREST EXPENSE		6,268			8,492
NET INTEREST INCOME		33,334			30,962
Provision for loan losses		780			2,268
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		32,554			28,694
NONINTEREST INCOME
Service fees on deposit accounts		1,813			1,581
Investment securities gains, net		16			108
Equity securities gains, net		262			(313)
Gain on sale of loans, net		2,459			2,424
Earnings on Bank-owned life		902			486
insurance
Insurance commissions		2,683			2,174
Travel agency commissions		98			88
Wealth management		2,124			1,780
Benefits consulting		642			599
Other		347			1,196
TOTAL NONINTEREST INCOME		11,346			10,123
NONINTEREST EXPENSE
Salaries and employee benefits		19,932			17,984
Occupancy and equipment		4,001			2,909
Data processing		1,891			2,167
Professional fees		643			573
Advertising		348			398
Federal deposit insurance		725			500
Other		5,127			5,007
TOTAL NONINTEREST EXPENSE		32,667			29,538
INCOME BEFORE INCOME TAXES		11,233			9,279
Income taxes		1,352			1,240
NET INCOME	$	9,881		$	8,039

MARKET MAKERS

BOENNING & SCATTERGOOD, INC.

Contact: Eugene Bodo 1-800-883-1212

4 Tower Bridge, 200 Barr Harbor Drive, Suite 300 West Conshohocken, PA 19428-2979

RAYMOND JAMES AND ASSOCIATES, INC.

Contact: Anthony LanFranca 312-655-2961

222 South Riverside Plaza, 7th Floor Chicago, IL 60606

Kish Bancorp, Inc. stock is traded on the OTCQX market under the stock ticker symbol: KISB. For more information, please visit ir.kishbancorp.com.

4255 East Main Street, Belleville, PA 17004

1-800-981-5474 | www.KishBank.com

You	We
	are		are
	why.		Kish.